Case Number: TUR1/624/(2008)
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
Knightsbridge
Guarding Limited
Introduction
1. Unite the Union (the Union) submitted
an application to the CAC on 28 February 2008 that it should be recognised for
collective bargaining purposes by Knightsbridge Guarding Limited (the Employer)
for a bargaining unit comprising “all hourly paid employees up to and including
the level of shift manager employed by Knightsbridge Guarding Limited on the
Lehman Brothers contract at 25 Bank Street, London”. 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, Panel Chairman, and, as
Members, Mr George Getlevog and Mr Michael Leahy. The Case Manager appointed to support the
Panel was Sarah Kendall.
2. By a
decision dated 8 April 2008, the Panel accepted the Union’s application. The parties then entered a period of
negotiation, with the assistance of Acas, 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 was held on 19 May 2008 and the names of those who attended the hearing
are appended to this decision. For the
purposes of this decision, Professor Paul Davies was appointed to replace
Professor Roy Lewis as Panel Chairman.
Summary of the
3. The Union
explained that it wished to amend its proposed bargaining unit in two
respects. Firstly, it should include
workers at both the Employer’s Broadgate and 25 Bank Street sites, the two
sites comprising the Lehman Bothers’ contract.
Secondly, the Company had changed the job title of various shift
managers to control room operatives and had converted them from hourly to
monthly paid workers. That effectively
excluded them from the Union’s proposed bargaining unit. As a consequence the Union contended that its
bargaining unit, as proposed in the application, was no longer an appropriate
bargaining unit and that that the appropriate bargaining unit should be “all employees up to and including the
level of control room operative employed by Knightsbridge Guarding Limited on
the Lehman Brothers’ contract at 25 Bank Street and Broadgate, London.”
4. The
5. The Union stated that collective
bargaining in the industry was not common but cited, as an example of
collective bargaining within the industry, the bargaining arrangement at the
Employer’s Goldman Sachs contract, which applied to the five sites within that
contract. By way of a comparison with
the situation at Lehman Brothers, the Employer had reached a voluntary agreement
with the union concerned after it had made an application for statutory
recognition to the CAC. The
6. The Union believed that a bargaining unit of
88 members was neither small nor fragmented and was a coherent unit.
7. All staff were
given standard contracts of employment.
However, rates of pay at each of the sites were determined by the client
of the contract at each site. The Union
quoted paragraphs from a standard contract of employment which stated that
staff would receive the rate of pay applicable to the site on which they were
providing a security service. If staff
were moved from one site to another, be it a permanent move or temporarily to
cover absence, individuals could receive the higher or lower hourly rate
applicable at the site, although it would never be less than the minimum
wage.
8. The Union disputed the Employer’s
argument that Knightsbridge Guarding operated a flexible and interchangeable
workforce across its sites. Although the
Employer had contractual provisions entitling it to transfer workers to different
sites, in practice that was not the case
and was only used in cases were the client had made a request or an individual
needed to be moved following a disciplinary issue. The Union stated that its proposed bargaining
unit was a stable workforce and that, if the Employer lost the Lehman Brothers’
contract, the workforce would transfer under the TUPE regulations.
9. The Employer had contended that the Lehman
Brothers’ contract was not a ‘stand alone’ contract in the sense that it could
constitute an obvious bargaining unit.
The Union explained that it was not seeking to argue that its proposed
bargaining unit was ‘stand alone’ but that it was distinct and managed
separately. For example, there was
on-site management, in particular a senior contracts manager, a training and
development manager and an operations manager.
In addition, the Union stated that there had been recent appointments of
a shift operations manager, an access control administrator, a control room
manager and an RSO officer.
10. Kieron Pyne, a Full-Time Officer of
Unite the Union, provided a witness statement.
He stated that he had worked on the Goldman Sachs contract from 2000 to
2007, initially employed by Reliance but transferred to Knightsbridge Guarding
Limited by way of a TUPE transfer in 2004.
He was initially employed as a security officer advancing to supervisor
and later loading bay supervisor. He
provided evidence into the background of the Union’s application regarding
Goldman Sachs but had not worked on the Lehman Brothers’ contract. His position was that there were clear
similarities between the Goldman Sachs and Lehman Brothers’ contracts. Although some terms and conditions of
employment appeared to be determined centrally, the Goldman Sachs contract was
separately managed and, in practice, workers tended to remain with the one
contract and were not moved between contracts.
