Case Number: TUR1/471/(2005)

28 November 2005

CENTRAL ARBITRATION COMMITTEE

TRADE UNION AND LABOUR RELATIONS (CONSOLIDATION) ACT 1992

SCHEDULE A1 - COLLECTIVE BARGAINING: RECOGNITION

DETERMINATION OF THE BARGAINING UNIT

The Parties:

GMB

and

Magna Kansei Ltd

Introduction

1. The GMB (the Union) submitted an application dated 25 August 2005 to the CAC that it should be recognised for collective bargaining purposes by Magna Kansei Ltd (the Employer) for a bargaining unit comprising “production operatives, warehouse/forklift drivers, moulding operatives, cell leaders and stand-in cell leaders, material handlers, syncro drivers, containment inspectors, quality technicians, paint and assembly operatives, grannie operatives, maintenance technicians, tooling assistants, marshalls/drivers and team leaders”. The stated location of the bargaining unit was “Magna Kansei Ltd, Pennywell Industrial Estate, Sunderland, SR4 9EW”. This was received by the CAC on 25 August 2005 and copied to the Employer on 26 August 2005. The Employer submitted a response to the CAC on 2 September 2005 which was then copied to the Union.

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 John Goodman CBE, Chairman of the Panel, and, as Members, Mr Sandy Boyle, and Mrs Maureen Chambers. The Case Manager appointed to support the Panel was Miss Sharmin Khan.

3. By a decision dated 30 September 2005, 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 an 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 7 November 2005 and the names of those who attended the hearing are appended to this decision.

Background

4. Before the hearing, the Case Manager notified the Panel that the Employer had submitted late, further evidence which was received by the CAC on 4 November 2005. On behalf of the Panel, the Chairman discussed the issue with both Parties. With the Parties consent, the Panel permitted the Employer to submit as new evidence only the documents that further clarified issues already raised by the Employer. These included the Employer’s contract form for temporary and permanent employees; its Statement of Main Terms and Conditions of Employment revised in May 2005; and its Pay Rate Schedule for 2005. The Panel allowed the Union time (agreed by the Union) for it to review the new evidence before the hearing commenced.

5. The central issue in dispute between the Parties was whether, as proposed by the Employer, the Union’s proposed bargaining unit (as described in paragraph 1 of this decision) should be extended to include workers located at the Employer’s Washington site, who the Panel was told performed similar job roles as those listed by the Union in its description of the proposed bargaining unit at the Sunderland site. A summary of the Parties written submissions and as amplified at the hearing follows.

Summary of the Union’s Submissions

6. After referring both to its attempts to agree an appropriate bargaining unit and to the Schedule, the Union referred to the case of Regina (Kwik-Fit) (GB) Ltd v Central Arbitration Committee to remind the Panel that in determining the bargaining unit, its first duty was to decide if the unit proposed by the Union was appropriate and that it was not its duty to search for and decide on the ‘most’ appropriate bargaining unit. The Union stated that if the Panel found that its proposed bargaining unit was appropriate; its duty was to go no further.

7. The Union put forward its case that its proposed bargaining unit was compatible with effective management. In respect of the other provisions set out in paragraph 19B(3) of the Schedule it stated that there were no existing national or local bargaining arrangements and the Employer did not collectively bargain. Pay rises were imposed by the Employer. The Union did not consider that its proposed bargaining unit which covered around 350 workers was either small or fragmented. The Union explained to the Panel that the unit it had chosen covered workers that were union members and workers that had signed its petition. The Union sought to represent workers that desired recognition of the Union. The Union also explained that it had excluded Quality Engineers and Shift Managers as these workers were responsible for supervising and managing the workers in its proposed bargaining unit and they did not share common interests with them.

