VICTORIA DISTRICT REGISTRY
FAIR WORK DIVISION
VID 1198 of 2013
CARMELO JOSEPH MARMARA
PETER JOHN COOK
MICHAEL DEMIANO CREA
ADRIAN RICHARD TAINSH
TOYOTA MOTOR CORPORATION AUSTRALIA LIMITED (ACN 009 686 097)
12 December 2013
REASONS FOR JUDGMENT
1 Section 50 of the Fair Work Act 2009 (Cth) (“the FW Act”) in combination with ss 51-53, prohibit a person “covered” by an enterprise agreement from contravening a term of that agreement whilst the agreement “applies” to that person. The Toyota Motor Corporation of Australia (TMCA) Workplace Agreement (Altona) 2011 (“the Agreement”), is an enterprise agreement made in accordance with Pt 2-4 of the FW Act. The respondent (“Toyota”) is a person “covered” by the Agreement within the meaning of s 53 and the Agreement “applies” to Toyota within the meaning of ss 51 and 52.
2 Each of the applicants is employed by Toyota. They are also “covered” by the Agreement and it “applies” to them. Toyota does not take issue with the standing of the applicants or their capacity to represent other employees of Toyota as representative parties under Rule 9.21(a) of the Federal Court Rules 2011.
3 The applicants claim that Toyota has breached cl 4 of the Agreement (“cl 4”) and that therefore Toyota has contravened s 50 of the FW Act. Broadly speaking, the applicants rely on a ‘no extra claims’ provision in cl 4 of the Agreement to contend that Toyota has contravened the Agreement by making further claims in proposing that variations to the Agreement be agreed to by employees.
4 The applicants seek a declaration that Toyota has contravened s 50 of the FW Act. They seek an injunction restraining Toyota from making any claims in relation to wages or any other terms and conditions of employment covered by the Agreement until 6 March 2015, which is the nominal expiry date of the Agreement. They also seek the imposition of a pecuniary penalty under s 546(1) of the FW Act, should the Court find that Toyota has contravened s 50 of the FW Act.
5 The proceeding raises interesting and complicated issues about the extent to which parties to an enterprise agreement may agree to limit their capacity to access the variation process provided by the FW Act. In that context, the following issues arise for determination:
(i) Has Toyota made “further claims” within the meaning of cl 4 by proposing variations to the Agreement?
(ii) If so, is the no extra claims component of cl 4:
(a) an “objectionable term” and rendered ineffective by s 253(1) of the FW Act;
(b) not a “permitted matter” within the meaning of s 172(1) of the FW Act; or
(c) otherwise inconsistent with the FW Act and thus invalid?
6 Reference hereafter made to statutory provisions are references to provisions contained in the FW Act, unless otherwise indicated.
7 The relevant facts were uncontroversial.
8 Toyota has a large manufacturing plant at Altona which employees around 3000 employees ("the Plant"). Approximately 90% of those employees are members of the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union ("AMWU"). A small proportion of employees at the Plant are members of the Electrical Division of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia ("CEPU"). Employees at the Plant are covered by the Agreement as is the AMWU.
9 In the course of negotiations for the Agreement, logs of claims were exchanged. On behalf of employees, a log of claims was served by the Federation of Vehicle Industry Unions, an informal grouping of the AMWU and the CEPU used for the purpose of negotiating the Agreement.
10 By September 2011 the negotiations had reached a stalemate and industrial action was taken by Toyota’s employees including 24 hour strikes on 2 September and 14 October 2011, 48 hour strikes on 14-15 and 22-23 September 2011 and bans on overtime during the months of September and October 2011.
11 The outstanding issues between the parties were agreed following conciliation by the Fair Work Commission (“the Commission”). After a vote by employees, the Commission approved the Agreement on 25 November 2011. In doing so, the Commission was satisfied that the Agreement met each of the requirements of ss 186 and 187 of the FW Act, including the requirement in s 186(4) that the Agreement not contain any “unlawful terms”.
12 Clause 4 of the Agreement was made in the following terms:
This comprehensive Agreement resolves the enterprise bargaining claims by The Parties and shall operate seven days from the date of approval by FWA and will nominally expire on 6 March 2015.
TMCA and the Union agree to start negotiations for renewal of this Agreement, three months prior to its expiry.
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.
Written commitments as outlined in the letter to FVIU chairperson dated 16 September 2011 will be honoured by all parties.
13 That part of cl 4 shown in bold (“the no extra claims component of cl 4”) is the provision in cl 4 which the applicants claim Toyota has breached.
14 In a letter to employees dated 31 October 2013, the President and CEO of Toyota, Mr Max Yasuda, indicated Toyota's intention to seek changes to terms and conditions in the Agreement. Mr Yasuda explained in the letter that manufacturing in Australia is continuing to struggle and in the year ahead Toyota's international parent will decide whether the Plant will maintain its export volumes. Mr Yasuda stated that under the Agreement, employees are set to receive pay rises in April and September 2014 and in order to "cover the cost" of those increases, savings need to be found in other areas of the company. The proposed changes were said to involve removing "out dated and uncompetitive practices and allowances that increase [Toyota's] costs and reduce [Toyota's] global competitiveness". Mr Yasuda indicated the proposed variation of the Agreement would be put to a vote of the employees on 5 December 2013.
15 On 11 November 2013, an Executive Director of Toyota, Chris Harrod, wrote to employees further explaining the need for changes to the Agreement. That letter referred to a "need to bring forward part of our 2015 Workplace Agreement (WPA) negotiations" and reiterated that in order to deliver scheduled pay increases, it was necessary to remove "out dated and uncompetitive terms and conditions" from the Agreement. That same day, Toyota sent an email to employees outlining 27 proposed variations to the Agreement.
16 On 15 November 2013, employees were notified of two further proposed variations and an amendment to one of the proposed variations. The proposed variations as they had been described to employees at 15 November 2013, may be summarised as follows:
(i) reduction in the minimum Christmas shutdown period from 21 days to 8 days (ie from 25 December to 1 January);
(ii) reduction in the minimum notice period from 2 months to 1 month where Toyota needs to change a ‘rostered day off’ to a ‘programmed day off’ or vice versa;
(iii) instead of employees being required to be available to work a maximum of 20 hours overtime each month, employees must be available to work a minimum of 20 hours overtime each month;
(iv) reduction in paid training days for elected union representatives from 10 days per year (which can be pooled so that extra days can be taken by individuals if necessary) to 5 days in the first year of being an elected representative and 2 days per year thereafter (with no pooling allowed);
(v) removal of a 4 hour paid leave allowance to donate blood;
(vi) inclusion of a requirement for a medical certificate to be provided for each day of paid sick leave taken instead of employees having 5 days of paid sick leave without providing a medical certificate; and the inclusion of a requirement that employees notify their supervisor of an absence at least half an hour prior to the commencement of their shift instead of employees being required to notify management of their absence within the first hour after the commencement of their shift;
(vii) removal of a requirement for Toyota to hire 8 trade apprentices each year;
(viii) where an employee is required to move between areas of the Plant on the same shift, the current process for selection will remain but where agreement cannot be reached there will be no resort to the problem resolution procedure (ie issuing of a grievance) specified in the Agreement;
(ix) simplification of the counselling and disciplinary process to reduce the number of steps required to be taken by management while extending the time periods for employees to take corrective action;
(x) reduction in the number of steps to be taken as part of the problem resolution procedure, narrowing the definitions of ‘problem’ and ‘grievance’ and attempting to resolve problems within 24 hours of a problem being raised;
(xi) reduction in wash up time for particular employees with corresponding extension in rest period to standardise work practices across the Plant;
(xii) last shift prior to Christmas shutdown to be extended from a 5 hour shift to a full 8 hour shift;
(xiii) changes to shift pattern for ‘trades employees’ including a new requirement for all trades employees to work on weekends, reduction in overtime rates on weekends, restrictions on taking ‘programmed days off’ and a reduction in paid training hours;
(xiv) increased term for temporary fixed term contracts, increased scope for Toyota to retain temporary fixed term contractors and a reduction in the rate of pay for such contractors;
(xv) removal of a confined space allowance currently paid to employees working in confined spaces or in stooped or cramped positions;
(xvi) removal of a first-aid allowance currently paid to trained first-aid officers;
(xvii) removal of a respiratory allowance currently paid to paint shop employees who wear air fed respiratory equipment;
(xviii) removal of a dirt money allowance currently paid to employees who perform work that is unusually dirty or offensive;
(xix) removal of an electrical licensing allowance currently paid to licensed electrical workers;
(xx) no new competency skill payments to be paid to technical, engineering, clerical employees or supervisors;
(xxi) no new qualification payments to be paid to technical, engineering, clerical employees or supervisors;
(xxii) removal of payments currently made to employees who need to travel for work outside of ordinary work hours;
(xxiii) reduction in Sunday overtime rate of pay from double time and a half to double time;
(xxiv) reduction in overtime rates of pay for technical, clerical, engineering employees and supervisors;
(xxv) removal of annual leave loading (or shift premium, where applicable) paid to employees;
(xxvi) removal of a $700 annual reimbursement payment for employees who obtain income protection insurance;
(xxvii) removal of shift premiums paid to employees taking long service leave;
(xxviii) removal of a meal allowance paid to employees required to work overtime for more than two hours without being notified on the previous day or earlier; and
(xxix) removal of a requirement that where employees do not have a 30 minute unpaid meal break within six hours of the time they attend for work, employees working beyond six hours be paid time and a half until they receive a meal break.
