Collective Bargaining

Collective Bargaining is a process in which the representatives of a labour organisation and the
representatives of business organisation meet and attempt to negotiate a contract or
agreement, which specifies the nature of employee-employer union relationship.(Flippo)
Collective bargaining generally includes negotiations between the two parties (employees’
representatives and employer’s representatives).
Collective bargaining consists of negotiations between an employer and a group of
employees that determine the conditions of employment.Often employees are represented
in the bargaining by a union or other labour organization.
 The result of collective bargaining procedure is called the collective bargaining agreement
(CBA).
•By collective bargaining we mean the ‘good faith bargaining’.
• It means that proposals are matched with counter proposals and that both parties make
every reasonable effort to arrive at an agreement’
•It does not mean either party is compelled to agree to a proposal. Nor does it require that
either party make any specific concessions.
Why is it called Collective Bargaining?
It is called “collective” because both the employer and the employee act collectively and not
individually in arriving at an agreement. It is known as ‘bargaining’ because the process of
reaching an agreement involves proposals and counter proposals, offers and counter offers.
 Collective Bargaining
• The term “ Collective Bargaining ” was coined by Beatrice Potter Webb in 1891.
• Webb used this term in her book The Cooperative Movement in Great Britain to describe the
method adopted by Labour Unions to improve the working and employment conditions of
their members.
Collective Bargaining : The Concept
•Collective bargaining is a process of discussion and negotiation between an
employer and a trade union culminating in a written agreement and the adjustment
of problems arising under the agreement.
•The Supreme Court of India has defined the process of collective bargaining as a
technique by which, dispute as to conditions of employment is resolved amicably by
agreement rather than coercion.
•Workers, who are generally represented by a trade union, use this medium to
express their grievance about various issues such as wages and working conditions.
The term “ Collective Bargaining ” extends to all negotiations that take place
between an employer , a group of employers, or one or more employers’
organisations on one hand and one or more worker’s organisations on the other to
perform the following functions :
•Determine the wage working conditions and terms of employment; and /or
•Regulate relations between employers snd workers; and /or
•Regulate relations beween employers or their organisations and a worker
organisation or workers’ organisations.
 Collective Bargaining : The Concept
Sociologist view Collective Bargaining as a complex web of relationships through which the
terms and conditions of employment are negotiated and agreed upon by the employers and
organised labour.
Social Psychologists view Collective Bargaining as a medium of institutionalising conflict
relationships between organisations of Workers and Employers.
According to International Labour Organisation ( ILO), Freedom of Association ( Convention
No.87 ) and Collective Bargaining ( convention No.98 ) are fundamental rights. Both of these
form an integral part of the ILO Declaration on Fundamental Principles and Rights at Work
Both Freedom of Association and Right to Collective Bargaining form an integral part of the ILO
Declaration on Fundamental Principles and Rights at Work, the Organisation for Economic
Cooperation and Development ( OECD )’s core labour standards, World Trade Organisation (
WTO )’s social clause , and the United Nations ‘ Global Compact’.
Several analysts have focused on the economic and political functions of Collective Bargaining.
For instance some emphasise on economic functions (Dunlop ,1958 ) , others highlight the
political role (Ross,1969 )
 Need and Importance of Collective Bargaining
1. Collective bargaining develops better understanding between the employer and
the employees:
2 It promotes industrial democracy:
3. It benefits the both-employer and employees:
4 It is adjustable to the changing conditions:
5 It facilitates the speedy implementation of decisions arrived at collective
negotiation:
Collective Bargaining : Objectives
The basic objective of collective bargaining is to arrive at an agreement between
the management and the employees determining mutually beneficial terms and
conditions of employment.
This major objective of collective bargaining can be divided into the following
sub-objectives:
1 To foster and maintain cordial and harmonious relations between the
employer/management and the employees.
