Decision

Bargaining Unit Decision

Updated 1 October 2021

Applies to England, Scotland and Wales

Case Number: TUR1/1206(2021)

07 June 2021

CENTRAL ARBITRATION COMMITTEE

TRADE UNION AND LABOUR RELATIONS (CONSOLIDATION) ACT 1992

SCHEDULE A1 - COLLECTIVE BARGAINING: RECOGNITION DETERMINATION OF THE BARGAINING UNIT

The Parties:

GMB

and

Fablink Tank Systems Ltd

1. Introduction

1) The GMB (the Union) submitted an application to the Central Arbitration Committee (the CAC) dated 29 January 2021 that it should be recognised for collective bargaining by Fablink Tank Systems Ltd (the Employer) for a bargaining unit comprising “All hourly paid employees up to and including Team Leaders but excluding Supervisors, Office Staff, Managers and Personal Contract Holders”. The application was received by the CAC on 29 January 2021 and the CAC gave both parties notice of receipt of the application on the same day. The Employer submitted a response to the CAC dated 2 February 2021 which was copied to the Union.

2) In accordance with section 263 of the Trade Union and Labour Relations (Consolidation) Act 1992 (the Act), the CAC Chair established a Panel to deal with the case. The Panel consisted of Professor Kenny Miller, Panel Chair, and, as Members, Mr Sean McIlveen and Ms Virginia Branney. The Case Manager appointed to support the Panel was Linda Lehan.

3) By a decision dated 12 February 2021 the Panel accepted the Union’s application. The parties then entered a period of negotiation in an attempt to reach agreement on the appropriate bargaining unit. As no agreement was reached, the parties were invited to supply the Panel with, and to exchange, written submissions relating to the question of the determination of the appropriate bargaining unit. A hearing via zoom was held on 11 May 2021 and the names of those who attended the hearing are appended to this decision. The Panel is required, by paragraph 19(2) of the Schedule to the Act (the Schedule), to decide whether the Union’s proposed bargaining unit is appropriate and, if found not to be appropriate, to decide in accordance with paragraph 19(3) a bargaining unit which is appropriate.

2. Matters clarified at the beginning of the hearing

4) The Panel Chair opened the hearing by asking the Employer to clarify that it was now in agreement that the Team Leaders should be included within the bargaining unit proposed by the Union and that this was not an issue forthwith which the Employer confirmed.

5) The Panel Chairman thanked the parties for their written submissions and confirmed that the Panel had read those closely.

3. Summary of the submissions made by the Union

6) It was the Union’s view that the bargaining unit should comprise “All hourly paid employees up to and including Team Leaders but excluding Supervisors, Office Staff, Managers and Personal Contract Holders located at the Evenwood Plant”. The Union acknowledged that the issue of Team Leaders had been resolved and it was agreed that the Team Leaders would now be part of their proposed bargaining unit. The Union clarified that it did not agree to expand the bargaining unit to incorporate all staff positions at the Evenwood site and to further expand the bargaining unit by including another site at Tursdale which had been suggested by the Employer at a joint meeting with ACAS on 13 April 2021.

7) The Union said it was opposed to salaried staff roles and the second site being included in the bargaining unit as there had been no desire from the other groups to either join the Union, nor had they shown any signs of support to be included. The Union argued that the other groups were distinct entities, separate from the hourly paid, shop floor employees and should therefore not be added to the bargaining unit.

8) The Union believed that the Tursdale site, approximately 20 miles away, was run as a separate site and had no day-to-day interaction with the Evenwood site.

9) The Union argued that no Works Representative from the Tursdale site had a seat on the current Fablink consultation forum and if the two sites were closely linked, as the Employer suggested, then it would be normal for the Tursdale workers to be represented on the forum that currently discussed pay and Company business. The Union stated that they had no knowledge of what consultation forums existed at Tursdale, if any, and it was their belief that the Employer was seeking to align them with the Evenwood site purely for the recognition process. The Union stated that there had been no evidence provided to date to show that the two sites were effectively run as one entity before now.

