Bargaining Unit Decision
Case Number: TUR1/747/2011
3 November 2011
CENTRAL ARBITRATION COMMITTEE
TRADE UNION AND LABOUR RELATIONS (CONSOLIDATION) ACT 1992
SCHEDULE A1 - COLLECTIVE BARGAINING: RECOGNITION
DETERMINATION OF THE BARGAINING UNIT
Unite the Union
Polyprint Mailing Films Limited
1. Unite the Union ("the Union") submitted an application to the CAC dated 14 June 2011 that it should be recognised for collective bargaining by Polyprint Mailing Films Limited ("Polyprint") in respect of a bargaining unit comprising "Pre-Press, Printers and Assistants, Bag Machine Room, Ink Store, Maintenance/Engineers, Warehouse and Delivery Drivers". The workers in the proposed bargaining unit were based at two locations - Mackintosh Road and Earl Road - both on the Rackheath Industrial Estate, Norwich.
2. In accordance with section 263 of the Trade Union and Labour Relations (Consolidation) Act 1992 ("the Act"), the CAC Chairman established a Panel to deal with the case. The Panel consisted of Professor Roy Lewis, Chairman of the Panel, and, as Members, Peter Martin and Malcolm Wing. The Case Manager appointed to support the Panel was Kate Norgate.
3. By a decision dated 12 July 2011 the Panel accepted the Union's application and, as no agreement was reached on the bargaining unit, subsequently invited both parties to supply the Panel with, and to exchange, written evidence and submissions relating to the determination of the appropriate bargaining unit. This documentation, together with supplementary written submissions produced by both parties, served as the Panel's bundle at a hearing held in London on 13 October 2011. Appended to this decision are the names of those who were present at the hearing and who provided oral evidence and oral submissions.
4. As Malcolm Wing was unable to attend the hearing, the Chairman of the CAC appointed Professor Sue Corby as a Member of the Panel.
Clarification of the Union's proposed bargaining unit and Polyprint's alternative units
5. Excluding 3 Directors, Polyprint had 47 employees at the time of the hearing. These were classifiable in terms of main job function or teams as follows: Pre-press (2 employees); Print (20); Ink Mixing (1); Engineering (2); Driver (1); Quality Assurance/Data Input (1); Warehouse (2); Conversion (3); Production Office (6); Planner (1); Accounts (2); and Senior Management Team ("SMT") (6). This classification, together with the numbers of employees, was set out in Appendix 1 of Polyprint's first written submission. It was not challenged by the Union.
6. As stated above, the bargaining unit proposed by the Union consisted of "Pre-Press, Printers and Assistants, Bag Machine Room, Ink Store, Maintenance/Engineers, Warehouse and Delivery Drivers." The Union's "Bag Machine Room" corresponded with Polyprint's "Conversion" job function. In terms of the main job function list set out in the previous paragraph, the Union's proposed bargaining unit initially consisted of the employees in the first 8 categories on the list, amounting to 32 employees in all. It excluded the 15 employees comprising the Production Office, the Planner, Accounts and the SMT.
7. During the course of the hearing, it was confirmed that the description of workers in the Union's proposed bargaining unit was intended to cover the workers whom the Union regarded as "manual", as opposed to non-manual or white collar workers. It also became clear that the single employee listed under the functional head of Quality Assurance/Data Input was not a manual worker. He was included among the 32 in the Union's proposed bargaining unit on account of an historical fact, namely, at the time when the Union was making its statutory request to Polyprint for recognition the individual in question had been in the Engineering team, but he had since changed his function. Accordingly, the Panel indicated to the parties that it was satisfied that he should be treated as not being within the Union's proposed bargaining unit.
8. For the avoidance of doubt, this exclusion did not entail any amendment to the Union's proposed bargaining unit, which was defined in terms of "Pre-Press, Printers and Assistants, Bag Machine Room, Ink Store, Maintenance/Engineers, Warehouse and Delivery Drivers" and thus made no mention of Quality Assurance/Data Input. The removal of the one employee who had been incorrectly included meant that Union's proposed bargaining unit consisted of 31 rather than 32 out of Polyprint's 47 employees.