11. Ghislain Mudlamootoo, an employee working on
the Lehman Brothers’, also provided a witness statement. He also stated that, on a day to day basis,
the on-site management worked autonomously and independently from central
management in Knightsbridge Guarding and that workers rarely moved between
contracts.
12. In conclusion, the Union asked the
Panel to find that its revised proposal was an appropriate bargaining unit.
Summary of the Employer’s Submissions
13. The Employer explained that it
supplied manned security guarding for buildings predominantly within Central
London, mainly in the City and Docklands.
Its clients were mainly elite financial institutions, amounting to 35
contracts covering approximately 119 sites, and it currently employed just under 900 employees throughout its operations.
14. The Employer submitted that both the
Union’s proposed bargaining unit and its subsequently amended bargaining unit
were inappropriate. In its view, an
appropriate bargaining unit would be one that covered the whole company at its
country-wide but mainly Central London locations. The centralised nature of the management
structure was key to its case.
15. The Employer stated that the general
operational management of the Lehman Brothers’ contract was the responsibility
of the senior accounts manager who was responsible for both sites; he was
located at Bank Street, or at Head Office where he attended frequent
operational meetings. The senior
accounts managers would feed general management practices into central
management meetings. Regular meetings were held, on a weekly, monthly and six
weekly basis, which dealt with general management and operations at various
levels, from local discussions through to Senior level at the Employer’s Head
Office and then to Board level.
16. Julie Gordon, the Operations and
Support Services Director provided a written statement and oral testimony at
the hearing:
17. She stated that from an operational
management point of view all contracts were approached in the same way. A senior account manager would be responsible
for the day to day running of their contract but would not necessarily be
permanently located at the site in question.
They would attend weekly operations meetings held at the Employer’s Head
Office where any issues would be discussed.
Those also in attendance would be the Operations and Support Services
Director, the Operations and Communications Senior Manager, who would report on
issues such as manning and conduct or those pertaining to service. Issues such as recruitment and pre-employment
screening would also be discussed. Also
present at the meeting would be Human Resources and Health and Safety
representatives who would report on site related issues. The Employer would also hold six weekly
meetings which were held at a more junior level of management from the contract
i.e. below the level of Account Manager.
These meetings would provide the opportunity to discuss the effective
operation of the business as a whole from an operational view and to plan for
the future.
18. Ms Gordon explained that there was
also a monthly senior management meeting with the Board of Directors, Senior
Account Managers and all other Heads of Departments.
19. Ms Gordon explained that the Employer
utilised the ‘Logo Soft’ system which was held on a server at the Central
Office. This system generated pay and
received local operations data which recorded shifts worked on a monthly basis,
overtime and holiday. The information
was collected at local level and exported to the Central Office. The management of this system fell to the IT
manager who reported directly to the Finance Director based at the Employer’s
Head Office.
20. Ms Gordon stated that the approach to
training and health and safety was to some extent a centralised one but did
submit that training for the Lehman Brothers’ contract involved more than the
general induction training which was mandatory for all security officers;
unless individuals had specific site training they were not allowed to work on
that contract. The Employer, when
requiring emergency cover, relied on the Operations Communications Centre Pool,
a group of 43 workers who were able to cover for absence and ensured the Employer
met the terms of the 35 contracts it held.
21. The Employer stated that it had
trained a number of these workers at their own expense so that they could be
deployed in key roles. However, none of
the 43 workers had been trained to work across the 35 contracts and some were
not trained until the opportunity arose to work on a specific contract. Not all of these workers were able to work on
the Lehman Brothers’ site as they had not received the required site
training. A list of those who were
trained was updated regularly and provided to the client contract.
22. The Employer’s payroll was managed
centrally by the Payroll Manager. Ms
Gordon reported that everyone was paid on the 15th of every month
and that any queries relating to the payroll were dealt with the Payroll
Manager together with Accounts Managers.
When new contracts were awarded there was a harmonisation of payroll
procedures. Orders and purchases in
respect of a new contract were dealt with by the Finance Department.
23. The Employer summarised Ms Gordon’s
evidence by stating that it supported its argument that most issues were
handled on a Company-wide basis and that discussions on issues affecting staff
were mostly likely to take place within a national structure. The Employer also drew distinctions between
the Lehman Brothers’ contract and that at Goldman Sachs where union recognition
had been granted. The key difference was
that many functions, such as HR and finance, had been devolved to site
level. That was not the case with the
Lehman Brothers’ contract.
24. The Employer accordingly asked the
Panel to support its Company-wide bargaining unit.
