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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Kwik-Fit Ltd., R (on the application of) v Central Arbitration Committee [2002] EWCA Civ 512 (18 March 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/512.html Cite as: [2002] ICR 1212, [2002] IRLR 395, [2002] EWCA Civ 512, [2002] Emp LR 611

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
(Mr Justice Elias)

		Royal Courts of Justice Strand London WC2
		18th March 2002

1. LORD JUSTICE BUXTON: In this appeal the background facts; the contentions of the parties before the Central Arbitration Committee ("the CAC"); the determination of the CAC; and the relevant parts of the governing legislation, which is Schedule 1A to the Trade Union and Labour Relations (Consolidation) Act 1992; are all set out in lucid detail in the judge's judgment, in terms that all counsel engaged before us were good enough to say they had no dispute with. It would be a work of supererogation to try to repeat that exercise in this judgment. I therefore annexe to this judgment paragraphs 1 to 21 of the judgment of Elias J, from which any further information necessary to elucidate the present judgment can be obtained.
2. I would also venture to endorse in strong terms what was said by the judge in paragraph 23 of his judgment, that the CAC was intended by Parliament to be a decision making body in a specialist area, that is not suitable for the intervention of the courts. Judicial review, such as is sought in the present case, is therefore only available if the CAC has either acted irrationally or made an error of law. There was a faint attempt before Elias J to argue irrationality. The judge rejected that claim, and there is no respondent's notice to seek to reinstate it. The only issue before us is whether the CAC erred in law in its construction or understanding of the legislation that gives it its authority, and thus proceeded in a way that in law was not open to it.
3. I am quite clear that the determination of the CAC in this case was entirely in accord with the legal provisions that bind it. Since in so holding I will be venturing to differ from the views of the judge who has great experience in this area of work, I need to set out in some detail my reasons for so thinking, though at the end of the day the point appears to be a short one.
4. A striking feature of the scheme provided by Schedule A1 is that everything turns on and is put in motion by a "request" by the trade union to be entitled to conduct collective bargaining on behalf of a group of workers (paragraph 1). That request has to contain a proposal by the union of a particular "bargaining unit" (paragraphs 2 (3) and 8(b)). The CAC becomes involved if "employer rejects request", at which stage the union, not the employer, may apply to the CAC under paragraph 11(2)(a) for the CAC to decide, in the absence of agreement

"whether the proposed bargaining unit is appropriate or some other bargaining unit is appropriate".