2. To protect the interests of both the employer and the employees.
3. To keep the outside, i.e., the government interventions at bay.
4. To promote industrial democracy.
 Classification of Collective Bargaining
Prof. Neil Chamberlain, a noted Labour Economist, has made a three-fold
classification of collective bargaining theories. It may be looked upon from three
angles
1. The marketing concept and the agreement as a contract
• The marketing concept view collective bargaining as a contract for the sale of
labour. It is a market or an exchange relationship and is justified on the ground
that it gives assurance of voice on the part of the organised workers in the matter
of sale.
• The same objective rules which apply to the construction of all commercial
contracts are invoked since the Union-Management relationship is concerned as a
commercial one
2. The Government concept and the agreement as law
• The Government concept view collective bargaining as a constitutional system in
industry. It is a political relationship. The union shares sovereignty with
management over the workers and as their representative uses that power in their
interests.
• The application of the agreement is governed by weighing of the relation of the
provisions of the agreement to the needs and ethics of the particular case.
3 . The industrial relations concept as jointly decided directives
• The industrial relations concept views collective bargaining as a system of
industrial governance. It is a functional relationship. The union joins with
the company officials in reaching decisions on matters in which both have
vital interests.
• When the terms of the agreement fail to provide the expected guidance to
the parties, it is the joint objective, not the terms, which should control.
• To some extent, these approaches represent stages of development of the
bargaining process itself. Early negotiations were a matter of simple
contracting for the terms of sale of labour. Developments of the later
period led to the emergence of the Governmental theory.
• The industrial relations approach can be traced to the Industrial Disputes
Act of 1947, which established a legal basis for union participation in the
management.
• There are at least three different situations in which collective bargaining
may take place, namely
(1) when the union is the first recognised and negotiates for the first time;
(2) when an old contract is about to expire or has expired or it is desired to
amend it and
(3) when it is necessary to adjust grievances or to resolve disagreements
regarding the interpretation of a contract.
 Bargaining Process
The five stages involved in bargaining process are as follows:
1. Pre-negotiation
2. Negotiators
3. Negotiation
4. Agreement or Contract
5. Implementation of Agreement.
*If collective bargaining fails, the other stages in conflict settlement are conciliation, arbitration
and adjudication, in that order.
Collective Bargaining in India: An Overview
Although attention was paid to, adopt collective bargaining as a method to resolve industrial
disputes since, the dawn of planning era ( Five Years Plan ) in India; it received increasing
emphasis since the days of the National Commission of Labour.
National Commission on Labour and Collective Bargaining
The emergence of the National Commission on Labour in 1966 was a epoch-
making in the history of collective bargaining in India. The Commission made
comprehensive investigations into almost all the problems relating to labour. The
role of collective bargaining in solving labour problems was duly appreciated by
making a series of recommendations to make collective bargaining more
effective.
 Prerequisites for a Successful Collective Bargaining
• Strong & Stable Unions :Unless the workers are able to form strong and stable Unions,
collective bargaining will not be successful.
• Freedom of association : Freedom of association implies that the workers as well as the
employers will have the right to form an organisation of their own to protect their interests.
• Mutual Recognition : There should be mutual recognition between both the groups. The
conflict of interests makes the two groups hostile to each other. They must recognise each
other and realise that adjustment and understanding is essential for the achievement of
organisational goals.
•Political Climate : a favourable political climate, essential for successful collective
bargaining. If the government encourages collective bargaining as the best method of
regulating conditions of employment, it will be successful. Where the governments restrict
trade union activities, there can be no collective bargaining.
•Agreement Implementation : Agreement must be observed by those to whom they apply.
The workers’ organisation must be strong enough to exercise its authority over its
members. If the trade union has no power over its members, collective bargaining will not
be effectively implemented.
Agreement Implementation
One of the most important elements involved in agreement implementation is spelling
out of a procedure for handling grievances arisen out of collective agreement.
It is suggested that collective bargaining agreements should contain formal procedures
to be used in resolving grievances over the interpretation and application of the
agreement.
 National Commission on Labour
Important Recommendations
• Collective bargaining as it has developed in the West may not be quite suitable for India
given its different socio-industrial background.
• There is a need to evolve satisfactory arrangements for union recognition by statute as
also to create favourable conditions to make such arrangements succeed.
