Collective Bargaining

Theory :

Richrardson says “Collective Bargaining takes place when a number of work people enter into
a negotiation as a bargaining unit with an employer/group of employers with an object of
reaching an agreement on the conditions of employment of the work people”.

The process of collective bargaining emerged with a view to resolve the differences and
disputes between the employers who have divergent interests in industry. The essence of
collective bargaining is a bargain between interested parties and not a decree from outside
parties.

Concepts :
• It is a technique adopted by the management and unions to resolve
industrial conflicts.
• It plays a significant role in resolving industrial conflicts and industrial
actions.
• It helps in improving labour-management relations and productivity.
• It emerged as a result of industrial conflicts and growth of TU movements.
• Collective bargaining has two phrases – “Collective i.e. a group action and
“Bargaining” which suggests negotiating.
• It implies an original yet flexible and dynamic position from which both the
negotiating parties retreat gracefully to a compromising position.
• It is a function which partakes of the nature of psychology, debate,
philosophy, human relations, dramatics which are dependent on the
environment, economic strengths of both the parties.
• Important features of collective bargaining are –
i)It is carried out on collective not individual basis.
ii)It is flexible and mobile and fixed or static process.
iii)It is a two party process.
iv)It is continuous process.
v)It is industrial democracy at work.
vi)It is not competitive but complementary process.
vii)It is mixture of art & science.
viii)It is a logical process of resolving an industrial conflict.
ix)It is industrial democracy at work.

Benefits of Collective Bargaining :

The unions want to achieve economic goals viz. Wages, hours of work, holidays, leave with
wages, incentive earning and various retirement and fringe benefits. However, the non-
economic goals are job satisfaction, protection of employment.

The management tries to achieve, through collective bargaining, goals like flexibility and
efficiency in operations, cost reduction etc.
Collective Bargaining enables both union and management to achieve –
• Increase economic strength.
• Establish uniform conditions of work with a view to avoiding industrial
disputes and maintaining stable relations.
• Prompt and fair redressal of grievances.
• Avoid major industrial actions like strike, lockout, go-slow and coercive
actions.
• Lay down fair rates of wages and norms of working conditions.
• Optimum utilization of human resources.
• Promote stability and prosperity of industry.

Growth of Collective Bargaining in India :

1.Gandhiji promoted collective bargaining in 1922 in Ahmedabad Textile Mills.

2.The concept was not, however, popular till 1950s since the parties were dependent on legal
machinery for settlement of industrial disputes.
3.Since 1952 it acquired importance. As per National Commission on Labour Report, most of
the collective bargaining was conducted at unit levels except industry level agreements were
reached in Mumbai, Ahmedabad textile mills, Plantation industry in south and Assam and coal
industry. Besides it existed in chemicals, petroleum, oil refinery, automobile industry, port &
dock, LIC etc.
4. Trends of collective bargaining in India indicate –
• Agreements are mostly unit-wise expect some are industry –wise.
• Scope of agreements widened from wages to bonus, productivity,
modernization, Standing Orders, Incentive schemes and job evaluation
etc.
• Period of long term agreements increased from 3 to 5 years.
• Number of agreements kept on increasing.
• Joint consultation has been accepted as a concept in agreement.

5.Collective bargaining is successful in India for factors like –

• Statutory provisions laying down principles & procedures of negotiation.
• Voluntary measures viz. Workers’ education, labour participation in
management, Code of inter-union harmony, code of efficiency, works
committee, shop council and grievance redressal machinery.
• In 1962 industrial truce resolution has influenced growth of collective
bargaining.
• In 1964 ID Act was amended providing clause for termination of Award.
Settlement with notice and process of arriving at settlement with the
intervention of Conciliation Officer.

Issues involved in Bargaining Process :

1.Change in approach of management and union. Both parties should realize that it does not
imply litigation. It is an approach which indicates that two parties are determined to resolve
their differences in a peaceful manner relying on their strength and resources and they do not
look towards 3rd. party intervention.