10) The Union believed that the Employer was seeking to artificially inflate the numbers within the bargaining unit, ahead of a potential ballot to swell the numbers in their favour. The Union did not feel that their proposed bargaining unit would cause a fragmented bargaining unit, or a fragmented management structure. The Union anticipated that should it be granted recognition on the basis of the proposed bargaining unit, terms and conditions for hourly paid workers at Tursdale would mirror those agreed for Evenwood workers. There were no existing separate arrangements for Tursdale hourly paid employees – if changes following consultation with the Works Council were applied at both sites, then with collective bargaining the Union envisaged this approach would continue. When asked if the Union would be opposed to representing the Tursdale site it was explained that they had not been approached by anyone from that site and had therefore taken the view that Tursdale workers were not seeking Union recognition. The Union confirmed that they rejected the two proposals put forward by the Employer for alternative bargaining units (see paragraphs 18 and 22 below).

4. Summary of the submissions made by the Employer

11) The Employer explained that Fablink Tank Systems Limited (FTSL) employed a skilled workforce of nearly 200 people based in two manufacturing locations in County Durham: Evenwood and Tursdale. FTSL specialises in the manufacturing of metal pressings, operator cab assemblies, fuel and hydraulic tanks and complex structures as well as ‘clean build’ of vehicle assemblies. Evenwood was the main site and when additional ‘footprint’ (capacity) was needed this was established at Tursdale four years ago. The Tursdale site is approximately 12 miles from Evenwood – a journey of around 20 minutes by road. Tursdale is adjacent to the coating facility supplier that is used in the finishing process and is close to the Employer’s main customer at Peterlee. The product is manufactured at Evenwood and finished at Tursdale, as part of a single manufacturing process. Tursdale is also an expanding fabrication site. Originally, employees were transferred from Evenwood to Tursdale, prior to the recruitment of employees based at Tursdale. Employees also worked flexibly across the two sites. The Employer stated that this was fundamental to meeting customer demand and that there was very good flexibility and teamwork. The Employer stated that ten to fifteen per cent of employees moved between the two sites. Manufacturing at both sites was managed by the Head of Manufacturing. Based at Evenwood, he spent two half-days a week at Tursdale.

12) The Employer’s primary submission was that the GMB’s proposed bargaining unit was incompatible with effective management. This was contrasted with the Union’s rationale for its proposed bargaining unit, consistently advanced, that the hourly paid workers at the Evenwood plant were a group of employees who had indicated that “they wished to be members of the Union” and “be recognised”. Whilst it was accepted that membership footprint and support for union recognition were used to determine if a union’s application met the CAC validity and acceptance criteria, union membership strength was not a relevant criterion to determine the “appropriateness” of a bargaining unit. The Employer also stated that the Union’s proposed bargaining unit bore no likeness to the way that the Company operated in practice.

13) The Employer stated that the proposed bargaining unit of “hourly paid employees up to and including Team Leaders” at the Evenwood site excluded 10 hourly paid workers located at FTSL’s Tursdale facility who worked in identical job roles. Both Evenwood and Tursdale shared many “common denominators” which included having the same reporting line to a Production Manager who covers both sites (Head of Manufacturing Operations), similar production processes and product lines, similar job roles, and exchanges of workers to and from Evenwood. The same pay rates and skills grid, the same working hours and shift patterns, holiday and other employment terms applied at both sites.

14) The Employer accepted that the Union’s proposed bargaining unit was not in itself, ‘small’, but it would leave out a tiny separate bargaining unit at Tursdale, isolated and fragmented from the collective bargaining process. Importantly, the ‘desirability of avoiding small fragmented bargaining units within an undertaking’ was a matter that the Panel must take into account in deciding a bargaining unit which is appropriate (Paragraph 19B(3).