• No collective bargaining can exist and succeed without the right to strike or lockout.
• However, in spite of all these, collective bargaining in India could not make much
headway due to various reasons.
Important reasons among them are:
There has been lack of strong trade unions and employers’ organisations to
represent the national interests.
There has been increasing inclination to compulsory adjudication for the
settlement of industrial disputes.
Multiplicity of trade unions have resulted in union-rivalry in solving labour
problems.
The Government has shown its lukewarm attitude towards promotion of collective
bargain-ing culture in the country.
The Governments initiatives to encourage collective bargaining are only in letters,
not in spirit and practice.
What are the Important Types of Strikes in
Collective Bargaining?
• A flash strike (or wild-cat strike) is initiated by a group of workers in
violation of a contract and without warning. A sit-down strike is one in
which strikers do not leave their place of work but remain in the plant
and in control of production facilities.

• A slow-down strike, also known as ‘go-slow’ is not really a strike in the

usual sense as workers do not cease work. Workers do not leave their
work; they merely limit output while remaining on the job.

• Since the right to strike is the ultimate weapon in collective bargain,

the two go together like love and marriage. Although the strike does
not inevitably accompany bargaining, its availability as an instrument
of pressure is an important condition of collective bargaining. Unions
resort to it when all other techniques have failed.
 Functions of Collective Bargaining
John Dunlop and Derek Bok have listed five important functions of collective bargaining:
1. establishing the rules of the workplace;
2. determining the form of compensation;
3. standardising compensation;
4. determining priorities on each side; and
5. redesigning the machinery of bargaining.
• According to Flanders (1974) collective bargaining serves two employers interests.
• One is market control. By negotiating pay and conditions that are more or less standard,
employers effectively take the costs of one of the most important factors of production out
of competition.
• The second interest served by collective bargaining is a contribution to managerial control.
Nature of Collective Bargaining
•Some countries view it a duty of employer to engage in collective bargaining in
good faith while in others (Australia ) it is not the case.
•There are countries (Cyprus and Malaysia) that distinguish between interest
issues and rights issues . In such countries , collective bargaining can take place
on interest issues and not on rights issues.
•Interest issues refers to the wages and working conditions while rights issues
concern the interpretation of do’s and don’ts in the course of employment
relationship.
• In the countries like India , anything and everything can be bargained for, in others , such as
Malaysia, hiring, reward. Transfer, promotion, assignment of work and adjustment of
workforce are explicitly recognised by law as managerial prerogative.
• A survey of Collective Bargaining in different countries over different time periods revealed
that economic, institutional, and political environments have a bearing on the kind of effect
that collective bargaining has on economic performance of the firms and well being of
workers.
•In the wake of the rise of market forces, there has been a shift in wage fixation from ‘ to
each according to his need’ to ‘to each according to his or her skill, effort ,responsibility and
working conditions’. The ILO Convention on Equal Remuneration for work of Equal Value was
founded on this criteria.
•During the late 1980s and 1990s when the enterprise level permanent workforce began to
shrink rapidly and casual , contract or contingent workforce began to increase trade unions
realised that their future membership base would lie more in later category.
•During late 1990s they began pressing for non-discrimination in remuneration between
temporary and contract workers.
 Legal Framework of Collective Bargaining
• Article 19(c) of the Constitution of India guarantees freedom of association as a fundamental
right . This was recognised in the Trade Union Act,1926, Industrial Dispute Act,1947and the
Industrial Employment ( Standing Orders )Act 1946.
• These three important Acts collectively create an environment within which a collective
bargaining between employee unions and the management could happen.
• The government does not allow the right of collective bargaining to industrial workers in
government undertakings such as railways , posts, telecommunications and Central Public
Works Department. Remuneration and other aspects are decided by the government on the
basis of the Pay Commission recommendations, and not through collective bargaining .
Theories of Collective Bargaining
1.The Marketing Concept and the Agreement as a Contract:
•The marketing concept views collective bargaining as a contract for the sale of
labour. It is a market or exchange relationship and is justified on the ground that it
gives assurance of voice on the part of the organised workers in the matter of sale.
