Case Number: TUR1/499(2006)

Case Number: TUR1/499(2006)

23 June 2006

CENTRAL ARBITRATION COMMITTEE

TRADE UNION AND LABOUR RELATIONS (CONSOLIDATION) ACT 1992

SCHEDULE A1 - COLLECTIVE BARGAINING: RECOGNITION

DETERMINATION OF THE BARGAINING UNIT

The Parties:

AMICUS

and

X-Fab UK Ltd

Introduction

1. AMICUS (the Union) submitted an application dated 10 March 2006 to the CAC that it should be recognised for collective bargaining purposes by X-FAB UK Ltd (the Employer) for a bargaining unit comprising “All workers in Manufacturing Operations at the XFAB UK Plymouth site excluding Managers and Team Leaders.” The stated location of the bargaining unit was “XFAB UK Limited, Tamerton Road, Roborough, Plymouth, PL6 7BQ.” The application was received by the CAC on 10 March 2006. The Employer submitted a response dated 16 March 2006 which was received and copied to the Union by the CAC on 20 March 2006.

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 Purcell, Chairman of the Panel, and, as Members, Mr Mike Cann and Lord David Lea. The Case Manager appointed to support the Panel was Miss Sharmin Khan.

3. By a decision dated 26 April 2006, the Panel accepted the Union’s application. The Parties then entered a period of negotiation in an attempt to reach agreement on the appropriate bargaining unit. 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 and a hearing was held on 14 June 2006. In accordance with paragraph 19 of Schedule A1 it is the Panel’s task to determine first whether the Union’s proposed bargaining unit is appropriate and then, if it is found not to be so, to determine another bargaining unit that is appropriate.

4. The CAC Panel has extended the period in which it must determine the bargaining unit until 23 June 2006 to accommodate the hearing and consider all the evidence before it before reaching its decision.

Employer’s submission

5. The Employer is a German based company operating in the UK from its sole base in Plymouth. The Employer designs manufacturing processes used to manufacture silicon chips for use in a variety of applications including communications equipment and medical equipment such as heart pacemakers.

6. The Employer’s position was that the Union’s proposed bargaining unit was not compatible with effective management.

7. The Employer described two other bargaining units in its written submissions that if explored, it submitted, would illustrate why the Union’s proposed bargaining was not appropriate. The first of these two alternative options was a bargaining unit that would include all staff excluding managers. The second alternative would be all engineering and processing functions on the Plymouth site (i.e. Manufacturing Operations, Quality and Technology), excluding Managers. The Employer noted that as an organisation operating in a dynamic business environment it often had to reconfigure its structure. Both ‘quality’ and ‘technology’ (previously called ‘product development’) were relatively new organisational areas. This need for organisational agility was one factor leading them to prefer as wide a bargaining unit as possible with these three areas being the most inter-linked.

8. The Employer provided diagrammatic representations of its departments and personnel and the lines of management involved. Separate diagrams were produced to show the parameters of each of the Employer’s alternative bargaining units as well as for the Union’s proposed bargaining unit; the Union agreed that the parameters in the diagrams and the picture conveyed of the overall organisational structure appeared to be accurate.

9. The Employer submitted that the organisation worked as one team with everyone involved in the production process to some degree using the handful of expensive machines at the site located in the ‘clean room’ (the manufacturing and design processes have to be undertaken in a dust free environment). It was incompatible with effective management to divide the organisation and would have the effect that staff would work side by side with some having their pay, hours and holidays collectively bargained for and others not.

10. The Employer submitted that the Team Leader role was relatively new, so much so that formal job descriptions had yet to be written. Whilst team leaders had some basic involvement in disciplinary processes – the initial reporting of disciplinary issues - they had no role to play in giving of warnings, dismissals or the setting of pay rates. These were functions performed by senior managers and module managers to whom team leaders reported. Team leaders worked on production in the clean room and the Employer estimated that they would spend between 70 and 80% of their time working with the production technology along side the staff in their teams.