15) The Employer believed that to give credibility to the effectiveness of a single-site bargaining unit at Evenwood only could potentially lead to another bargaining unit at Tursdale and competing or rival applications by another trade union there. If there were to be collective bargaining covering only a group of employees at one location, that would lead to differential terms and conditions between workers who carry out identical job functions. It would impede effective management, flexibility and collaboration within the Company and could lead to de-harmonisation and a ‘two-tier workforce’, which ought to be avoided. The Company was not of such a scale as to be able to cope with that and it would certainly not be compatible with effective management. The Employer submitted that a key spirit of the legislation was to avoid fragmentation and to avoid that it made sense that the bargaining unit be extended to include the employees at the Tursdale site, as identified in its proposed alternative bargaining units.

16) The Employer said that there was no management autonomy at local site level (that is, as between Evenwood or Tursdale) to fix pay, hours and holidays and even at Head of Manufacturing Operations level there was no authority to determine such matters locally. Decisions on pay were fixed by the Board and the Company operated on a functionally integrated basis across the two sites.

17) The Employer stated that in the event that there was to be collective bargaining, the Company’s aspiration was for all employees to have a voice regardless of whether they were based at Evenwood or Tursdale as this would be better aligned with the “whole company” approach taken by the Company, as exemplified by the operation of its well-established Works Council which had been in place for around five years. When questioned, the Head of Human Resources explained that the Works Council met on a regular basis and had different representatives from across the various departments. It was confirmed that there was a representative from the Tursdale site who unfortunately chose not to attend the Works Council meetings but everyone at the Tursdale site still had access to the minutes. It was explained that the representatives attend regular meetings with site managers to provide updates on customers and priorities for the month, discuss changes to working practices, and represent all employees at Evenwood and Tursdale. The aim was to improve information flow, encourage employee input, and provide an inclusive and collective voice through which employees’ views and preferences could be brought to, and considered, by the management team. The Employer confirmed that a number of initiatives had been successfully introduced through the Works Council including changes to banked hours, issuing of new employment contracts and consultation during a recent redundancy programme.

18) The Employer put forward as an alternative bargaining unit: “All hourly paid employees up to and including Team Leaders but excluding Supervisors, Office Staff, Managers and Personal Contract Holders located at the Company’s two plant sites at Evenwood and Tursdale”. This bargaining unit covered 127 workers and the Employer believed that this slightly enlarged two-site bargaining unit, which included all hourly-paid workers, was a workable unit for the purposes of collective bargaining, if union recognition were to be adopted and was compatible with the effective management of FTSL.

19) The Employer’s view was that their alternative bargaining unit would be compatible with effective management as: all hourly paid workers have harmonised terms and conditions of employment and work on an integrated basis across the two sites in identical roles and job functions; all workers ultimately report in to the same Manager (Head of Manufacturing Operations), who is responsible for both sites; it is aligned with the Company’s centralised decision-making process related to people practices and policies; all workers in the slightly enlarged bargaining unit are employed on the same contractual terms and qualify for identical benefits and working conditions; collective bargaining may take place in respect of all employees affected by proposed changes to pay, hours and holidays irrespective of geography (site location) or work function; it is more inclusive and non-divisive; and collective bargaining across the two split sites would lead to fair and efficient practices, in line with the spirit of the legislation.

20) The Employer submitted that this bargaining unit would reflect more closely the existing reality of how the Company operated in practice and the commonality of approach across the two sites that allowed employee mobility between the sites and enabled workload balancing to meet requirements. It would avoid any unfairness and potential inequality of terms and conditions of employment for similar work and would ensure that all employees of the same grade and function would have a say in the collective bargaining process with a voice for all. It would be a more sensible and logical bargaining unit than that proposed by the Union.

21) The Employer stated that the Union’s proposed bargaining unit at the single Evenwood site had, by its own admission (in its application form to the CAC), been identified not on the grounds of location or characteristics, but by reason of union density and “the group of employees who have indicated that they wish to be members of the Union and be recognised”. This is irrelevant for the purposes of the statutory framework [see Unite the Union and London City Airport Ltd TUR1/1139/2019 at para 58]. The overriding consideration for the CAC is compatibility with effective management of the Employer, not the Trade Union.

