England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM the High Court, QBD, Administrative Court
Mr Justice Lewis

		Royal Courts of Justice Strand, London, WC2A 2LL
		04/05/2017

Lord Justice Underhill:

INTRODUCTION

1. The Appellant ("Lidl") is the service company that employs the staff working in the Lidl supermarket chain in Great Britain. On 7 March 2016 the Second Respondent to this appeal, the GMB, submitted an application to the Central Arbitration Committee ("the CAC"), under paragraph 11 of Schedule A1 to the Trade Union and Labour Relations (Consolidation) Act 1992, to be recognised by Lidl for the purposes of collective bargaining for a bargaining unit defined as "Warehouse Operatives working in the following sections: Goods in, Goods Out & Selection employed at Lidl's Bridgend Regional Distribution Centre".
2. The CAC accepted the application under paragraph 15 of the Schedule, giving rise to a period during which it was open to the parties to agree whether the proposed bargaining unit was "appropriate": see paragraph 18. They were unable to agree, so the matter fell for decision by the CAC under paragraph 19, the full terms of which I will set out in due course. By a decision dated 25 May 2016 a panel of the CAC (comprising Professor Gillian Morris, Ms Judy McKnight and Mr Paul Wyatt) decided that the proposed unit was appropriate.
3. On 14 June 2016 Lidl issued proceedings for judicial review of the CAC's decision; and that claim was, with admirable expedition, listed on a rolled-up basis before Lewis J on 15 July. The CAC did not appear and the claim was resisted by the GMB as an Interested Party. By a judgment handed down on 10 August Lewis J granted permission but dismissed the claim. This is an appeal against that decision, permission having been granted by Arden LJ on the papers.
4. Before us Lidl was represented by Mr Daniel Barnett of counsel and the GMB by Ms Aileen McColgan. Both counsel appeared before Lewis J. In addition, Mr Barnett had presented Lidl's case at the hearing before the CAC.

THE FACTS

5. The essential background facts are not in dispute and I can set them out very shortly.
6. At the time of the application to the CAC Lidl had 18,203 employees in Great Britain. The Lidl business had nine Regional Distribution Centres ("RDCs"). The warehouse staff at Bridgend in respect of whom recognition is sought number 273, i.e. about 1.2% of Lidl's total workforce.
7. Warehouse operatives are classed by Lidl as "category 6" staff. This is a broad category numbering 14,675 employees, i.e. about 81% of the workforce, and includes the workers in its stores and junior office staff. Their contractual terms and conditions, whatever their particular roles and wherever they are employed, are essentially the same, but there are a few differences as regards particular terms. Although warehouse operatives comprise most of the category 6 staff employed in RDCs, they are not the only such employees: HR administrative staff, cleaners and maintenance staff are also in category 6. The warehouse operatives at Bridgend are about 1.5% of Lidl's category 6 employees.
8. Lidl does not recognise a trade union for any of its employees in Great Britain.

THE STATUTORY PROVISIONS

9. The provisions of Schedule A1 to the 1992 Act are extremely complex, but the issue before us is narrow and I need only give a bare summary, in order to give the context, and set out one paragraph in detail.
10. Part I of the Schedule is headed "Recognition" and provides for a procedure by which an independent trade union may request recognition from an employer and, if that cannot be achieved by agreement, seek a decision from the CAC which in effect requires the employer to recognise it. Recognition means recognition for the purposes of collective bargaining – defined in paragraph 3 as negotiations relating (unless otherwise agreed) to pay, hours and holidays – for a specified group of workers, the workers concerned being described as the "bargaining unit" (see paragraph 2 (2)).
11. The recognition process is begun by the union making a request for recognition under paragraph 4 of the Schedule: the request must, among other things, identify the proposed bargaining unit (see paragraph 8).
12. If the request is not accepted within a specified period, the union may apply to the CAC under paragraph 11 (2) for a decision:

"(a) whether the proposed bargaining unit is appropriate;

(b) whether the union has … the support of a majority of the workforce constituting the appropriate bargaining unit."

The application to the CAC with which we are concerned was for a decision on the first of those issues. There are criteria in paragraphs 14-15 governing the acceptance or rejection by the CAC of such an application, but no issue arises about those in this case.