8. In respect of the new evidence submitted by the Employer, the Union advised the Panel that the Employer’s previous offer letter to one of its workers (of which it could provide a copy), stated the location of the worker to be the Employer’s Sunderland site and that the Employer’s revised Statement of Main Terms and Conditions used to contain a clause on mobility at that site. The Employer now appeared to rely on its offer letter for this. The Employer clarified that the workers were employed on the basis of the location to which they were initially recruited but his or her contract did not bind that worker to that site. The Employer’s Main Statement of Terms and Conditions did not differentiate between the sites for that reason. Shift patterns and location could change according to the requirements of the customer. The Employer later suggested to the Panel that it felt it was not necessary to include a ‘mobility’ clause in the its Statement of Main Terms and Conditions as the workers offer letter, was to be read in conjunction with the main document, and superseded it. The Union maintained that in its view mobility of the workers between the two sites was very limited. It said that its members were not aware of any worker moving between the two sites, after the initial start up phase of the new site at Washington.

9. Through its canvassing campaign at the Sunderland Site the Union was not aware of any evidence that indicated the movement of workers between the Sunderland and the Washington Site except for temporary periods during inspections. The Union stated that it had not canvassed the Washington Site and to date had no contact with workers from that Site. It was not aware of a membership presence there nor had it been approached by any workers seeking advice on employment issues such as disciplinary or grievance matters. The Union had not been able to agree with the Employer a basis on which it could be given access to the Washington site, for example along the lines set out in the DTI’s Code, despite the Employer suggesting to the Union that this second site should be added to the Union’s proposed bargaining unit. It had had no opportunity to write to or speak to the workers there.

10. In conclusion the Union maintained that its proposed bargaining unit was compatible with effective management. It covered the by far larger and older plant, including around 350 workers, whereas the new Washington plant was much smaller and was relatively recently established. None of the matters listed in paragraph 19B(3) of the Schedule conflicted with that need and that the Panel should therefore determine that its proposal was an appropriate bargaining unit.

Summary of the Employer’s Submissions

11. The Employer rejected the Union’s proposal and contended that the Union’s proposed bargaining unit was not compatible with effective management and the matters listed in paragraph 19B(3)of the Schedule did conflict with that need. The Employer also emphasised that in its view, if the determined bargaining unit was as that proposed by the Union, the CAC would be contradicting the principles outlined in paragraph 171 of the Schedule and would also be contrary to what the Union claimed to desire.

12. The Employer proposed that the bargaining unit should be extended to cover those workers who carried out similar roles to those listed by the Union in its proposal, and who were located at the Washington site. This would add around 68 workers to the 349 at the Sunderland site. The Employer argued that restricting the bargaining unit to the Sunderland Site would be problematic both for its workforce and for the Employer to maintain success in a highly competitive industry. It also proposed that a voluntary agreement to recognise the Union should depend on the outcome of a secret ballot on that agreement.

13. To put its case into context, the Employer first briefly described Magna Kansei Ltd (MKL) (the Company), its ownership, board membership and its operational structure. The Company was an operating division of ‘Intier Automative’ which was owned by the global Company ‘Magna International Inc’ (Magna). The Company was a joint venture between ‘Magna International Inc’ of Toronto, Canada and ‘Calsonic Kansei’ of Tokyo, Japan which was set up in 1990 to manufacture and supply components to vehicle manufacturers. The Employer’s first operational site was set up in 1992 at Pennywell, Sunderland to supply components to the Nissan Plant (one of its main customers) which was situated in the nearby location of Washington. In 2002, the Company set up its second (smaller) site at Washington. The two facilities were three miles apart, with the Sunderland site manufacturing and supplying components to ‘Nissan’, ‘BMW’, ‘Jaguar’ and ‘Land Rover’ and the Washington Site manufacturing and supplying components to ‘Nissan’. The Employer confirmed that it had no other operational sites in the U.K.

14. Since opening the Washington site in 2002 the Employer said it had always approached consulting and managing its workforce as one group. Recognition of the Union at one site and not the other could give rise to a range of disparities between the workers and would make management of the operation more difficult. For instance, senior management would not be able to justify terms and conditions that were more favourable, achieved through collective bargaining at one site to workers that were performing similar roles at a site just three miles away.

