30 May 2008
CENTRAL ARBITRATION COMMITTEE
TRADE
SCHEDULE A1 - COLLECTIVE BARGAINING:
RECOGNITION
DETERMINATION OF THE BARGAINING UNIT
The Parties:
Unite the
and
Kamns Paper Mill Ltd
Introduction
1. Unite
the Union (the Union) submitted an application dated 9 January 2008 to the CAC
that it should be recognised for collective bargaining by Kamns Paper Mill Ltd
(the Employer) for a bargaining unit comprising “All Permanent Production
Workers up to including Team Leaders” based at the Employer’s premises in
Waterside Road, Hamilton Park Industrial Estate, Leicester. The CAC gave both parties notice of receipt
of the application on
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 Frank Burchill, Chairman of the Panel, and, as Members, Mr Paul
Gates and Mrs Jackie Patel. The Case
Manager appointed to support the Panel was Nigel Cookson.
3. It
was clear from the submissions put before the Panel during the acceptance
period that there was a degree of confusion between the parties as to the
composition of the proposed bargaining unit.
In order to clarify the scope of the unit the Panel called the parties
to an informal meeting with the Chairman of the Panel and the Case Manager
attending on behalf of the CAC. The
meeting was held in
“All Permanent Production
Workers up to and including Supervisors”.
For the avoidance of doubt this bargaining unit comprises the following
job titles - Day FLT Driver, FLT Driver, Grinder, Supervisor, Machine Operator
PM1, Machine Operator PM2, Stock Prep Operator, Machine Operator (celli),
Machine Assistant (celli), Electrician, Fitter, Dyer Operator PM1 and Dryer
Operator PM2.
4. Shortly
after the meeting the Employer, in a letter dated 26 March 2008, informed the
CAC that it had identified an additional 12 electricians and fitters that fell
within the terms of the bargaining unit but which it had failed to mention at
the meeting on 13 March 2008.
5. By
a decision dated
Background
6. Kamns Ltd was
part of LPC Group (the Group) which manufactured paper products including
toilet paper, facial tissue paper and kitchen roll, selling those products to
retail supermarkets, hospitals, hotels, etc.
The Group was originally set up in 1980 as a paper converting
operation. Prior to 1998 the large reels
of paper (parent reels) were purchased from external sources to be converted
into the final product. However, in 1998
a paper mill (Kamns) was established on the
Summary of the submission made by the
7. The
8. The
proposed bargaining unit covered 60 workers which equated to approximately 60%
of the Kamns’ workforce. It could not be
considered a small fragmented bargaining unit as it accounted for the majority
of the workers employed by Kamns. There
were no existing local or national agreements for the purpose of collective
bargaining for this group of workers.
9. The
10. When
Kamns first opened it had its own management structure which, prior to the
11. The
proposed bargaining unit met the criteria of effective management and, as far
as the
Summary of the submission made by the Employer
12. The only
issue before the Panel was the appropriateness of the bargaining unit and the
Employer would agree entirely with the
13. There were
two stages to the manufacturing process undertaken by the Group. The first stage was the manufacture, at the
paper mill, of large reels of paper whilst the second stage, under the general
control of LPC (UK), was the conversion of these reels into the packaged end
product (the converting process) at three converting sites in Leicestershire, one
on the same site as the paper mill at Hamilton, and others at Rothley and New
Star Road. There were approximately 90
workers currently employed by Kamns and approximately 600 employed by LPC (UK)
and the Employer explained how it was hard to differentiate between the workers
employed by the two companies.
14. The
bargaining unit proposed by the
15. Prior to the
reorganisation at the end of 2007, both Kamns and LPC (UK) employed
electricians and fitters. Since that
time all LPC Group electricians and fitters on the
16. The workers did
not think of themselves as exclusively employees of Kamns or exclusively
employees of LPC (UK) as they mixed and matched according to needs. On the
17. The induction
processes were common to both groups of workers irrespective of the identity of
the employer. Advertisements for new
staff were produced under the LPC banner and a new starter, technically
employed by Kamns, would go through exactly the same induction process as a new
starter employed by LPC (UK) and would be trained by the same trainer.
18. There was one
central management resource for all of the operations of the Group, which
incorporated finance, HR, IT, etc and this was based at the
19. Fringe
benefits such as the use of a mobile phone or life assurance were common
between the companies. The Employer
referred to a mobile phone request form which was on LPC headed paper and
referred to Kamns as the relevant business unit. It was, the Employer argued, in reality a
business unit and any bargaining unit should reflect that reality.