17 The variations sought by Toyota (“the proposed variations”) are, on any view, significant. The extent to which the proposed variations will reduce the current entitlements of the employees under the Agreement was not the subject of detailed submissions. However, as the applicants contended by reference to the communications made by Toyota to its employees, Toyota’s stated purpose in seeking the proposed variations is to bring forward part of the forthcoming negotiations for a replacement agreement to the Agreement. That is stated to be necessary in order to cover the cost of forthcoming pay increases. Those pay increases were agreed to when the Agreement was negotiated and made. In that respect, the applicants contend that in truth the proposed variations are an attempt by Toyota to renegotiate the Agreement that was reached in November 2011 by making new claims with a view to striking a new bargain. Other than for its contention that Toyota has not made any “further claims”, Toyota did not challenge the applicant’s characterisation of its conduct.
18 One further factual matter upon which Toyota relied was that some 333 variations to enterprise agreements which had been approved by the Commission contained some form of no extra claims provision. The material relied upon lacks sufficient detail but in any event it cannot support any proposition capable of assisting the issues of construction which need to be determined and I need not make any further reference to it.
has toyota made “further claims”?
19 Toyota contended that it’s communication of the proposed variations to employees did not involve the making of “any further claims in relation to wages or any other terms and conditions of employment” within the intended meaning of those terms in cl 4 of the Agreement. Toyota contended it had not made any “claims” but that instead, it had made a request that the employees approve proposed variations to the Agreement.
20 Whether Toyota has made a “further claim” in contravention of cl 4 of the Agreement turns upon the language of cl 4, understood in the light of its industrial context and the legislative scheme pursuant to which the Agreement was made and in which it is to operate. Toyota relied upon the observations made to that effect in Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at  (Gleeson CJ and McHugh J) and  (Gummow, Hayne and Heydon JJ) and in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (2006) 153 IR 426 at  (French J).
21 The applicants did not demur from that approach to construction other than to refer to the following well known and often cited observations of Madgwick J at  of Kucks v CSR Limited (1996) 66 IR 182:
It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which may have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.
But the task remains one of interpreting a document produced by another or others. A Court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award.
22 Those observations were referred to with approval in Amcor at  (Kirby J) and - (Callinan J) as well as by Wilcox, Conti and Jacobson JJ at  of Ansett Australia Ltd v Australian Licensed Aircraft Engineers’ Association  FCAFC 209.
23 Similar observations about the approach to the construction of an industrial instrument were made by French J in City of Wanneroo at :
It is of course necessary, in the construction of an award, to remember, as a contextual consideration, that it is an award under consideration. Its words must not be interpreted in a vacuum divorced from industrial realities – City of Wanneroo v Holmes (1989) 30 IR 362 at 378–379 and cases there cited. There is a long tradition of generous construction over a strictly literal approach where industrial awards are concerned – see eg George A Bond & Co Ltd (in liq) v McKenzie  AR (NSW) 498 at 503-4 (Street J). It may be that this means no more than that courts and tribunals will not make too much of infelicitous expression in the drafting of an award nor be astute to discern absurdity or illogicality or apparent inconsistencies. But while fractured and illogical prose may be met by a generous and liberal approach to construction, I repeat what I said in City of Wanneroo v Holmes (at 380):
Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties.
24 Toyota contended that a “claim” must involve a demand for something as of right and that as Toyota had no right to the variations it proposed, it has made no “further claims”.
25 It was submitted that in the industrial context, a “claim” cannot be demanded or asserted as of right unless it be something which is capable of being pressed by the party making it. In the legislative context provided by the FW Act within which cl 4 was approved and operates, Toyota contended that a claim is only capable of being pressed by employees and employers by engaging in “protected industrial action” (s 408), in the form of employee claim action (s 409), employee response action (s 410) or employer response action (s 411).
26 Upon that foundation, Toyota submitted that given protected industrial action cannot be taken before the nominal expiry date of the Agreement has passed (s 417(1)), a proposal to vary the Agreement before that expiry (as is the case here) is not capable of being pressed by the party making it and therefore it is not a demand or assertion as of right.
27 In my view, Toyota’s contention adopts an overly narrow approach to construction which results in a strained and inapt meaning being ascribed to the word “claim” in the term “no further claims” as used in cl 4. The meaning contended for is inconsistent with the ordinary meaning of “claim” when used in the context of industrial bargaining. It is also inconsistent with the intended purpose of the no extra claims component of cl 4 as discerned from its text as well as from the context provided by the remaining text of cl 4 and by other provisions in the Agreement.
28 The ordinary meaning of the word “claim” is not limited to a demand for something as of right and extends to a contention or demand for something which the claimant regards or asserts to be due or fitting. That meaning is particularly apposite when the word “claim” is used in the context of industrial bargaining because industrial bargaining typically involves the making of demands for new rights (ie increased pay and improved conditions) rather than the making of demands that extant rights be given effect.
29 Industrial negotiations will usually involve the exchange of claims between the negotiating parties. Typically, each of the employer and the employees will make claims designed to improve upon or advance their respective entitlements or interests. Claims made in that context may be reasonable or they may be what is commonly referred to as “ambit claims”. To limit the meaning of “claim” to a demand as of right, would defy its ordinary understanding in the context of industrial bargaining.
30 Toyota relied upon a brief observation made by Dowsett J at  of Newlands Coal Pty Ltd v Construction, Forestry, Mining and Energy Union (2005) 147 IR 304. His Honour there determined that an employer who offered and then entered into an Australian Workplace Agreement had not made an “extra claim”. His Honour relevantly said:
The word “claim” applies an assertion of entitlement, moral or legal. An offer is not a claim. If an employer offers an AWA and an employee accepts, there is no claim. The clause has no relevance.
31 In that passage, Dowsett J was defining a claim as an assertion of an entitlement as a means of contrasting a claim from an offer. The reference to “moral or legal” is, as I perceive it, intended to be illustrative rather than a comprehensive description of the nature of the entitlement which may be asserted when a claim is made.
32 The meaning ascribed to the word “claim” by Dowsett J, does not assist Toyota’s contention and seems to me to go the other way. It is clear his Honour did not regard the meaning of the word “claim” to be limited to an assertion of a legal right to an entitlement. That is made plain by the reference to “moral”, although what his Honour meant by “moral” is not entirely clear. What I perceive his Honour meant by that term was the assertion of an entitlement regarded by the claimant as legitimate or, as I have described it, an entitlement regarded as due or fitting.
33 There is nothing in the FW Act or in the Agreement which suggests that an assertion of a party’s rights or interests is only to be regarded as a claim if it may be pressed by the taking of “protected industrial action”. That protected industrial action may be available to press a claim in some circumstances does not suggest anything at all about the ordinary industrial understanding of the word “claim”. There are a whole range of circumstances contemplated by the FW Act where claims may be made and pursued without the capacity for the party making the claim to press the claim by taking protected industrial action. An obvious example relates to claims for an enterprise agreement made by an employer. Unlike claims made by employees, in relation to which protected industrial action may be taken “for the purpose of supporting or advancing claims” (s 409(1)(a)), protected industrial action is only available to an employer in relation to a proposed enterprise agreement “as a response to” industrial action taken by employees (s 411). Furthermore, the FW Act contemplates bargaining for an enterprise agreement whilst the capacity for a party to take protected industrial action is suspended (ss 423-428).
34 Although put in furtherance of its primary contention that a “claim” must involve a demand as of right, Toyota raised an additional point which needs to be considered. That point is open to be accepted, even if the limitation on the ordinary industrial meaning of “claim” which Toyota contended for is rejected as I have done.
35 Toyota’s additional contention is that the communication made by Toyota to its employees was no more than a request to accept or reject a proposed variation made in the context of a “joint process” requiring the agreement of both the employer and the employees. Toyota’s proposed variations are thus to be seen as a request or as an offer which can be accepted or rejected rather than as a “claim” within the meaning of cl 4.
36 To consider that contention and to assist my determination of issues which later arise, I need to consider in a more detailed way the terms of cl 4 in order to establish what the parties intended when they agreed not to make “any further claims”.
