Submission 167 Australian Council of Trade Unions Workplace Relations Framework Public inquiry

“No extra claims” clauses

A ‘no extra claims’ clause is usually agreed upon by the parties as part of the broad range of outcomes that are negotiated during bargaining, and as a concession that they constitute the full and final settlement of all matters. As a consequence it places certain restrictions on what can be pursued during the life of the agreement.

As we argue in chapter 14, enterprise agreements should be able to contain the full range of matters that are negotiated and agreed to by the parties, including a commitment to not make any future claims against the other.

Reference is made in the PC Issues paper to the Toyota decision. It should be noted that the Toyota dispute arose because the company sought to make wholesale reductions to the terms and conditions of employment for its employees covered by the Agreement, without agreement from the other parties covered by the agreement. The scope of this proposal extended well beyond merely seeking ‘desired flexibility’ as suggested by the PC issues paper.

The Full Court in Toyota defined a ‘claim’ as ‘a proposal…to materially change the terms and conditions of employment other than in a manner already provided for in the agreement’. For a claim to be an extra claim, the new rights or obligations created must be inconsistent with those provided for by the enterprise agreement. Where an agreement is expressed to ‘cover the field’, this may include the introduction of new rights or obligations about which the agreement is silent. (compare by way of example the outcome in DL Employment Pty Ltd v Australian Manufacturing Workers' Union [2014] FWCFB 7946 with that in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Fonterra Australia Pty Ltd [2015] FWC 1486).

Toyota confirms that (on the basis of the construction of cl.4 of that Agreement), it did not prevent Toyota from pursuing a ‘proposal’ that the Agreement be varied under Subdiv A of Div 7 of Pt 2-4 of the FW Act. The Full Court make it clear that ‘it is a conclusion which relates only to so much of the no further claims term as would stand in the way of Toyota and its employees taking advantage of the provisions of the FW Act that deal with the subject of the variation of an enterprise agreement. In other respects, there has been no challenge to the validity of that term, and nothing we have said should be understood as going beyond that context’.

The prevalence of no extra claims clauses has significantly declined in recent years (Agreement Making in Australia under the Workplace Relations Act 2007-2009 at Table 3.29). One explanation for this is the decrease in industrial disputation and subsequent industrial action, which such provisions were historically intended to deal avoid. That said, they are still a relatively common feature of Agreements and serve as ‘the only practical means of keeping such a party to his or her bargain’ (at para 55 of the Toyota Decision).  

Consultation on workplace change

Each agreement is required to contain a term that requires employers to consult about major workplace change that will have significant effects on employees⁵⁴³. A model term is provided, which applies by default if an agreement contains no consultation term. The model term is based on standards developed by the AIRC. However, it regrettably limits the obligation to consult to one which arises only after a “definite decision” has been made by employees. Accordingly, the scope to persuade an employer to adopt a different course of action is limited and discussion is centred around ameliorating the “significant effects” upon employees of “major changes”, rather than involving them directly in the decision as to what changes if any are to be made and the reasons for and against.

There is nothing preventing parties to agreements from agreeing to consultation provisions which extend beyond “major change” and “significant effects” of “definite decisions” – any HR practitioner will expound the virtues of employee engagement in workplace change and continuous improvement. Where such clauses contemplate consultation over, for example, changes to work practices or organisation, pursuing such changes in accordance with consultative process is contemplated by the agreement and does not constitute an extra claim, unless implementing the change involved would conflict with other explicit terms of the agreement⁵⁴⁴. This provides considerable scope for flexibility during the term of an enterprise agreement.

17	Individual Arrangements

At the most fundamental level, there is an element of hypocrisy involved in adapting an industrial relations system so as to create a framework for the making of individual statutory arrangements. The industrial relations system owes its existence to a recognition of the fact that the making of individual agreements - “freedom of contract” - results in labour market outcomes for employees which are not socially desirable or acceptable (such as poverty and exploitation). But our system is not a fundamentalist system - there are some compromises embedded within it.

Our system evolved over time to establish, indirectly and then directly, “cut off points” whereby the nature of work performed by employees or their incomes is used as proxy to identify that it is not necessary for those employees to benefit from particular rights or protections it provides to others, in order for those employees to obtain socially acceptable outcomes in the labour market through individual negotiation. Notably however, the meeting or exceeding of those “cut off points” does not result in the entirety of those rights and protections being switched off.

The curious thing about statutory individual arrangements is that they offend both the fundamental view and the compromise view: they been crafted so as to result in the removal of rights and protections that would otherwise be in place; and they have been made available without any reference to the cut off points otherwise embedded in the system. The predicable thing about individual statutory arrangements is that the have been and are more prevalent in industries where workers are the lowest paid.