2.It should be conducted at plant level where both parties should be determined to arrive at an
agreed solution of their respective problems. The employer should be represented by
management and workers by their trade unions.

3.Employer & employees should enter upon negotiations on points of differences or on

demands with a view to reach an agreement. Any effort to bypass negotiation should be
considered as unfair practice.

4.Negotiations are successful when parties rely on facts and figures to support their viewpoint.
Specialist like economists, productivity experts and professionals, should assist the union so
that they present their arguments effectively and meaningfully.

5.To ensure collective bargaining functions meaningfully, both parties should avoid unfair
labour practices. The negotiations should be conducted in an atmosphere of goodwill and
mutual confidence.

6.The terms of agreement should be documented. In case bipartite negotiations fail, parties
should rely on conciliation or arbitration for settlement. If no settlement is reached, parties
should be free to take industrial action.

7.The terms of agreement should be respected and implemented both in letter and spirit by
both the parties.

8.Any dispute arising out of terms of agreement should be referred to arbitrator for immediate
resolution.

Issues in Bargaining Process :

The unions normally raise following issues in collective bargaining –

• Basic wage rates, Dearness Allowance and other allowances like HRA,
Shift Allowance, Leave Travel Assistance & other job specific allowances.
• Retirement benefit like Pension.
• Bonus & ex-gratia payment.
• Leave with wages, leave encashment and holidays.
• Union office room, check-off system, industrial time for union officials,
notice board and other facilities for office bearers.
• Employment of employees’ children on their superannuation.

Management usually raises following issues in the negotiation :

• Productivity improvement, scrap reduction.
• Optimum utilization of available man-power.
 • Deployment of workmen on day-to-day basis depending upon production
requirement, absenteeism etc.
• Automation, rationalization of work process, revision of production norms.
• Separation / Redeployment of surplus manpower.
• Matters relating to discipline in industry.

Structure of Bargaining :
Collective bargaining is conducted in informal and formal manner on an ongoing basis at plant
level and at industry levels.

Informal negotiation is carried out on day-to-day basis at the shop floor level between the shop
floor supervisor / foreman and departmental representatives of the union regarding the work
related issues like deployment of workmen, station manning etc. where there is financial
issues.

Formal negotiation is carried out between the plant management i.e. plant manager / General
Manager & Personnel Manager, Production Manager / IE Manager and negotiating committee
deputed by union(s). The issues comprise of union’s Charter of Demands, production incentive
scheme, Rationalization, Automation, work related issues, VRS etc. Normally such negotiation
results into formal agreement with a definite period of 3 to 5 years and the same is reached at
bipartite/tripartite level.

Formal negotiation on financial issues as listed above is at times conducted in industry level
like cotton, jute, engineering industry etc. In this situation, a committee comprising of
employers’ representative as well as representatives of central unions operating in that
industry negotiate the demands at central level and arrive at settlement mostly with the
assistance of Conciliation Officer.

Contents of Agreement :

The contents of agreement may be listed as below –

1.Period of agreement.
2.Terms of financial issues as settled like basic wages, DA, Allowances, Leave, Holidays etc.
3.Terms of management issues which have been resolved like production norms, Incentive
payment, deployment plan of workmen and issues of Discipline etc.

Signature of Negotiating Committees of union and management including the signature of the
Conciliation Officer in case the settlement is reached with the intervention of Conciliation
Officer under Section 12 (3) of The Industrial Disputes Act 1947.

Implementation of Agreement :

Onus of implementation of the terms of agreement mostly depends on the management with
regard to financial commitments made by them and also the workers’ commitments for
productivity linked issues and discipline. Implementation of the commitments, if delayed or
denied, attracts penal provisions under law. Once the commitments of agreements are
implemented, they become conditions of service for the workmen and any alteration of the
same can be done only through subsequent agreement only.

