Decision

Bargaining Unit Decision

Updated 26 October 2020

Case Number: TUR1/1173(2020)

10 August 2020

CENTRAL ARBITRATION COMMITTEE

TRADE UNION AND LABOUR RELATIONS (CONSOLIDATION) ACT 1992

SCHEDULE A1 - COLLECTIVE BARGAINING: RECOGNITION

DETERMINATION OF THE BARGAINING UNIT

The Parties:

Unite the Union

and

Hayakawa International (UK) Limited

1. Introduction

1) Unite the Union (the Union) submitted an application to the CAC on 7 May 2020 that it should be recognised for collective bargaining by Hayakawa International (UK) Limited (the Employer) for a bargaining unit comprising “all workers in the engineering, production and warehousing departments not inclusive of supervisory or management level”. The location of the bargaining unit was given as 5, Davy Way, Llay Industrial Estate, Llay, Wrexham, Clwyd, Wales LL12 0PG. The CAC gave both parties notice of receipt of the application on 11 May 2020. The Employer submitted a response to the CAC dated 14 May 2020 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 Professor Gillian Morris, Panel Chair, and, as Members, Mrs Susan Jordan and Ms Fiona Wilson. The Case Manager appointed to support the Panel was Nigel Cookson.

3) By a decision dated 28 May 2020 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. This period was extended until 2 July 2020 with the consent of the Union in order to allow further negotiations under the auspices of Acas. 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. In a letter dated 6 July 2020 the Case Manager explained to the parties that ordinarily (but not universally) the CAC would hold a public hearing to assist the Panel to determine the question of the appropriate bargaining unit. However, at present, owing to the Covid-19 pandemic, the CAC was not conducting hearings face to face but would, wherever possible, reach its decisions based on the parties’ written submissions; additional written submissions may also be sought by the Panel as part of the Panel’s decision-making process. The letter stated that if, having had sight of the parties’ written submissions, the Panel concluded that it could not reach its decision fairly without some form of hearing, virtual or otherwise, the parties would be informed accordingly.

4) In this case the Panel has made its decision on the basis of the parties’ initial written submissions (“the initial submissions”); each party’s written response to the initial submissions of the other party (“the second submissions”); and documentation and information sought by the Panel from the parties following receipt of the initial submissions. The Panel is grateful to the parties for their compliance with this process in a timely manner. The Panel is satisfied that it was able to make its decision fairly on the basis of the written material supplied by the parties and that no hearing was necessary to decide the matter.

5) The decision begins by setting out background information relating to the workforce supplied by, or sought by the Panel from, the Employer. It then summarises the submissions of each party in a form which includes their initial written submissions amended, as appropriate, by their second submissions.

6) The Panel is required, by paragraph 19(2) of Schedule A1 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. 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.

2. Background information relating to the Employer and the workforce

7) The Employer said that, although Hayakawa was a global name, the Employer was a UK operation with single premises in Llay, Wrexham. The Employer supplied a list of all its employees as of 14 July 2020 by job title. The list, appended to its initial submissions, was as follows:

Job Title	Number
Production Operators	9
Warehouse Operator	1
Materials Co-Ordinator	1
Assistant Engineers	2
Quality Engineer	1
Design Engineer	1
Production Engineer	1
Senior Engineer	1
Production Supervisor	1
ISO Adviser	1
Senior Supervisor (Customer Service)	1
Admin Assistant	1
Senior Admin Assistant	1
Commercial Assistant	1
Assistant Manager	1
Office Manager	1
Total Employees	25

The Employer stated that there were, in addition to those workers, three Directors listed at Companies House, one of whom was responsible for day-to-day operations and profitability at the Employer. In its second submissions the Employer stated that two employees, who were understood to be within the Union’s proposed bargaining unit, had left the Employer of their own accord since the Employer’s initial submissions.

