FWC approves termination of Zombie hospitality agreement

FWC approves termination of Zombie hospitality agreement

The Fair Work Commission recently approved the termination of an ageing enterprise agreement. The decision highlights the legislative provisions that must be met in the circumstances and spotlights the unique situation of `Zombie Agreements’, which occurs when agreements are not renewed.

A `Zombie Agreement’ refers to a workplace instrument that is past its nominal expiry date but continues to operate as it has not been terminated or replaced by another Agreement. This means the wages and conditions of workers remain `frozen’ as per the agreement and do not improve as changes occur to modern awards.

The application to terminate the agreement was made on 24 November 2021 by Empire Holdings (OLQ) Pty Ltd T/A Empire Hotel and Cloudland (Empire). The agreement passed its nominal expiry date on 1 June 2011, over ten years ago. Presently, the agreement covers around 200 employees.

If the agreement is terminated, employees will be covered by the Hospitality Industry (General) Award 2020 (the Award).

Empire largely engages casual employees who service a range of hospitality venues across Brisbane. The employees are paid a flat rate per hour for all hours worked.

Commissioner Jennifer Hunt noted that there are only minor differences in ordinary rates between the Agreement and the Award. However, she estimated that employees are being deprived of approximately $5 per hour when working a Saturday, $10 per hour on a Sunday, and over $24 per hour on a Public Holiday, in comparison to the Award.

Three employees submitted arguments to the Commission supporting the termination of the Agreement, largely focusing on the improved penalty rates that would apply as per the Award.

Commissioner Hunt first determined that in accordance with s.226(a) of the Fair Work Act 2009 (FWA), termination of the Agreement was “not contrary to the public interest”. This decision was based on the Agreement being made over 15 years ago and containing significantly less beneficial terms and conditions compared to those contained within the Award.

Regarding s.226(b) of the FWA, Commissioner Hunt determined that it was appropriate to terminate the Agreement. Although noting that Empire would face substantial increases in wages, particularly for work undertaken on weekends and public holidays, this was outweighed by the substantial benefits that would accrue to employees as well as achieving parity with the hospitality industry overall.

Empire had sought an operative date of the termination of the Agreement as 22 May 2022 to allow it to stage previously booked weddings and other functions under the current wage rates.

However, Commissioner Hunt determined it was more appropriate to terminate the Agreement with an effective date of Monday 31 January 2022.

We anticipate despite the government’s past inability to pass legislation to end Zombie Agreements; their days are numbered with an expectation that 2022 will see the end of Zombie Agreements.

Empire Holdings (QLD) Pty Ltd T/A Empire Hotel and Cloudland (AG2021/8562) 11 January 2022

For questions about terminating agreements, negotiations, or other employment questions, please contact Dean Cameron at Workforce Advisory Lawyers – We Know Employment Law on 1300 925 529, 0417 622 178 or via email to dean.cameron@workforceadvisory.com.au

Disclaimer: This information is provided as general advice on workplace relations and employment law. It does not constitute legal advice, and it is always advisable to seek further information regarding specific workplace issues. Liability limited by a scheme approved under professional standards legislation.

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