Workers’ Participation in Management

Concept :

Workers’ participation in management crystallizes around the concept of industrial democracy

and it indicates an attempt on the part of an employer to build his employees into a team which
works towards achievement of a common objective.

Davis says “It is a mental and emotional involvement of a person in a group situation which
encourages him to contribute to goals and share responsibilities in them”.

Kenneth Walker says “Workers’ participation in management is a resounding phrase, bringing

the past and the future …… There are 2 basic ideas in the concept of workers’ participation in
management : that there are two groups of people in an undertaking i.e. managers and
workers. Managerial functions are essentially those concerned with planning, organizing,
motivating and controlling, in contrast with ‘doing’ work”.

• The essence of workers’ participation in management lies in the belief and

confidence on the subordinates that they can constructively contribute to
growth of productivity and discipline of the organisation and avoid IR
disharmony.
• It meets the psychological needs of workers at work by eliminating feeling
of futility, isolation, and consequent frustration that they are not considered
part of a team.
• Participation in decision-making process develops feeling of ownership
and loyalty, confidence, trust, favourable attitude towards supervisors and
a sense of involvement in the organisation.
• Participation enhances employees’ ability to influence, decision making at
different levels in the organizational hierarchy with concomitant
assumption of responsibility.
• It is promoted at different levels like at shop floor level, departmental level
and even at national level.
• It incorporates the willing acceptance of responsibilities by the body of
workers. This ensures implementation of changes.
• The participation is conducted through the mechanism of forums and
practices and which provide for association of workers representatives.
 • The goal of participation is to bring changes in production and transfer of
management functions to the workers so that management becomes “
Auto Management”.

Purpose of Workers Participation :

• Increased use of technology which has necessitated co-operation of

workers due to complex operation of production.
• The employees are no more servants but partners with their employers in
the efforts to attain the goals of the enterprise.
• The growth of trade union which safeguard the interests of workers and
protect them against exploitation by the management.
• Govt.’s interest in industrial development and welfare of workers.
• Need for increase output without any interruption.
• Avoidance of legal resources like provisions of Section 9A of the ID Act,
1947.
• It is an instrument of improving efficiency of enterprise.
• It is a device for developing social education for promoting solidarity
among the workers through “Suggestion Scheme”, QC Concept etc.
• It is a means of attaining industrial peace and harmony for higher
productivity.
• It is a humanitarian act of giving acceptable status to workers.

Practices of WP in other countries :

West Germany : The concept of WP exists with objectives like –

• Prevention of workers’ exploitation either by owner or by top management.
• Economic growth through democratic process.
• Resolution of conflicts by obligatory compliance of orders or by democratic
regulations.
• Management should be placed institutionally under obligation to use it’s
authority as a trustee and not to abuse it.
• Sharing financial gains and other information about the enterprise for the
purpose of collective bargaining for wages and benefits.
Great Britain :
• Consideration and discussion of changes in the methods of production,
safety and welfare of employees.
• Training & education.
• Work rules & Personnel problems.
• Matters of mutual interest, except wages and other issues.
• Solving IR problems.
Japan :
• Worker is a member of industrial family.
• He should be co-decision maker.
• Continuous improvement through involvement of workers.
 • Workers’ involvement at the shop floor level problems.
India :
• Increase productivity for general benefit of enterprise, employee and the
community.
• Give employees a better understanding of their role in working of industry
and of the process of production.
• Satisfy workers’ urge for self-expression.
• Challenge in work.
• Heighten sense of responsibility.
• Avail workers’ ideas and suggestion.
• Realistic management decisions.
• Accommodation, change, motivation and commitment to implement
decisions and changes.
• Improved communication.
• Better worker-supervision relations.

Gains of WP :
• Promotes balanced interactions which result in less resistance to
innovation.
• Enables members of the group to unfreeze their attitudes and engage
catheresis.
• Enables leaders to reinforce their position. They enhance status and
induce workers to abide by the decisions.
• It gives subordinates feeling that boss listens to the problems and
suggested solutions.
• Job gives a scope to demonstrate skills.
• Subjects individuals to group pressure in accomplishing tasks.
• It is beneficial economically, psychologically and sociologically.