13. The resolution of whether the proposed bargaining unit is appropriate is governed by paragraphs 18-19B of the Schedule. If the parties are unable to reach agreement the CAC is obliged by paragraph 19 (2) itself to "decide whether the proposed bargaining unit is appropriate". By sub-paragraph (3), if it decides that it is not, "it must also decide … a bargaining unit which is appropriate". The decision of the CAC in the present case was taken under paragraph 19 (2).
14. The provision of central importance for this appeal is paragraph 19B, which provides, so far as relevant, as follows:

"(1) …

(2) 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 (3) so far as they do not conflict with that need.

(3) 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 characteristics of workers falling within the bargaining unit under consideration and of any other employees of the employer whom the CAC considers relevant;

(e) the location of workers.

(4) 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.

(5) …"

I will refer to the five heads under sub-paragraph (3) as "the sub-paragraph (3) matters". To anticipate, this appeal is essentially concerned with head (c) – the "desirability of avoiding small fragmented bargaining units".

15. It is worth spelling out the structure of the exercise required by paragraphs 19 (2) and 19B. The determinative question is simply whether the proposed bargaining unit is "appropriate". That term is not defined anywhere; but in considering the statutory question the CAC is obliged to take into account the matters specified in paragraph 19B (2). Among those matters the need for the unit to be compatible with effective management, as specified under (a), clearly has primacy over the sub-paragraph (3) matters (brought in via (b)). That appears from the provision that the latter are only to be taken into account "so far as they do not conflict with that need". But the considerations covered by the two heads under paragraph 19B (2) are not wholly distinct: to a considerable extent the assessment of the sub-paragraph (3) matters will feed into the assessment of the compatibility of the unit with effective management.
16. It is in my view clear that that structure, adopting a broad criterion of "appropriateness", subject to specified considerations to be "taken into account", rather than setting hard-edged criteria, reflects an intention on the part of Parliament to allow full range to the expert judgement of the CAC in making decisions about bargaining units. It follows that the Court should be very cautious in entertaining legal challenges to decisions of the CAC under paragraph 19. I endorse, without setting out in extenso, the observations of Moses J in R (British Broadcasting Corporation) v Central Arbitration Committee [2003] EWHC 1375 (Admin), [2003] ICR 1542, at paras. 12-15 (pp. 1548-9), which themselves adopt observations of Elias J in R v Central Arbitration Committee, ex p Kwik-Fit (GB) Ltd [2002] EWHC 277 (Admin), approved by this Court on the appeal ([2002] EWCA Civ 512, [2002] IRLR 395).
17. I should add for completeness that in exercising any of its powers under Schedule A1 the CAC is under a general duty formulated at paragraph 171 as follows:

"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."

THE PARTIES' CASES BEFORE THE CAC

18. Both parties lodged written submissions for the hearing before the CAC. We were told that, in accordance with the usual practice in the CAC, the actual hearing was short and the oral submissions added little to what had already been submitted in writing.
19. For the purposes of the issues in this appeal I need only refer to Lidl's submissions, drafted by Mr Barnett, of which we have been given a copy. More particularly, we are concerned with paras. 14-48, which set out its reasons for contending that the bargaining unit proposed by the union was not appropriate. (Paras. 49-68 addressed four alternative units proposed by Lidl.) Since one of the issues is whether the CAC properly addressed some of the points made in those paragraphs, I need to summarise them in a little detail.
20. At paras. 14-17 Mr Barnett addressed the primary criterion under section 19B (2), namely whether the proposed bargaining unit was "compatible with effective management". His submission, described as "Lidl's principal argument", was that it was simply too small for that purpose. As he put it, "it is not only a statistically insignificant subgroup of the workforce but an artificial one".
21. Mr Barnett then proceeded to address in turn each of the five heads under paragraph 19B (3). For the purposes of this appeal we are concerned only with his submissions about head (c). As to that:

(1) At paras. 25-27 he set out the figures which I have given at paras. 6-7 above, which show how small a proportion of the workforce generally, and the category 6 workforce in particular, the warehouse operatives at Bridgend represent.

(2) At paras. 28-30 he submitted that it was "neither efficient nor compatible with effective management to fragment the workforce in that way" – sc. such that so comparatively small a proportion of the workforce group formed a bargaining unit for the purpose of collective bargaining. He referred to Lidl's "one company" ethos and the fact that there is "single status" as regards terms and conditions for category 6 staff, which would be destroyed if the proposed bargaining unit were adopted. Having to treat the Bridgend warehouse operatives (or all warehouse operatives) differently would be neither efficient nor compatible with effective management.