15. Secondly the, Company operated synchronised and Just In Time (JIT) production and delivery at both of its plants (a common management practice in the automotive industry). These reduced lead times to as little as 20 minutes and meant the Company met its customer needs by allowing its day to day operations to be led by customer demand. Therefore, an individual’s ‘working time’ at the plant was arranged around the customer’s requirements. To meet demand workers were also required to transfer between the two sites according to what the customer required. The Employer argued that the flexibility and mobility of its workers was vital for the Company to maintain its operations.

16. The Employer explained that the Company operated a single Management structure whereby the senior management team had responsibility for all operations, and that support functions such as Human Resources and Finance provided services for the Company as a whole. The Employer provided a diagram that showed that beneath the General Manager (and his Deputy) the Company’s operation was managed by: two Operations Managers, one at the Sunderland site and one at the Washington site; Finance Manager; Human Resources (HR) Manager; Health and Safety Manager; Quality Manager; Manufacturing Engineering Manager; Supply Chain/ Programme Manager. The diagram showed these managers on one level. The Employer stated that the senior management team regularly briefed and consulted with its employees on a group and individual basis. The General Manager operated a ‘skip level’ policy where by individuals were encouraged to express their views to him on a one to one and confidential basis irrespective of their location.

17. The Employer informed the Panel that its parent company, Magna, operated world wide an Employees’ Charter (the Charter) and also conducted an Employee Opinion Survey (EOS). The Employer was committed to operate both and used these methods to communicate and consult with its workforce. The Employer provided a copy of the Charter which listed six key principles under the headings “Job Security; a Safe & Healthful Workplace, Fair Treatment; Competitive Wages and Benefits; Employee Equity and Profit Participation; Communication and Information”. The Employer argued that the Charter methodology was implemented with input from workers located at both sites. In line with the Charter, the Employer conducted annual salary surveys and treated its workforce with fairness and consistency and as an integrated whole.

18. The EOS was conducted by external management and was carried out on a confidential basis, the results of which indicated to the Employer areas that needed development and improvement. The Employer also advised that it consulted with its workers through an Employee Forum. The forum was made up of representatives of each constituency within the Company. The election process used was applicable to both sites. The Employer provided a copy of its constitution as supporting evidence. Appendix one of this constitution showed the Employee Forum as consisting of 18 Employee Representatives drawn from 12 constituencies of which Washington was a separate constituency entitled to two representatives. The Employer explained that through these methods it was able to develop and improve its policies. The Union questioned how changes to the workers’ contracts were made through these methods and whether or not internal ballots were held to determine support for and acceptance of such changes. In response, the Employer confirmed that ballots were not held but workers were invited to come forward with their views through letters though there was sometimes a limited response to this. However, in the past, senior management had held workshops with the workers at the Sunderland site and all ideas were considered when the Employer made its final decision on any issues.

19. The Employer advised the Panel that though slightly different for administrative and managerial staff, the terms and conditions of employment for all workers were essentially identical. Benefits for a worker related to the job role undertaken rather than his or her location. It was argued that with the exception of the customers which each site supplied the only real variable between the workers at each site was their shift patterns. The Employer did inform the Panel that one shift pattern was currently worked only at the Washington site but that it was open to both sites to work.

20. To comply with JIT production requirements and customer needs, under the terms of the Company’s employment contracts workers agreed to and did transfer between the two sites. The Employer maintained that to all intents and purposes then, the two sites operated as a single unit, using similar principles and equipment at each site. The transfer of workers was fluid, for example workers could be transferred temporarily for weeks at a time or sometimes months at a time. The Employer argued that the only sensible approach was for the same categories of workers at both plants to be included. Otherwise there could be different terms between two geographically close plants, which could potentially cause difficulties in the movement of workers between the two sites.