The same objective rules which apply to the construction of all commercial contracts
are invoked since the union-management relationship is concerned as a commercial
one.
•According to this theory, employees sell their individual labour only on terms
collectively determined on the basis of contract which has been made through the
process of collective bargaining.
 Theories of Collective Bargaining
• The uncertainty of trade cycles, the spirit of mass production and competition for jobs make
bargain a necessity. The trade union’s collective action provided strength to the individual
labourer.
• It enabled him to resist the pressure of circumstances in which he was placed and to face an
unbalanced and disadvantageous situation created by the employer. The object of trade
union policy through all the maze of conflicting and obscure regulations has been to give to
each individual worker something of the indispensability of labour as a whole.
• It cannot be said whether the workers attained a bargaining equality with employers. But,
collective bargaining had given a new- relationship under which it is difficult for the employer
to dispense without facing the relatively bigger collective strength.
2.The Governmental Concept and the Agreement as Law:
• The Governmental Concept views collective bargaining as a constitutional system in industry.
It is a political relationship. The union shares sovereignty with management over the workers
and, as their representative, uses that power in their interests. The application of the
agreement is governed by a weighing of the relation of the provisions of the agreement to
the needs and ethics of the particular case.
• The contract is viewed as a constitution, written by the point conference of union and
management representative in the form of a compromise or trade agreement. The
agreement lays down the machinery for making executing and interpreting the laws for the
industry. The right of initiative is circumscribed within a framework of legislation.
• Whenever, management fails to conform to the agreement of constitutional requirements,
judicial machinery is provided by the grievance procedure and arbitration.
 Theories of Collective Bargaining
3. The Industrial Relations (Managerial) Concept as Jointly
Decided Directives:
• The industrial relations concept views collective bargaining as
a system of industrial governance. It is a functional
relationship .Discussions take place in good faith and
agreements are arrived at. The union joins with company
officials in reaching decisions on matters in which both have
vital interests. Thus, union representatives and the
management meet each other to arrive at a mutual
agreement which they cannot do alone.
• To some extent, these approaches represent stage of
development of the bargaining process itself. The industrial
relations approach can be traced to the Industrial Disputes
Act of 1947 in our country, which established a legal basis for
union participation in the management.
 What does it mean to bargain in “good faith”?
• Collective bargaining should be carried out voluntarily, freely and in good faith. The parties
are free to engage in bargaining and there should be no interference from the authorities in
their decisions to do so.
• The principle of good faith implies that the parties make every effort to reach an agreement,
conduct genuine and constructive negotiations, avoid unjustified delays in negotiations,
respect agreements concluded and applied in good faith, and give sufficient time to discuss
and settle collective disputes.
• In the case of multinational enterprises, such companies should not threaten to transfer the
whole or part of an operating unit from the country concerned in order to unfairly influence
negotiations.
Collective Bargaining Agent
The identification of collective bargaining agent has remained a debated issue till date.
There is no law at national level for recognition of trade unions. However in some states –
Maharashtra and Madhya Pradesh, for instance-there are legal provisions for recognition.
In India, there are several ways of determining a representative union for the purpose of
collective bargaining . These methods include the following :
1. Code of Diiscipline, which is common across most public sector undertakings.
2. Secret Ballot, which is mandatory in three states viz Andhra Pradesh ( since 1975 ),
Odisha ( since 1994 ) and West Bengal ( since 1998).
3. Membership verification
 Collective Bargaining Agent
Under section (2p) of the Industrial Dispute Act 1947collective agreements to settle disputes
can be arrived at with or without recourse to conciliation machinery established by
legislation.
An agreement of one trade union is not binding on members of another or other union(s)
unless arrived at during conciliation proceedings, the other union(s)-including a minority
union- can ,therefore, raise an industrial dispute.
Under section 36 (1) of the Industrial dispute Act 1947 which deals with workers’ representation,
a collective agreement is binding on workers who have negotiated and individually signed the
settlement . It is not binding on workers who do not sign the settlement or authorise any
other worker to sign on their behalf.