(3) At para. 31 he submitted as follows:

"31. Moreover, the proposed bargaining unit results in local fragmentation within the Bridgend RDC. It will lead to:-

(a) tension between the 223 warehouse operatives in the Bridgend RDC and the 39 other category 6 employees in the Bridgend RDC who currently enjoy the same terms and conditions but are not warehouse operatives (and fall outside the proposed bargaining unit);

(b) tension between the 223 warehouse operatives in the Bridgend RDC and the 957 other category 6 employees costed to the Bridgend RDC (mainly store employees in the Bridgend area), who are employed on the same terms and conditions."

(4) Paras. 33 and 34 read as follows:

"33. Further, the proposed bargaining unit results in national (as well as local) fragmentation. It is not compatible with effective management to have one of nine RDCs operating under different terms regarding pay, hours or holiday. It will:-

(a) cause tension between the 223 warehouse operatives in the Bridgend RDC and the rest of the 2,443 warehouse operatives in the other eight regions (the Bridgend warehouse operatives representing just 9.1% of all the warehouse operatives); and

(b) lead to difficulty when transferring employees between regions – which again can be done for a number of reasons.

34. The logical consequence of the union's position is that Lidl could end up recognising a substantial and unworkable number of bargaining units, each competing with one another, including:-

nine separate bargaining units, for the warehouse operatives in each of the nine regional RDCs;

nine further bargaining units, for the other category 6 employees within the RDCs;

at least nine (and possibly 637) further bargaining units, either one for the stores within each of the nine regions, or even one for each of the 637 stores;

one for the category 6 employees in head office in Wimbledon

and even that is limiting the employees in a bargaining unit to the category 6 employees. If the net is spread wider, there could be more applications for recognition."

(5) Para. 35 repeats the points that the proposed bargaining unit is too small and that treating it differently is incompatible with Lidl's "one Lidl culture".

THE DECISION OF THE CAC

22. The structure of the CAC's decision is as follows. Paras. 1-8 are introductory. Paras. 9-29 contain very full summaries of the submissions of the parties, without any findings or expressions of view by the Panel itself. The section in which it considers and expresses its conclusions on the submissions is at paras. 30-36, headed "Considerations" (I suspect that this is a slip for "Consideration"). It is with that part of the decision that we are concerned.
23. Para. 30 identifies the relevant statutory provisions. Para. 31 says that "[t]he 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". It then proceeds to consider the matters which it is required by paragraph 19B (2) to take into account. It deals separately with the primary question, raised by paragraph 19B (2) (a), as to whether the proposed bargaining unit is "compatible with effective management", and with the sub-paragraph (3) matters. I take them in turn.
24. As regards the former, the CAC says, at paras. 32-35:

"32. The Panel considers that the Union's proposed bargaining unit is compatible with effective management. The Employer's operation is divided into nine major geographical areas, each of which has its own Regional Distribution Centre, of which Bridgend is one. Each region has its own management team which is expected to deal with local problems. A Regional Director has responsibility for the stores and warehouse within a given region, supported by (amongst others) a Head of Logistics, Heads of Sales and a Head of Administration. Disciplinary and recruitment matters are dealt with by the Team Manager of the warehouse. There is a management structure in place, therefore, which reflects the geographical scope of the Union's proposed bargaining unit.

33. The Employer emphasised to us the importance of the 'One Lidl' culture and the principles of standardisation to its operation, exemplified in the fact that there is a single pay scale applicable to all its category 6 workers. However the Employer informed us of two exceptions to this principle: an enhanced rate for employees who work within the M25, in line with the Employer's commitment to being a living wage employer, and a night shift premium paid in five of its nine warehouses, including Bridgend, due to market forces in those areas. It is evident, therefore, that the Employer is able to accommodate additional allowances within its structures and payroll systems.