21. The Union accepted the Employer’s argument that there may be similarities between the two sites and that the Employer applied its policies to the whole workforce but it was not convinced that collective bargaining rights at one site and not the other would be problematic. It was not at all uncommon in the North East and elsewhere for employers to collectively bargain at some sites within a company and not at others. The Union suggested that this did not appear to reduce their success. Furthermore, as issues such as pay and negotiations were currently excluded from the forums the Employer had described, it could not see the disadvantages. The Employer could ultimately through collective bargaining make changes at one site and would not be prevented from imposing changes at sites where the Union was not recognised if it felt more favourable benefits had been achieved and this was appropriate. The Employer did not deny this possibility, but it challenged the Union’s point on grounds of both efficiency and fairness. Further, by restricting the bargaining unit to the Sunderland site only, the present largely uniform environment and arrangements could be lost. It refuted the Union’s point and explained that the relevant issue was the objective of collective bargaining. By restricting the bargaining unit to workers located at one site only, the collective environment would be lost.

22. The Employer proposed that to modify the Union’s proposed bargaining unit to cover all those employees performing the jobs listed in the Union’s application whether or not they were based at the Washington or Sunderland Site, would add around 60 workers and would help maintain the Employer’s need for flexibility of its workers in order to drive costs down and maintain employment levels. In its view, the Union’s proposed bargaining unit was contrary to the principles in paragraph 171 of the Schedule and was not compatible with effective management as required by paragraph 19B of the Schedule.

Issues clarified for the Panel

23. To assist the Panel further with its decision, the following matters were clarified by the Parties.

24. With regard to pay and benefits, the Employer confirmed that no bonus scheme applied to the workers in the proposed bargaining unit or for similar workers located at its Washington site. Workers were able to earn shift premiums and overtime rates. Overtime pay was available to all workers except members of management. The Employer also confirmed that the same appraisal processes were used for workers at both sites.

25. The Employer explained to the Panel that though the operations at both sites were very similar and workers were frequently required to transfer between the sites it was necessary to keep the facilities separate to provide coverage for the customer needs in that region. The mix of workers at each site was adapted to the pattern of work required to meet an order. The two sites each had a separate line manager titled ‘Operations Manager’. The two Operations Managers were generally responsible for the production operations at his/her plant, one at Sunderland and one at Washington, and they were assisted by a Shift Manager and a Technical Manager to oversee the day to day activities. Decisions about the day to day activities were at the discretion of the Operations Managers but any major changes would need to be authorised by the General Manager.

26. The Panel enquired about how and in what numbers transfers were arranged. In response, the Employer explained that transfers were arranged on both a formal and informal basis and were not always documented, so actual figures were difficult to identify. However, the Employer said that some employees moved when the Washington site had opened in 2002 and since then, about 30 transfers had taken place. The duration of the transfer depended on the customer needs and could range from a few days to several weeks.

27. The Panel noted from the evidence that workers were required to take their holiday entitlement during shutdown periods and enquired if these periods were the same for both sites. The Employer informed that shutdown periods would also be adapted to the customer. For instance, the site supplying to the Nissan plant i.e. the Washington site, would have shutdown periods according to the Nissan Programme. The Sunderland site, as it supplied other clients as well, had shutdown periods that were wider. The Employer stated that if a worker had been temporarily transferred, when deciding on when the worker should take their holiday, the Employer would revert to, and provide time off according to the shutdown period of his or her base site.

Considerations

28. The Panel is required, by paragraph 19(2) of the Schedule to the Act, to decide the appropriate bargaining unit. Paragraph 19B of the Schedule states that, in making that decision, 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 proposed bargaining unit and of any other employees of the employer whom the CAC considers relevant; and the location of workers. The Panel must also have regard to paragraph 171 of the Schedule which provides that “in 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.”

29. The Panel’s first responsibility is to decide, in accordance with paragraph 19B of the Schedule, whether the Union’s proposed bargaining unit is compatible with effective management. The Panel’s decision has been taken after a full and detailed consideration of the views of both Parties. This includes the view expressed by the Employer about the alternative bargaining unit which it considers to be appropriate.

30. The Panel is not required to decide which of the proposed bargaining units is the best or the most appropriate. Having taken into account the cases put forward for both, the Panel finds that the Union’s proposed bargaining unit is compatible with effective management.