11. The Employer submitted that the Union’s proposals sought to exclude the Technology (Process Development) workers in part on the basis that some of them did not work on the shop floor (the clean room), yet, the Employer submitted, the Union did not apply such a stipulation to the workers from Logistics (which it stated is part of the Manufacturing and Operations Department) who are included in its proposed bargaining unit. While different departments reported to different directors in the German head office, within the Plymouth site there was a unified management structure.

12. The Employer stated that salaries are a common factor within the workforce and that in determining pay awards, it does not make a specific differentiation between the departments – different roles would attract different salaries but all common job titles across the Departments, such as ‘engineer’, had a minimum starting salary that was the same. For example all Engineers in Technology. Quality and Manufacturing and Operations had a minimum starting salary of £19,000 although actual salaries did vary above that figure for reasons relating to performance pay enhancements or there having been a higher starting salary based on experience/qualifications or the fact that some workers are employed for a 42 hour working week and some for 37.5 hours. There was no systematic differentiation or apportioning of greater amounts of ‘the pot’ between roles when it came to budgeting for a ‘cost of living’ rise in those years where one was awarded. Furthermore the benefits given to workers were common across all departments, for example the annual leave entitlement is the same for all employees, all employees are paid by annual salary in 12 equal monthly amounts, company sick pay is the same for all employees and all employees with requisite length of service participate in the monthly bonus scheme. The Employer submitted that there were more similarities between the workers in the proposed bargaining unit and the workers outside it than there were differences between them and it is therefore not appropriate to divide the workers up where their circumstances are so similar and where collaborative working was required.

Union’s submissions

13. The Union’s submission was that its proposed bargaining unit is appropriate. In the alternative the Union, in both its written and oral submissions, posited that a bargaining unit matching its description but with the addition of those workers in the Quality Department could also be appropriate; this again was subject to the exclusion of managers and team leaders. This possible alternative bargaining unit was acknowledged by the Union because the Quality Department was formed only after it had submitted its original application to the CAC so it was not, at that earlier time, in a position to consider whether to include it from the outset.

14. The Union’s belief was that there were 4 main Departments in the organisation; Manufacturing and Operations (within which was located the proposed bargaining unit), the new Quality Department, the Process Development Department, now referred to as Technology and administration areas covering information technology, human resources, finance and other administration.

15. The Union stated that it was unaware of any significant desire for it to be recognised in any of the other Departments outside the proposed bargaining unit, with the exception of the Quality Department where it was known that some workers did favour its recognition. The Union submitted that it would be incompatible with effective management to bargain on behalf of people who had not indicated a desire for it.

16. The Union submitted that whilst there were no existing bargaining arrangements in place there was an existing Works Council which functioned as a consultative forum for all workers with management. Specific representatives already sat on the Works Council to represent the Manufacturing and Operations Department which suggested, the Union argued, that the Employer already recognised that workers in that Department were a distinct constituency, to therefore viewed them as an appropriate bargaining unit, consistent with the present company structure.

17. The Union contended that all the workers in its proposed bargaining unit worked in the main work area at the Plymouth site, namely the workshop/“wafer fab” (the clean room). Other workers were based in different areas with the exception of the Quality Department.

18. The Union noted that the proposed bargaining unit represented a substantial proportion of the workers and could not be described as small; this negated any argument, it submitted, that small fragmented bargaining units would be created. The Union asserted that the same degree of fragmentation had already been accepted by the Employer in its acceptance that the Manufacturing and Operations Department was a constituency for the purposes of the Works Council, the unit was therefore not arbitrary.

19. The Union did not dispute that there were occasional interchanges of workers between departments, however it did not believe this as a daily occurrence and did not consider it made it less practicable to identify the Manufacturing and Operations Department as a distinct unit. The practice of collective bargaining would not jeopardise that flexibility.