20. There
was a joint management structure across both companies. For example, the
21. In
addition the Group’s marketing literature did not distinguish between the two
limited companies, examples of which were included in the Employer’s bundle of
exhibits. The Employer also explained
that at the time the paper mill was set up Kamns was a dormant company within
the Group. It was set up as a separate
limited company for financing purposes and on a day to day basis the businesses
were run together. Kamns had only one
customer, which was LPC (UK). The
Employer also pointed out the common ownership of the Group in that it was
owned by six members of a single family.
22. Looking
at that background and Derry Print
it was clear that the bargaining unit should be all permanent workers up to and
including team leaders at LPC (UK) and Kamns.
Only a bargaining unit comprising all production workers employed in the
paper mill and in the converting process across the three sites in Hamilton,
Rothley and
23. In reply to
questioning, the Employer confirmed that pensions were the same across the Group
and that hours of work were generally the same although differed across shift
patterns. Holidays were consistent if
workers were on the same shifts and the number of holidays per year was set at Group
level. The sick pay scheme was the same
across the Group within the
24. In closing
the Employer submitted that the Panel had to decide whether the bargaining unit
was compatible with effective management.
It was not relevant that there may be differences between the workers
whom the Employer says should be in the appropriate bargaining unit. ‘Market forces’ was a grand way of saying
different people were taken on at different times and paid according to
experience. This again was not
relevant. What was relevant was whether
there would be left a small fragmented bargaining unit, and the Employer would
say that this would be the case. In
respect of the characteristics of the workers, the Employer submitted that
there was an inherent dependency and integration between the two processes and
workers on the same site were not even differentiated by the colour of their
overalls. It was the Employer’s case
that the workers were interchangeable and this made this case indistinguishable
from
The
25. In
additional submissions received after the hearing the
26. Both
the Derry Print Ltd and John Brown applications would have been invalid under
paragraph 7(1)(a) of the Schedule as each employed less than the minimum of 21
workers. Therefore the union applied for
both cases to be heard together as they were associated companies with the same
owner. The CAC Panel decided that they
were associated employers and the applications, although separate, were heard
together for the purpose of the test in paragraph 7(1)(a) but separately for
the remainder of the tests bring applied. Both applications were accepted whereas the
application in respect of Kamns was valid and admissible as a stand alone
employer because it employed more than 21 workers as required by statute.
27. In Derry Print the association was much more than two companies owned
by one individual. The two companies
were run as a single entity and whilst the machines were owned by the separate
companies they were in the same workshop and operated by workers who were
employed by either of the companies, not necessarily by the company that owned
the machines. The
28. Finally,
it was not unusual for parent companies to produce Group wide handbooks and
polices but it was more unusual for a subsidiary company to directly employ
workers who worked for the parent company, as now appeared to be the case with
the 12 electricians and fitters.
The Employer’s further
submissions
29. In response to the Union’s further
written submissions the Employer explained that the reason it relied
on Derry Print was not minutely to compare the
precise factual detail of the two cases, but rather to apply the
principles. It was no ground of
distinction that there was no “dominant company” in Derry Print, the only relevant questions were whether the
workforces were “inextricably combined” as the CAC expressed in paragraph 34 of
Derry Print and whether there was a
“reality of unity” (paragraph 35).
30. The
Employer provided a floorplan of the relevant part of the
31. A further illustration of the
interconnectedness of the companies was that Kamns was not organised to have any other
customer than LPC (UK) because it had no sales or marketing function and no
separate branding. The products Kamns made were commodities – no one
would choose to make parent reels in
32. The
33. The
34. The bargaining unit proposed by the
Considerations
35. 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 he
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 careful consideration of the views of both parties as set
out in their written submissions and delivered orally at the hearing.
36. The
37. The
a) The proposed bargaining unit is a
clearly defined group of workers within the company. The production workers were all on the same
terms and conditions of employment and these differed to the terms and
conditions of the managers and office workers who will have a role separate
from production.
b) It was not a small or fragmented
bargaining unit with some 60 workers within its ranks which amounted to some
60% of the total workforce at Kamns.
c) Prior to the changes in 2007 the paper mill had its own
management structure.
d) The workers in the proposed bargaining
unit saw themselves as being separate from, and more highly skilled than, the LPC
(UK) workers employed on the same site.
e) There were no national or local
agreements for the purposes of collective bargaining covering the workers in
the proposed bargaining unit.