Considerations
25. In its application the Union defined
its proposed bargaining unit as “all hourly paid employees up to and including
the level of shift manager employed by Knightsbridge Guarding Limited on the
Lehman Brothers contract at 25 Bank Street, London.” In accordance with the
guidance given to us by the Court of Appeal in R (Kwik-Fit (GB) Ltd) v
Central Arbitration Committee [2002] ICR 1212, CA our first task is
to determine whether this constitutes an appropriate bargaining unit. The
Employer has never accepted the appropriateness of this definition. The unusual
feature of this case is that by the time of this hearing the Union no longer
regarded it as appropriate either. Nevertheless, we do not read either the
statute (see para. 19(2) of the Schedule) or the Kwik-Fit decision as
absolving us from the task of forming a view on the appropriateness of the
Union’s proposed bargaining unit, even though the Union no longer supports it.
26. The Union’s now preferred bargaining
unit differs from the proposed unit in two ways. First, the words ‘hourly paid’
have been removed from the definition and, associated with that change,
“control room operative” has been substituted for “shift manager”. This is a
reflection of the fact that, after the initiation of this application, the
Employer granted salaried status to the more senior of the formerly hourly paid
employees and changed their job titles. The Union by this change does not seek
to bring a wider range of functions within the bargaining unit, but only to
prevent the exclusion of those within the proposed unit as a result of a change
initiated by the Employer. The Employer did not seek to advance an argument
that the inclusion of monthly paid employees or of workers up to and including
control room operatives within the bargaining unit was inappropriate. We
conclude that the proposed bargaining unit is inappropriate in its reference to
“hourly paid employees” and to “shift managers” in the light of the subsequent
changes made by the Employer to the status of the higher level employees.
27. The second difference between the
proposed bargaining unit and that now preferred by the Union is the inclusion
within it of the Broadgate site of Lehman Brothers. The Union explained its
original omission of this site on the grounds that it had not originally
understood the Broadgate site to be included within the contract between Lehman
Brothers and the Employer. Neither party advanced any argument for treating the
two Lehman Brothers sites differently. We understand them both to be
administered under the same contract and we think that the exclusion of the
Broadgate site does indeed make the proposed bargaining unit inappropriate.
28. Having reached the conclusion that
the bargaining unit proposed by the Union is indeed inappropriate, we have to
determine “a bargaining unit which is appropriate”, as paragraph 19(3)
requires. The use of the indefinite article suggests that we are not required
to identify the most appropriate bargaining unit but only “an” appropriate
bargaining unit. However, having found the Union’s proposed unit to be
inappropriate, the statute, it seems to us, does not require us to give the
Union’s now favoured bargaining unit any priority in this process. In any
event, we proceeded by giving equal weight to the Employer’s and the Union’s
proposals for an appropriate bargaining unit. We also kept in mind that an
appropriate bargaining unit might be one proposed by neither Employer or Union,
though in fact no ‘middle way’ emerged in the course of our consideration of
this case.
29. We have set out above the bargaining
unit now favoured by the Union. As we have indicated, the Employer did not
challenge the appropriateness of the two changes suggested by the Union to its
proposed unit, and we conclude that, if a contract-based bargaining unit is
appropriate, it should incorporate the two changes suggested by the Union.
However, the main question raised in the parties’
submissions and in oral argument was whether a contract-based bargaining unit
is in fact appropriate. The Employer for its part has maintained throughout the
case that the appropriate bargaining unit should cover, as it was put in its
submissions for the hearing, “the whole company, at its nationwide but mainly
Central London locations” (para 3). By contrast, the bargaining unit now
proposed by the Union would contain about 10 per cent. of
the Employer’s overall workforce. The Employer maintained that only a
company-wide bargaining unit would be compatible with effective management and
that the Union’s proposed unit would lead to fragmented bargaining units within
the company. As Mr Mansfield for the
Employer put it at the hearing, these arguments were in this case two sides of
the same coin or, as he also said, the ‘positive’ and ‘negative’ ways of
stating the same proposition.
30. In order to evaluate the rival
contentions of the parties it is necessary to understand a little of the
structure of the Employer’s business. The Employer bids for guarding contracts,
mainly in Central London and mainly for clients with either financial services
or property businesses. It is therefore involved in a continuous process of
taking on new workforces when it wins contracts and losing them when it fails
to retain a contract. In many cases, employers who oppose union recognition for
a section of the workforce maintain common terms and conditions of employment
for their employees; and fear a significant loss of flexibility if the terms
and conditions of some workers begin the depart from those of the remainder as
a result of union recognition in respect of a part of the workforce.