37 In that respect, Toyota contended that the character of cl 4 was intended to be aspirational rather than substantive. The aim ascribed to the no extra claims component of the clause was suggested to be that no demands supported by threatened or actual industrial action be made. In the context of the Act prohibiting the taking of any such action (s 417) and in response to the suggestion that if that limited construction was applied the words utilised would be superfluous, Toyota contended that the provision prohibiting any further claims was merely intended as an exhortation urging good conduct and in that sense was aspirational rather than substantive.
38 Whilst the Agreement may well contain a number of clauses which can be described as aspirational, there is nothing in the language of cl 4 that suggests any such intent.
39 Clause 4 is an important provision in the Agreement. It regulates the operation of the Agreement. It specifies a “nominal expiry date” for the Agreement and thus the nominal term of the Agreement, without which the Agreement could not have been approved by the Commission (s 186(5)). Neither the subject matter nor the terms of cl 4 suggest that it was intended to have other than substantive operation.
40 There are a number of features of cl 4 which cast light on the evident general purpose of the clause as well as the intended scope of the obligation that no further claims be made.
41 The applicants contended that the evident purpose of cl 4 was to lock in the outcome of the bargaining negotiations until the nominal expiry date of the Agreement had passed in order to provide for certainty. The applicants sought to characterise cl 4 as a general provision which locked in the outcome of negotiations save for where the terms of the Agreement expressly provided a capacity for change to be effectuated in relation to specific matters.
42 By its first sentence, cl 4 acknowledges the intent of the parties that the Agreement is “comprehensive” and “resolves the enterprise bargaining claims” made by them. It specifies the start date for renewed negotiations for a replacement agreement. It restricts the making of any further claims in relation to wages or any other terms and conditions of employment during the nominal term of the Agreement as well as prohibiting the taking of “any steps to terminate or replace” the Agreement “without the consent of the other parties”.
43 The applicants also point to the circumstances surrounding the making of the Agreement. As I have set out already, the making of the Agreement followed extensive negotiations which commenced by an exchange between Toyota and the relevant unions of their respective log of claims. The unions and their members took significant protected industrial action to advance their claims before the Agreement was finally made. The applicants contend that it is unsurprising, in that context, that the parties would have desired to lock in the outcome of negotiations, provide certainty and facilitate industrial peace for at least the nominal life of the Agreement.
44 In my view, the terms of cl 4 do manifest an intent that the settlement reached and recorded in the Agreement be both comprehensive, stable and enduring. To the extent the parties recognised that there were outstanding matters from their negotiations which they were prepared to deal with during the nominal term of the Agreement, those matters appear to have been expressly dealt with.
45 The final sentence of cl 4 refers to a letter of commitment that the parties agreed to honour. The letter lists a number of topics by reference to numbered claims which I infer were made during the course of the negotiations for the Agreement. In relation to each topic, a commitment is identified which the parties to the Agreement have agreed to carry out during the life of the Agreement. Many of the commitments made require the establishment of working parties to review and address the particular claim in question. In at least one case (“TLD definition”) the commitment contemplates that variations to the terms of the Agreement may be agreed to.
46 Similarly, cl 5a of the Agreement lists three clauses of the Agreement “which will be subject to further review and possible change during the life of the Agreement”. Clause 5a is quite specific as to how a variation to the clauses identified may be achieved. It relevantly provides:
These items may be subject to variation during the life of the Agreement, where such variations are determined by consent of all Parties to the Agreement through consultation between TMCA and the Federation of Vehicle Industry Unions. The variations will only be effective if and when approved by FWA upon application by Parties to this Agreement.
47 Clause 2 also identifies matters which may be the subject of variation during the nominal life of the Agreement. The clause refers to a consolidation process identified as the consolidation of the terms of various industrial instruments into the terms of the Agreement. In that context, cl 2.3 provides:
The Parties agree that should it be discovered that a material provision has been inadvertently excluded from or mistakenly included in this Agreement as a result of the consolidation process, that they will make application, consistent with the Fair Work Act 2009, as amended from time to time, to vary the Agreement to include or exclude the provision (as the case may be).
48 In addition to those clauses which contemplate that the terms of the Agreement may be varied through processes external to the Agreement, the applicants relied upon a large number of clauses in the Agreement that contemplate agreed variations from standard processes or entitlements provided by the Agreement. Such variations would be given effect by way of processes which are internal to the Agreement. A list and a brief characterisation of each of the clauses in the Agreement of that kind were provided by the applicants without demur from Toyota and, omitting those clauses elsewhere referred to in these reasons, are set out below:
Changes to work practices may be made by agreement; for example there may be variations in scheduled start and finish times [dot point 7]
Changes to labour levelling arrangements can be made by agreement
Fixed Term Employment may be introduced by agreement [para 2]; the parties will develop an agreed standardised approach and agreed standard process [para 8]
Casual Employees may be used if the named persons reach agreement; if circumstances change, the parties may again reach agreement
If any Party wishes to vary span of control ratios, they shall present their case for agreement by the other parties [para 2]; named parties may agree on countermeasures [para 3]
The named parties may reach agreement on any deviation to the process relating to Senior General Foreperson Positions
Higher duties based on a minimum of 2 weeks (may be varied by agreement) [Table headed ‘Principles to be applied to the process’]
“Variation of shift times”: shift times may be varied by agreement
The named parties may agree to any variation of crib times
The named parties may agree to vary crib breaks on Sundays
By agreement, the named parties may substitute public holidays
The named parties may agree to vary crib breaks on public holidays
Any changes to Local arrangements for Dirt Money will be by agreement
Any proposed change to agreed Plant Operating Days will be subject to agreement [para 6]; where the company requires a decrease to the Christmas shutdown it will ask employees to vote on changing the shutdown period; if the employees reject the proposal and sufficient volunteers cannot be found, selection criteria will be agreed between the company and the Union [para 8].
Employees who work during the Operational Shutdown are to take annual leave at a time decided by arrangement or mutual agreement
Annual leave to be taken at a time agreed [para 1]; if the parties so agree it does not have to be taken in one continuous period [para 2]
Named parties can agree to a different notice period for taking annual leave [paras 1 & 2]
Named parties can by agreement allow employees to take long service leave early
“Variation of the Period of Long Paternity Leave”: employee can extend period of leave by agreement
“Variation of the Period of Adoption Leave”: employee can extend period of leave by agreement
Local arrangements may be agreed to between named parties
Designated work groups may be varied with relevant State legislation
Changes to the classification structure can only be made upon agreement being reached [para 2]
Global standards may be introduced if agreed prior to any rollout
The Parties will agree on a career path for SKTM3 employees
There will be an agreed AQF3 FLM program and/or global content
The introduction of Individual Performance Appraisals will be negotiated through the FVIU
The Parties will reach agreement on a revised classification structure within the first 6 months
The Parties agree to develop a process for determining trades employee levels
The Problem Resolution Committee may decide to extend the length of paid union meetings
The Parties will develop a process within 2 months for reimbursing employees for personal mobile phone use
49 Clause 15 of the Agreement is also relevant. By cl 15 the parties acknowledged that “Business Structure Change” may be necessary for Toyota’s business to remain internationally competitive. The term “Business Structure Change” is defined in the Agreement’s glossary as significant organisational change including restructuring and outsourcing. There are some exceptions made to that description but those exceptions are themselves excluded if the organisational change involves significant adverse effects on employees. The purpose of cl 15 is expressed to be to facilitate the implementation of Business Structure Change proposals made by Toyota. The clause provides for consultation and negotiation processes designed to facilitate agreement in relation to such proposals. A private arbitration mechanism is provided to facilitate the determination of matters that have not been the subject of agreement.
50 In my view, the Agreement (of some 160 pages) may be fairly characterised as a highly detailed industrial instrument. What seems evident from the nature, structure and in particular the terms of the Agreement to which I have referred, is that in a careful and prescriptive manner, the parties have addressed what they foresaw as the need to alter the terms of the Agreement dealing with wages and other conditions of employment during its nominal term. The detailed approach taken also suggests that insofar as a potential variation to those conditions was foreseen (whether internally or externally) it has been provided for.
51 By reference to the matters expressed to be open to variation, the parties to the Agreement have adopted a restrictive approach to the capacity for the Agreement to be varied. The same approach has been taken in relation to the capacity for the Agreement to be terminated or replaced during the nominal term of the Agreement.