Taking into account all the relevant
factors this was, so the
38. On
the other hand we heard from the Employer that the companies are so
inextricably linked that they should be considered to be one employer. The Employer took the Panel to Derry Print in which the Panel observed
that ‘In an exceptional case . . . it
might be correct to regard two or more employers as a single employer. It is permissible to “lift the corporate
veil” and view two companies as one in reality if there is overwhelming
evidence that, in all relevant aspects, they are actually one’. Indeed, the Employer, in the course of its
opening, said that if this was a case involving only the one employer the
39. We
heard argument and counter argument as to whether this case was on all fours
with
40. The
Employer submitted that in this instance, having lifted the ‘corporate veil’,
the appropriate bargaining unit compatible with effective management was one
that encompassed workers from both Kamns and LPC (UK). It took the Panel through the processes
undertaken by both companies, highlighting what it viewed as the high level of
interchangeability between the workers employed at the
41. It
argued that in reality there was no distinction between the two companies and
whether a worker was employed by LPC (UK) Ltd or Kamns was purely a technical matter. It took the Panel to employment documents;
contracts of employment, job descriptions etc to show how both companies could
be referred to within the same document.
We heard about the induction processes, the central management
resources, the fringe benefits, the marketing literature and the joint
management structure all of which the Employer claimed supported its assertion
that the two companies were one.
42. In
considering the submissions made to the Panel, both oral and in writing, we
would make the observation that we are not bound by previous cases of the CAC such
as Derry Print. However, having made this point the Panel is,
on this occasion, prepared to accept the principles in that case as the
appropriate standard for us to employ in this matter.
43. In
Derry Print the Panel considered the
circumstances of the case to be exceptional and that it was a combination of
such circumstances that enabled it to reach its decision that it was possible
to regard two or more companies as a single employer. After considering all the factors we are not
persuaded that such exceptional circumstances prevail in the case before us and
it is therefore our conclusion that the cases are distinguishable.
44. The
Panel in Derry Print took the view
that it would be impracticable to conduct negotiations for two parts of an
inextricably combined workforce whereas we can see no such difficulty arising
in this matter. The production workers
employed by Kamns are a clear and cohesive group of workers whose primary task
is to manufacture the parent reels. They
are distinct from that group of workers employed under LPC (UK) contracts responsible
for converting these reels into the end product. Whilst the Panel accepts that the overarching
terms and conditions apply across both companies this is certainly not
exceptional. The same would apply in the
vast majority of organisations with group structures. It is not uncommon for there to be a standard
form of contract shared between those companies forming a group and the same
would apply to such as induction processes, staff handbooks and common benefits
etc. Neither is it uncommon to find that
functions such as HR, training and finance are centralised across a group. Rather, economies of size make this more
common than not.
45. The
Employer set great store by the interchangeability of the workers employed by
Kamns and LPC (UK). However, the Panel remains
unconvinced that there is the degree of interchangeability between these two
groups of workers as asserted by the Employer and certainly far removed from
the degree that the Panel found in
46. Having
regard to the factual matrix as detailed by the Employer, we find that it is
not a unified workforce which only a legal technicality assigns to different
companies but rather two companies within a group with different and distinct
areas of operation. The Panel therefore
rejects the Employer’s submissions on the single employer point.
47. Having
given the matter great thought the Panel finds that the
48. This
bargaining unit comprises workers with a commonality of interest in that
collectively they are responsible for the manufacture of the paper reels on the
49. The appropriate bargaining unit is that proposed by the
Professor Frank Burchill (Chairman)
Mr Paul Gates
Mrs Jackie Patel
30 May 2008
Appendix
Names of those who attended the
hearing:
For the
Peter Ellis - National Officer
Andrea
Przystupa ‑ Senior
Researcher
Dave Roome ‑ Local Officer
Guy
Langston ‑ Organiser
For the Employer
Mr John Bowers QC - Counsel
Mr John Danton - Chief Executive
Mr David Lynn - Site
Manager
Mr Chris Finlay - Solicitor
Mr John Stobart - Solicitor
Mr Jay Vaghani - Trainee
Solicitor