22) The Employer also offered another potential bargaining unit for the CAC Panel to consider: all hourly paid workers including Team Leaders at Evenwood and Tursdale and monthly paid closely involved in shop floor activities, excluding Managers’. The Employer stated that even their proposed alternative unit (set out at paragraph 18) carried the risk of segregating monthly paid employees and would also hinder fair and efficient working practices across the two sites. The Employer explained that the salaried employees they were concerned about (such as engineering, quality, welding, goods-in/out) were mainly in specialist roles which supported all shop floor activity, worked closely and frequently with shop floor employees, did not have supervisor responsibility and enjoyed a number of common employment terms as shop floor hourly paid workers.

23) The Employer explained that the ‘dilemma’ posed by its proposed alternative bargaining unit - which was compatible with effective management - was the ‘consequential and fragmentation impact’ on this small group of monthly paid employees who would still fall outside that bargaining unit. Given the small size of the Company, the Employer submitted that its proposed potential bargaining unit – including ‘monthly paid closely involved in shop floor activities…’ would also be compatible with effective management, encourage fair and efficient practices and, importantly, eliminate any small fragmented units. The Employer asked the CAC Panel first to consider this matter before deciding on an appropriate bargaining unit.

24) The Employer pointed out that a key spirit of the legislation was to avoid fragmentation and submitted that fragmentation was simply not necessary or appropriate and it made sense that the bargaining unit was extended to include the employees at the Tursdale site, as identified in their alternative proposals

25) In GMB and Shred-It Limited [TUR1/1105/ (2019)], like the current case, the GMB’s proposed bargaining unit consisted of workers at only one of Shred-It’s branches (its Gateshead branch). Shred-It argued that the proposed bargaining unit was too narrow and the workers in that bargaining unit would “stick out like a sore thumb” in the context of how Shred-It carried out its UK operations in practice. The CAC agreed that the proposed bargaining unit was inconsistent with how Shred-It ran its business and that a UK-wide bargaining unit was more appropriate.

26) In URTU and Fowler Welch Ltd [TUR1/1084/ (2019), at paras. 20 and 21], the CAC considered that the union’s proposed bargaining unit was not appropriate because it was confined to LGV drivers at a single site, Teynham. The pay, hours and holidays of drivers at Teynham and another site, Paddock Wood, were identical and those at a third site, Thanet Birchington, were being aligned to these. LGV drivers at all three sites worked interchangeably in terms of journeys undertaken on behalf of the employer’s customers, the only difference being that they began their working day at their ‘home’ depot. The CAC concluded that omitting the three drivers at Paddock Wood and the two at Thanet Birchington from a bargaining unit of 89 drivers at Teynham, and subjecting them to separate arrangements for determining pay, hours and holidays, would not be compatible with effective management. The CAC decided that an appropriate bargaining unit would comprise all workers below management level at all three sites, who were subject to the same terms as regards hours and holidays.

27) The Employer also cited the case of Paragon Labels [TUR1/852/(2013)], in which the CAC considered a proposed bargaining unit comprising hourly paid workers at only one site out of a total of eight sites in its labels division UK-wide, as apt to the Company’s case: “…the Panel considers that the evidence presented suggests an employer with workers with largely common terms and conditions of employment that have been determined by central management with a very limited scope for modification by Factory Mangers (for example overtime is allocated to relevant workers by Factory Managers within a budget set by central management). The Panel concludes that collective bargaining at the single site of Tenens Way would make little sense when Factory Managers could do no more than act as messengers to and from central management, with no real power to decide upon the subjects under negotiation. Further, the Panel has noted both parties’ comments regarding fragmentation with reference made to Cable & Wireless. We consider that there is a genuine difficulty presented by the Union’s proposed bargaining unit in relation to potential fragmentation and fragmented bargaining. Firstly, the proposed bargaining unit excludes roles that share a number of characteristics with roles that have been included. They share the same terms and conditions and are hourly paid. The only difference, for some at least, appears to be a differing channel of management, such as with the Plate Workers and related roles. The risk of further fragmentation of bargaining also exists in separating one site for collective bargaining amongst a number of sites with workers with the same terms and conditions that are decided by central management. It strikes the Panel that the Employer has, in this case, raised a valid argument regarding effective management. The Employer’s is a business that is particularly dependent upon the fast reaction to customer orders. The Panel considers that having one site with differing terms to others, such as regarding pay, hours and holidays presents an obstacle to effective management. The Panel concludes that the Union’s proposed bargaining unit is not an appropriate unit.” (Paragraph 63).