52 In the context of the scheme for bargaining provided by the FW Act, where agreements are made in resolution of claims pursued through bargaining, a proposal by one party to vary the outcome arrived at in a way which advances its interests is apt to be regarded as a further claim. That is particularly so where the proposed variations are significant and suggest an attempt, as I consider is here the case, to strike a new bargain. Both the ordinary industrial meaning of “claim” and the scheme of the Agreement to which I have referred, are consistent with the construction of “further claims” in cl 4 as encompassing a proposal made by a party to the Agreement to materially change the terms and conditions of employment set out in the Agreement other than in a manner already provided for by the Agreement. Such a proposal is not merely a request or offer, it is also a “further claim” within the intended use of that expression in cl 4.
Is the no extra claims component of Clause 4 an “objectionable term”?
53 There is no issue that for the nominal term of the Agreement, the effect of the construction of the no extra claims component of cl 4 which the applicants have contended for and which I have accepted, is to prevent Toyota and its employees from pursuing and participating in the variation process provided by Subdiv A of Div 7 of Pt 2-4 of the FW Act (“the Subdiv A variation process”), in relation to Toyota’s proposed variations.
54 Toyota contended that if the no extra claims component cl 4 has that effect, it is invalid because it is inconsistent with the FW Act. Toyota also contended that if cl 4 has that effect, it is an “objectionable term” rendered ineffective by s 253(1) of the FW Act. For both of those reasons and a further reason that I will consider last, Toyota contended that it could not have contravened cl 4 by pursuing proposed variations. I will consider the contention that cl 4 contains an objectionable term first. That consideration will assist in dealing with the broader issue of whether, even if cl 4 does not contain an “objectionable term”, there is nevertheless an inconsistency between cl 4 and the FW Act.
55 The FW Act is not silent on the question of whether an enterprise agreement may restrict a person’s participation in the variation processes provided by the FW Act. That issue is directly dealt with, at least in part, in the following way.
56 Before approving an enterprise agreement under s 186, the Commission must be satisfied that the enterprise agreement does not contain “unlawful terms” (s 186(1) and (4)). Section 194 identifies the kind of terms of an enterprise agreement which are to be regarded as “unlawful terms”. Section 194(b) provides that an “objectionable term” is an “unlawful term”. Section 12 defines an “objectionable term” to mean a term that:
(a) requires, has the effect of requiring, or purports to require or have the effect of requiring; or
(b) permits, has the effect of permitting, or purports to permit or have the effect of permitting;
either of the following:
(c) a contravention of Part 3-1 (which deals with general protections);
(d) the payment of a bargaining services fee.
57 Part 3-1 of the FW Act to which paragraph (c) of the definition of “objectionable term” refers, contains what are commonly referred to as the general protections provisions. Relevantly, it includes s 340(1) which provides that:
(1) A person must not take adverse action against another person:
(a) because the other person:
(i) has a workplace right; or
(ii) has, or has not, exercised a workplace right; or
(iii) proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or
(b) to prevent the exercise of a workplace right by the other person.
58 The meaning of “adverse action” to which s 340(1) refers, is dealt with by s 342(1) and relevantly includes action by an employer against an employee which injures the employee in his or her employment or alters the position of the employee to the employee’s prejudice (s 342(1), Item 1). Adverse action includes threatening to take action (s 342(2)(a)) and “action” is defined by s 12 to include an omission.
59 Section 340(1) uses the expression “workplace right”. The meaning of that term is given in s 341. Relevantly to the matters in issue, s 341(1) provides:
(1) A person has a workplace right if the person:
(b) is able to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument; or
60 The expression in s 341(1)(b), “a process or proceedings under a workplace law or workplace instrument”, is defined in s 341(2) to include the process of:
(e) making, varying or terminating an enterprise agreement;
61 The term “workplace law” used in s 341(1)(b) is defined by s 12 of the FW Act to include the FW Act.
62 There is no issue that the Subdiv A variation process is a process of the kind to which s 341(1)(b) refers.
63 It is necessary that I outline the key aspects of the Subdiv A variation process.
64 Subdivision A of Div 7 of Pt 2-4 sets out the process for variation of an enterprise agreement by agreement between employees and their employer.
65 Section 207(1) states that the following “may jointly make a variation of an enterprise agreement”: employees who are covered by the agreement, employees who will be covered by the agreement if the variation is approved by the Commission (together, the “affected employees”) and employers covered by the agreement.
66 An employer covered by the enterprise agreement may propose that the affected employees vote to approve a proposed variation (s 208(1)). The vote may be conducted by ballot or by electronic means (s 208(2)). If a vote is requested, the variation is “made” when a majority of affected employees of each individual employer covered by the agreement, who cast a valid vote, approve the variation (s 209). However, the variation will have no effect unless approved by the Commission (s 207(3)).
67 Once the variation is made, an application must be submitted within 14 days to the Commission to approve the variation (s 210). Under s 211(1), unless the Commission is satisfied there are serious public interest grounds for not approving the variation, the Commission must approve the variation provided it is satisfied that:
had an application been made for the approval of the agreement as proposed to be varied as a new agreement, the Commission would have been required to approve the agreement; and
the agreement as varied does not specify a nominal expiry date that is more than 4 years from the date the agreement was first approved by the Commission.
68 Where the Commission has concerns that these requirements are not met, the Commission may approve a variation subject to undertakings which meet its concerns, provided the undertakings do not result in substantial changes to the variation or cause financial detriment to any affected employee (s 212).
69 Various requirements for the making of an enterprise agreement have application to the variation process (s 211(3)), including steps that must be taken prior to seeking approval of affected employees (s 180), matters the Commission must consider before approving an agreement (s 186(2)) and the requirement for genuine agreement by employees (s 188).
70 Toyota contended that on the basis of the statutory framework described above and if the no extra claims component of cl 4 precludes Toyota and its employees from participating in the Subdiv A variation process in relation to Toyota’s proposed variations, cl 4 is an “objectionable term”. Toyota contended that this is so because cl 4 permits a contravention of s 340(1) of Part 3-1 of the FW Act in that it permits Toyota to injure an employee in his or her employment or alter the position of the employee to the employee’s prejudice by preventing the exercise of a workplace right by the employee, namely the right to participate in the Subdiv A variation process. Toyota did not contend that by reason of any action which may be taken by employees, cl 4 was capable of preventing Toyota from exercising its workplace right to participate in the variation process in contravention of Part 3-1. I suspect it did not make that argument because the definition of “adverse action”, in so far as it applies to action taken by employees against an employer (s 342(1), Item 5), excludes the possibility of contravention.
71 Toyota placed particular reliance on the terms of s 340(1)(b) to contend, in essence, that cl 4 “permits, has the effect of permitting, or purports to permit or have the effect of permitting” (s 12) the taking of adverse action by Toyota (s 340(1)) “to prevent the exercise of a workplace right” (s 340(1)(b)) by Toyota’s employees, namely the ability to “initiate, or participate in” (s 341(1)(b)) the Subdiv A variation process (s 341(2)(e)).
72 Toyota contended that it was not necessary for the Court to determine whether in fact Toyota had engaged in conduct which resulted in an injury and/or prejudicial alteration to the position of an employee. It was submitted that the relevant test is whether, at the date of approval of the Agreement, cl 4 permitted Toyota to engage in conduct which would result in an injury and/or prejudicial alteration.
73 Toyota identified the circumstances in which cl 4 would authorise or have the effect of authorising a contravention of s 340(1). It contended that if Toyota’s employees approached it to discuss changes to the Agreement which would be beneficial to the employees and which required a variation of the Agreement, in order to avoid contravening cl 4 (and despite Toyota wanting to pursue the necessary variations), Toyota would have to decline to enter into any discussion. Clause 4, it was contended, would in those circumstances be permitting Toyota to take “adverse action” to prevent the employees from initiating the variation process. Toyota contended that the adverse action in the circumstances here illustrated would be by omission and would be constituted by Toyota’s refusal to participate in the pre-application processes contemplated by ss 207 and 208 which are a necessary precondition for approaching the Commission for a variation. That action would be adverse to the employees because it would be injurious to their employment as variations which would be beneficial to them could not be pursued. Lastly, Toyota contended that in the theoretical circumstances here contemplated, Toyota would be taking the adverse action described for a prohibited reason because it would be motivated by a desire to avoid contravening cl 4. That motivation, so Toyota contended, and the motivation of preventing the employees from exercising their workplace right of initiating and participating in the variation process, were “inextricably linked” and thus Toyota’s conduct would be infected with the prohibited reason.
74 The applicants resisted the proposition that the no extra claims component of cl 4 is an “objectionable term”. They contended that cl 4 does not require or permit action from anybody. Whatever effect cl 4 has, it has that effect directly, without requiring or authorising any further action.