31. In the case of Knightsbridge
Guarding, however, although many terms and conditions of employment are common
across the workforce, in the core areas of pay, hours and holidays, with which
statutory recognition is concerned, there is acknowledged to be variation
across the workforce according to the particular guarding contract to which
they are assigned. Mr Szczesnowicz, who gave helpful and patient oral evidence
at the hearing, explained, for example, that wage rates tended to vary between
financial services and property company guarding contracts, with the latter
displaying hourly rates of pay as much as £1.50 less than for financial services
companies. He explained the circumstances which might lead financial services
clients to wish to pay more for higher quality employees than property clients.
However, Mr Szczesnowicz also stated that, among the financial services
clients, wage rates might vary significantly, and quoted a figure of £1 per
hour between the highest and the lowest payers. This variation was partly due
to the operation of the Transfer of Undertakings Regulations but was also in
part explicable by clients’ choices as to quality of the employees they wished
to see deployed on their contract.
32. Mr Szczesnowicz’s oral evidence was supported by the
Witness Statement and oral evidence of Ms Julie Gordon, the Operations and
Support Services Director, whose evidence was clear and to the point. As she
said in her witness statement, “hours of work will be determined by a
particular client” (para 17); “With regards to pay there is also a company
minimum of £7.92 per hour. However, rates vary from client to client and site
to site.” (para 18); and “Issues concerning pay, hours
and holidays are very much client driven.” (para. 23). The picture which
emerges from the evidence of these two senior managers, therefore, is one of
significant variation in the core terms and conditions of employment. Even if
certain trends can be ascertained across the industry, such as a move to a
48-hour week and away from the traditional 56-hour pattern, the implementation
of this reform of working time is not proceeding at the same pace across all
the contracts which the Employer holds.
33. Given this variation in core terms
and conditions of employment, the Employer clearly faces an issue when seeking
to move employees from one contract to another. There was in fact a dispute
between the parties, which we are unable to resolve, as to the level of
movement from contract to contract (the Employer asserting it was significant
and the Union that it was infrequent) but it is clear from the evidence laid
before us that the Employer has developed a contractual mechanism for handling
the issue. Thus, a specimen Knightsbridge Guarding contract, of which we were
give a copy, provides for contractual mobility (“You are engaged on the
understanding that you may be required to work . . . at any place nominated by
the Company within the Company’s area of operation.” (Clause 4)). At the same
time it provides for hours of work, rates of pay and even holidays to vary
according to the place of work at any particular time. (“Your hours of work
will vary according to the site(s) to which you are assigned.” (Clause 4) “Your
contracted rate of pay will be in line with the National Minimum Wage. However,
you will receive the rate applicable to the site on which you provide security
services.” (Clause 5). “If you transfer to another site/contract your annual
leave entitlement . . . may increase or decrease according
to the Terms and Conditions of Employment applicable to the new site/contract.”
(Clause 5)) There was some discussion at the hearing about the pool of some 40
workers in the “float team”, ie those workers who are employed specifically to
provide short-term cover across a number of contracts, as the need arises. The
evidence here, as well, was that they were paid a standard rate whilst “in the
pool” but would receive the rate applicable to the particular contract or site
when providing cover services at a particular location.
34. Taking the evidence as a whole,
therefore, it appears that there is significant variation in pay, hours and
holidays across contracts and, to some extent, sites and that the Employer has
adapted its contracts so as to cope with these variations so as to permit, at
least in the Employer’s view, significant flexibility in the allocation of
labour across contracts. The question which then arises is whether recognition
of a union in respect of workers employed on a particular contract or contracts
would add significantly to the Employer’s burden in coping with an already
non-uniform situation. In his careful evidence
Mr Szczesnowicz stated that his worry was that contract-by-contract
collective bargaining would increase his managerial costs because he would have
to devote managerial resources to an annual tripartite discussion (Employer,
Union and Client) potentially on each of the company’s at present 35 contracts to
reach agreement on pay, hours and holidays. The Employer’s preferred a system
was one under which the Union would have an input into the development by the
Employer of its annual “national strategy” on the changes to pay, hours and
holidays which it was aiming to achieve that year in its negotiations with its
clients.