28) The circumstances of Cable & Wireless and Lidl (which was also a larger single site) also highlighted the unattractive effects of fragmented collective bargaining.

29) In Cable & Wireless, Collins J held: “Small fragmented units are regarded as undesirable in themselves. However, it is obvious that the real problem is the risk of proliferation which is likely to result from the creation of one such unit.” (paragraph 17, R (Cable & Wireless Services UK Ltd) v CAC [2008] IRLR 425).

30) In Lidl, the issue was the threat of proliferation of similarly small fragmented units and the instability that would result from such proliferation of bargaining units: “…it would reflect a well-known problem in industrial relations – perhaps more historical than current, but policy-makers in this field have long memories. It has long been regarded as undesirable (to use the statutory term) that employers should have to negotiate in more than one forum – and, more particularly, with more than one trade union – in respect of parts of their workforce who were not essentially different. At the very least, conducting two or more sets of negotiations where one would do is wasteful of time and effort. But there is also the risk of inconsistent outcomes, which can breed anomalies and discontent between comparable groups of workers (including, though certainly not only, in an equal pay context)… The policy expressed by head (c) is evidently that, other things being equal, where a group of employees can appropriately be bargained for by a single trade union in a single bargaining unit it is desirable that they should be. It is thus concerned specifically with fragmentation of collective bargaining.” (Lidl Ltd v Central Arbitration Committee & Anor [2017] EWCA Civ 328, Underhill LJ at para. 36).

31) The Employer concluded by observing that the flipside of the Lidl experience, for the Company is that it could end up not with the problem which Lord Justice Underhill identified (at para 38) of “a small island of recognition in a sea of non-recognition”, but rather a small island of non-recognition in a sea of recognition.

5. Considerations

32) The Panel’s decision has been taken after a full and detailed consideration of the views of both parties as expressed in their written submissions and amplified at the hearing.

33) The Panel is required by paragraph 19(2) of the Schedule to the Act, to decide whether the proposed bargaining unit is appropriate and, if found not to be so, to decide in accordance with paragraph 19(3) a bargaining unit which is appropriate. Paragraph 19B(1) and (2) state that, in making those decisions, the Panel must take into account the need for the unit to be compatible with effective management and the matters listed in paragraph 19B(3) of the Schedule so far as they do not conflict with that need. The matters listed in paragraph 19B(3) are: the views of the employer and the union; existing national and local bargaining arrangements; the desirability of avoiding small fragmented bargaining units within an undertaking; the characteristics of workers falling within the bargaining unit under consideration and of any other employees of the employer whom the CAC considers relevant; and the location of workers. Paragraph 19B(4) states that in taking an employer’s views into account for the purpose of deciding whether the proposed bargaining unit is appropriate, the CAC must take into account any view the employer has about any other bargaining unit that it considers would be appropriate. The Panel must also have regard to paragraph 171 of the Schedule which provides that “[i]n exercising functions under this Schedule in any particular case the CAC must have regard to the object of encouraging and promoting fair and efficient practices and arrangements in the workplace, so far as having regard to that object is consistent with applying other provisions of this Schedule in the case concerned.”

34) The Panel’s first responsibility is to decide, in accordance with paragraph 19(2) of the Schedule, whether the Union’s proposed bargaining unit is appropriate. The Panel should not reject the Union’s proposed bargaining unit because it feels that a different unit would be more appropriate nor, in considering whether it is compatible with effective management, should it consider whether it is the most effective or desirable unit in that context. There is no requirement on the Panel to seek to identify a more appropriate bargaining unit if it finds that the Union’s proposed bargaining unit is appropriate.