5. Under paragraph 19(2) and (3) the CAC must decide "the appropriate bargaining unit" taking into account the matters specified, which as here relevant can be summarised as the need for the unit to be compatible with effective management; the views of the employer and of the union; the location of workers; and "the desirability of avoiding small fragmented bargaining units within an undertaking."
6. Simply reading these provisions through, it seems self-evident that the CAC's task is to start with the only proposal that it has before it, that contained in the union's request, and to determine whether that proposal is "appropriate": it however being open to the CAC under paragraph 11(2)(a) to determine that some other bargaining unit is appropriate.
7. It was complained on the part of the employer in this case that such a construction gives the union's proposal a preferable position, and upsets the industrial relations balance that ought otherwise to exist between proposals put forward by unions and proposals put forward by the employer. But, in my judgement, any such imbalance springs directly from the effect of the statutory provisions, which lay down clearly how the CAC must approach the question before it. That view is reinforced by the fact that, in the context of any particular request, the CAC of necessity can only recognize one bargaining unit. The word "appropriate" was plainly used by the draftsman to direct the CAC's attention to whether, bearing in mind the practice set out in paragraph 19(3) and 19(4), the bargaining unit that it had under consideration was suitable for the purpose for which it was to be used: that is, the conduct of collective bargaining in respect of a group of workers. Such a process does not exclude the consideration of bargaining units other than that proposed by the union. They may enter the picture in two ways: as a means of testing whether the union's bargaining unit is indeed appropriate; and as an alternative bargaining unit to be inserted in the request should the union's bargaining unit be seen as inappropriate. But it should be remembered that the statutory test is set at the comparatively modest level of appropriateness, rather than of the optimum or best possible outcome. Since the CAC has only to find and can only find one bargaining unit; and has only to be satisfied that the unit that it does find is appropriate; I see no escape from the contention that, provided the CAC concludes that the union's unit is appropriate, its inquiry should stop there.
8. The employer strongly argued before us that that was a misconstruction, in particular of paragraph 11(2) of the Schedule read with paragraph 19(2) and 19(3). I have already set out paragraph 11(2). The employer argued that the question "whether the proposed bargaining unit is appropriate or some other bargaining unit is appropriate" placed on the CAC, not the duty and obligation to which I have just referred, of considering first the union's proposed bargaining unit; but a duty to treat on equal terms, and effectively as competitors, the unit proposed by the union and any alternative bargaining unit that may be proposed by the employer; and that a choice had to be made, or that that approach had to be adopted, was reinforced by the language used in paragraph 19(2) and 19(3), that the CAC must, in 19(2), decide "the" bargaining unit within a period of time, and (3) must take into account the matters there set out in deciding "the" appropriate bargaining unit.
9. I fear that I am unpersuaded by those arguments. Although Mr. Bowers QC resisted this conclusion, it seems to me to be an inevitable implication of that construction of paragraph 11(2) that the CAC would then have to choose between the union's unit and the employer's unit, should it conclude that both of them are appropriate. In other words, having discharged its statutory duty of deciding appropriateness, it then goes on to perform another task of deciding which of the two or possibly more proposed units is more or most appropriate amongst them all. That, as it seems to me, involves reading into the statute a requirement that not only is not there, but also is inconsistent with what is there: because if the obligation under 11(2)(a) was to conduct a comparative exercise, it would be wrong to use simply the language of appropriateness, rather than language that much more clearly drew the Tribunal's attention to the need to choose between various alternatives.
10. It is also not irrelevant to that consideration that there is no formal provision under the statute for the employer to propose an alternative. Of course, he may do so, and in this case I am prepared to accept that that is what he did: though a fair reading of the entire objections raised by the employer seems to me more to concentrate on his objections to the London bargaining unit in the context of the management structure of the company as a whole, rather than to urge that there were positive merits supporting a bargaining unit extending to the company at large. However that may be, the employer can take part in this process without proposing any bargaining unit at all. If it were intended that in every case where the employer proposed an alternative unit his unit would be necessarily considered pari passu with the union's unit, then I cannot help thinking that some much clearer guidance would have been given in the Schedule to that end, with provisions for the employer to take the necessary step preliminary to that consideration.
11. However, in that context, of the employer's interest, it is important to note that the analysis of this Schedule, in terms of the CAC starting with consideration of the union's unit, is subject to the important qualification that, in determining the appropriateness of the union's proposed bargaining unit, the CAC must not confine itself to the union's arguments, but has to take into account the statutory considerations, including importantly effective management and the views of the employer. As he did in the present case, the employer may well raise objections to the appropriateness of the union's proposed bargaining unit by urging that only another and different unit could be appropriate. The CAC cannot simply ignore such objections. It has to determine whether the objections, and the availability of alternatives that may form an important part of the argument in support of those objections, render inappropriate for bargaining purposes the unit proposed by the union. What, in my view, however, the CAC does not have to do is to conduct a search for the most appropriate unit from amongst those that are proposed to it.
12. The judge accepted that last point, thereby disagreeing with an important part of the submissions of the employer before him. However, he also disagreed with the contention of the CAC, that the statutory scheme required the union's proposal to receive first consideration. He did so because he appears to have understood the contention to be that the CAC could and must consider the union's proposal, as it were in the air, without reference to possible modifications to it, and without reference to the views of the employers. The latter could only be taken into account if the CAC found that the union's proposal failed the test of appropriateness.
13. The CAC said before us that that had not been its argument. It had accepted before Elias J that in assessing the union's proposal, which is the starting point of the inquiry, the CAC can and must take into account the employer's views. It may not be very illuminating to seek to resolve how the argument in fact did proceed before Elias J, because the important consideration in the present case is that the CAC undoubtedly did take the employer's views in respect of a company-wide unit into account when examining the union's proposals. Its conclusion, set out in detail in paragraphs 13 to 16 of its determination, was, however, that those arguments did not undermine the appropriateness of the London area proposed by the union for bargaining purposes. I have indicated that I am satisfied that that was a conclusion fully open to the CAC, it having given consideration in the context of the union's proposal to the employer's competing proposal. In reaching that conclusion, the CAC did not, as Elias J feared it might have done, fail to have regard to matters that it was statutorily required to take into account.
14. I should mention a number of further considerations by which I am fortified in that conclusion. First, as Elias J records in paragraph 30 of his judgment, the argument before him focused on three sentences in the determination, relating to the obligation to take into account the need for the unit to be compatible with effective management:

"The union reminded us that 'compatible' means 'consistent' or 'able to co-exist with'. That is, we are not required to decide on the most effective form of management, merely that what we decide is compatible with effectiveness. Or, to put it another way, we need to examine whether the union's proposed bargaining unit is found wanting and does conflict with effective management."

