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Employees stuck in ‘zombie’ contracts of WorkChoices era

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Thousands of Australian employees are still unwittingly trapped in so-called "zombie" workplace contracts written during the WorkChoices era, an investigation by the ABC's daily news podcast The Signal has found.

One of South Australia's largest employers, On The Run, has opted to finally phase out WorkChoices-era contracts for its roughly 3,250 employees — offering many of them the full range of late night and other shift payments, penalty rates and shift breaks for the first time.

But lawyers and unions say tens of thousands of employees at other businesses across the country remain stuck in WorkChoices-era agreements and are often unaware of it, because of a loophole in the modern industrial relations system that the Federal Government has so far refused to close.

Keelia Fitzpatrick from the Young Workers Centre in Melbourne told The Signal the WorkChoices-era contracts need to be removed, and is calling on the Workplace and Deregulation Minister Craig Laundy to conduct an audit with a view to phasing them out.

"There's thousands of employers who created their own agreement during WorkChoices, and many of them are still living on today," Ms Fitzpatrick said.

"Our view is that these outdated, expired zombie agreements need to be terminated and they need to be replaced with agreements that are compliant with the Fair Work Act.

"It's only fair that if you're working in 2018, you should be working under an agreement that meets the minimum standards of our laws in 2018."

Zombie agreement employee 'didn't know such things could happen in Australia'

The estimated tens of thousands of employees still working under WorkChoices-era conditions are often completely unaware that their entitlements at work are not consistent with the "Better Off Overall" test set out in the Fair Work Act, lawyers and unions contend.

The Signal podcast spoke with one former On The Run employee — going by the pseudonym John — who, lawyers estimate, was thousands of dollars worse off over time because he had been employed — perfectly legally — on a contract that was supposed to have expired in 2012.

John worked overnights for more than a year at an On The Run outlet in Adelaide's western suburbs, and said he was often unsupervised, meaning he could not take breaks during his shifts or even go to the toilet.

The modern award applying to John's work provides that he should have been earning $17.70 an hour during the week, $23.01 an hour for a night shift, $26.55 an hour on Saturday afternoons and $35.40 an hour on public holidays.

But because he signed an agreement struck during WorkChoices and was signed up as a trainee despite being required to work on his own, he was instead paid $16.76 an hour on weekdays and $19.18 per hour on weekends and public holidays.

He said he was shocked when he learned how much less he was earning compared with the relevant award, and said he wanted to warn other workers like him that they were potentially getting a bad deal from their employers.

"I was really surprised," he said.

"I come from India and I used to work in Dubai so I am used to things like this in the countries that I came from, but I came for a better life and better prospects in Australia, and I didn't expect such a thing to happen to me in this country.

"That a law that was outlawed 10 years ago is still in place in certain companies and is being used against people and nobody could stop them from doing it because it was legal, you know, I just couldn't comprehend that."

Workers' options limited, lawyers say

After he quit his job at On The Run, John sought legal advice from Adelaide solicitor Patrick McCabe, who contacted John's former employer about some of his client's concerns.

But Mr McCabe told The Signal that there was little that could be done about the WorkChoices-era contract once John had left his job, because he no longer had standing to contest it at the Fair Work Commission.

"Because this agreement is entirely lawful, he was paid lawfully," Mr McCabe said.

"In fact he was paid above his lawful entitlements, because On The Run actually decided to pay a rate in excess of the rate specified in the agreement, although it was still well below the rate that would have been applicable if the award applied.

"So the options were in that sense limited."

The "zombie agreements" remain legally in place in situations where employees and employers have agreed for them to continue.

In the case of the On The Run agreement, the "zombie agreement" had been reached in 2007 during the WorkChoices era, and had been scheduled to expire in 2012.

But because On The Run's employees did not petition to have the agreement replaced by the relevant award by 2012, the WorkChoices-era provisions have continued to prevail.

It was only when On The Run opted itself to replace the "zombie agreements" with the relevant award earlier this year that things shifted; most of On The Run's employees will be covered by the Vehicle Manufacturing, Repair, Service and Retail Award from July 1 this year.

Zombie situation 'very familiar': Young Workers Centre

At the Young Workers Centre, Ms Fitzpatrick said John's situation was fairly typical of cases she had dealt with in the past.

She added that WorkChoices-era agreements remained common at a host of fast food and beverage outlets around Australia, and were often in place because employees signed up to them did not understand their work conditions were not consistent with the modern award.

"It's a very familiar situation," she said.

"Migrant workers, young people who are in their first or second job who are just keen to get work experience and just sign whatever is put in front of them — sadly those decisions to sign up for work and seize the opportunity to work can often mean that you're missing out on minimum wages and provisions that you should be entitled to when you're working in Australia."

In a statement to The Signal, Mr Laundy said he encouraged employees who think the may be worse off "to apply to the Fair Work Commission for termination of their agreement".

He added that the current mechanism for replacing zombie agreement was "an effective avenue", and confirmed the Department of Jobs and Small Business' Workplace Agreements Database could not confirm how many zombie agreements remained in place.

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