9. For its part, Polyprint did not accept the validity of the distinction within its organisation and for present purposes between manual and white collar. It proposed two alternative bargaining units as being appropriate: either all employees excluding the Directors, giving a total of 47 employees, or all employees excluding the SMT and the Directors, giving a total of 41 employees.
10. Polyprint was in the business of printing mailing films and envelopes, as well as packaging for the food industry and other sectors. It had a significant share of the UK market in these fields and worked with leading publishers and mailing companies.
11. Polyprint was founded in 1988 by Jonathan Neville, now Managing Director and Brian Pitcher, now Production Director. When the business started it consisted of just 3 people - Neville Johnson, Brian Pitcher and Neil Squance, now a member of the SMT. Apart from the 47 employees, there were 3 Directors, namely, Messrs Neville and Pitcher, and Catherine Clayton, Finance Director and de facto HR Manager. Neville Johnson was the majority shareholder, with the remaining shareholding split among the other two Directors and a company in which Neville Johnson was also the majority shareholder.
12. Polyprint had two locations: a printing facility at Mackintosh Road and an administration unit and conversion facility at Earl Road. Conversion meant the conversion of polythene into printed and clear polythene bags and pouches. The sites were less than 200 yards apart. Of the 47 employees, 14 were based at Earl Road, 27 at Mackintosh Road and 6 worked between both sites.
13. Polyprint was a member of the British Printing Industries Federation (BPIF) and used its services for advice on matters such as health and safety, training and employment law. It was not and had never been covered by the BPIF's collective bargaining arrangements. There were no existing local or national collective bargaining arrangements at Polyprint.
14. Noteworthy features of Polyprint's terms and conditions of employment and employment practices included the following:
(1) All employees were paid monthly.
(2) Those in the Union's proposed bargaining unit often worked overtime, were paid overtime premiums and were subject to a clocking-on system, which was used to calculate their overtime. The SMT did not work paid overtime. Other employees outside the Union's proposed bargaining unit were in principle able to work overtime in return for the same overtime premiums paid to employees within the Union's proposed unit. However, overtime was not usual among such staff, who were not subject to a clocking-on system. The only employees outside the Union's proposed bargaining unit who sometimes tended to work overtime were the 2 Accounts employees, both of whom were part-time. All employees in the Union's proposed bargaining unit were full-time.
(3) Most of the workers in the Union's proposed bargaining unit - 27 out of 31 - worked a 38 hour week double shift system with a 20% shift premium added to their basic pay. However, 4 out of the 31 - 2 Warehouse, 1 Ink Mixer, and 1 Driver - worked on days with a 40 hour week and no shift premium. Those outside the Union's proposed bargaining unit worked days with a 40 hour week and did not receive a shift premium.
(4) All employees received the same annual pay award, which was expressed as a percentage of their basic salary.
(5) Employees outside the Union's proposed bargaining unit were entitled to a maximum of 5 days full pay, inclusive of statutory sick pay ("SSP"), before moving on to SSP, whereas those in the Union's proposed bargaining unit had 3 "waiting" days before they become entitled to sick pay, which meant 60 per cent of full pay for a maximum of 6 weeks, and then SSP.
(6) The following terms and employment practices were the same for all employees: holiday entitlement, voluntary personal pension scheme, private medical insurance, grievance and disciplinary procedures and health and safety induction/training. All employees had access to the same car parking, restroom, and kitchen facilities.
Summary of the submissions made by the Union
15. The Union's experience was that it was common in the printing industry for small to medium-sized companies to recognise a union in respect of groups of manual workers such as its proposed bargaining unit.