15. The judge held, at paragraph 62 of his judgment, that that construction was correct. The duty was not to determine the unit that was compatible with the most effective management: there might be a number of possible bargaining units that would be consistent with effective management, but not necessarily as effective. I would respectfully agree. But if the CAC plays this comparatively modest role in deciding compatibility with effective management, it is difficult to see why, in the case of appropriateness, it does not have the same order of obligation: which is to assess the proposal before it in its own right, whilst recognizing that there may be other possible proposals that would equally meet the statutory requirements. Were the case otherwise, and the CAC were under an obligation to seek the optimum bargaining unit, or at least (as the judge held) to consider and adopt improvements on the union's proposed unit, then it is difficult to see why it would not be obliged, as part of that process, to bring the relationship between the union's proposed unit and efficient management under more critical review than is envisaged by the judge in paragraph 62.
16. Second, the judge rejected Kwik-Fit's argument that the duty of the CAC was to find the most appropriate bargaining unit, as I have indicated. It is helpful to cite what he said in paragraphs 49 to 50 of his judgment:

"However, while I accept Mr Bowers' submissions on this aspect of the case, I do not agree with his related submission that the CAC must choose the most appropriate bargaining unit on the evidence before it. On the face of it, this is a perfectly cogent submission. Indeed, it seems perverse to conclude that the CAC is entitled to determine, as the appropriate bargaining unit, a less rather than more appropriate unit. But in my judgment what is most appropriate depends upon the particular context in which a determination has to be made. The CAC is not engaged in an abstract exercise of deciding how in an ideal world it would map out a company's bargaining arrangements. It is faced with a specific claim for recognition which the employer has already rejected. The employer's opposition may be to any bargaining; sometimes it will be to the particular bargaining unit selected by the union. But the employer's opposition must seriously engage the union's proposal if it is to carry any significance. If the employer is going to suggest an alternative bargaining unit it must be one that would at the very least be capable of regulating the terms of a significant proportion of the workers in the union's proposed bargaining unit. To take an extreme example, it is obviously no answer to a claim for recognition in Bolton that there is a more appropriate bargaining unit in Liverpool. That simply does not meet the union's claim that it should represent a group of workers who want their pay, hours and holidays determined by collective bargaining, and it does not meet the concerns of these workers.

50. If the CAC were to have to determine the most appropriate bargaining unit, independently of the context in which the issue arises, it would in many, perhaps most, cases be reaching a decision of no value which could, moreover, frustrate the statutory process. The company will often be able to suggest what everyone would agree would be, if it could be implemented, a more desirable bargaining unit to that proposed by the union, while of course being unwilling actually to recognise any union in respect of its proposed unit. For example, unions will often pursue recognition following a concerted membership campaign in a particular geographical area or company division. It can hardly have been Parliament's intention that it should fail in its recognition ambitions simply because the employer was able to conceive of a better starting point for collective bargaining, such as recognition nationally or on a regional basis, or through plants rather than divisions. Of course, the position would be otherwise if the union's proposals were not compatible with effective management."