75 The applicants referred to and relied upon the judgment of North, McKerracher and Reeves JJ in Australian Industry Group v Fair Work Australia (2012) 205 FCR 339. In considering whether a term in an enterprise agreement was an “objectionable term”, the Full Court was called upon to interpret what was meant by the word “permits” in paragraph (b) of the s 12 definition of “objectionable term”. At  the Full Court noted that a number of decisions of Full Benches of the Commission had come to the view that the word “permits” means “authorises”. The Full Court concluded that, taken in context, “permits” should be read in that manner. As can be seen from  of the Full Court’s reasons, the rationale for the approach taken in the Commission which the Full Court accepted, is based on the word “permit” being used in relation to a term in an enterprise agreement, in the sense of the term giving permission or opportunity for conduct to take place and thus authorising that conduct.
76 The applicants did not contest Toyota’s contention that a restriction imposed upon the capacity for employees to initiate or participate in the Subdiv A variation process could be action which injured or prejudicially altered the position of employees and thus could be capable of being characterised as “adverse action”. The applicants contended however that cl 4 did not authorise or purport to authorise or have the effect of authorising Toyota to take any adverse action for a prohibited reason.
77 They contended that there are two relevant scenarios in which the relevant terms of cl 4 need to be considered. The first is a situation in which the employees want to effectuate a variation and Toyota does not. In that situation, Toyota would be entitled to refuse to participate in the pre-application processes contemplated by ss 207 and 208. Those processes are necessarily founded upon an employer’s willingness to participate and the employer is given the option of not participating. It would be pointless to require a ballot of employees of the kind which s 208 contemplates to determine whether there is majority employee support for a variation, because no variation could be made if the employer opposes it. The employer’s entitlement to oppose a variation is authorised by the terms of the Subdiv A variation process and as such could not constitute “adverse action”, including because s 342(3) provides that “adverse action” does not include action that is authorised by the FW Act.
78 The other possible scenario that the applicants’ submission raised is essentially that which was relied upon by Toyota. In that scenario, both the employees (or some of them) and the employer want to pursue a variation. On the applicants’ contention, this too is not a situation in which the terms of cl 4 would authorise a contravention of s 340(1). In this situation, Toyota’s refusal to pursue the variation process, whilst motivated by the terms of cl 4, would not be motivated by any intent to deny to its employees their workplace right of initiating or participating in the Subdivision A variation process. The holding of such a motivation would be inconsistent with the foundation upon which the scenario is based where Toyota wants to pursue a variation and desires, rather than intends to preclude, the exercise of the participatory rights of its employees.
79 The determination of whether cl 4 is an objectionable term should commence with consideration of what the FW Act intends by placing the restrictions that it has placed on terms which require or permit a contravention of Pt 3-1. The FW Act relevantly restricts the operation of an “objectionable term” in three ways. First, s 186(4) provides that in approving an enterprise agreement under s 186(1), the Commission must be satisfied that the Agreement does not include any “unlawful terms” and thus any “objectionable term”. Second, s 253(1) provides that a term of an enterprise agreement has no effect to the extent that it is an “unlawful term” which expression includes an “objectionable term”. Section 253(2) provides however that where an enterprise agreement includes a term that has no effect because of s 253(1), the inclusion of the term does not prevent the Agreement from being an enterprise agreement. Finally, s 356 which is found in Part 3-1 provides as follows:
A term of a workplace instrument, or an agreement or arrangement (whether written or unwritten), has no effect to the extent that it is an objectionable term.
80 The s 12 definitions of “workplace instrument” and “workplace law” make it clear that the expression “workplace instrument” in s 356 includes an enterprise agreement.
81 The Explanatory Memorandum to the Fair Work Bill 2008 (Cth) at - when read with -, suggests that it was not intended that by reason of s 186(4) the Commission “will have to scrutinise each enterprise agreement to ensure that all its terms are about [non-objectionable terms] as this would unduly delay the agreement approval process” (at ). Rather, the primary role for excluding the operation of “objectionable terms” is given to s 253(1) and s 356. By reason of those provisions a term in an enterprise agreement, or in the wide range of other agreements or arrangements described in s 356, will have no effect to the extent that it is an “objectionable term”.
82 In so far as the definition of “objectionable term” is directed to precluding a term from requiring or authorising “a contravention of Pt 3-1”, the FW Act’s apparent purpose is to protect the intended operation of Pt 3-1 from being undermined by the making of enterprise or other agreements. That purpose needs to be understood and kept in mind.
83 Additionally, an understanding of what the FW Act intends by restricting the capacity for an objectionable term to impinge upon the operation of Pt 3-1 needs to be informed by an understanding of what that Part proscribes.
84 An object of Pt 3-1 is to protect workplace rights (s 336(1)(a)). The manner in which that is done is specifically addressed by the provisions of Pt 3-1. For example, and in relation to the “workplace rights” protected by s 340(1)(a), the holder of a workplace right is protected from being exposed to adverse action taken by another person because the first person has the workplace right; has exercised or has not exercised the workplace right; or proposes to or proposes not to exercise the workplace right. Section 340(1)(b) is similar in effect and proscribes adverse action taken “to” prevent the exercise of the workplace right.
85 The conduct which s 340(1) proscribes is conduct taken for a particular reason (“a prohibited reason”). What is proscribed is reason dependent. Section 340(1) is not contravened simply because the conduct identified as “adverse action” by s 342(1) has occurred. To give a simple example, the dismissal of an employee does not constitute a contravention of s 340(1) but could constitute such a contravention if the dismissal was done in whole or in part (s 360) for the reason that the employee held a workplace right.
86 It follows that there can be nothing wrong with an enterprise agreement authorising an employer to dismiss an employee. That of itself could not constitute an “objectionable term”. If however the enterprise agreement provided that the employer was required to, or that the employer may dismiss an employee because the employee had a particular workplace right, the provision would clearly be an objectionable term. If that were not so, the protection which s 340(1) seeks to provide to the holder of a workplace right could be substantially undermined by the provisions in an enterprise or other agreement.
87 The restrictions placed upon the operative effect of an “objectionable term” are designed to ensure that the protections provided by Pt 3-1 are not undermined in that way. Thus, a provision in an enterprise agreement which by its terms requires (either directly or indirectly) adverse action to be taken for a prohibited reason, would be an objectionable term and therefore ineffectual.
88 A provision in an enterprise agreement that required or permitted action to be taken that could fall within the FW Act’s definition of “adverse action”, but which was silent as to the reason or reasons for which the conduct could be taken, could authorise or have the effect of authorising a contravention of Pt 3-1 if the conduct was taken or threatened to be taken for a prohibited reason. In relation to a provision in an enterprise agreement of that kind, ss 253(1) and 356 would have ambulatory effect. Such a term would be effective where the action authorised by it was taken or threatened to be taken for a non-prohibited reason, but ineffective to authorise the action if taken or threatened to be taken for a prohibited reason. In that way a person taking adverse action for a prohibited reason would not escape liability under Part 3-1 on the basis that their conduct was required or authorised by the enterprise agreement.
89 It cannot be the case that conduct permitted by a term in an enterprise agreement which could constitute adverse action (for instance the dismissal of an employee) must be ineffective because it is theoretically capable of being taken or threatened to be taken for a prohibited reason. However, when such conduct is taken or threatened to be taken for a prohibited reason, s 253(1) and s 356 will render the clause ineffective to authorise the taking of that conduct in that circumstance.
90 Clause 4 of the Agreement prohibits the making of any further claims and in that respect is capable on its face of precluding the pursuance of a variation application. As “action” includes an omission, what is precluded is capable of constituting “adverse action” within the meaning of s 342(1). However, the no extra claims component of cl 4 does not require or permit any action to be taken for a prohibited reason. It does not by its terms require or permit a contravention of Pt 3-1, have that effect or purport to have that effect. It is not ineffectual on that basis.
91 For reasons I have explained, it is not appropriate to consider (as the submissions of the parties have done) whether such a clause is otherwise rendered ineffective by reference to the theoretical capacity for the action permitted by cl 4 to be taken for a prohibited reason. If that action is taken or threatened to be taken for a prohibited reason, the operative authorising effect of the clause would be rendered ineffective in that circumstance.
92 On this basis, the question then is whether the no extra claims component of cl 4 is ineffective in the current circumstances. There is no evidence to suggest that Toyota is threatening to or has pursued the proposed variations for reasons that include the reason that Toyota wants to preclude the exercise by its employees of their ability to initiate or participate in the Subdiv A variation process. To the contrary, everything that Toyota has done suggests that it would like to facilitate the participation of its employees in the variation process. In those circumstances, the ambulatory effect of s 253(1) and s 356 has not rendered the no extra claims component of cl 4 ineffective in relation to the conduct in question. Toyota’s contention that cl 4 is, for relevant purposes, an objectionable term must therefore be rejected.
93 If my analysis is not correct, and it is necessary to consider whether a theoretical capacity exists for the no extra claims component of cl 4 to be utilised in furtherance of a prohibited reason, I would accept the applicant’s contention that the scenario posited by Toyota should be rejected. There could be no basis for attributing to Toyota a prohibited reason of the kind Toyota contended for.
is clause 4 inconsistent with the FW act?