35) The Panel has considered the matters listed in paragraph 19B(3) of the Schedule so far as they do not conflict with the unit to be compatible with effective management. The views of the Employer and the Union, as described earlier in this decision, have been fully considered. The Panel does not consider that there are any existing national or local bargaining arrangements in this case. The bargaining unit proposed by the Union including the Team Leaders, whom the Employer now agrees should be included in the bargaining unit, does not avoid completely the risk of small fragmented bargaining units within the undertaking as it does not cover the 10 hourly paid workers located at FTSL’s Tursdale facility who work in identical job roles and share many common denominators. It is the view of the Panel that excluding the 10 workers at Tursdale would not be compatible with effective management. It would exclude workers who have the same terms and conditions, undertake fundamentally the same tasks and are managed by the same management employee. In essence, exclusion of these hourly paid workers would inhibit fair and efficient practices across both sites.

36) Having decided that the Union’s proposed bargaining unit is not appropriate the Panel’s next responsibility is to decide a bargaining unit which is appropriate. We believe that a bargaining unit that encompasses hourly paid workers at both sites up to an including Team Leaders is appropriate. The Panel considers that this bargaining unit is compatible with effective management. These workers work in identical job roles, share many common characteristics and report to the same Manager (Head of Manufacturing Operations). There is also interworking between the two sites during busy periods so that a bargaining unit that covers both sites would facilitate manufacturing continuity. In our view such a bargaining unit would be compatible with effective management and would not give rise to small fragmented bargaining units being created within the Employer’s business unit. Accordingly, the Panel has determined that a bargaining unit consisting of “All hourly paid employees up to and including Team Leaders but excluding Supervisors, Office Staff, Managers and Personal Contract Holders located at the Company’s two plant sites at Evenwood and Tursdale” is an appropriate bargaining unit

37) As well as its alternative proposed bargaining unit, the Employer also asked the Panel to consider a potential bargaining unit which would include a number of monthly paid employees who worked mainly in specialist roles supporting shop floor activity (as discussed at paragraph 22 above). Having given careful consideration to this proposal, the Panel was not persuaded that the omission from the bargaining unit of these employees would risk “segregating” them such that efficient working across both sites would be hindered. Nor were we persuaded that these employees should be included to avoid the creation of small fragmented bargaining units, as in this case, we considered this possibility to be more hypothetical than real. The Panel noted that the Employer stated that a bargaining unit comprising hourly paid employees (including Team Leaders) at the two plants would be “sensible and logical”. In our view, the Employer’s alternative potential bargaining unit would detract from the clarity and cohesion that our determined bargaining unit provides. Importantly, the determined bargaining unit is compatible with effective management. The Panel is satisfied that our determined bargaining unit noted above is an appropriate bargaining unit and one which is consistent with the object set out in paragraph 171 of the Schedule as it will involve fair and efficient practices and arrangements in the workplace.

6. Decision

38) We have decided that the appropriate bargaining unit in this case is one comprising “all hourly paid employees up to and including Team Leaders but excluding Supervisors, Office Staff, Managers and Personal Contract Holders located at the Company’s two plant sites at Evenwood and Tursdale”.

39) As the appropriate bargaining unit differs from the proposed bargaining unit, the Panel will proceed under paragraph 20(2) of the Schedule to decide if the application is invalid within the terms of paragraphs 43 to 50.

Panel

Professor Kenny Miller, Panel Chair

Mr Sean McIlveen

Ms Virginia Branney

07 June 2021

7. Appendix

Names of those who attended the hearing:

For the Union

Mark Wilson GMB Organiser

Derek Cattell GMB Branch Representative

John Gilmore GMB Branch Representative

For the Employer

Clive Gallagher Head of Site

Clare Hennessy Head of Human Resources

David Morgan Employment Partner, BurnessPaull