35. We have two difficulties with this
argument. The first is that it is not clear to us that an addition of cost
alone leads to incompatibility with effective management. No doubt, in some
cases a very substantial increase in costs as a result of a particular
configuration of bargaining unit might be regarded as incompatible with
effective management. However, in this case we do not believe that the
additional costs, which were not in any way quantified for us in either the
written or oral evidence, to be of this magnitude. Nor do we believe that the
skills needed to handle collective bargaining are unavailable in the market, so
that it would be impossible for the Employer to acquire whatever reinforcement
it feels it would need for its Human Resource function to deal with
contract-based bargaining.
36. Second, as the written evidence of Ms
Gordon shows, the process of setting pay, hours and holidays in outsourced
activities such as guarding results at present from an interaction between the
provider of the contracted out services (the employer of the workers) and the
client (whose commercial contract with the contractor determines rather
precisely the shape of the employment contract in these core areas). To this
extent, the Employer is simply not in a position to set company-wide levels of
pay, hours and holidays. What can be achieved in these areas requires
client-by-client negotiation and cannot be determined by employer fiat. Since
the Employer is necessarily committed to this second stage of client-by-client
negotiation (after the setting of the “national strategy”), the creation of a
contract-based bargaining unit would not operate so as to create this second
stage but rather to involve the union in it. We are further of the view that
the Employer’s proposal, which removes the Union from direct, if informal,
involvement in the contract-by-contract negotiations between employer and
client which will inevitably take place after the “national strategy” has been
set, is a less effective implementation of the notion of “collective
bargaining” than that put forward by the Union.
37. Finally, we have looked at the issue
from, as it was put, the “negative” side, ie from the issue of fragmented
bargaining units. Clearly, the Union’s approach could eventually lead to a
situation in which each contract is regarded as a separate bargaining unit
(though on the basis of voluntary agreement the Employer would be in a position
to respond to such a development). We understand an important part of the test
implicit in para 19B(3)(c) to be that the bargaining
unit, if containing only a part of the total workforce, should be
self-contained and with identifiable boundaries. Our description of the
Employer’s business has shown that differentiation of the workforce according
to the contract to which the worker is assigned to be a strong feature of the
Employer’s business organisation and so we think that the Union’s now proposed
bargaining unit maps well onto the Employer’s business structure and does not
create a risk of uncertainty as to where its boundaries are or where the
boundaries of similarly based bargaining units would be.
38. For the sake of completeness we
should make it clear that we accept that the Employer provides a range of
employment policies centrally and thus uniformly across contracts. We see no
reason why under statutory recognition based on a particular contract, such
policies should not continue to be developed centrally, though, as now, they
would have to be delivered at an individual level. We have in mind here in
particular health and safety, discipline, grievance, equal opportunities and
maternity policies. A fortiori, the provision of administrative functions, such
as the payroll, could continue to be provided centrally under statutory
recognition. In fact, our view is that the present balance within the
Employer’s organisation between centrally determined and locally negotiated
matters would be affected very little by statutory recognition. Rather, the effect
of recognition of the
39. Finally, the Union sought to derive
some assistance form the fact that in November 2006, under the statutory
recognition process, the Employer signed a recognition agreement with the Union
(or rather the then separate Transport and General Workers’ Union) in respect
of a guarding contract at Goldman Sachs, a contract which the Employer no
longer holds. In that case, however, agreement was reached between the Employer
and the TGWU that the Goldman Sachs contract constituted an appropriate
bargaining unit. We accept the Employer’s argument that the Goldman Sachs
contract was unusual in that the client required, and was prepared to pay for,
a higher level of local management than is common under the standard contracts
used by the Employer and other competitors in the industry. Thus, recognition
on a contract basis at Goldman Sachs did not have the same cost implications
for the Employer as it claims for other, more standard contracts. Nevertheless,
this episode does suggest that contract-based recognition is not inherently
incompatible with effective management of the Employer’s business.
Decision
40. The appropriate bargaining unit is
all workers up to and including the level of control room operative employed by
Knightsbridge Guarding Ltd on the Lehman Brothers contract at
Professor Paul Davies
George Getlevog
Michael Leahy
Names of those who attended the hearing
For the
Neil Johnson - Solicitor
Jennie Formby - National
Secretary, Unite the
Kieron Pyne - Full
Time Officer, Unite the
Ghislain Mudlamootoo - Employee of Knightsbridge Guarding Ltd
For the Employer
Mark Szczesnowicz - Chief Executive
Julie Gordon - Operations
& Support Services Director
Jonathon Mansfield - Lawyer
Nicole Morton-Cameron - HR
Manager