17. I would respectfully agree. But the difficulty is that, once it is accepted that the CAC's task goes beyond assessing the appropriateness of the union's proposed unit, there is no logical reason to stop at any point short of that contended for by Kwik-Fit. The judge's observations are, rather, directed at why such a step might produce results that were inappropriate in the context of the general process envisaged by Appendix A1. But that in my view goes a long way towards demonstrating that the CAC's task is to determine whether the structure proposed by the union is appropriate for pay bargaining purposes, and no more than that.
18. Third, Kwik-Fit, by a respondent's notice, seeks to reinstate this part of its argument, that the CAC should have determined the most suitable bargaining unit. As a modified version of that claim, it argues that in assessing the union's proposed unit, the CAC should at least have taken into account the relative merits of the employer's proposed unit as a unit. The difficulty of the first contention is not only that pointed out by the judge, but also that the process might well leave the CAC with having found that two, or possibly more, overlapping units were appropriate. It is wholly unclear on Kwik-Fit's argument what the CAC is then supposed to determine. It was to avoid that dilemma that Annexe A1 was drawn in the way that it was. It is at that point that the employer can only avoid that dilemma by saying that the CAC must then choose between two units that it has found to be appropriate.
19. So far as the second contention is concerned, while the CAC did not in terms pass on the employer's bargaining unit, it was well aware of why that unit had been proposed; of the merits claimed for it; and of the reasons why those merits were said to make the union's unit inappropriate. Unless the CAC did indeed have a primary obligation to choose between all possible contenders in the field, a contention that the judge thought, as I think, to be quite inconsistent with the use of the language of appropriateness, the CAC had fully fulfilled its statutory task.
20. Fourth, the judge held that since, in his view, the CAC had wrongly formulated its task, he could not be certain that it would have come to the same conclusion on the evidence before it, had it applied the proper test to it. The matter therefore had to be remitted. But the real, indeed the only, vice identified by Elias J was that to which he refers in paragraph 44 of his judgment: if the construction proposed by the CAC is correct, the employer's views as to the appropriate unit would have no relevance unless and until the union's proposal was found to be wanting. But the passages set out by Elias J make it entirely clear that the employer's views were seen as relevant by the CAC and taken into account by it. The employer's position was very simple. The union's unit, limited to London, was not appropriate, because the only appropriate unit in Kwik-Fit's view was a single unit covering the whole country, mirroring the management and management structure of the company. For reasons set out in detail, the CAC did not accept that criticism. Even if the judgment of Elias J were to be upheld, and the issue be remitted to the CAC for the reasons set out therein, I do not see how the CAC could properly come to any other conclusion than that which it has already reached.
21. Sixth, and allied to the last point, the contest before the CAC was straightforward. It did not partake of the type of case hypothesised by Elias J, where modifications or improvements might be suggested to the union's proposal, or where constructive dialogue was offered by the employer as to proposals different from those of the union. The employer's position in this case was that only his proposal, of a national unit, could meet the statutory criteria. The CAC did not agree. In so determining, they not only upheld the union's proposal but rejected, in a reasoned decision, the employer's criticism of it. Since it is not now contended that the CAC acted irrationally, and plainly could not be so contended, that must necessarily be the end of the case.
22. For those reasons I would allow the appeal and reverse the decision of the judge below.
23. LORD JUSTICE LATHAM: I agree.
24. SIR DENIS HENRY: I agree.
Order: Appeal allowed. ANNEX

The Background

25. Kwik-fit GB is a company operating throughout Great Britain. It specialises in the replacement of tyres, brakes and exhausts on cars. It is part of the Kwik-Fit Group, which is a wholly owned subsidiary of the Ford Motor company. It apparently has some 646 centres in Great Britain of which 110 are located in London (ie within the M25 boundary).
26. The TGWU has been for some two years actively seeking to organise and recruit Kwik-Fit employees in the London area. It has on a number of occasions represented employees in disciplinary and grievance procedures in that region. On 5 October 2001 it submitted an application for recognition by Kwik-Fit in relation to the company's London employees, pursuant to Part 1 of Schedule A1 to the Trade Union Labour Relations (Consolidation) Act 1992. The Central Arbitration Committee ("CAC") held a hearing into that application on 18 December at which there was a wide ranging discussion between representatives of both parties as to the appropriate bargaining unit. The CAC also received written observations in advance of that hearing, and various company documents.
27. Subsequently, on 20 December 2001, the CAC determined that the bargaining unit proposed by the TGWU, namely the two London divisions, was indeed the appropriate bargaining unit. Under the relevant legislation that means that if there is the requisite approval in a ballot of the workers in the relevant unit, the company will be obliged to recognise the union for collective bargaining purposes in respect of wages, hours and holidays.
28. Kwik-Fit now seeks to challenge that determination of the CAC. It has initiated proceedings for judicial review. I granted permission for the application to be made on 29 January. There was some urgency about the application because it was proposed to send out the relevant ballot papers on 18 February. In order not to lose this timetable in the event that the application was unsuccessful, and because there was very little further evidence that needed to be lodged, the parties agreed that there should be a very truncated timetable for exchanging any additional evidence and it has been possible for the substantive hearing to be heard within a week of permission being granted. The TGWU is an interested party and has been separately, and ably, represented by Ms Mountfield.

