Lidl Ltd v CAC involved the complicated procedure whereby an independent trade union can apply to the Central Arbitration Committee (CAC) for statutoryrecognition for collective bargaining purposes.

The GMB union applied for statutory recognition for a "bargaining unit" made up of a very limited group of employees – warehouse operatives working in particular sections of Lidl's Bridgend regional distribution centre which is one of nine such centres. The staff in the bargaining unit represented just over 1% of the supermarket's total UK workforce.

The employer and union did not agree on the proposed bargaining unit, so the CAC had to decide if the union's proposed unit was "appropriate". The regulations say 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 matters to the extent that they do not conflict with that. One of those factors is "the desirability of avoiding small fragmented bargaining units".

The CAC accepted the union's proposed bargaining unit. The CAC's decision was upheld by the High Court last year. Even though the proposed bargaining unit would involve "double segmentation" (because 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.

The Court of Appeal has now rejected Lidl's appeal. The main argument in the Court of Appeal was around the CAC's rejection of the "fragmentation" argument, on the basis that because GMB's proposed bargaining unit would be the sole one, by definition there couldn’t be any small fragmented units. The Court of Appeal agreed with this approach. 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.

It is clear that as long as the 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. As Lord Justice Underhill pointed out, 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. 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. Challenges to CAC decisions on this point are unlikely to succeed, therefore.