16. The Union stated that there had been voluntary discussions with Polyprint during October/November 2010, during which no issues were raised by Polyprint about the appropriateness of the Union's proposed bargaining unit. Agreement in principle was reached to afford recognition to the proposed bargaining unit if an Acas membership check showed that a majority were in membership. In fact, an Acas membership check issued on 12 January 2011 had confirmed that the Union had majority membership within the proposed bargaining unit. Polyprint then backed away from union recognition. The Union submitted that it was clear that at the time of the voluntary discussions Polyprint did not object to its proposed bargaining unit.
17. The Union argued that its proposed bargaining unit, which consisted of 31 manual employees out of a total of 47, was neither small nor fragmented. As far as the Union was concerned, its proposed unit comprised a distinct group with common characteristics, namely, workers who performed skilled or semi-skilled manual jobs and did not normally carry out work outside the proposed bargaining unit.
18. The Union maintained that, with one exception, those outside the proposed bargaining unit did not operate printing machinery. The exception to this was that Neil Squance, a former printer and now a member of the SMT, operated machinery at times of exceptional customer demand and/or to cover for printers who were off sick. In response to additional evidence in the form of "daily machine figures" sheets produced by Polyprint at the hearing, the Union submitted that this merely confirmed that Neil Squance worked printing machinery now and again and that, him apart, those outside the proposed bargaining unit did not work on the machines.
19. The Union accepted that there were 4 workers within the bargaining unit who worked a 40 hour week. However, the other 27 worked a double shift system and 38 hour week, with a 20% allowance for shift work. They also tended to work overtime, in contrast to those outside its proposed bargaining unit. The latter group had a different sick pay entitlement and also had different supervisors.
20. The Union believed that its proposed bargaining unit was compatible with effective management. It contended that Polyprint had not demonstrated that the Union's proposed bargaining unit would have a detrimental affect on how the business was managed. The Union acknowledged that Polyprint was run effectively and maintained that its proposed bargaining unit would not detract from its continued success.
21. The Union relied upon the Court of Appeal's decision in Kwik-Fit  to support the proposition that the Panel's task under Schedule A1 of the Act was to determine whether the Union's proposed bargaining unit was an appropriate unit, rather than whether it was the most or the more appropriate unit.
22. Addressing the alternative bargaining units put forward by Polyprint, the Union pointed out that those workers outside of its proposed bargaining unit performed office-based or managerial jobs. In contrast, the Union's proposed bargaining unit constituted a coherent and distinct group of manual workers. It also suggested that Polyprint's alternative bargaining units were designed to dilute this group with a view to defeating the Union's claim for recognition.
Summary of the submissions made by Polyprint
23. When Polyprint had its initial voluntary discussions with the Union in October 2010 the proposed bargaining unit was not in contention. However, subsequently the Union indicated that its proposed unit was based on where it had membership and therefore more chance of success in any support test. Following the receipt of advice Polyprint objected to the exclusion of a significant number of employees as this was both unfair to the excluded employees and inconsistent with Polyprint's "one team" ethos. The problem was that the Union was not prepared to countenance a different and wider bargaining unit.
24. Polyprint's starting point was its "one team" approach to managing the business. Team work and a flexible approach across all aspects of the organisation ensured a quick turn around for clients. The work flow in relation to orders was highly integrated involving inter-changeability of roles within the business. There was, moreover, continuous communication and movement on a daily basis at all levels between the two locations.
25. Polyprint sought to demonstrate its flexibility and inter-changeability of roles with a number of specific examples, including the following.
(1) The Warehouse Manager, a member of the SMT who was excluded from the Union's proposed bargaining unit, often did fork lift work, which was also carried out by the two Warehouse employees, who were within the Union's proposed bargaining unit. Further, one of these employees substituted for the Warehouse Manager if he was absent.
(2) Neil Squance, the Works Manager and SMT member, who was excluded from the Union's proposed bargaining unit, often ran printing machines at the Mackintosh Road site and conversion machinery at Earl Road. This was, according to Polyprint, confirmed by the selection of daily machine figures sheets it produced at the hearing.
(3) The Conversion Room Supervisor, who was included within the Union's proposed bargaining unit, also worked in Pre-Press and performed data inputting.