34. The Panel appreciates that the scope of regional management for unilateral action can be limited. In relation to the night shift premium we were told that a region requests the premium from Head Office and that the decision to pay it is taken nationally not locally. However this does not obviate the fact that it is consistent with the Employer's current practice for the request to make an additional payment to be initiated at regional level. The Employer confirmed to us that, although it is not its current practice to compile information on personnel costs for an individual warehouse separately the information was technically available to enable it to do so. We understand that there is currently little discretion to alter hours at regional level and that the holiday provisions are currently standard for all category 6 staff. We also understand that current software systems are standardised. Any alteration to the existing terms on hours and holidays would require the consent of both parties to the collective bargaining process. In the event that the parties were to negotiate changes to hours or holidays we would expect that the Employer would adapt its software systems to implement these changes.

35. In relation to the roles within the Union's proposed bargaining unit, the Panel notes that Warehouse Operatives are treated as a distinct group with a separate contract. Although the Employer's written evidence emphasised the importance of its ability to transfer Warehouse Operatives to stores, we were told in oral evidence that this had occurred only at the request of the individual concerned. We consider therefore that a bargaining unit composed only of Warehouse Operatives is consistent with effective management."

25. The final paragraph, para. 36, addresses the matters identified in paragraph 19B (3) as follows:

"The Panel has considered the matters listed in paragraph 19B (3) of the Schedule, so far as they do not conflict with the need for the unit to be compatible with effective management. The views of the Employer and the Union, as described earlier in this decision, have been fully considered. The Panel does not consider that there are any existing national or local bargaining arrangements in this case. In relation to the desirability of avoiding small fragmented bargaining units within an undertaking, the Union's proposed bargaining unit would be the sole existing bargaining unit within the Employer's undertaking and there is not evidence of any current demand elsewhere [emphasis supplied]. As far as the characteristics of workers are concerned, the Panel notes that Warehouse Operatives are treated as a distinct group with a separate contract and are easily identifiable. All the workers in the proposed bargaining unit are based at a single location. The Panel is satisfied that its decision is consistent with the object set out in paragraph 171 of the Schedule."

It will be seen that, although this is not spelt out, the CAC there takes in turn, starting from the second sentence, each of the five "matters" identified in paragraph 19B (3). Thus head (c) is addressed in the fourth sentence by the CAC, which I have italicised for ease of reference. Its simple point is that the proposed unit would be the sole bargaining unit in Lidl and that there was no evidence of any demand for the creation of other units elsewhere.

26. Para. 37 of the decision records the Panel's formal decision, namely that the appropriate bargaining unit was that proposed by the union.

LIDL'S GROUNDS OF CHALLENGE AND THE DECISION OF LEWIS J

27. In its original judicial review claim form Lidl advanced three grounds of challenge. However, before us it proceeds only with the first, which is directed specifically to para. 36 of the CAC's decision. It reads:

"The CAC misconstrued paragraph 19B(3)(c) of the Schedule:

1.1 Paragraph 19B(3)(c) requires the CAC to take into account:

"the desirability of avoiding small fragmented bargaining units within an undertaking"

when determining whether a proposed bargaining unit is compatible with effective management and, hence, appropriate.

1.2 At paragraph 36 of its decision, the CAC held that because the GMB's proposed bargaining unit would be the sole existing bargaining unit (and there was no evidence of any current demand elsewhere) and, by inevitable inference, there could not be any small fragmented bargaining units (emphasis added).

1.3 In so doing, the panel proceeded on the assumption that paragraph 19B(3)(c) requires more than one small and/or fragmented bargaining unit in order to point towards incompatibility with effective management.

1.4 The panel failed to consider whether the proposed bargaining unit was, itself, a small fragmented unit pointing towards incompatibility with effective management.

1.5 Section 6 of the Interpretation Act 1978 provides that "words in the singular include the plural and words in the plural include the singular" and thus required the CAC to interpret the word 'units' (plural) as including 'unit' (singular).

1.6 Thus the panel erred in failing to consider whether the proposed bargaining unit was, itself, incompatible with effective management."