A settlement ( a written agreement between employers and workers ) arrived at in the course of
conciliation proceedings is binding , under section 18(3) of the Act, not only on the actual
parties in the industrial dispute but also on heirs , successors, or assignees of the employer
on the one hand and all the workers in the establishment- present of future –on the other.
Issues of Collective Bargaining
•Wages and Working conditions · Grievances · Disciplinary matters ·
• Work norms · Health and safety
•Incentive payments · · Insurance and benefits
•Job Security · · Union recognition
•Changes in technology · · Union activities / responsibilities
•Work tools, techniques and practices · · Management rights etc.
• Transfers and promotions ·
 Issues of Collective Bargaining
Practically speaking, any issue that has relevance to management and workers becomes the
subject matter of bargaining. However, in certain specific cases both management and the
union are reluctant to yield ground. Traditionally, management is not willing to negotiate
work methods’, arguing that it is management’s exclusive right to decide how the work is to
be done. Likewise, unions don’t want negotiations on production norms and disciplinary
matters, because any agreement in this regard would put limits on their freedom.
However over the years, the nature and content of collective bargaining has changed quite
dramatically. Traditionally, wages and working conditions have been the primary focus areas
of collective bargaining. However, in recent times, the process of collective bargaining has
extended to almost any area that comes under employer-employee relations, covering a
large territory
Major Issues dealt with in Collective Bargaining
The major issues dealt with in collective bargaining are broadly categorized as below:
•Wage Related issues – These include topics like how basic wage rates are determined, cost –
of-living adjustments, wage differentials, overtime rates, wage adjustments etc. ·
Supplementary economic benefits – These include issues as pension plans, paid vacations,
paid holidays, health insurance plans, dismissal plans, supplementary unemployment
benefits etc.
• Institutional Issues – These consists of rights & duties of employers, employees & unions,
including union security, check off procedures, quality of work-life program etc.
• Administrative Issues – These include issues such as seniority, employee discipline and
discharge procedure, employee health & safety, technological changes, work rules, job
security and training, attendance, leave etc.
 Levels of Collective Bargaining in India
In India, collective bargaining typically takes place at three levels:
1.National-level industry bargaining is common in core industries such as banks, coal, steel, ports
and docks, and oil where the central government plays a major role as the employer
In these industries, the CTUO do not typically provide any guidelines on a charter of demands,
including an increase of wage or improvement of working conditions; instead, both sides –
the government and trade unions – set up a “coordination committee” to engage in the
collective bargaining proceedings.
Pay scales for government employees at the national level are revised by Pay Commissions, and
wage increases are determined by Wage Boards for several industrial sectors, such as
journalists and other newspaper employees. Wage Boards are tripartite organizations
established by the government to fix wages. They include representatives from workers,
employees and independents.
2. Industry-cum regional bargaining is peculiar to industries where the private sector dominates,
such as cotton, jute, textiles, engineering, tea plantation, ports and docks.
Bargaining generally occurs in two stages: company-wide agreements are formed, which are
then supplemented with regional (i.e. plant-level) agreements. Basic wage rates and other
benefits are usually decided at the company level, while certain allowances, incentives etc.,
are decided at the regional or plant level, taking into account the particular circumstances,
needs etc., of the employees.
However, such regional agreements are only binding on company management if the
employers’ association authorizes it in writing to bargain on its behalf.
3. Enterprise or plant-level bargaining practices differ from case to case because there is
no uniform collective bargaining procedure.
Typically, the bargaining council (or negotiating committee) is constituted by a
proportional representation of many unions in an establishment. It is therefore easier
for the management to negotiate with one bargaining agent if multiple unions at the
company can form such a single entity. If not, the management will then have to
negotiate individually with each registered union. In the private sector, employers
generally press for plant-level bargaining because uniformity of wage negotiation can
be ignored and the bargaining power of trade unions can be reduced.
Navigating a Difficult Bargaining Environment
•Avoid letting bargaining drag on for months, even years.
•Separate the monetary from the non-monetary.
•Keep bargaining simple and focused on the essential issues.
•Use a more Interest-Focused approach at the table.