Types of Participative Forums in India :

Works Committee : The forum is required to be constituted under provisions of the ID Act,
1947 when the factory has 100 or more workers. Prior to this, few Works Committees were set
up in printing presses of the Govt. of India. TISCO had set up Joint Committees in 1958. The
objectives of setting up WCs was to settle the differences on the spot between the workers and
management. Decisions of the WC are recommendatory type & not binding. The ID Act has
laid down broad functions of WCs in terms of welfare, safety and health of the workers.
However, in practice, many industries use WC as a forum for settlement of differences at the
unit level. The number of workers representative in the WC should not be less than number of
management representatives.

Joint Management Council : The 2nd. 5 year plan gave emphasis on JMC. The Govt. of
India’s Industrial Policy Resolution of April 1956 emphasized the need for JMC. The functions
of JMCs are improvement of communication, working & living conditions, implementation of
safety measures, improvement of productivity, encouragement of suggestions and assistance
in the administration of laws and agreements, planning and execution of welfare activities,
retrenchment, rationalization, closure plans, introduction of new products, redeployment of
men and machinery, apprenticeship schemes.

Workers’ representation of Board of Directors : On the recommendations of the

Administrative Reforms Commission, the Govt. of India accepted, in principle, the
representation of workers’ representative in the Board of Directors in public sector enterprises.
Features of workers’ Directors are : -

• The workers representative should be the one working in the enterprise.

• Participation should, initially, be restricted to enterprise engaging 1000
employees excluding casuals and badli workers.
• The definition of “Worker” given in ID Act should be followed.
• Participation at the board level; should be introduced if at least 51% of
workers vote through secret ballot in favour of the worker-director.
• Prerequisite of the scheme of participation shall be training in the business
of the company, which will be responsibility of Government.
• Presence of Worker-Director on the Board will not lead to any breach in
confidentiality of information required by him.

Examples of Worker – Director in Board are in public sector industries like BHEL,HAL, Port
Trust, Hindustan Organic Chemicals Ltd., National Coal Mines Development Corporation,
Dock labour Board, National Newsprint & Papers Mills (Gujarat), National Textile Mills
(Maharastra, West Bengal, Assam, Bihar & Orissa).

Joint Council : Every industrial establishment having 100 or more employees should
constitute Joint Council. The features of Joint Council are as follows –

• Number of councils should be determined in the organisation based on

different types of services required. Such councils should be constituted in
consultation with union or representatives of employees.
• Outsiders should not be members of councils. Only employees working in
the organisation should be members of councils.
• The council should function for two years. Incase of resignation of a
council member, the vacancy should be filled up through nomination.
• The head of the organisation will be Chairman of the council. The Vice-
chairman will be selected from the employee representatives.
• The council will appoint a Secretary who will prepare agenda for the
meeting, prepare minutes and report about progress of decisions taken in
the council. The management will provide facilities for effective functioning
of the Secretary.
• The meetings should be held at least once in 3 months when progress of
decisions taken in last meeting will be reviewed.
• Decisions shall be implemented within one month.
• Functions of the council are –
 a) Resolution of inter-council problem.
b) Review functioning of unit level council for improvement of customer
service.
c) Unit level matters those have bearing on other branches/enterprise.
d) Development of skills of workers.
e) Improvement of conditions of work.
f) Preparation of schedules of working hours and holidays.
g) Recognition and appreciation of useful suggestions of workers through
reward.
h) Matters having bearing on organizational improvements.

Unit Council : In 1977, Unit Council was announced by the Government of India in
organisations like hotels, restaurants, hospitals, air, sea, railway and road transport services,
port & docks, Electricity Board, STC etc. having 100 or more number of employees.
Features of the scheme are –

• Discuss day-to-day problems of the unit and find solutions.

