Lidl Ltd v CAC is a rare example of an appeal against a decision of the Central Arbitration Committee (CAC) on the complicated procedure whereby an independent trade union can apply to the CAC for statutory recognition for collective bargaining purposes, a process that remains unchanged by the new Trade Union Act.

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

The employer and union didn’t agree on the proposed bargaining unit, so the CAC had to decide if the union's proposed unit was "appropriate"; in other words, compatible with effective management. One key factor is the desirability of avoiding small, fragmented bargaining units. The CAC accepted the union's proposed bargaining unit. Lidl challenged the CAC's decision but the High Court upheld it, finding that the CAC had properly considered Lidl's arguments:

  • 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 efficient management. The warehouse operatives were treated as a distinct group with a separate contract and there was a management team in place that reflected the geographical scope of the proposed bargaining unit.
  • Despite the accepted "one Lidl" culture and a single pay scale applying to all warehouse operatives (along with large numbers of other employees), the CAC was entitled to conclude that exceptions could be made to standard terms and conditions without compromising the need for effective management. The fact that a higher rate was paid within the M25 and a night shift premium offered in some but not all of the distribution centres showed that the employer could accommodate additional allowances within its structures.
  • There was no evidence of current demand for collective bargaining at other sites. Recognising the proposed bargaining unit would therefore not result in small, fragmented bargaining units.

Disputes about bargaining units rarely make it to the High Court, so the decision is a useful example of the sorts of factors that the CAC should take into account. However, the wording of the legislation is such that as long as the union can come up with 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.