Beware of the No Extra Claims Clause

Marmara v Toyota Motor Corporation Australia Limited [2013] FCA 1351 (12 December 2013)

An employer, who included a ‘no extra claims’ clause in its enterprise agreement to protect itself from further claims, has been barred from making a “claim” itself.

For many years, employers have thought it sensible to include a “no extra claims” clause in their enterprise agreements as a safeguard against agitation for additional benefits from employees, and from that perspective, the idea makes sense. But typically, these clauses are worded to say that none of the parties, which by definition include the employer, can make additional claims.

In this case, the employer has been rebuffed in the federal court because it wanted to re-open its enterprise agreement to try to reduce some benefits, and the court used the no extra claims to bar the employer from doing this. The employer argued that the Fair Work Act permits applications to vary agreements before the agreements expire, and since the Act is superior to the agreement in the legal hierarchy, then the Act should prevail.

But the judge disagreed, pointing out that in his opinion, the employer’s request to employees to agree to the changes was a “claim”. The employer had written to employees outlining the parlous state of its business and seeking employee agreement to make the changes to the agreement, an entirely legitimate process to adopt. But this federal court decision, made after the union raised the “no extra claims” clause, has frustrated that attempt.

The value of this decision is that employers should probably not bother with these old style ‘no extra claims’ clauses.  Once an agreement is made, it is illegal to engage in any industrial action while the agreement is within its expiry date, so employees will not normally engage in this sort of behaviour and where they have they have copped huge fines (and their unions too). And if a claim is made, there is nothing to compel the other party to agree save and except where there is an interpretation issue. But where it is a new claim, these can only succeed if both sides agree.