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When Must an Employer Recognise a Trade Union for Collective Bargaining Purposes?

on Friday, 19 May 2017.

In Lidl Ltd v Central Arbitration Committee & Anor, the Court of Appeal considered whether a group of warehouse operatives constituting 1.2% of Lidl's total workforce was an appropriate bargaining...

...unit for the purposes of the statutory test contained in the Trade Union and Labour Relations (Consolidation) Act 1992 (the Act).


The GMB union, an independent trade union, applied to the Central Arbitration Committee (CAC) for statutory recognition of a 'bargaining unit', which was made up of warehouse operatives working in particular sections of Lidl's regional distribution centre in Bridgend (one of nine such centres owned and run by Lidl). The staff in the bargaining unit constituted just 1.2% of Lidl's total workforce in the UK. At that time, Lidl did not recognise a trade union for any of its employees in Great Britain and would not agree to recognise the GMB in respect of this group of workers. It therefore fell to the CAC, under the process set out in the Act, to decide whether the GMB's proposed bargaining unit was 'appropriate'. The Act states that when making this decision the CAC must take into account the need for the proposed unit to be "compatible with effective management", as well as other listed factors. One of those factors is "the desirability of avoiding small fragmented bargaining units".

The CAC accepted the GMB's proposed bargaining unit and in doing so noted that, because the proposed bargaining unit would be the sole existing bargaining unit, there would not be any small fragmented bargaining units. This decision was subsequently upheld by the High Court. It was established that even though the proposed bargaining unit would involve 'double segmentation', as it was formed by reference to both job description and location, it was nonetheless "compatible with effective management", on the basis that:

  • the warehouse operatives were treated as a distinct group with a separate contract
  • despite the accepted 'one Lidl' culture and a single pay scale applying to all warehouse operatives, exceptions could be made to standard terms and conditions without compromising the need for effective management
  • there was no evidence of current demand for collective bargaining at other sites.

Lidl appealed to the Court of Appeal.


The Court of Appeal dismissed Lidl's appeal on the basis that the reference to 'small fragmented bargaining units' in the legislation reflects the undesirability of employers having to negotiate in more than one place and with more than one union over parts of their workforce who are essentially the same, with the accompanying risk of inconsistent outcomes and of disruption as a result of competition between unions. In other words, it is fragmentation of 'collective bargaining' that the test is designed to prevent. In Lidl's case, having "a small island of union recognition in a sea of non-recognition" could be regarded as undesirable in more general terms, but this has to be looked at not as a fragmentation issue but under the overriding heading of appropriateness/compatibility with effective management.

The Court of Appeal pointed out that the 'appropriateness' test is a broad one, under which there are specific considerations to be taken into account, rather than a set of hard-edged criteria. In the court's view, the test was deliberately framed in this way to allow "full range to the expert judgment of the CAC" in making decisions about bargaining units. It therefore recommended that the court exercise caution in entertaining challenges to CAC decisions on bargaining units.

Best Practice

Employers are advised to think carefully about whether they have any appropriate reason not to recognise a union. If an employer does not have a reason to reject recognition of the union outright, it can still seek to negotiate over the constitution of the bargaining unit with the union or argue this before the CAC. Employers can consider, for example, how many employees they believe should form part of the bargaining unit and seek to justify this. If the statutory recognition procedure is followed, the CAC may make some orders. These may, for example, compel employers to disclose a list of workers within the proposed bargaining unit and the locations where they work. Employers should be prepared to comply with the CAC’s demands.

Employers should always take into account the possible impact on wider industrial relations in deciding whether or not to aggressively challenge a union application for recognition. This case demonstrates that as long as a union proposes a unit that can be described as 'appropriate', the CAC will generally accept it, even if the employer can make a good argument that another bargaining unit is more appropriate. With the Trade Union Act imposing higher ballot thresholds, it seems likely that applications for recognition may increasingly involve smaller bargaining units, and this case shows that size alone will not necessarily prevent a bargaining unit being appropriate; although multiple application for small units may be found inappropriate on the basis of fragmentation.

For more information, please contact Lorna Scully in our Employment Law team on 0121 227 3719.

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