94 Toyota contended and it was not disputed, that an enterprise agreement made under the FW Act is a form of delegated legislation. The expression “fair work instrument” is defined by s 12 to include an enterprise agreement. Section 7(1) of the Legislative Instruments Act 2003 (Cth) provides that “fair work instruments” are not “legislative instruments” (see Item 18 of the table set out in s 7(1) of that Act). That, as French J noted at  in City of Wanneroo, leaves such agreements within s 46 of the Acts Interpretation Act 1901 (Cth) (“the AI Act”) which provides:
(1) If a provision confers on an authority the power to make an instrument that is neither a legislative instrument for the purposes of the Legislative Instruments Act 2003 nor a rule of court, then:
(a) this Act applies to any instrument so made as if it were an Act and as if each provision of the instrument were a section of an Act; and
(b) expressions used in any instrument so made have the same meaning as in the enabling legislation as in force from time to time; and
(c) any instrument so made is to be read and construed subject to the enabling legislation as in force from time to time, and so as not to exceed the power of the authority.
(2) If any instrument so made would, but for this subsection, be construed as being in excess of the authority's power, it is to be taken to be a valid instrument to the extent to which it is not in excess of that power.
95 By reason of the application of s 46 of the AI Act, the no extra claims component of cl 4 must be read and construed subject to the FW Act and so as not to exceed the power given to the Commission to make the enterprise agreement in which it is contained. Critical to the question here raised is whether the no extra claims component of cl 4 is consistent with the scheme of the FW Act. As French CJ said in Plaintiff M47/2012 v Director-General of Security (2012) 86 ALJR 1372 at , even absent the usual constraint found in an enabling Act that delegated legislation made under it be “not inconsistent with” the Act, “delegated legislation cannot be repugnant to the Act which confers the power to make it”. By reference to observations made in Morton v Union Steamship Company of New Zealand Ltd (1951) 83 CLR 402 at 410 (the Court), Hayne J stated at  in Plaintiff M47/2012, that whether an inconsistency exists depends upon “whether the regulation in question varies or departs from (in other words alters, impairs or detracts from) the provisions of the Act”. Observations to the same effect were made by Crennan J at . At , Kiefel J expressed the requirement as follows:
Regulations must not conflict with or override the provisions of their enabling Act, unless the enabling Act so provides.
96 The FW Act does not restrict the enterprise agreement making power of the Commission by the often utilised and generally expressed salutation made by most enabling Acts that regulations made under the enabling Act be “not inconsistent” with it. Nor is the purpose for the grant of the power to make enterprise agreements equivalent to the usual purpose for the grant of a regulation making power which is to make prescriptions that are necessary or convenient to carry out or give effect to the enabling Act. The FW Act confers upon the parties (not the Commission) the power to make enterprise agreements (ss 172 and 182). It confers a supervisory role upon the Commission which is charged with approving, and thus giving operative effect to, an enterprise agreement if satisfied the range of requirements specified by the FW Act have been compiled with (Subdiv B of Div 4 of Pt 2-4). The particular and specific scheme for the making of delegated legislation under the FW Act needs to be firmly borne in mind when consideration is given to whether a term of an enterprise agreement is inconsistent with or repugnant to the scheme of the FW Act generally.
97 Toyota contended that the effect of the no extra claims component of cl 4 is to deprive it and its employees of the right to participate in the Subdiv A variation process. Clause 4 was said to be repugnant to the FW Act and invalid because it qualifies, impairs and in significant respects negates the essential legislative scheme of the Subdiv A variation process which authorises Toyota and its employees to jointly make a variation to the Agreement and which authorises Toyota to request employees to approve a variation by vote. In that respect, Toyota contended that the ability to initiate and participate in the Subdiv A variation process is a right including because it is recognised by Pt 3-1 of the FW Act as a “workplace right”. Toyota contended that the scheme of the FW Act intends that in order to address changed circumstances the parties to an enterprise agreement should be free to make appropriate variations to their agreement as and when required.
98 The applicants contended that the Subdiv A variation process is facilitative and not mandatory and that the scheme of the Act does not preclude the parties to an enterprise agreement from agreeing not to take advantage of a facility available to them under the FW Act, such as the Subdiv A variation process. The intent of the scheme of the FW Act is that the parties to enterprise agreements should be free to strike their own enterprise bargain within the parameters set by the FW Act. That, the applicants contended, is manifested by the objects expressed in s 3(f) and in s 171(a).
99 It was contended by the applicants that the parameters for bargaining set by the FW Act which protect various provisions of the FW Act from derogation by the terms of an enterprise agreement are detailed and have been given specific expression in the FW Act. Those parameters were said to be constituted by the following provisions:
(a) Section 253(1) provides that a term of an enterprise agreement has no effect to the extent that it is not a term about a permitted matter, it is an unlawful term, or it is a designated outworker term.
(b) Unlawful term is defined in s 194 to include:
(i) a discriminatory term (which is defined in s 195);
(ii) an objectionable term (which is defined in s 12);
(iii) a term that provides a method by which an employee or employer may elect not to be covered by the Agreement;
(iv) a term that confers an entitlement or remedy in relation to termination of employment that is unfair, before the employee has completed the minimum employment period under Part 3-2;
(v) a term that excludes the application of a provision of Part 3-2 or modifies the application of such a provision in a way that is detrimental to a person;
(vi) a term that is inconsistent with a provision of Part 3-3 dealing with industrial action;
(vii) a term that provides for an entitlement to exercise a right of entry other than in accordance with Part 3-4; and
(viii) a term that provides for the exercise of a State OH&S right other than in accordance with Part 3-4.
(c) Section 56 of the FW Act provides that a term of an enterprise agreement has no effect to the extent that it contravenes s 55. Section 55 then contains a series of prescriptions as to how an enterprise agreement may affect any of the National Employment Standards.
(d) Section 326 of the FW Act provides that a term of an enterprise agreement has no effect to the extent that it permits an employer to make deductions that are not permitted by the FW Act.
100 The applicants contended that no such constraint has been included in the FW Act in relation to the Subdiv A variation process. As a matter of statutory construction, that fact lends credence and weight to the proposition that the scheme of the FW Act does not intend to restrict the capacity of parties to enterprise agreements to agree to restrict their own consensual access to the Subdiv A variation process. Having said that, the applicants correctly conceded that the matters identified expressly by the Act from which a provision in an enterprise agreement may not derogate, are not exhaustive. There remains capacity for a term of an enterprise agreement to be repugnant to the FW Act by implication despite the extensive attention given to this issue in express terms in the various provisions that the applicants relied upon.
101 On the applicants’ contention, there were good reasons consistent with the scheme of the FW Act for parties to an enterprise agreement to retain the capacity to agree to restrict their access to the Subdiv A variation process. Locking in a bargaining outcome and providing certainty and industrial peace for the nominal term of an enterprise agreement are objectives consistent with the scheme of the FW Act which industrial parties ought be free to pursue and agree upon. These objectives are served by enabling parties to set their own prescriptions as to the extent of variation (both external and internal to an enterprise agreement) which is desirable and thus permissible during the nominal term of the enterprise agreement. The applicants contended that the Agreement reflects such an approach and its terms are therefore consistent with the scheme of the FW Act.
102 Further, the applicants contended that there are strong policy reasons why Parliament has allowed enterprise agreements to limit the capacity of parties to bring about their variation during their nominal term. Employees are at a serious disadvantage when negotiating over a proposed variation during the nominal term of an enterprise agreement. They cannot take protected industrial action, which is a significant feature of the statutory regime to equalise the bargaining strength of the participants in negotiations for the making of an enterprise agreement. On the other hand, the employer can place significant practical pressure on employees to agree to a variation. The applicants contended that in those circumstances to allow full force and effect to be given to a “no further claims” clause negotiated in an enterprise agreement when both sides have the full benefit of the statutory regime for bargaining, is a vindication of that statutory regime and a recognition of the inferior position of employees when a variation is sought.
103 There is merit in each of the competing contentions and the resolution of this issue is not free from doubt.
104 It is not uncommon for delegated legislation which purports to restrict the ordinary right of a person to have a matter reviewed by a court, to be struck down, unless the restriction is clearly authorised by the enabling Act: Pearce D and Argument S, Delegated Legislation in Australia (4th ed, LexisNexis Butterworths, 2012) at [19.33]. However, the access provided by the Subdiv A variation process, including access to the Commission’s approval process, is manifestly distinguishable from the exclusion of a person’s rights of access to the courts.
