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B.Com LL.B (H)


I have taken efforts in this project. However, it would not have been possible without the kind
support and help of many individuals. I am highly indebted to Ms.Upma Shree for her guidance
and constant supervision as well as providing necessary information regarding the project and
also for her support in completing the project.

Collective Bargaining is a type of negotiation used by employees to better their conditions and
terms of employment with their employers. It begins with joining a union, agreeing to abide by
the rules of the union and electing union representatives. During a Collective bargaining period,
the union representatives approach the employer and attempt to negotiate a contract to which
both sides can agree with.

Collective Bargaining through a union effectively transform a group of atomized workers into
one large worker with whom management has no choice but to negotiate. Some collective
bargaining agreements are registered with the labor court and are binding by law, however others
are only mutually accepted agreements. It may be to negotiate a first collective agreement or the
renewal of a previous collective agreement.

Collective bargaining agreements deals with specific issues, such as basic pay, overtime
premiums, bonus arrangement, holiday entitlements, hours of work, etc. In many companies,
agreements have a fixed time scale and a collective bargaining process will review the
procedural agreement when negotiations take place on pay and conditions of employment.

The law of collective bargaining encompasses four basic points:

1. The employer may not refuse to bargain over certain subjects with the employees'
representative, provided that the employees' representative has majority support in the
bargaining unit.
2. Those certain subjects, called mandatory subjects of bargaining, include wages, hours,
and other terms and conditions of employment.
3. The employer and the union are not required to reach agreement but must bargain in
Good Faith over mandatory subjects of bargaining until they reach an impasse.
4. While a valid collective bargaining agreement is in effect, and while the parties are
bargaining but have not yet reached an impasse, the employer may not unilaterally
change a term of employment that is a mandatory subject of bargaining. But once the
parties have reached an impasse, the employer may unilaterally implement its proposed
changes, provided that it had previously offered the changes to the union for

What gave rise to collective bargaining?

 The idea emerged as a result of industrial conflict and growth of the trade union
 In an industrial establishment the friction between employers and employees is
 Collective Bargaining is one method wherein the employers and employees can settle
their disputes.
 As trade unions developed in the country, collective bargaining became the rule and
employers found it necessary and convenient to deal with the representatives of the
workmen instead of individual workmen.
 This was not only for making or modification of contracts, but also in the matter of taking
disciplinary action between one or more workmen.
 The biggest advantage of collective bargaining is that the management and the laborers
are brought to the same platform where both parties can engage in discussions to solve
problems, to address issues and both enjoying an equal footing can have a collective goal
for mutual rewards.
 Collective bargaining is a legally sound platform or mode of communication. It
establishes workable bilateral relationship between the staff and the management. All the
rights, that of the management and that of the laborers, are clearly stated and everyone
knows their roles, duties, rights and limitations.
 Collective bargaining allows for the protection of everyone’s rights and welfare. It is not
heavily tilted either towards the management or the employees.
 Collective bargaining allows management or the owners of a company to have
predictability in their expenses or budgets such as controlling salaries and compensations
in a preplanned manner. It ensures stability in the company finances.
 Collective bargaining empowers the laborers and a healthy relationship is developed
across all departments and hierarchal levels of an organization.


 Collective bargaining stunts the free hand that managements usually like to possess. The
authority and liberty of the owners or senior management would be limited and may be
curtailed if the trade unions are far too influential and strong or consequential.
 While collective bargaining was developed to bridge the communication gap between the
employers and employees, they can easily create further rifts instead of bridging the gap.
Vested interests of elected representatives or sabotage by competitive organizations and
rivals can ruin the foundation of a company through collective bargaining.
 Collective bargaining is time consuming, it slows down the decision making process and
makes it all the more complicated since there is no authoritarianism. Instead, there is
increased bureaucratization.

1. Negotiations appear to be highly fragmented, with a multiplicity of bargaining units. This

makes it difficult to conclude agreements at different levels. The main problem in this
case is usually the absence of bargaining at sectoral and state level.
2. Innovation in goods and services often leads to changes in productive activities, and to
the emergence of new activities that replace the previous ones in a partial and misleading
way. This sometimes gives rise to a diversification in collective bargaining, including
overlaps and confusion.
3. The new productive context includes the emergence of new forms of business
organisation and new relationships between companies – for example, in terms of
networking and outsourcing. Work is often affected by different companies jointly or
4. Sometimes, negotiations can be extended for an excessive period of time.