The legislative context

29. It is necessary to set out the statutory background against which this application is made. The legislation was introduced by theEmployment Relations Act 1999 which created a new schedule - Schedule A1 - to the Trade Union and Labour Relations (Consolidation) Act 1992. The schedule deals with recognition and subsequent variations as well as de-recognition. Recognition itself is regulated by Part 1 of the schedule. The provisions are exceptionally detailed; Mr Bean QC for the CAC accurately described them as being of "byzantine complexity". I will not begin to seek to deal with all the permutations envisaged by the statue but will merely outline the basic structure so that the issues in this case can be placed in context.
30. The purpose of the legislation is to enable a trade union which is refused recognition by an employer to use the legal process to require the employer to enter into collective bargaining. Recognition means that the union should be "entitled to conduct collective bargaining on behalf of a group or workers" (paragraph 1). Collective bargaining, in turn, is defined as "negotiations relating to pay, hours and holidays", unless the parties agree to a broader range of matters (paragraph 3).
31. The process commences with the trade union making a request for recognition from the employer. Certain conditions must be met if the request is to be treated as valid within the terms of the legislation. For example, it must be in writing, be made by an independent trade union and identify the proposed bargaining unit. In addition, the employer (together with any associated employer) must employ at least 21 workers (paragraphs 4 to 9).
32. The employer is given 10 working days to agree the request. If the request is accepted that is the end of the matter. If it is rejected or there is no response, then the union applies for recognition. This is made pursuant to paragraph 11 (2), an important provision in this case which I set out below. (There is a variation of the procedure where the employer agrees to negotiate about the proposed recognition but those negotiations fail to bear fruit).
33. The second stage is the acceptance or otherwise of the application. The CAC must decide two questions in order to determine whether the application can be accepted. First, it must be satisfied that the original request was valid in the way I have described above. Second, it must decide whether it is admissible within the meaning of paragraphs 33 to 42 (paragraph 15). The most important criterion of admissibility is that members of the union must constitute at least 10 per cent of the workers in the proposed bargaining unit, and that the CAC must be satisfied that a majority of the workers would be likely to favour recognition (paragraph 36).
34. The third stage is the determination of the bargaining unit. (That, of course, is the principal issue in this case.) In accordance with the general philosophy that voluntarism is preferable to legal regulation, the CAC must try to help the parties reach agreement as to the relevant bargaining unit. But if that is unsuccessful, then the CAC itself must determine the bargaining unit (paragraph 19 (2)). Paragraphs 19 (3) and (4) set out criteria which must be taken into account in the course of that process. I consider them in more detail below.
35. Once the CAC has determined the bargaining unit, the fourth stage depends on the outcome of that decision. If the bargaining unit determined is the same as that proposed by the union, then a ballot may have to be held. In general, a ballot will not be required if the union has a majority of the workers in the bargaining unit as members (although even then a ballot may be required if, broadly, there are doubts as to whether the majority does want the union to be recognised, or if good industrial relations makes this desirable) (paragraph 22). Otherwise a ballot will be necessary. Where no ballot is required, the CAC simply declares that the union is recognised and entitled to conduct collective bargaining.
36. The position is more complex if the stipulated bargaining unit is not that proposed by the union. The CAC must then decide whether the application is invalid within the meaning of paragraphs 43 to 50 (paragraph 20). The most significant feature here is that the CAC must be satisfied in respect of the stipulated bargaining unit that the 10 per cent criterion and that relating to the likelihood of majority support are met. If not, the application will at that stage be treated as invalid. If it is valid, then the issue as to whether a ballot is required is determined in the same manner as I have outlined above.
37. Where a ballot is required it will be carried out by a qualified independent person appointed by the CAC. The employer must co-operate in the process and permit the union to have access to the workers. The CAC must make a declaration of recognition if the result is favourable; this requires both that those who vote in favour constitute a majority of those voting; and that they constitute at least 40 per cent of the workers constituting the bargaining unit (paragraph 29 (2)).
38. If the vote is against then the CAC must declare that the union is not entitled to recognition. Essentially it cannot re-apply for recognition in respect of that group of workers (or a substantially similar group) for three years (paragraph 40).
39. The consequences of the declaration in favour of recognition are that the employer is obliged to recognise the union in respect of the relevant bargaining unit. In the absence of agreement between the parties, the CAC will be required to stipulate the method by which collective bargaining can be carried out (paragraphs 30 and 31). The ultimate, and only, sanction for failure to comply is specific performance (paragraph 31 (6)).