105 There is no right given by the Subdiv A variation process to any person to have a variation of an enterprise agreement made just as no one is given a right by the FW Act to have an enterprise agreement made. Access to the variation process depends upon consent. As s 207(1) provides, the parties to an enterprise agreement “may jointly make a variation of an enterprise agreement”. Employees have no right to insist upon the consent of the employer. There is no right conferred upon employees to require the employer to even consider whether the employer is prepared to consent. Nor is any equivalent right conferred upon an employer. The capacity given by s 208(1) for an employer to request affected employees to vote on a proposed variation is procedural and not, in my view, intended to confer upon the employer a right not correspondingly provided to the affected employees.
106 Nor do I accept that by designating that a person has, as a “workplace right”, the ability to initiate and participate in the process of making, varying or terminating an enterprise agreement, that the FW Act intends to confer a right of access to the Subdiv A variation process. The designation of the ability to initiate or participate in a variation process as a “workplace right” is not designed to confer a right for the purposes of the Subdiv A variation process. The designation has been made for Pt 3-1 purposes and for the specific purpose of providing the protection from adverse action that Pt 3-1 provides. I accept however, that the protection afforded by Part 3-1 to the capacity of persons to participate in the Subdiv A variation process, indicates that the FW Act regards that capacity as an important element of its scheme.
107 The Subdiv A variation process is cast in facilitative terms which do not suggest that a right to access its processes has been conferred. Its terms are very similar to those found in Subdiv C of Div 7 of Pt 2-4 which provide for parties “to an enterprise agreement to jointly agree to terminate an enterprise agreement” during the nominal term of the agreement. The terms of Subdiv A and C of Div 7 are to be contrasted with those of Subdiv D of Div 7 of Pt 2-4 which deals with the termination of an enterprise agreement after its nominal term and which, in my view, does provide access to the process for termination as of right. That a right to apply is conferred is apparent from the terms of s 225 which provide:
If an enterprise agreement has passed its nominal expiry date, any of the following may apply to the FWC for the termination of the agreement:
(a) one or more of the employers covered by the agreement;
(b) an employee covered by the agreement;
(c) an employee organisation covered by the agreement.
108 The distinction here made by the scheme of the FW Act between consensual processes available to be utilised during the nominal term of the enterprise agreement and the unilateral process available after the nominal expiry date of an agreement has passed, is an important distinction which reveals an important aspect of the scheme of the FW Act.
109 There can be no doubt that the scheme of the FW Act seeks to encourage enterprise bargaining in order to resolve competing industrial claims through agreement making. The scheme clearly envisages that bargaining for an enterprise agreement should occur periodically and not be an ongoing process for which there is little or no stability in terms of outcomes and no respite from the ongoing disputation created by the making of further claims.
110 The insistence of the FW Act that enterprise agreements have a nominal expiry date (ss 186(5) and 211(1)(b)) is central to the FW Act’s scheme of encouraging periodic and not ongoing bargaining. That can be seen in a number of other features of the scheme. The tools made available by the FW Act for bargaining are only made available periodically. Access to protected action is not available to industrial parties from the day their enterprise agreement is approved until its nominal expiry date has passed (s 417(1)). By reference to the nominal expiry date of an enterprise agreement, restrictions are placed upon the capacity of industrial parties to apply for good faith bargaining orders to be made by the Commission (s 229(3)). The Commission’s other powers to facilitate bargaining, such as the making of majority support determinations and scope orders (Subdiv C of Div 8 of Pt 2-4) are also dependent upon there being bargaining for a proposed agreement, as is the Commission’s power to deal with a bargaining dispute (Subdiv D of Div 8 of Pt 2-4).
111 That is not to say that the scheme of the FW Act excludes entirely the capacity of parties to bargain before the nominal expiry date of their current enterprise agreement has passed. However, if they do, apart from being denied some of the ordinary tools of bargaining, the later made agreement will have no application until the nominal expiry of the earlier agreement has passed (s 58).
112 Furthermore, the discretion provided to the Commission to refuse an application to terminate an enterprise agreement after its nominal term has expired (s 226) is more restrictive than that provided to the Commission when dealing with the approval of an application to terminate an enterprise agreement which has not reached its nominal expiry date (s 223). A discretion is also given to the Commission to refuse a variation application made during the nominal term of the agreement (s 211).
113 Whilst those indicators support the proposition that the scheme intends that the outcome of periodic bargaining should be stable, certain and endure, the scheme also sets limits to the pursuit of those objectives. The nominal expiry date for an enterprise agreement may not be a date more than 4 years after the date on which the Commission approves the enterprise agreement (s 186(5)). That restriction may not be avoided by a later variation (s 211(1)(b)).
114 An enterprise agreement continues to operate beyond its nominal term until terminated or replaced (ss 54 and 58). Nevertheless, the indicators I have just referred to suggest that the scheme of the FW Act seeks to encourage a periodic renewal of the terms and conditions of employment regulated by enterprise agreements. That recognition must itself be based upon a recognition that economic, organisational and other circumstances will change over time and that the objects of the FW Act, including those which seek to promote fairness, productivity and economic growth, will be best served by the encouragement of periodic bargaining at least every 4 years or so.
115 It can be seen then that the FW Act seeks to encourage both the certainty and stability of bargaining outcomes and the renewal of industrial conditions so as to keep them current and appropriate. Where the FW Act intends that the balance be struck between those competing objectives is not free from doubt. The answer must at least in large part be given by the nature of the Subdiv A variation process itself.
116 Whilst I accept that the process may be characterised as facilitative, that characterisation does not necessarily lead to the conclusion that the FW Act intends to permit the facility to be rendered inaccessible by industrial parties through their enterprise agreements. It is a facility which has a useful and important purpose within the scheme of the FW Act. It is not difficult to discern that purpose. Economic activity is fluid, it fluctuates and changes and the need may arise from time to time to adjust or even substantially change the terms and conditions for the performance of work. The fluidity of economic and other circumstances requires some capacity for adjustments to be sought to be made even during the nominal life of an enterprise agreement. The scheme of the FW Act supports freedom of bargaining within set parameters and suggests that certainty and stability of bargaining outcomes as between periodic bargaining is intended. However, some limited capacity to deal with change is given by the Subdiv A variation process in furtherance of the scheme’s intent that a limited facility for effectuating change be available.
117 The nature of the limitation upon change intended is provided by the requirement for any such change to be the subject of consent. A mechanism for obtaining consent is provided for in the Subdiv A variation process. That mechanism includes a requirement that employees genuinely agree to proposed variations. The mechanism is not perfect. It will not necessarily provide for equality of bargaining strength as between the employer and its employees. It will not necessarily provide a fair outcome for all employees covered by the enterprise agreement, as approval of a variation by the majority of employees may sometimes be to the disadvantage of the minority.
118 The Sub-div A variation process does however give a veto power in relation to a proposed variation to each of the employer and the majority of employees. It is, in my view, the mechanism chosen to strike a balance between the scheme’s desire for certainty and stability of outcome and the scheme’s desire to provide parties with some capacity for flexibility.
119 In the end, the question seems to come down to this: does the scheme of the FW Act contemplate that through the consensual agreement making process provided by the FW Act, the parties to enterprise agreements may exclude themselves from the consensual variation process provided by the FW Act? Like many of the approaches the scheme of the FW Act takes, in my view, the scheme seeks to strike a balance.
120 That the hands of the parties to an agreement could be completely tied by their prior agreement so that no later capacity to effectuate an agreed change is available, no matter how beneficial to all that change may be, is not a common feature of any type of agreement making. It is an unattractive notion and a consequence that is not likely to have been intended by the framers of the FW Act. I do not consider that the scheme of the FW Act intends that parties to an enterprise agreement may exclude themselves entirely from the Subdiv A variation process. A provision in an enterprise agreement to that effect would be inconsistent with the FW Act and invalid.
121 That is not to say however that the scheme of the FW Act has set its face against the prospect that by their agreement, parties to an enterprise agreement may impose restrictions on their capacity to agree to a variation without ousting their capacity to do so. Those restrictions may take the form of a range of required steps. A requisite period of consultation prior to a proposal for variation being pursued provides one possible example. A facility for employees to meet and consult with their union as a prerequisite step may provide another example. So long as, practically speaking, the capacity for parties to access the Subdiv A variation process is not ousted, a term imposing restrictions is not necessarily inconsistent with the FW Act.
122 It is then necessary to consider whether the terms of the no extra claims component of cl 4 foreclose the capacity of the parties to the Agreement to consensually access the Subdiv A variation process. The terms of cl 4 preclude any further claims “in relation to wages or any other terms and conditions of employment”. Those terms do not exclude the capacity of the parties to effectuate a variation to cl 4 itself including by removing it. That can be done without breaching the enterprise agreement and if it is done, the parties will have unfettered access to the Subdiv A variation process in relation to desired variations to wages or any other terms or conditions of employment.