(4) The Office Manager, who was excluded from the Union's proposed bargaining unit, did not operate machinery but was frequently physically present on the factory floor.
(5) Brian Pitcher, the Production Director, would mix ink when the employee with ink-mixing as his regular assignment - his son as it happened - was on holiday.
26. Polyprint regarded itself as small firm in terms of the size of its labour force. It submitted that the Union's proposed bargaining unit was small and fragmented. It excluded 15 or 16 employees. This was divisive and would discriminate between departments. Some of the potentially excluded employees had expressed their concern that they had not been given a voice on the shape and size of the bargaining unit as proposed by the Union, and that they would be overlooked under collective bargaining based on the Union's proposed unit. They worked very closely with the workers within the Union's proposed unit and shared common terms and conditions of employment.
27. Pay increases were a prime example. All employees received the same annual pay award, which was expressed as a percentage of their basic salary. The annual pay award was based on an assessment of Polyprint's accounts for the previous year and a projection of finances for the year ahead. Last year all employees received a 2 per cent pay increase. Polyprint was concerned that any difference in pay resulting from collective bargaining with the Union's proposed unit would encourage dissension and a "them and us" culture.
28. Polyprint gave the following examples of other largely common terms and conditions of employment: all employees were paid monthly; all employees received the same holiday entitlement; 4 of the employees in the Union's proposed bargaining unit worked a 40 hour week on days without a shift premium, in common with the employees outside the Union's proposed unit; although those outside the Union's proposed unit did not clock on, they could - with the exception of the SMT - work overtime on the same rates as those inside the Union's bargaining unit; despite an assertion by the Union to the contrary, there was no flexi-time arrangement for those outside the Union's proposed bargaining unit; the pension scheme was offered to all employees; all existing employees were entitled to private medical insurance; the disciplinary and grievance procedures were common to all employees; while there was a current discrepancy in sick pay arrangements between those inside and those outside the Union's proposed bargaining unit, Polyprint was looking to harmonise sick pay in the future and this was to be discussed at the Employee Forum.
29. Polyprint had recently established an Employee Forum, which covered all employees. To date two meetings had been held to discuss the format and rules of the Forum and the first substantive meeting had taken place on 7 October 2011. The Forum, consisting of 5 volunteer representatives covering all departments, was to meet on a monthly basis, reverting to quarterly meetings once the initial list of discussion topics had been addressed. The Forum was set up following a survey of employees carried out by an external company. Anything could be raised at the Forum and at the first meeting there were a lot of questions asked about the statutory process in relation to trade union recognition. Going forward the Forum was an embodiment of Polyprint's "one team" approach.
30. In the light of the above, Polyprint's central submission was that the Union's proposed bargaining unit was not compatible with effective management since it cut across the way the company operated. Polyprint put forward two alternative units for the Panel to consider, which it maintained would be compatible with effective management. The first was a bargaining unit comprising all 47 employees, excluding the 3 Directors, and the second was a unit comprising all employees, excluding both the 3 Directors and the 6 employees in the SMT. It stated that its first proposal would ensure that there would be no fragmentation, employees would continue to share common standards and terms, all employees would be treated equally and the workforce would continue to be effectively managed. It believed its alternative bargaining unit would limit fragmentation and allow for continued equal treatment of all non-management employees.
31. Polyprint cited the CAC's decision on the appropriate bargaining unit in Unite the Union v Kettle Foods Limited (TUR1/557/2007). In this case the CAC rejected a union proposed bargaining unit of production workers as being incompatible with effective management, and instead decided in favour of an employer proposed unit of all employees below senior management. Polyprint argued that Kettle Foods was an example of the CAC recognising a genuine "one company" ethos, where there was functional flexibility on the part of the workers and a single status in respect of terms and conditions of employment. Polyprint urged the Panel to find that its position was analogous to that of Kettle Foods.
The applicable law
32. The CAC is required, by paragraph 19(2) of Schedule A1 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 these decisions, the CAC must take into account the need for the unit to be compatible with effective management and the matters listed in paragraph 19B(3) 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 he considers would be appropriate.