28. Lewis J gave his reasons for rejecting that ground at paras. 17-18 of his judgment, which read as follows:

"17. In relation to the matter referred to in paragraph 19B(3)(c) of Schedule A1, the sub-paragraph is not looking at size alone. It is not dealing with small bargaining units but "small fragmented" units. More importantly, the factor that the CAC must take into account is 'the desirability of avoiding small fragmented bargaining units within the undertaking'. The task for the CAC is to consider what difficulties might be created by accepting the proposed bargaining unit as appropriate. One such difficulty may be the risk of proliferation in the number of small fragmented bargaining units if one (or more) bargaining units is recognised. The recognition of one bargaining unit may lead to demands for other units. Other difficulties could arise if the proposed bargaining unit was not clearly defined, or was not self-contained and did not include many employees whose work was not in reality different from those who were included within the proposed bargaining unit. That may lead other workers, not included within the proposed bargaining unit, to propose further bargaining units. Other difficulties might arise in other cases. The adverse consequences that it is desirable to avoid may arise if there is one (or more than one) bargaining unit within an undertaking. That approach is consistent with the dicta of Collins J. in his decision in the Cable & Wireless case at paragraphs 16 and 17 of the judgment.

18. In the present case, however, the ground of challenge is that the Panel, in its decision, misdirected itself and considered that there had to be more than one unit within the undertaking before the desirability of avoiding small fragmented units became a relevant factor. On a reading of the decision as a whole, however, it is clear that the panel was responding to the arguments put forward on behalf of the Claimant and it was not misdirecting itself. The Claimant itself was arguing that recognising the proposed bargaining unit would result in tension between the workers included within the proposed bargaining unit and others (for example, the other category 6 employees at, or costed to, the Bridgend Regional Distribution Centre who were not included within the proposed bargaining unit) or between warehouse operatives at Bridgend and those who might seek recognition to be entitled to conduct collective bargaining on behalf of a group or groups of workers at other warehouses in the other eight regions. The Claimant contended, as recorded in the decision itself, that the consequence would be that the employer could end up having to recognise a substantial and unworkable number of bargaining units each competing with one another. It was in that context that the Panel noted that the proposed bargaining unit would be the sole existing bargaining unit within the undertaking and that there was no evidence of any current demand elsewhere. In other words, the CAC was not misdirecting itself as to the meaning of paragraph 19B(3)(c) of Schedule A1 to the 1992 Act. It was not setting out a view that there had to be more than one bargaining unit within the undertaking for that factor to be relevant. Rather, it was concluding that the concerns that the Claimant had were not well founded on the material before it and that the risk, which it was desirable to avoid, of creating small fragmented bargaining units within the undertaking did not, on the facts, arise. The CAC did not misinterpret paragraph 19B(3)(c) of Schedule A1."

29. It will be seen that Lewis J refers to the decision of Collins J in R (Cable & Wireless Services UK Ltd) v Central Arbitration Committee [2008] EWHC 115 (Admin), [2008] ICR 693. In that case the Communication Workers Union sought recognition in respect of a bargaining unit consisting of all the employers' field service employees, who comprised about 7% of the total workforce. The CAC decided that that was an appropriate bargaining unit. The employer had argued that such a unit would be "small [and] fragmented" within the meaning of paragraph 19B (3) (c), but the CAC rejected that contention, saying (at para. 42 of its decision, reproduced by Collins J at para. 12 of his judgment (p. 699)):

"The Panel does not accept the Employer's argument that the bargaining unit would create a fragmented unit. Fragmentation is not measured numerically as a given proportion of the workforce but in terms of whether a bargaining unit would divide up the workforce into numerous groups prone to compete with each other. The stability and occupational identity of field service workers, who also have a strong company identity, militates against fragmentation. The outcome of other groups of workers seeking to gain recognition for their own bargaining unit, should they seek to do so, cannot be predicted by the Panel. During the course of the hearing evidence was given of a bargaining unit being extended in another company in the industry as other workers sought recognition."

The employer challenged that part of the reasoning. Collins J dealt with that challenge at paras. 16-17 of his judgment (pp. 700-1), as follows:

"16. [Counsel for the employer] complains that the panel were wrong to state that fragmentation was to be measured 'in terms of whether a bargaining unit would divide up the workforce into numerous groups prone to compete with each other'. This is not what the paragraph says nor is it a proper limitation on the ambit of the paragraph. It would be to write into the paragraph words which were not there. The mischief to be avoided by the establishment of small fragmented bargaining units is obviously material. While one such unit is no doubt potentially undesirable, it is what it may lead to that is important from the point of view of the employer and the need for compatibility with effective management. The claimant itself expressed concern that the unit was not self contained, that field engineers who worked with and did similar jobs to those in the particular directorate would not be included and that the 29 directorates within the company might seek separate bargaining units. While I accept that, if intended as a general proposition, the limitation expressed may not be entirely apt, in context the panel has focused on the concern expressed by the claimant. It is what the proposed unit, which was said to be neither self-contained nor to include many whose work was in reality no different from those within the directorate, would be likely to lead to that made it inappropriate. In the next sentence and in paragraph 43, the panel rejects the concern that there are likely to be attempts to establish other units or that there will be a lack of co-operation and sensible approach to negotiations which will lead to problems in effective management or fragmentation. Thus, even if the panel was expressing a general interpretation of paragraph 19B(3)(c) (and as I have indicated I do not think it was), in context it was taking the circumstances before it into account and its decision would undoubtedly have been the same.

17. [Counsel for the union] suggested that the use of the plural 'units' in 19B(3)(c) indicated that Parliament had in mind that the real undesirability was the existence of a number of such units. I do not think the plural necessarily points in that direction. Grammatical English would support a plural whether or not more than one such unit in a particular organisation was contemplated. Small fragmented units are regarded as undesirable in themselves. However, it is obvious that the real problem is the risk of proliferation which is likely to result from the creation of one such unit. Hence it is important to see whether such a unit is self-contained. Fragmentation carries with it the notion that there is no obvious identifiable boundary to the unit in question so that it will leave the opportunity for other such units to exist and that will be detrimental to effective management. Thus, while, as I have said, I think the panel was applying too narrow a test if it was making a general point in the sentence, in the circumstances of this case and having regard to the expressed concerns of the claimant, the approach was not wrong and did not lead to a result which was flawed."

30. Reading paras. 17 and 18 together, and with the dicta of Collins J to which reference is made, Lewis J's reasoning can be summarised as follows:

(a) that if the Panel had meant that paragraph 19B (3) (c) was not engaged at all because Bridgend would be the only bargaining unit, it was wrong; but

(b) that that was not what it meant, because its point about Bridgend being the sole unit (and there being no current demand for others) was directed at a different question arising out of Lidl's submissions to it.

THE APPEAL

31. Lidl's first ground of appeal is that Lewis J's interpretation of the CAC's reasoning in para. 36 of its decision is not sustainable. The Panel was plainly not responding to the particular contentions which he identified, which were not addressed to the paragraph 19B (3) (c) issue at all. Rather, it was indeed holding that the "small fragmented bargaining unit" question did not arise because Bridgend was the only such unit (and no other was on the horizon). If so, that was wrong, for the reasons pleaded in its grounds (see para. 27 above) – as indeed Lewis J appeared to have accepted.
32. Lidl's second ground is that the CAC in any event gave no adequate reasons for dismissing its case based on fragmentation, in particular because it did not deal with its contentions about the "tensions" to which the creation of the proposed bargaining unit would give rise (see para. 21 (2)-(3) above). No such criticism was pleaded in the original judicial review grounds. It was raised for the first time by Mr Barnett in the course of his submissions in reply before Lewis J. The judge observed, at para. 19 of his judgment, that it was a new point, though he went on to say very shortly why he thought it was unfounded in any event. Mr Barnett acknowledges that leave is required to advance this ground.
33. By its Respondent's Notice the GMB seeks to uphold the reasoning of Lewis J, but it also contends that paragraph 19B (3) (c) is indeed only engaged by the existence, or risk, of more than one bargaining unit, and that insofar as in the Cable and Wireless case Collins J held otherwise he was wrong.

GROUND 1: CAN A SOLE UNIT BE "FRAGMENTED" ?