8) The Employer said that since 2005 contracts of employment for all staff excluding Directors had been compiled and produced in a standard format by Magenta,^{[footnote 1]} differing only by job title and personal details such as employment start date, name, home address, salary or wage etc. The Employer stated that production operators, warehouse operatives, apprentice engineers, the design engineer and the ISO Advisor were paid on an hourly rate with provision for paid overtime. Supervisory and administrative staff were paid in monthly increments based on an annual salary as were some engineers.

9) The Employer supplied with its initial submissions two anonymised Statements of Terms and Conditions for a production operator, dated 2005 and 2019 respectively, and for the office manager, dated 2005 and 2017. The Panel noted that the hours of work for a production operator were 7.15-5.15 Monday-Thursday, four days a week, with a ten-minute paid break in the morning and afternoon and 30 minutes unpaid lunch break. The Panel asked the Employer to confirm that this was a standard pattern of hours for workers in the Union’s proposed bargaining unit or, alternatively, to indicate what the hours of work were for each individual group within it. In response the Employer stated that the pattern of work for employees other than production operators varied as per business requirements. The Employer said that Friday work was generally limited to office staff, all of whom received a 30-minute lunch break on all working days, and that the premises closed at 2pm on Fridays. The Employer stated that the standard pattern of holiday entitlement was based on 5.6 working weeks, ie 28 days for a five-day working week. On that basis production operators received a pro-rata annual entitlement of 22.5 days for their four-day working week. The Employer said that additional holiday entitlement was awarded to every employee on completion of ten years’ service. The Employer said that the office manager was entitled to 30 days’ paid annual holiday plus Bank Holidays because she had completed 20 years’ continuous service with the Employer.

10) The Employer said that pay, hours and holiday entitlement were reviewed annually by the Directors, either at the start of the Employer’s financial year (January-December) and/or in April following changes to National Minimum Wage or National Living Wage rates. The Employer said that current working time arrangements and holiday entitlements were relatively long-standing in line with business viability and statutory obligations; pay reviews were subject to business profitability and individual employee qualifications and experience. The Employer said that decisions were made at Director local level. The Employer said that this process was universal across all staff, including those within and those outside the Union’s proposed bargaining unit.

11) The Employer said that the Staff Handbook was integral to its employment contracts and contained policies and procedures applicable to every employee. The Employer said that the disciplinary and grievance procedures were set out in detail in the Staff Handbook. The Employer supplied a copy of the Staff Handbook at the request of the Panel.

3. Summary of the Union’s submissions

12) The Union said that its proposed bargaining unit was appropriate as there were significant differences in the Terms and Conditions between the administrative, supervisory or management level employees and non-supervisory/non-managerial operational staff (ie production operators, non-supervisory/non-managerial engineers and warehouse operators). The Union said that these differences related, but were not limited, to the Sick Pay Scheme and payment while on sick leave/absence and to holidays. The Union said that there was no uniformity of contracts relating to holidays; the quality engineer (within the bargaining unit) and senior engineer (outside the bargaining unit), gained additional holidays every two years whereas the other engineers and other workers with operational roles had to wait ten years before qualifying. The Union contended that this occurred in practice regardless of the written particulars of employment or Staff Handbook. The Union contended that there were no standard Terms and Conditions within the proposed bargaining unit nor were there standard Terms and Conditions for workers outside the proposed bargaining unit.

13) The Union accepted that some workers within its proposed bargaining unit were salaried (some engineers) whereas others were hourly paid. The Union said that all engineers negotiated their pay independently and were actively discouraged from discussing pay with colleagues; it was believed that this was to prevent them from collectively negotiating pay and created the real possibility of differing conditions between those doing similar roles. The Union said that there was no standard pay scale and that the method of determining pay was also not uniform. The Union said that warehouse and production workers had collectively negotiated their pay agreement although this was done informally and this informal agreement was later unilaterally changed by management. The Union said that production operators and warehouse operators still had the same pay.