31. The Panel accepts the Employer’s argument that the inclusion of appropriate jobs at the Washington site in the Union’s proposed bargaining unit could be the most appropriate bargaining unit. However the Panel is mindful that following the Court of Appeal’s judgment in the Kwik Fit Ltd decision referred to above, the first question the Panel is faced with, is whether or not the Union’s proposed bargaining unit is appropriate. If the Panel finds that it is not, then it must consider some other unit taking into account the provisions set out in paragraph 19B(3).

32. On balance the Employer has not made a compelling case that the proposed bargaining unit would lead to ineffective management. It failed to show how the processes which it presented as being central to the management of its workforce, for example the MKL Employee’s Charter’s six key principles, the Employee Opinion Survey and the Employee Forum would be adversely affected by recognition of the Union for its proposed bargaining unit. Recognition by the statutory process establishes rights for the Union to negotiate about pay, hours and holidays through collective bargaining. Negotiations on pay and benefits are expressly precluded by the Forum’s constitution. Secondly, when questioned on the matter of the two sites each having its own Operations’ Manager, the Employer did indicate that they had discretion to manage their plants and did not indicate or show that these managers worked closely along side each other. not indicate or show that these managers worked along side each other or as a team. The Panel has concluded that notwithstanding the transfer of workers between each site, the two sites are to some extent effectively managed as two distinct operations. It was also established that the sites had differing shutdown periods and the Employer acknowledged differences in working time arrangements. The Employer also stated that when necessary a transferred worker would revert to taking time off during shutdown periods at his/her base site.

33. The incidence of transfers between the sites, suggested by the Employer at the hearing to be of the order of 30 in the three year period since the initial opening of the Washington site, is a low percentage of the Union’s proposed bargaining unit. The Employer also confirmed that in most cases transfers were on a temporary basis, and there was a lack of available statistics to quantify this as it applied to the workers in the proposed bargaining unit. The Employer was unable to give an adequately specific answer on the frequency of transfers by workers in the appropriate job categories.

34. The Panel accepts that management could become more complicated in some respects if collective bargaining for the relevant groups is introduced only into the larger plant, but it considers that simple coping mechanisms would be available within the Company, for example in relation to transfers. Although it was argued by the Employer that the mobility and flexibility of its workforce is the essential factor on which its success is based, the Panel had some difficulty in accepting this was so crucial to operational strategy as it does not feature in the Main Terms & Conditions of Employment which were revised as recently as May 2005. However, it acknowledges the Employer’s view that the offer letters include references to this, and that these take precedence over the more general Main Terms and Conditions of Employment.

35. The Panel does not consider that, given the numbers involved, the Union’s proposed bargaining unit would leave the workforce fragmented.

36. In reaching its decision the Panel has, as it is required, considered primarily the provisions of paragraph 19B of the Schedule. It has also considered the provisions of paragraph 171 of the Schedule. Having done so it has concluded that whilst the introduction of the Union’s proposed bargaining unit may present some problems in the management, and the efficiency of the management of the workforce that are not present currently, it does not consider these to be substantial. Relatively simple coping mechanisms should be available. The Panel is also aware of the length of time that the Union has been seeking recognition from the Employer and of the need for fairness in relation to the large proportion of the Employer’s workforce covered by the Union’s application.

Decision

37. The appropriate bargaining unit is that proposed by the Union i.e.

“production operatives, warehouse/forklift drivers, moulding operatives, cell leaders and stand-in cell leaders, material handlers, syncro drivers, containment inspectors, quality technicians, paint and assembly operatives, grannie operatives, maintenance technicians, tooling assistants, marshalls/drivers and team leaders located at Magna Kansei Ltd, Pennywell Industrial Estate, Sunderland, SR4 9EW.”

Panel

Professor John Goodman CBE (Chairman)

Mr Sandy Boyle

Mrs Maureen Chambers

28 November 2005

Appendix

Names of those who attended the hearing:

For the GMB

Mr Bill Coates - Senior Organiser

Mr Mark Wilson - Regional Organiser

For Magna Kansei Ltd

Mr David Waters - General Manager

Ms Catherine Attwell - Human Resources Manager

Mr Jonathan Simmons - Solicitor