123 It can be seen therefore that the relevant terms of cl 4 have not ousted the capacity of Toyota or its employees to access the Subdiv A variation process in order to vary wages and other terms and conditions of employment specified by the Agreement. The relevant terms of cl 4 effectively impose an extra step in the process of achieving a desired variation, but do not foreclose access in either a technical or practical sense to the Subdiv A variation process. There is therefore no inconsistency between the no extra claims component of cl 4 and the FW Act.
124 That a two-step process should be required is not without a rational foundation. The relevant terms of cl 4 were designed to provide more certainty of outcome and more stability to Toyota as well as to its employees. The loss of that additional but removable certainty provided to all parties, has the potential to advantage one side to the relative detriment of the other at one point in time, but also to reverse that advantage at another point in time. That is a matter which is apt for separate consideration and agreement.
125 The applicants contended that the relevant terms of cl 4 were intended to entrench the no extra claims component of the clause so as to preclude its variation. The applicants accepted that was not done expressly but should nevertheless be regarded as the intention which is to be implied. I reject that contention in part based on the wording of the clause but also because that construction would lead to its invalidity and to adopt it would be contrary to the approach to construction which s 46(1)(c) of the AI Act requires.
is clause 4 a clause about a permitted matter?
126 Section 172(1) of the FW Act provides that an agreement about one or more of the matters identified in that provision may be made in accordance with Pt 2-4. The matters are described as “permitted matters”. The terms of s 172(1) are as follows:
(1) An agreement (an enterprise agreement) that is about one or more of the following matters (the permitted matters) may be made in accordance with this Part:
(a) matters pertaining to the relationship between an employer that will be covered by the agreement and that employer’s employees who will be covered by the agreement;
(b) matters pertaining to the relationship between the employer or employers, and the employee organisation or employee organisations, that will be covered by the agreement;
(c) deductions from wages for any purpose authorised by an employee who will be covered by the agreement;
(d) how the agreement will operate.
127 The applicants contended that cl 4 deals with a permitted matter of the kind described in paragraphs (a), (b) and also (d) of s 172(1). The applicant’s primary contention was based on paragraph (a) of s 172(1). The applicants noted that the Agreement contains terms about wages and other conditions of employment which clearly pertain to the relationship between Toyota and its employees. The no extra claims component of cl 4 is “about” those matters because it provides protection for them from the effects of any further claims. By reference to the legislative history of the predecessor provisions to s 172(1), the applicants emphasised that in 1988 the word “about” was added to the traditional formulation of the “matters pertaining” requirement in federal industrial legislation. The change to the traditional formulation was the subject of consideration in Re Amalgamated Metal Workers Union of Australia; ex parte Shell Company of Australia Limited (1992) 174 CLR 345 where in the judgment of Mason CJ, Deane, Toohey and Gaudron JJ at 354, the following observation was made:
To the extent that the definition allows that a dispute may be “about” matters, rather than “as to” matters, it may be wider than the definition effected by the combined operation of the definitions of “industrial disputes” and “industrial matters” which were found in the Conciliation and Arbitration Act 1904 (Cth) prior to its repeal in 1988.
128 By reference to what their Honours further said at 359 and also by reference to the judgment of McHugh J in Electrolux Home Products Pty Limited v Australian Workers Union (2004) 221 CLR 309 at -, the applicants contended that a matter about matters pertaining to the relationship between an employer and its employees includes a term which is ancillary, incidental or a machinery provision relating to a permitted matter. The applicants’ contention was fortified by the observations made in the Explanatory Memorandum to the Fair Work Bill at , which refers to the judgment of McHugh J in Electrolux and states:
It is intended that each substantive term of an enterprise agreement must be about one or more of the permitted matters in order for the agreement to be characterised as about permitted matters. This would not prevent an enterprise agreement from containing other, valid, terms where the term is ancillary or incidental to, or a machinery provision, relating to a permitted matter.
129 Toyota contended that the no extra claims component of cl 4 is not a permitted matter within the meaning of s 172(1). Toyota contended that the subject matter and effect of cl 4 is properly characterised as precluding the exercise of the Commission’s power of variation under Subdiv A of Div 7 of Pt 2-4 of the FW Act.
130 In R v Portus; ex parte City of Perth (1973) 129 CLR 312 and in Re Media, Entertainment and Arts Alliance; ex parte Hoyts Corporation Pty Ltd (1993) 178 CLR 379, the High Court determined that claims that sought to enlarge the powers, functions or jurisdiction of a predecessor tribunal to the Commission, were not claims as to a matter pertaining to the relationship between an employer and its employees.
131 Toyota contended that, in the present case, the effect of cl 4 as construed by the applicants, is the converse of the effect of the claims dealt with in Portus and Hoyts in that cl 4 contracts the powers of the Commission given by ss 210-216.
132 Toyota also relied on a passing observation made by Kiefel, Kenny and Gyles JJ in Construction, Forestry, Mining and Energy Union v Newlands Coal Pty Ltd (2006) 153 IR 110 at . Their Honours there observed that if a clause of a certified agreement made under the Workplace Relations Act 1996 (Cth) (“the WR Act”) was construed as excluding a statutory right to enter into an AWA, there would “be a real question” as to whether the clause would be “about matters pertaining to the relationship between an employer and employee” as was required by s 170LI of the WR Act.
133 I should say at the outset that insofar as Toyota’s submission is based upon cl 4 operating upon the jurisdiction given to the Commission to vary an enterprise agreement to remove an ambiguity or uncertainty, the applicants did not contend that cl 4 has that operation, and in my view it does not. An application made under s 217(1) for an ambiguity or uncertainty to be removed from an enterprise agreement does not involve the making of a “further claim”. No new or further entitlement would be advanced or demanded in those circumstances. What is being sought when a s 217(1) application is made is clarity in relation to existing entitlements or existing obligations.
134 I do not accept that the no extra claims component of cl 4 offends the requirements of s 172(1) in relation to permitted matters and that as a consequence it has no effect by reason of s 253(1)(a). I accept the applicants’ submission that cl 4 is about matters pertaining to the relationship between an employer and its employees.
135 Accepting, without deciding, that a term of an enterprise agreement which in substance precludes the exercise of the Commission’s powers is not a clause about a permitted matter, I reject Toyota’s characterisation of the no extra claims component of cl 4 as being a term of that kind.
136 The exercise of those powers and functions of the Commission conferred by ss 210-216 is dependent upon the parties having made a variation through the consensual process contemplated by ss 207-209. The exercise of the Commission’s jurisdiction is thus limited by a requisite precondition. For the reasons already explained, the no extra claims component of cl 4 is not inconsistent with or repugnant to the process which preconditions or limits the exercise of the Commission’s functions. The no extra claims component of cl 4 does not therefore limit the extent to which the Commission’s functions may be exercised beyond the limitations already provided for by the Act. The clause does not limit or preclude the exercise of the Commission’s functions, just as the refusal of an employer to agree to a proposed variation could not be said to do so.
137 The no extra claims component of cl 4 has not been rendered ineffective by s 253(1)(a) because it is about a permitted matter.
138 On 11 and 15 November 2013, Toyota proposed that the enterprise agreement made with its employees at the Plant, be extensively varied to reduce employee entitlements and provide cost savings to Toyota.
139 Those proposed variations are “further claims” within the meaning of the no extra claims component of cl 4, agreed to between Toyota and its employees to resolve the enterprise bargaining negotiations that led to the making of the Agreement.
140 The no extra claims component of cl 4 is not an “objectionable term” and is a term about “permitted matters”. It was therefore not rendered ineffective by s 253(1) of the FW Act, was operative at the time Toyota communicated its proposed variations and remains operative.
141 Despite the agreement of the parties to an enterprise agreement to do so, an enterprise agreement which ousts or excludes the capacity of an employer and its employees to vary their agreement in accordance with the consensual process provided for by the FW Act is, to that extent, inconsistent with the scheme of the FW Act and invalid.
142 Whilst the no extra claims component of cl 4 restricts the current capacity of Toyota and its employees to vary the wages and other terms and conditions of employment contained in the Agreement, there is no restriction on cl 4 being varied or removed in accordance with the variation process provided by the FW Act. Accordingly, as cl 4 is not entrenched by the Agreement and may be removed, it does not foreclose the capacity of Toyota and its employees to vary the wages and other terms and conditions of employment contained in the Agreement in accordance with the process provided by the FW Act, should they choose to do so. Clause 4 is therefore not inconsistent with the FW Act and is valid.
143 It follows that in making the further claims Toyota made when communicating its proposed variations, Toyota breached cl 4 of the Agreement and contravened s 50 of the FW Act. However, it does not follow that an injunction, in the form sought by the applicants, restraining Toyota from making any claims in relation to wages and other conditions of employment until 6 March 2015, should be granted.