Zombie Agreements

“What we find in many of these subway agencies is that they are working with agreements that are now really old. And they wouldn`t pass the BOOT (Better off Overall Test) if they were negotiated today,” Sowerbutts said. After the FWA, workChoice-era agreements or those concluded under the FWA continue after their nominal expiry date until the FWC authorizes a replacement or terminates the contract. Either an individual employee, or with the support of a union, or the company itself can ask the FWC to terminate the enterprise contract. He added that the current mechanism for replacing zombie agreements was “an effective way” and confirmed that the database of the Department of Labor Contracts and Small Businesses could not confirm the number of zombie agreements in force. A number of large companies have made headlines because of their “zombie agreements.” In particular, the hotel and restaurant empire of Justin Hemmes, the Merivale Group had paid its 3000 employees in accordance with an outdated employment contract that was approved during WorkChoices. It was found that employees were paid significantly less than expected in the applicable Modern Price (“Price”) and, therefore, after the workers` request, the Fair Work Commission (“Commission”), with the support of the union, denounced the Merivale Group`s agreement, which resulted in the company now being required to pay the prevailing premium rates. , which caused significant disruption and impact on the business. In addition, an Australian law firm has confirmed that it accepts the class actions in order to recover any arrears for all current and former Merivale Group employees. This was a double blow for the Merivale Group, which could see a claim for underpayment of $15 million to $25 million. However, it is not certain that a request for underpayment can be successful, as the implementation of zombie agreements is legal and is provided for under the FWA. Tip 3 – If there is a “zombie contract,” you will receive legal advice on whether the BOOT test is still successful In most cases, requests to terminate these agreements are made by the industry. If the company has its business to allow the termination of the contract, this process can be managed easily.

While an employer may legally have the right to pay its employees under zombie agreements and, on the one hand, may seem economically sound by placing the company in a seemingly indecent competitive position, this short-term view is not liable for the considerable damage to the reputation of such agreements when it is established that an employer is recovering from it.

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