33. Under paragraph 19B the overarching criterion in assessing the appropriateness of the proposed unit is the need for the unit to be compatible with effective management, and account must be taken of the other matters listed in the provision only "so far as they do not conflict with that need". Further, arguments about the other listed matters are in practice likely to be highly relevant to the need for the proposed unit to be compatible with effective management. This is true of matters such as the views of the parties, the desirability of avoiding small fragmented bargaining units within the undertaking, the characteristics of workers falling within the proposed bargaining unit and of other employees of the employer whom the CAC considers relevant, and the location of workers.
34. Applying the above to the present case, the Panel must decide, in accordance with paragraph 19(2), whether the Union's proposed bargaining unit is appropriate, bearing in mind that paragraph 2(3) of the Schedule states that references to the "proposed bargaining unit" are to the bargaining unit proposed in a union's request for recognition. The bargaining unit proposed by the Union in the request for recognition was described as "Pre-Press, Printers and Assistants, Bag Machine Room, Ink Store, Maintenance/Engineers, Warehouse and Delivery Drivers". Paragraph 19B(3)(a) requires the Panel to take into account the views of Polyprint and the Union in deciding whether the proposed bargaining unit is appropriate. Further, by virtue of paragraph 19B(4), in taking Polyprint's views into account for the purpose of deciding whether the proposed bargaining unit is appropriate, the Panel must take into account any view that Polyprint has about any other bargaining unit that it considers would be appropriate.
35. In addition, the Panel must have regard to paragraph 171 of the Schedule. This 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."
36. The Union's first written submission contended that, in the light of the Court of Appeal's judgment in the Kwik-Fit case, the test to be applied was whether the Union's proposed bargaining unit was an appropriate unit rather than the most or more appropriate unit. Polyprint's second written submission, which was produced at the hearing, did not address this question directly but commented, quite correctly, that the statutory provisions were modified by the Employment Relations Act 2004 following the Court of Appeal's judgment in Kwik-Fit.
37. In the Panel's view, the amended statutory provisions were by way of a clarification and there is no conflict between them and the Court of Appeal's reasoning. Specifically, the amended statutory provisions do not affect the Court of Appeal's reasoned statements of principle concerning the application of paragraph 19 of the Schedule, including in particular the following passage :
As he did in the present case, the employer may well raise objections to the appropriateness of the union's proposed bargaining unit by urging that only another and different unit could be appropriate. The CAC cannot simply ignore such objections. It has to determine whether the objections, and the availability of alternatives that may form an important part of the argument in support of those objections, render inappropriate for bargaining purposes the unit proposed by the union. What, however, the CAC does not have to do is to conduct a search for the most appropriate unit from amongst those that are proposed to it.
The Panel's conclusion
38. The Panel has carefully considered the parties' written evidence and submissions and the oral evidence and argument advanced at the hearing. The Panel's decision has been reached having taken full account of all that it has read and heard.
39. The Panel's reasoning is as follows:
(1) Polyprint seeks to have a "one team" approach. This is apparent in the way that it has applied the same percentage pay increase to all employees and in the fact that many of its terms and conditions of employment are common to all employees, notably, holidays, grievance and disciplinary procedures, pension provision, and the other items listed at paragraph 14(6) above. However, there are also differences in the terms and conditions and employment practices. Those in the Union's proposed bargaining unit are required to clock-on and in practice they work the large majority of paid overtime. Those outside this bargaining unit do not clock-on and do not typically work overtime. 27 out of the 31 in the Union's proposed bargaining unit work shifts and are paid a shift premium, whereas shifts and a shift premium do not apply to those outside this bargaining unit. Those within the Union's proposed bargaining unit are covered by different sick pay provisions compared with those outside, although the Panel accepts that Polyprint wishes to address the possible harmonisation of this term.