14) The Union said that the argument that the Union’s proposed bargaining unit would be divisive due to the workers excluded from it having similar terms and conditions to those within it and therefore not compatible with effective management,^{[footnote 2]} was not correct because there were variations in terms and conditions already between all job roles which had no impact on the bargaining unit. The Union said that its bargaining unit was the most compatible with effective management as it allowed effective management of all operational staff on an equal and collective basis and would promote standardisation of determining conditions. The Union contended there was no collective bargaining operating within the undertaking presently, but an imposition of remuneration increases by the business with no opportunity for employees to engage meaningfully to ascertain their wage structure. The Union further submitted that the results of the check of membership and support conducted during the acceptance stage of the statutory process^{[footnote 3]} manifestly demonstrated the desire within the bargaining unit to have collective bargaining and for the Union to represent them in that process. The Union said that no member of the proposed bargaining unit had responsibility in the disciplinary function within the undertaking.

15) The Union submitted that the proposed bargaining unit was a discrete unit and easily recognisable as such. The Union said that all those within its proposed bargaining unit were “operational”. The Union defined “operational” roles as those that “are involved directly with input, transformative, and/or output processes of manufactured goods.” as opposed to “administrative” roles that were “essential to the business, but centred on the internal processes, and do not directly impact upon the input-transformative-output processes of the manufacturing of goods”.^{[footnote 4]} The Union explained how the Union classified each of the roles listed by the Employer in paragraph 7 above. The Union said that in stating that only those with “administrative and general management support roles” were excluded from the proposed bargaining unit the Employer had shown that it could clearly distinguish between the operational, managerial and administrative roles.

16) The Union said that its proposed bargaining unit would cover over half of the workers at the Employer, leaving few excluded from the unit, which would greatly minimise the risk of small fragmented bargaining units. The Union said that all operational job roles were covered by this bargaining unit leaving little risk of different terms and conditions for people in the same roles and therefore little risk of small, fragmented bargaining units. The Union said that it had excluded the roles which the Employer wished to include within its proposed bargaining unit as it had no membership in those areas and workers in these job roles had showed no interest in and/or opposition to joining the Union or being represented by it. The Union said that this lack of interest also meant that there was little risk of creating small, fragmented bargaining units. In response to the Employer’s assertion that it would be a disservice to those employees outside the Union’s proposed bargaining unit to accept the unit in its current form, the Union noted that the Employer thereby acknowledged the benefits of recognition and collective bargaining. The Union said that, despite this, it was not convinced that forcing collective bargaining on workers outside its proposed bargaining unit was in the interests of good industrial relations and effective management and that it could result in the division that the Employer was looking to avoid. In addressing the desirability of avoiding small fragmented bargaining units within the undertaking, the Union submitted that the Panel should adopt the approach taken in R (Lidl Ltd) v Central Arbitration Committee.^{[footnote 5]}

17) The Union said that there were no existing national or local bargaining arrangements in place. The Union acknowledged that workers within its proposed bargaining unit had some varying characteristics, for example skilled and semi-skilled, but said that all carried out operational roles and worked together regularly and all workers operated from the same location in Davy Way, Llay, Wrexham.

4. Summary of the Employer’s submissions

18) The Employer said that its preferred bargaining unit, if recognition was secured by the appropriate numbers by ballot, would be across all employee groups within the workforce with the sole exception of the Directors.

19) The Employer referred to the Statements of Terms and Conditions described in paragraph 9 above and asked the Panel to consider the generic details of each, which the Employer said illustrated the uniformity, equality and evenness across all job titles. The Employer also stated that the Staff Handbook was relevant to all staff members and contained policies and procedures applicable to every employee (eg disciplinary rules and procedures, grievance procedure, redundancy consultation rights etc). The Employer said that the summary of the staff, set out in paragraph 7 above, and the style and nature of the current employment contracts was crucial in illustrating its concerns regarding the Union’s proposed bargaining unit The Employer said that although there may remain a slight discrepancy with regard to those included in the proposed bargaining unit, that slight discrepancy was not its primary concern, which was that the proposed bargaining unit would prove counter-productive in terms of the organisation’s current structure.