Stage 1: Preparing

The basis of collective bargaining is management engaging in dialog with the workers
collectively, and as such, the first stage of collective bargaining is organizing a group to
represent the workers. If a trade union exists, then such unions usually take up the role of
representing the workers. Otherwise the group is elected. The group representing workers
prepares a list of proposals relating to the issues under dispute, usually related to compensation
and working conditions. A pattern of benefits, conditions, rules, and regulations usually exists,
and the worker’s proposal aims at highlighting the need for improvements and changes to such
work conditions. Such a proposal becomes the basis for the negotiations that follow.

Stage 2: Arguing

The second stage of collective bargaining is the group representing the workers arguing and
substantiating their proposals, and the management counter-arguing, trying to refute the worker’s
claims and contentions. The negotiators of both sides use relevant data such as financial figures,
precedents, benchmarks, analogies, and other methods, and various methods such as use of logic,
appealing to emotions, pleadings, and other techniques to substantiate their point of view.

Stage 3: Signaling

This collective bargaining model rests on the worker's representatives submitting proposals that
they consider ideal, but willing to settle for less, and the management willing to concede more
than they publicly acknowledge.Sending signals across to the other party, through subtle
messages, change of tone, body language, and other cues reveal to the other side that the
proposal under discussion will meet with little resistance, can be accepted with modifications, or
have a low chance of acceptance. Signaling thereby, reveals the resistance point to the other
party without making it explicit.

Failure to send signals leads to both sides sticking to their positions, causing impasse and a
breakdown of negotiation and the dispute escalating to the next level of industrial action.

Stage 4: Proposal

One of the important stages of collective bargaining negotiations is one side making a proposal
in a bid to end the argument and reach a settlement. Such proposals are reconciliation of
arguments made by either side, based on the signals received.

Stage 5: Packaging
Good negotiators package proposals. Packaging involves making concessions, but placing items
that remain too tempting to resist along with some compromises required from the other side,
with the condition that the proposal comes as a whole and is not breakable. The other side makes

Stage 6: Bargaining

The packages put forth by either side identify a common ground, or a core that facilitates
settlement between the two parties to the dispute. The collective bargaining process, however,
continues with each side trying to dilute the other’s package by a counter package, each time
saying that this is “last and final" concession they will make. This session usually involves off
the record conversations, some joint exercises to resolve a deadlock, and very often culminate in
a marathon round of lengthy and hectic discussions to resolve last minute glitches before both
sides finally reach a settlement.

Stage 7: Closing

Closing is the final step in the collective bargaining process. Closing denotes settlement time, or
the time negotiation ends. The negotiators walk back over the negotiations and summarize all
positions, noting down agreements reached, issues withdrawn, and issued deferred, and clear
ambiguities. Selecting the right time to close depends on the skill of the negotiator. Closing too
early may lead to the negotiator’s side losing out on further concessions that the other party may
be willing to make, and closing too late may lead to some strategic advantage or position of
mutual ground being lost. The prevailing mood of the workers and the economic climate greatly
influences the closing time as well.

Stage 8: Agreeing

The final stage of the collective bargaining process is agreeing, or vetting the draft collective
bargaining agreement. Discussions in this stage center on date for implementation of the
settlement, such as date of payment for revised wages and introduction of new benefits, and
other considerations. The process, however, does not end until the principals, that is the owner or
stakeholder of the company and the rank and file workforce accept and ratify the agreement
struck by the negotiators.

Collective bargaining is a fundamental right. It is rooted in the ILO Constitution and reaffirmed
as such in the 1998 ILO Declaration on Fundamental Principles and Rights at Work . Collective
bargaining is a key means through which employers and their organizations and trade unions can
establish fair wages and working conditions. It also provides the basis for sound labour relations.
Typical issues on the bargaining agenda include wages, working time, training, occupational
health and safety and equal treatment. The objective of these negotiations is to arrive at a
collective agreement that regulates terms and conditions of employment. Collective agreements
may also address the rights and responsibilities of the parties thus ensuring harmonious and
productive industries and workplaces. Enhancing the inclusiveness of collective bargaining and
collective agreements is a key means for reducing inequality and extending labour protection.

Freedom of association ensures that workers and employers can associate to efficiently negotiate
work relations. Combined with strong freedom of association, sound collective bargaining
practices ensure that employers and workers have an equal voice in negotiations and that the
outcome will be fair and equitable. Collective bargaining allows both sides to negotiate a fair
employment relationship and prevents costly labour disputes. Indeed, some research has
indicated that countries with highly coordinated collective bargaining tend to have less inequality
in wages, lower and less persistent unemployment, and fewer and shorter strikes than countries
where collective bargaining is less established. Established collective bargaining practices were
an element that allowed the Republic of Korea to weather the Asian financial crisis of the 1990s
and enabled South Africa to make a relatively peaceful transition into the post apartheid era. ILO
standards promote collective bargaining and help to ensure that good labour relations benefit

 Labour law notes on collective bargaining- semester 5