Fair Work Commission Terminates Fortitude Valley Nightclub’s ‘Zombie Agreement’

The Fair Work Commission has recently ordered the termination of a “zombie agreement” that allowed the owners of a famous nightclub in Fortitude Valley to legally avoid paying penalty rates since 2008.

The Empire and Family Employee Collective Agreement 2006-2011 was made in 2008 and has passed its expiry date, which was on 1 June 2011. This allowed Empire Holdings – owners of Cloudland, The Empire Hotel, Press Club and the Warehouse – to not compensate their employees for penalty rates under the Hospitality Industry (General) Award 2020.  

This prompted employees to file three applications to have the zombie agreement terminated with one application having been discontinued. The company through its General Manager Paul Janssen filed its own application requesting that the termination be set on 22 May 2022, citing that venues are already booked and cost-for.

However, one employee argued that it would be unjust to keep the EBA agreement until May 2022. The employee reasoned that given that the company had opened a new venue, Valley Hopes Brewing, “during a time when many other businesses couldn’t afford to stay open,” the company should then be able to pay employees “an industry-standard wage.” 

Fair Work Commission Terminates Fortitude Valley Nightclub’s ‘Zombie Agreement'
Valley Hopes Brewing | Photo Credit: Cloudland / Facebook

“Empire holdings has a large team in the office and is 100% capable of costing new budgets for 2022 after taking into account new employees wages,” the employee said.

Another employee said that “previously budgeted weddings do not affect the majority of the staff. My team and I do not work in functions and deem this unfair as we work regular shifts in their main venues and should be paid accordingly.”

All employees were offered a flat rate of $50 per hour during the Christmas 2021 and New Year period 2022 but the company did not commit to a similar “undertaking” for Easter 2022.

According to Commissioner Jennifer Hunt, “a large contingent of employees are working for around $27 to $28 per hour for all casual hours worked by them, whether they are assisting with a function or not, or even when there are no functions in the locations.”

Fair Work Commission Terminates Fortitude Valley Nightclub’s ‘Zombie Agreement'
Photo Credit: Cloudland / Facebook

She added that employees who work on a Saturday are being deprived of approximately $5 per hour “when compared with the Award.” 

Similarly, when employees work on a Sunday, they are also being deprived of approximately $10 per hour, and approximately more than $24 per hour when compared with the Award when they work on a public holiday.

Moreover, staff who worked Monday to Friday between 7:00 p.m. to midnight and midnight to 7:00 a.m. were denied with appropriate rates under the award which would have meant an additional $2.37 per hour or part thereof and an additional $3.55 per hour or part thereof.

The Commissioner said that a “zombie agreement” denies employees some benefits that they should enjoy under the modern awards, including penalty rates. She said that it should not surprise employers, therefore, that employees who are becoming more aware of the effects of these pre-2009 agreements are now applying for termination of their old agreements.

“If employers are enjoying a comparative benefit in reduced wages by application of very old agreements, which do not provide for penalty rates near-equivalent to the modern award that would otherwise apply, the clock is essentially ticking for those agreements.”

And whilst the Commissioner recognises that the employer will incur increased wages bill particularly with “functions pre-paid and the Employer’s stated preparedness to not increase charges to customers of those functions,” she ruled the Agreement be terminated effective 31 January 2022. She reasoned that the burden of increased wages should rest with the Employer.  

“I am not satisfied that the bookings in place within its function rooms militate against the loss in wages experienced by its 200 large workforce when they work beyond 7:00 pm Monday to Friday, on the weekend or on public holidays. This is especially so when on some dates there are no events booked at all,” Commissioner Hunt explained.