20. The Union emphasised the difference between the staff in technology (the Process Development Department) and those in Manufacturing and Operations. The Union described the Technology engineers as ‘professional/technical’ staff who were carrying out research and development work based in a different area and with their own Director in the management structure. These were not workers engaged in manufacturing. Furthermore, the Union asserted that the salary details, provided as a table by the Employer in its written submission, showed a clear disparity between the starting salaries in the Technology area and those in Manufacturing and Operations and Quality Departments. The Union also stated its belief that there was a flexi time arrangement for Technology staff, but not elsewhere. In contrast, workers in the newly formed Quality area were similar in pay rates to the bulk of those in Operations and there was some interchange between the two work areas.

21. The Union submitted that its proposed bargaining unit excluded managers and team leaders. Team leader was a newly created role and the Union stated that it had been informed that the position involved the post-holder in disciplinary matters. Team Leaders direct the day to day tasks and, rather than working on the shop floor, they would generally work upstairs in the office area. The Union submitted that determining whether the team leaders fell into the traditional role of manager or charge-hand would help the Panel reach a view on whether their exclusion from its proposed bargaining unit was appropriate.

Considerations

22. The Panel was grateful to the parties for their written and oral submissions. The hearing was extremely valuable in enabling the Panel to fully consider and probe the evidence that has been presented by the parties both before and at the hearing. The Panel’s decision has been reached having taken full account of that evidence. The Panel would like to note that it was impressed with the positive demeanour of both parties and their representatives.

23. The Panel is required, by paragraph 19(2) of the Schedule to the Act, to decide whether the Union’s proposed bargaining unit is appropriate and, if found not to be appropriate, to decide in accordance with paragraph 19(3) a bargaining unit which is appropriate. Paragraph 19B(1) and (2) states 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.”

24. The Panel’s first responsibility is to decide, in accordance with paragraph 19(2) of the Schedule, whether the Union’s proposed bargaining unit is appropriate; paragraph 2(3) of the Schedule states that references to the ‘proposed bargaining unit’ are to the bargaining unit proposed in the union’s request for recognition. In this case the bargaining unit proposed in the request for recognition was described as comprising “All workers in Manufacturing Operations at the XFAB UK Plymouth site excluding Managers and Team Leaders”. Paragraph 19B(3)(a) of the Schedule requires the Panel to take into account the views of the Employer and the Union in deciding whether the proposed bargaining unit is appropriate. The Union made it clear, both in its written submission and its oral submissions, that its proposed bargaining unit remained as described above but that, if the Panel were minded to include workers from the Quality Department, then the Union, in effect, could understand the logic of such a change; the Union viewed such a change as an alternative bargaining unit. This, of course, does not alter the Panel’s first task and the Panel makes clear that it began its deliberations by reviewing whether the proposed bargaining unit as described on the initial application form is appropriate.

25. In considering whether the Union’s proposed bargaining unit is appropriate the Panel has taken full account of the alternative bargaining units that the Employer has described. The Employer did not strongly argue its suggestion of an all-inclusive bargaining unit and instead focussed its submissions, in the Panel’s view, on the appropriateness of a bargaining unit that embraced each of the Manufacturing and Operations, Technology and Quality Departments up to and including the roles of Team Leader. Its submissions for this bargaining unit were designed to show that the union’s proposed bargaining unit was not appropriate.

26. The Panel notes that the Union was not aware of the imminent creation of the Quality Department until after it had made its application to the CAC in March 2006; the Union has acknowledged there is some symmetry between the Quality Department and its proposed bargaining unit.

27. The Panel heard and read both sides views on the implications of existing salary rates and the job roles carried out within the various departments. The Panel is satisfied that there are a wide range of employees and salaries within the Union’s proposed bargaining unit and that those ranges are very similar to the ranges also found in the Quality and Technology departments. The Panel accepts, as did the Union at the hearing, albeit subject to a query over degree, that there is interchange and flexibility of worker movement between the Departments. Mindful of the desirability of avoiding small fragmented bargaining units the Panel believes that such would be a result of dividing Operations and Manufacturing from the similar Quality and Technology departments. This, in the Panel’s view and having taken account of the parties submissions, is an unnecessary risk; the characteristics that these departments have in common, which would include starting salary ranges, working area, general benefits and common involvement in production (to greater or lesser extents) serves more to bind the groups together than it does to separate them.