20) The Employer said that having due regard for the relatively small numbers of employees, only those with administrative and general management support roles were excluded from the Union’s proposed bargaining unit. As such, there was a real and genuine concern that acceptance of the proposed bargaining unit would create a potentially damaging division within the organisation, in circumstances where such a division did not currently exist. The Employer said that it saw the question as being whether the proposed bargaining unit was realistic and/or constructive in these specific circumstances. The Employer said that the issue was not so much as to whether the proposed unit was acceptable in its current form, but more as to whether it should be more expansive to include all roles within the business. The Employer said that it considered this to be the crux of the matter, rather than a dispute over those currently included in the proposed bargaining unit. The Employer said that it believed it would be a disservice to those employees outside the proposed bargaining unit to accept the unit in its present format. The Employer also said that if the Panel determined that the bargaining unit should be more expansive in line with the Employer’s submissions, a ballot may be necessary to determine whether recognition was supported overall. The Employer said that as it was not in a position to voluntarily accept the bargaining unit as currently proposed, it believed that it was fair and just that the Panel should decide on its appropriateness in the circumstances or determine whether an alternative approach was necessary.

21) The Employer said that the Union’s submission that there were significant differences in Terms and Conditions between supervisory and management level employees and non-supervisory, non-managerial operational staff (see paragraph 12 above) was wholly inaccurate and misleading. The Employer said that there was no disparity between those within the proposed bargaining unit and the remaining staff. The Employer said that there was no separate contractual Sick Pay scheme in place for any employee or additional, enhanced sickness/absence payments for supervisory or management level employees. The Employer said that all employees were entitled to Statutory Sick Pay only. The Employer also said that no member of staff qualified for an additional day’s holiday after two years; additional holiday entitlement was awarded to all employees upon completion of ten years’ service.

22) The Employer said that there was uniformity of parameters within engineers’ contracts, although pay at interview stage, and with further developments and experience, could be negotiated according to experience, trade qualifications, and skill sets. The Employer said that the recruitment process naturally differed as a result of the skills and qualifications of roles rather than for any other reasons. The Employer said that it therefore followed, as the Union itself had pointed out, that unskilled or unqualified roles attracted the same pay rates. The Employer refuted the Union’s allegation that employees were actively discouraged from discussing pay rates and questioned the grounds on which the allegation was being made. The Employer said that it had no evidence whatsoever of any such discouragement.

23) The Employer said that it failed to understand the basis for the Union’s submission that workers outside the Union’s proposed bargaining unit had shown no interest and/or opposition to joining the Union or being represented by the Union.

24) The Employer questioned whether Lidl could truly be considered as relevant or comparable to the Union’s submission as the Employer understood this case to have involved the validity of a bargaining unit within one site of a multi-site organisation. The Employer questioned whether Lidl’s circumstances could really be related to its own.

25) The Employer concluded its second submission by summarising the following points which it had made in its initial submission. First, that the Union’s proposed bargaining unit would create a potentially damaging division within the Employer in circumstances where such a division did not currently exist. Second, the Union’s proposed bargaining unit was wholly unrealistic and an expansion of the bargaining unit should be considered to include all roles within the Employer. Finally, if the Panel agreed that the bargaining unit should be expanded to include the whole workforce (excluding Directors), then a ballot would be appropriate to determine whether recognition was supported overall.

5. Considerations

26) 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 appropriate, 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.” 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; the answers provided by both parties to questions posed by the Panel; and the documentary evidence submitted by the parties.