34. I am prepared to address this issue as raised, but I should put down a marker here that I regard it as of limited general significance: see para. 39 below.
35. I accept Mr Barnett's submission that the CAC proceeded on the basis that paragraph 19B (3) (c) did not apply where there was a single bargaining unit and no risk of proliferation. That seems to me to be implicit in the fourth sentence of para. 36 of its decision. I thus respectfully disagree with Lewis J's explanation that it was simply addressing a particular argument made by Lidl.
36. In my view, however, the CAC was right to proceed on that basis. In the first place, that seems the better reading as a matter of ordinary English. That is not only because of the use of the plural but also because the word "fragmented" naturally connotes a whole which has been broken into parts and thus necessarily implies plurality. But a reading which refers to a plurality of units, or the risk of it, also makes sense in the present context because it would reflect a well-known problem in industrial relations – perhaps more historical than current, but policy-makers in this field have long memories. It has long been regarded as undesirable (to use the statutory term) that employers should have to negotiate in more than one forum – and, more particularly, with more than one trade union – in respect of parts of their workforce who were not essentially different. At the very least, conducting two or more sets of negotiations where one would do is wasteful of time and effort. But there is also the risk of inconsistent outcomes, which can breed anomalies and discontent between comparable groups of workers (including, though certainly not only, in an equal pay context). Further, there is a risk of disruption as a result of competition between trade unions: it will be noted that that point is made by the CAC in the decision which was under challenge in the Cable & Wireless case: see para. 29 above. The policy expressed by head (c) is evidently that, other things being equal, where a group of employees can appropriately be bargained for by a single trade union in a single bargaining unit it is desirable that they should be. It is thus concerned specifically with fragmentation of collective bargaining.
37. I am far from sure that that approach is really inconsistent with the observations of Collins J in the Cable & Wireless case. Although he says that the reference to "small fragmented units" could as a matter of language embrace a single unit, and that even one such unit could be "potentially undesirable", his main point is that "it is what it may lead to that is important from the point of view of the employer and the need for compatibility with effective management" (para. 16) and "the real problem is the risk of proliferation which is likely to result from the creation of one such unit" (para. 17).
38. I acknowledge that the situation which would obtain if the GMB were recognised for the warehouse operatives in Bridgend, but nowhere else, might – though not, I think, very naturally – be described as one where the system for setting the core terms and conditions for Lidl's workforce was "fragmented", in the sense that in Bridgend such terms were determined by collective bargaining whereas elsewhere they were not; also that the proposed bargaining unit could be described as "small" when compared with Lidl's overall workforce. It is not difficult to see how, to Lidl at least, that situation could be regarded as undesirable. But that kind of fragmentation is not the mischief referred to by paragraph 19B (3) (c): it does not involve fragmentation between bargaining units or fragmented collective bargaining. That does not mean that Lidl's concerns about having a small island of union recognition in a sea of non-recognition are necessarily irrelevant to the issue of whether the proposed unit is appropriate: it only means that they do not come in under paragraph 19B (3) (c). They still fall to be considered under the more general heading of their compatibility with effective management – or indeed, since the considerations itemised in paragraph 19B are not exhaustive, their appropriateness generally. The only difference is that the kind of "fragmentation" of which Lidl complains is not to be treated as axiomatically undesirable.
39. It will appear from what I say in the previous paragraph that I do not believe that the issue raised by this ground is of fundamental significance in practice. It has only been so prominent in this case because of the specific misdirection which Lidl alleges. For the future I would strongly discourage legal challenges based on the nice parsing of the constituent parts of paragraph 19B: I refer to what I have said at para. 16 above.

GROUND 2: INADEQUATE REASONS

40. As noted above, Lidl requires permission to raise this ground, which is not part of its claim as originally pleaded. Ms McColgan said that the union had no objection to it having permission, and we allowed the ground to be argued de bene esse while making it clear that we would reserve our position on whether it should be allowed to be pursued.
41. Mr Barnett's essential submission was that his arguments to the CAC about "fragmentation", which I have set out at para. 21 above, made a number of distinct points; but that in the single sentence of para. 36 in which the CAC addressed this part of the case it dealt only with one aspect. Specifically:

(a) he had argued that the recognition of a trade union in respect of one small unit was inconsistent with the "one Lidl concept" – see para. 21 (2) above; and

(b) he had made points at paras. 31 and 33 of his submissions based on the "tensions" which the recognition of the GMB for the proposed bargaining unit would cause;

but neither point is addressed at all. The only part of his case under this head which the CAC's reasoning responds to, he submitted, was the point made at para. 34 about the risk of proliferation.