28. Therefore the Panel, having regard to paragraph 19B(3)(a) and the evidence submitted by both parties, has concluded that the bargaining unit proposed in the Union’s application to the CAC is not an appropriate bargaining unit in the circumstances of this case. The bargaining unit might give rise to small fragmented bargaining units and due to the Panel’s conclusion on the close ties between the proposed bargaining unit and the Quality and Technology Departments it is the Panel’s view that the proposed bargaining unit would not be compatible with effective management.

29. Having decided that the Union’s proposed bargaining unit is not appropriate, the Panel has determined that the appropriate bargaining unit is “All workers up to and including team leaders in the following Departments - Manufacturing and Operations, Quality and Technology’. The Employer produced clear diagrams in its submission to illustrate the boundaries of the various bargaining units proposed by either party (there were four proposals which the panel had to consider). Both the union and the panel found these diagrams invaluable. For the avoidance of doubt which may arise given ambiguity in departmental titles, the panel shows the determined bargaining unit diagrammatically in the annex to this decision. The bargaining unit so determined is shown in the shaded area.

30. This bargaining unit embracing three departments covers a wide range of employee roles and salaries that bear much similarity to each other. The Panel is satisfied that there was no evidence that there are differences in pay scales across the departments, starting scales and increment criteria are common as are benefits and holiday arrangements. There was no evidence put to the Panel or any convincing submission that there was any similar commonality between the Information Technology and Administrative departments. The Panel is satisfied that the position of Team Leaders involves around 70% time on production and 30% on mentoring and overseeing. There is only basic involvement in the disciplinary process and there is no authority to make decisions, nor did the Panel hear there was any practice for Team Leaders to issue warnings or dismissal notices to other workers. The Panel is therefore satisfied that Team Leaders have more in common with members of their team than they have with the appointed managers they report to. It is therefore appropriate that they be included in the bargaining unit. The views of the Employer and the Union have been fully considered in this decision, there are no existing national or local bargaining arrangements, the bargaining unit is not small or fragmented and the Panel considers that the workers in this bargaining unit share similar characteristics. The Panel is satisfied that this bargaining unit is compatible with effective management and that its decision is consistent with the objective set out in paragraph 171 of the Schedule.

Decision

31. The appropriate bargaining unit is “All workers up to and including team leaders in the following Departments - Manufacturing and Operations, Quality and Technology”.

32. This bargaining unit is different from the one proposed by the Union in its application to the CAC. Consequently, it will be necessary, as paragraph 20 of the Schedule provides, for the Panel as a next step to determine whether the Union’s application is invalid on the basis of the bargaining unit defined in this decision. Both Parties will be invited to submit evidence and comments before that decision is made.

33. After the Panel reached this decision on the appropriate bargaining unit, but before it was published, it was asked by the Union to consider an additional piece of evidence relating to the status of team leaders; the evidence had not been available at the hearing. The Union presented an advertisement for the role of team leader with the Employer which the Union submitted indicated a job that was much more management focussed than had been indicated by the Employer at the hearing. The Panel has considered the information in the advertisement and concluded that it does not cause it to change its decision on the appropriate bargaining unit.

Professor John Purcell

Mr Mike Cann

Lord David Lea

23 June 2006

Appendix

Names of those who attended the hearing:

For AMICUS

Mr Heathcliffe Pettifer - Union Official

Mr Mark Ross - X-FAB Employee

Ms Alison Humphrey - Union Solicitor

For XFAB UK Ltd

Mr Brendan Bold - X-FAB Worldwide Director of Process Development

& Board Director

Ms Hilary Stanton - Human Resources Manager & Company Secretary

Mr David Cawse - Manufacturing Operations Manager.

Mr Chris Bailey - Finance Director and Board Director

Mr Martin Augustus - EEF Western Representative