27) 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 notes that it cannot 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, can it consider whether it is the most effective or desirable unit in that context.^{[footnote 6]}

28) The Panel considers that the Union’s proposed bargaining unit is compatible with effective management. The Panel considers that the Union’s proposed bargaining unit consists of a readily identifiable group of workers and accepts the Union’s contention that the Employer showed itself able to distinguish between operational and other groups of workers when it stated that the Union’s proposed bargaining unit excludes only those with “administrative and general management support roles” ( see paragraph 15 above) . The Panel notes that decisions relating to pay, hours and holiday entitlement are made at local Director level and that there are currently no management structures in place to which the Union’s proposed bargaining unit would present a difficulty. The Panel notes that the bargaining unit contains both hourly paid and salaried workers (with the former only being entitled to overtime pay) but this is not, in the Panel’s experience, unusual or a barrier to effective management. There appear to be a range of arrangements relating to the hours of work of those within the bargaining unit but again the Panel does not regard that as an obstacle to effective management. The Employer confirmed that holiday entitlements were calculated on the same basis for all workers.^{[footnote 7]}

29) The Panel notes that the Employer itself did not offer any explanation as to why the Union’s proposed bargaining unit would not be compatible with effective management; rather it said that the crux of the matter was not so much whether the proposed unit was acceptable in its current form but whether it should be more expansive to include all roles within the Employer. The Employer said that there was a real and genuine concern that acceptance of the Union’s proposed bargaining unit would create a potentially damaging division within the organisation in circumstances where such a division does not currently exist. The Panel appreciates that a bargaining unit covering all roles may have its attractions for the Employer but, as stated in paragraph 27 above, the Panel’s role is not to decide whether another bargaining unit would be more appropriate than that proposed by the Union.

30) The Panel has considered the matters listed in paragraph 19B(3) of the Schedule, so far as they do not conflict with the need for 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. In relation to existing national and local bargaining arrangements, there are no bargaining arrangements of either description in place. In relation to the desirability of avoiding small fragmented bargaining units within an undertaking, the Union’s proposed bargaining unit would be the sole bargaining unit within the Employer. There is no evidence of any demand for recognition for collective bargaining purposes on the part of other workers within the workforce and as a consequence no evidence of a risk of fragmentation of collective bargaining. The Panel notes the Employer’s statement that it failed to understand the Union’s submission that workers outside its proposed bargaining unit had shown no interest in and/or opposition to being represented by the Union. The Panel accepts that there is no evidence that such workers are actively opposed to being represented but equally accepts that there is no evidence that they are seeking recognition for collective bargaining purposes which is the material consideration in this context. As far as the characteristics of workers are concerned, all those within the Union’s proposed bargaining unit are operational and have no role within the Employer’s disciplinary and grievance procedures or other managerial responsibilities. All the workers in the proposed bargaining unit are based at a single location. The Panel has had regard to the object set out in paragraph 171 of the Schedule in reaching its decision.

6. Concluding observation

31) The Union alleged that engineers were actively discouraged from discussing pay with colleagues. The Employer refuted this allegation. The Panel has not investigated this matter; makes no findings on it; and it has played no part in its decision.

7. Decision

32) The Panel’s decision is that the appropriate bargaining unit is that proposed by the Union namely “all workers in the engineering, production and warehousing departments not inclusive of supervisory or management level”.

Panel

Professor Gillian Morris, Panel Chair

Mrs Susan Jordan

Ms Fiona Wilson

10 August 2020

1. Magenta Moon Ltd has been the retained HR and Employment Law adviser to the Employer since 2005. ↩

2. The Employer did not, in fact, make this point in this way in its submissions; see below. ↩

3. See paragraphs 15-20 of the decision to accept the Union’s application promulgated 28 May 2020. ↩

4. The Union said that these were the definitions given in the Open University publication Understanding Operations Management. ↩

5. [2017] EWCA Civ 328. ↩

6. R (Cable and Wireless Services UK Ltd v Central Arbitration Committee [2008] EWHC 115 (Admin), Collins J at [9]. ↩

7. The Panel notes that the Union contested whether this was the case in practice: see paragraph 12 above. The Panel was content to assume, for the purposes of reaching its decision, that the Employer’s statement was correct as it did not consider the differences between the parties to be material for this purpose. ↩