42. I have no difficulty rejecting that submission as regards element (a) in Mr Barnett's complaint. The CAC did not address this point as part of para. 36 but it did do so in the course of its consideration of the general question of the compatibility of the proposed unit with effective management: see in particular para. 33. That is of course consistent with the approach which I have held under ground 1 to be correct.
43. I have found rather more difficulty with element (b). Although the CAC in the part of its decision where it sets out the parties' cases duly summarises Mr Barnett's submissions about the tensions to which the creation of the proposed bargaining unit would give rise, it does not expressly refer to those submissions either in paras. 32-35 or in para. 36. Ms McColgan submitted that it was unnecessary for it to do so because the risk of such tensions was disposed of by its finding that there was no risk of proliferation; and that was also Lewis J's answer when the point was raised by Mr Barnett in his reply below.
44. I am tempted by that answer, not least because I am resistant to applying a fine-tooth comb to the reasoning of the CAC. However, I have to say that I am not persuaded that it is right. The CAC's finding in para. 36 does indeed dispose of any arguments based on tensions that might arise as a result of the proliferation of bargaining units; and I dare say that is why it thought it unnecessary to say more than it did. But Mr Barnett's points under these particular paragraphs were not in fact based on tensions between employees in different bargaining units but on tensions between employees in the proposed bargaining unit and other employees, there and elsewhere, in respect of whose terms there is no collective bargaining at all: it might indeed be said that his points depend on bargaining units not proliferating. That reflects his submission as to the correct understanding of head (c) under paragraph 19B (3). The trouble is that I have held above that that understanding is wrong, and that these points (in so far as they have any real substance) belonged rather as part of the consideration of the general question of compatibility with effective management.
45. In a perfect world the CAC would have appreciated that mismatch and would have dealt with the "tension" arguments as part of its consideration of paragraph 19B (2). Although it is in principle to be applauded that it adopted a systematic approach, addressing each of the statutory sub-paragraphs and "matters" in turn, it needed to be alive to the possibility that the parties in their submissions drew the boundaries between those provisions differently and to see that nothing fell through the gaps: where, as here, there are well-structured written submissions, it is always a useful exercise before finalising a decision to do a final paragraph-by-paragraph check to ensure that all substantive points have been covered, even if not in the same order.
46. Having said that, I am very doubtful whether this gap in the CAC's explicit reasoning had any effect on its ultimate decision. It is not quite clear what Mr Barnett's reference to "tensions" means in this context, but I take him to be referring to resentment felt by the employees who fall outside the proposed bargaining unit against those within it. I am not sure that that is any more than a personalised way of expressing the argument that it is inconsistent with effective management to have a tiny proportion of the workforce bargained for collectively when the rest are not; and that broader argument was indeed directly addressed by the CAC at paras. 32-35 of its decision. I find it very hard to believe, given the findings in those paragraphs, that if the CAC had explicitly addressed the question it would have found that the feelings of the excluded category 6 employees at the Bridgend RDC (para. 31 (a) in Mr Barnett's submissions) or in the stores costed to it (para. 31 (b)) would create a situation incompatible with effective management; still less the feelings of excluded warehouse operatives in the other eight regions (para. 33 (a)). Ill-feeling is in practice only likely to be a problem if the terms of those who are collectively bargained for begin to diverge significantly, and for the better, from those whose terms remain set by management. The CAC was certainly aware of the "tensions" argument – as I have said, it included it in its summary of the parties' submissions. It is highly unlikely that if it believed that it did indeed reflect a genuine threat to effective management it would not have said so.
47. It may be said that I am speculating illegitimately about the CAC's reasoning. But if so, I am afraid that I would be less generous than the GMB and would not permit a reasons challenge to be advanced for the first time on appeal. If such a challenge had appeared in the original claim form, an obvious answer would have been for the CAC, which was of course a party, to have amplified its reasons in the respects criticised, either on its own initiative or with the encouragement of the GMB or indeed the Court. No doubt subsequently-supplied reasons of that kind would have been examined narrowly, but they would have been admissible and would probably (I believe almost certainly) have resolved the difficulty. That opportunity was lost, and I do not think it would be proportionate, in all the circumstances already explored, to allow the point to be raised now.

DISPOSAL

48. I would accordingly dismiss this appeal. I would make one closing point. Mr Barnett emphasised as part of his opening observations that the bargaining unit approved by the CAC in this case represented a far smaller proportion of the overall workforce than in any previous decision. But the appeal was not based on that point as such but on the narrow and specific grounds discussed above. Broader grounds were advanced before Lewis J but they were not pursued before us. If, as to which I would express no view, this case breaks any new ground, it does so because of the CAC's decision and not ours; and that is as it should be.

Lord Justice Longmore:

49. I agree.