"No extra claims" clauses in enterprise agreements may be contrary to the Fair Work Act

Recently a full Federal Court found a no extra claims clause in an enterprise agreement was contrary to the Fair Work Act 2009 (Cth) (the Act).

Background

In December 2013, Toyota Australia invited its manufacturing workforce to vote on 27 proposed variations to its enterprise agreement to remove out-dated and uncompetitive practices and allowances.

Just prior to the scheduled vote, a group of shop stewards launched a challenge against the proposed variations arguing that the no extra claims commitment contained in clause 4 of the enterprise agreement did not allow for the proposed variations.

The no extra claims commitment provided that:

"…The parties agree they will not prior to the end of this agreement:

• make any further claims in relation to wages or any other terms and conditions of employment; and
• take any steps to terminate or replace this Agreement without the consent of the other parties."

In the first instance, the Court held Toyota Australia was unable to vary the enterprise agreement, as it was contrary to the enterprise agreement's no extra claims commitment.

Findings

On appeal, a full Federal Court found the no extra claim commitment in clause 4 was invalid as it was inconsistent with or repugnant to provisions in the Act which allow parties to "jointly make a variation of an enterprise agreement, and that the employer may request the relevant employees to approve such a proposed variation."

Accordingly, as the no extra claims commitment in the enterprise agreement was contrary to the Act, it had no effect.

Toyota Australia's appeal against the decision in the first instance was allowed and the shop steward's challenge to Toyota Australia conducting a vote to vary the enterprise agreement, dismissed.

Lesson

Employers should take care when drafting no extra claim commitments in enterprise agreements. In particular the clause should not restrict the ability of the parties to the enterprise agreement to jointly apply to vary the enterprise agreement in accordance with the relevant provisions under the Act.

If you would like more information about the case or drafting enterprise agreements generally, please contact National Workplace Lawyers on +61 2 9233 3989.

National Workplace Lawyers

Note — this is for information purposes only and does not purport to be comprehensive or to render legal advice.