• Equal representation of management and workers in the council.
Management in consultation with union will decide number of members.
The total number of members will not exceed 12.
• Management representatives will be nominated by unit level management.
• Decisions shall be taken through consensus and not by voting. Unsettled
matters may be referred to Joint Council for resolution.
• All decisions will be implemented within one month.
• Management will designate one member as Secretary whose duty will be
to record minutes.
• Decisions of one council having bearing on other units/divisions shall be
referred to Joint Council for final consideration.
• Unit council will continue for 3 years.
• Council should meet once in a month.
• Chairman of the council will be management representative and vice-
chairman will be elected by the workers.
• Activities of the unit council are –
a) Improvement of efficiency, productivity, customer service, reduction of
wastage.
b) Improvement of methods of operation.
c) Recommend steps to reduce absenteeism.
d) Eliminate pilferage & corruption and institute system of rewards.
e) Improvement of physical conditions of work viz. Illumination, ventilation
etc.
f) Proper flow of communication between management & workers.
g) Improvement of safety, health & welfare.

Plant Council : This council was formed in pursuance of the recommendations of the 2nd.
Meeting of the Group on Labour at New Delhi on 23.11.1985. The scheme is applicable to all
Central public sector undertakings. The features of this council are –
 • One plant council for the whole unit. Minimum 6 and maximum 18
members of equal representation. 1/3rd. members should from supervisory
category and one women representative in case 15% or more female
employees exist.
• Tenure is for 3 years.
• CEO will be Chairman of the plant council.
• A Secretary will be appointed with adequate facilities for discharge of his
duties.
• Mid-term vacancies will be filled up through nomination.
• Meeting shall be held on consensus and shall be binding on all.
• Functions of plant council are –
a) Operational – productivity scheme-monthly targets- material supply-house
keeping – quality & improvement – machine utilization – suggestion
scheme – review of shop level bodies.
b) Economic – profit & loss statement, balance sheet- review of operating
expenses, financial results, cost of sales – labour & management cost.
c) Personal – absenteeism –problem of women workers- welfare schemes-
safety-township; administration- environmental; protection- community
development.

Shop Councils :
Features of Shop Council are –
• Industrial unit should have 500or more workers.
• Employer will constitute the council for each department or one council for
more than one department depending upon number of workers.
• Equal representation of employer and workers’ representatives.
• Employer’s representatives will be nominated from the department by the
management. Workers’ representatives will be working in the same
department and to be elected by them.
• The management will consult the union(s) for workers’ representatives.
• Total number of members will be max. 12.
• Decision will be based on consensus and not by voting.
• Decisions will be implemented within a month’s time.
• Decision of a shop council having bearing on other department, will be
referred to Joint Council for consideration / decision.
• Shop council will exist for 3 years.
• The council shall meet once in a month.
• The Chairman will be management nominee and vice-chairman will be
workers’ nominee.
• Functions of the council will be –
a) Assist management in meeting production target.
b) Improvement of productivity, efficiency, reduction of wastage, utilization of
machine capacity & manpower.
c) Reduce absenteeism.
 d) Suggest safety measures.
e) Assist management in maintaining discipline.
f) Improving working conditions.
g) Suggest welfare measures.
h) Two-way communication.
i) Quality improvement.
j) Multiple skill development.
k) Cost reduction.
l) Periodic critical review of machines for safety.

Workers’ representation at Board level : Administrative Reforms Commission

recommended representation of workers in Board of Directors in PSUs. Features of the
recommendations are –

• Worker – Director should be working in the same enterprise.

• Enterprise should employ 1000 or more persons.
• The worker will be a “workman “ as defined under the ID Act, 1947.
• At least 51% workers by secret ballot should favour worker participation at
Board level.
• Workers through secret ballot will elect Worker- Director.
• The Govt. should train the worker-Director regarding their awareness of
IR/ Business techniques etc.
• Worker-Director will maintain confidentiality of business decisions.