The determination of the CAC

40. The fundamental question is whether the CAC properly approached its determination of the appropriate bargaining unit. The CAC gave reasons for its determination, as it habitually does. (Surprisingly, there is no statutory duty to do so in relation to this decision, unlike the decision on admissibility where reasons must be given: see paragraph 36 (3)).
41. After setting out the background, the CAC summarised the union and the employer's cases in the following terms:

"Summary of the Union case

7. The Union argued that the two London Divisions were distinct in employment terms from the rest of the Company. There was a London weighting allowance and had, until recently, operated a particular pattern of hours of work. The Union contended that the London Divisions had an identifiable management structure and that final decisions on matters of discipline and dismissal were taken by Divisional Directors alone without formal reference to the Company Head Office. They noted that there was one personnel manager, or Training and Development Manager, in London covering both Divisions.

8. The Union drew the panel's attention to a variety of examples of companies in the transport sector which actively encouraged the decentralisation of collective bargaining, often to a local site level. A number of these were integrated organisations with national operations. It must be presumed, they argued, that these organisations found bargaining decentralisation compatible with the effective management of a centralised organisation. They suggested that their application could not be construed as encouraging the fragmentation of bargaining units since it covered the whole of the London area.

Summary of the company's case

9. In rejecting the Union's arguments, the Company laid especial emphasis on the integrated and centralised nature of its operations. The success of the Company was founded on standardised high quality service provided in each of the Centres. This was reflected in the management of the employment relationship. All fitters and, with appropriate variations to allow for seniority, Centre Managers had the same basic terms and conditions of employment as revealed in the common employment Handbook, the same training, same career ladder, same hours of work and holiday entitlement and identical rosters system. The rules of the profit sharing scheme were nationally designed and applied equally in all Centres based on local profitability. While decision taking in discipline and dismissal matters was taken by a manager or Director at the appropriate level (with more senior staff being handled at Head Quarters level) the same national procedures were used and carefully enforced in all sites.

10. The only flexibility in terms and conditions of employment related to pay since it was both necessary and sensible to adjust pay rates in accordance with local or regional variations. The Company drew attention to the fact that there was no reference to a London Weighting in any of the company literature. They accepted that virtually all qualified and trained fitters in the two London Divisions received an allowance or salary enhancement but noted that similar allowances were paid in Aberdeen and some other locations where they were experiencing recruitment difficulties. While Divisional Directors made recommendations for such allowances, the decision was taken centrally in the Scottish Head Quarters. The Company contended that there was nothing special or unique about the way the London Divisions were managed, with each having a divisional director.

11. The Company expressed concern at the possible consequences of a decision to allow for a London bargaining unit. There was a danger that it might sap morale if different terms and conditions were to apply. More serious was the real possibility of multi-unionism emerging in the future with competing bargaining units in different divisions. Emphasis was placed on the danger of leap-frogging in bargaining."

42. Then after drawing attention to two previous rulings of the CAC which the employers submitted supported their argument, the CAC continued setting out the employer's case:

"As an integrated, national company the only bargaining unit that would be compatible with effective management would be one covering the whole of their operations in England, Scotland and Wales for Tyre and Exhaust Centre staff up to and including Centre Managers."

43. The CAC then set out its own considerations together with its conclusions in paragraphs 13 to 16:

"13. The Act requires the Panel in s. 19.3 (a) to give precedence to the need for the bargaining unit to be compatible with effective management. Other considerations to be taken into account, in as far as they do not conflict this compatibility with effective management, are listed in s.19.4. We have listened carefully to the oral submissions of both parties, have studied their written submissions and have questioned them closely on aspects of their cases. We note that there are no existing local and national bargaining arrangements that apply to Kwik-Fit GB and neither party has argued that any particular distinctive characteristics of the workers or their location apply in this case. We are not of the view that a bargaining unit covering the whole of London and a significant proportion (20%) of the Company's employees can be considered either a small or fragmented unit especially as there are no other bargaining units in the Company (with the exception of Northern Ireland which is, in any event a separate company).