(2) The "one team" approach is also apparent in the flexible deployment of labour. Thus, the Works Manager, a member of the SMT, sometimes operates printing machinery, and the Warehouse Manager, also a member of the SMT, involves himself in fork lift work as the need arises. In practice, however, there are limits to the degree of flexibility. It is certainly not the norm for those within the Union's proposed bargaining unit to do office-based work, whether administrative or managerial.
(3) The workers in the Union's proposed unit are engaged in manual work. With only two significant exceptions - the Works Manager and the Warehouse Manager to the extent that they do manual work - 14 of the 16 workers outside the Union's proposed bargaining unit do not engage in manual work. Subject to that qualification, it is accurate to describe the workers in the Union's proposed bargaining unit as manual and those outside this unit as non-manual. This is a widely accepted industrial relations distinction.
(4) The Panel notes that the majority of the workers in the Union's proposed bargaining unit are based at Mackintosh Road, a few in the Bag Room at Earl Road, and some - the Engineers and the Driver - operate between both locations, although the two locations are physically close together and closely coordinated in terms of work organisation.
(5) The Panel also notes that an Employee Forum has been established since the Union put in its claim for recognition. The Panel does not regard employee consultation through such a Forum and collective bargaining as mutually exclusive.
(6) The Panel notes further that the management reporting lines for those within the Union's proposed bargaining unit differ from those of the administrative and managerial staff outside this bargaining unit.
(7) In purely numerical terms, a bargaining unit of 31 manuals out of 47 employees is not self-evidently small or fragmented. The more fundamental question is whether a bargaining unit of 31 manual employees out of a total of 47 would or would not be compatible with effective management. Clearly, the need to negotiate with the representatives of such a group over pay, hours, and holidays would pose a challenge to Polyprint. However, in such negotiations if they occurred there would be no logical reason why the management side would not continue to have regard to Polyprint's accounts for the previous year and a projection of finances for the year ahead, which the Panel was told was the basis of its present wage policy. In short, collective bargaining would not necessitate Polyprint abandoning economic discipline and such other considerations as it regarded as relevant, including flexibility. While collective bargaining based on the Union's proposed bargaining unit would of course have to be managed by Polyprint, the Panel is not persuaded that this would be incompatible with effective management.
(8) The Panel's conclusion is not undermined by either of the two alternative bargaining units advanced by Polyprint. From the employer's perspective its alternatives would no doubt be preferable and more sensible than the Union's proposed bargaining unit. However, notwithstanding Polyprint's view, the Union's proposed bargaining unit is, in the Panel's view, an appropriate unit satisfying the criteria contained in paragraph 19 of the Schedule. The Panel also considers that this overall conclusion is consistent with the provisions of paragraph 171 of the Schedule.
(9) A CAC Panel determines each case on its own facts and merits and is not bound by other CAC decisions. The Kettle Foods case is in any event distinguishable from the present case in respect of the extent of the harmonisation of terms and conditions of employment and the introduction by Kettle Foods of an annualised hours system. While the Panel acknowledges that Polyprint's "one team" approach is more than merely aspirational, it would be true to say that it has not been applied as systematically as the "one company" ethos of Kettle Foods.
40. In the light of these considerations, the Panel concludes that the Union's proposed bargaining unit is appropriate.
41. The appropriate bargaining unit comprises Pre-Press, Printers and Assistants, Bag Machine Room, Ink Store, Maintenance/Engineers, Warehouse and Delivery Drivers.
Professor Roy Lewis (Chairman)
Mr Peter Martin
Professor Sue Corby
3 November 2011
Those who attended the hearing:
For the Union
Mr Mark Walker Regional Officer
Mr Neil Johnson Solicitor, Thompsons
Mr Jonathan Neville Managing Director
Mrs Catherine Clayton Finance Director
Mr David Morgan Solicitor, Burness LLP
 R (Kwik-Fit (GB) Ltd) v CAC  ICR 1212;  IRLR 395.
 See note 1.
  ICR 1212, at 1216, para 11, per Buxton LJ;  IRLR 395, at 397.