Varying enterprise agreements during their life

Analysis

Varying enterprise agreements during their life

An important question on variations to existing enterprise agreements will soon come before a Full Federal Court: should employees be allowed to vote on changes despite having a ‘no extra claims’ clause?

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An important question on variations to existing enterprise agreements will soon come before a Full Federal Court: should employees be allowed to vote on changes despite having a ‘no extra claims’ clause? 
 
Late last year Justice Bromberg in the Federal Court stopped Toyota asking its employees to vote on proposed changes to their existing agreement as this would amount to a breach of the 'no extra claims' clause in the agreement.
 
This clause stated ‘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’.
 
(See: Marmara v Toyota Motor Corporation Australia Limited [2013] FCA 1351)

Varying agreements when circumstances change
 
Toyota has made the decision to cease manufacturing operations in Australia in 2017, but has nevertheless appealed against this Federal Court decision. The appeal will be heard in late May this year.
 
The critical issue is whether parties are able to contract out of agreement provisions made under the Fair Work legislation. The Federal Government has expressed the view that employees should have the right to vote on proposed changes.
 
Related case
 
A related matter is the Auroroa Energy case (Aurora Energy Pty Ltd [2014] FWCA 1580). That case was decided in March 2014 by a single commissioner and it approved an application by Aurora Energy Pty Ltd to vary its enterprise agreement despite the existence of a ‘no extra claims’ clause in the agreement.
 
The FWC held that the term had the effect of ‘ousting’ the ability of the parties to vary the agreement in any way. This was a problem because it was in effect inconsistent with the FW Act and so invalid.
 
Justice Bromberg had noted in the Toyota case that the company could engage in a two-step process — firstly seek to vary the no extra claims clause itself; and secondly, if successful, seek the more substantive changes it was asking for.
 
In contrast, Aurora's clause provided that the parties must not make any further claims during the term of the agreement.
 
It therefore effectively excluded the parties entirely from the Fair Work Act's agreement variation provisions, and on this point Justice Bromberg had also noted that it would not be lawful.
 
The appeal in the Toyota case will be reported on WorkplaceInfo in due course.
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