14. We have taken great care in reviewing the points made to us about the need for the unit to be compatible with effective management. We have noted that the union recognises that the company has strong national policies and culture and operates as a national unit. It has suggested that its aim is to negotiate a modern partnership agreement which fits the needs of the business, to remain an efficient `best-in class' business, while meeting the needs of its members. We accept that the company operates centrally and seeks to apply uniform policies and procedures across all sites not just in employment but in wider aspects of operational management. We also accept that there is nothing particularly distinctive about the London divisions which mark them out from the rest of the company although, as both parties agreed, London does have a distinctive labour market. There are, however, aspects of operations such as the handling of disciple (sic) and dismissals, the relative autonomy of Divisional Directors, and the local delivery of training co-ordinated currently by one manager in London which allow us to conclude that it is possible for other aspects of employment practice, such as collective bargaining, to be applied at the London Divisional level. We note that there are many examples of central control being exercised in companies which have opted for a decentralised bargaining structure. That is, the central features of policy and practice and the approval of budgets remain in the control of the centre, a matter the trade unions sometimes find frustrating. We do not believe that collective bargaining covering all of the London Centres would undermine or challenge the continued mode of management preferred by Kwik-Fit GB. In this regard we have paid attention to the two previous CAC decisions drawn to our attention by the company. It seems to us that in both cases particular emphasis was placed on the needs of these two companies to ensure that there was full flexibility of labour between sites and there were particular business reasons why this was necessary. With the relatively rare exception of the movement of staff across the M25 boundary, we have heard no evidence that there is significant movement of fitters to Centres in different Regions, let alone Divisions. The particular features of these cases do not therefore apply to this one.

15. We are required to ensure that the unit is compatible with effective management. The union reminded us that `compatible' means `consistent' or `able to co-exist with'. That is, we are not required to decide on the most effective form of management, merely that what we decide is compatible with effectiveness. Or, to put it another way, we need to examine whether the union's proposed bargaining unit is found wanting and does conflict with effective management. Using this test we concluded that it was possible for a bargaining unit to apply across the London divisions. We noted that it is only recently that two divisions have been created and the previous organisation structure provided a unified management in London. We also note that, within the bounds of national policies, there exists a management team quite capable, in our view, of conducting collective bargaining and able to forge workable relationships with the union. That is, the bargaining unit proposed by the union is compatible with effective management.

16. We cannot predict what the consequence of a London bargaining unit would be on the rest of the company, just as we cannot predict how the company will respond to legislative changes concerning employee participation. We do note, however, that the company has the managerial capacity and the size to exert a strong influence over future events if it so wishes."

The key legislative provisions

44. This case involves a challenge to the determination of the bargaining unit by the CAC. The parties have strongly relied upon the following provisions in particular in their submissions - paragraph 11:

"11 (1) This paragraph applies if -

(a) before the end of the first period the employer fails to respond to the request, or

(b) before the end of the first period the employer informs the union (or unions) that the employer does not accept the request (without indicating a willingness to negotiate).

(2) The union (or unions) may apply to the CAC to decide these questions -

(a) whether the proposed bargaining unit is appropriate or some other bargaining unit is appropriate;

(b) whether the union has (or unions have) the support of a majority of the workers constituting the appropriate bargaining unit."

45. The other significant provisions are paragraphs 19 (2), (3) and (4). They are as follows:

"19 (1) This paragraph applies if -

(a) the CAC accepts an application under paragraph 11 (2) or 12 (2), and

(b) the parties have not agreed an appropriate bargaining unit at the end of the appropriate period.

(2) The CAC must decide the appropriate bargaining unit within -

(a) the period of 10 working days starting with the day after that on which the appropriate period ends, or

(b) such longer period (so starting) as the CAC may specify to the parties by notice containing reasons for the extension.

(3) In deciding the appropriate bargaining unit the CAC must take these matters into account -

(a) the need for the unit to be compatible with effective management;

(b) the matters listed in sub-paragraph (4), so far as they do not conflict with that need.

(4) The matters are -

(a) the views of the employer and of the union (or unions);

(b) existing national and local bargaining arrangements;

(c) the desirability of avoiding small fragmented bargaining units within an undertaking;

(d) the character is of workers falling within the proposed bargaining unit and of any other employees of the employer whom the CAC considers relevant;

(e) the location of workers."