INDUSTRIAL RELATIONS & LABOUR LAWS

NAME – ESANI DE
ROLL NUMBER – 39
SECTION – A
DEPARTMENT – MBA(DAY)
ASSIGNMENT – CASE STUDY ON COLLECTIVE BARGAINING

2nd December,2020
THE CASE:

You are working as Plant Manager in a 50 years old light engineering factory which has
employed 350 workmen and one trade union. The long-term wage Settlement has expired on
31.10.2020. The Trade Union has submitted a Charter of Demands on 1.12.2020 demanding
wage increase of 2500/- per man per month in the next wage Settlement. Your Corporate
Management has advised that in consideration of the fact that there is a recession due to
prevailing pandemic, the settlement should be self-financed. Accordingly, you have
submitted a list of Management demands to the trade union proposing automation and
rationalization of workforce. You want collective bargaining on both union and
management’s demands to be negotiated simultaneously and a win-win Settlement should be
reached.
Please prepare a blue print for pre-negotiation, negotiation and post – negotiation of the
demands of both parties so that next Settlement is signed by 31.7.2021.

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SOLUTION TO THE CASE:

BACKGROUND:
The process of negotiation between employers and employees aimed at agreements to
regulate working salaries, working conditions, benefits and other aspects of workers’
compensation and rights for workers is known as collective bargaining. The interests of the
employees are commonly presented by representatives of a trade union to which the
employees belong.
In our light engineering factory, we have employed 350 workmen along with a trade union
and the long-term settlement has expired on 31.10.2020. Before the next settlement, which is
to be signed on 31.7.2021, both the management as well as the trade union should negotiate
their demands by the process of collective bargaining and a win-win settlement should be
reached.

THE BLUEPRINT:
STAGE 1: Pre-Negotiation
1. Being Aware of the Situation: The people of both management and trade union
should be aware of the fact that a worldwide pandemic, Covid-19 has reduced the
demand drastically and in result to which the sales has dropped significantly in
comparison to previous years.

2. Charter of Demands: Both the management and trade union have demands which
should be discussed during the negotiation. The list of demands are as follows:-
Management Demands:
 Automation of Work
 Rationalization of Workforce
Trade Union Demands:
 Increment in wages by Rs. 2500/- per person per month
 This increment should be mentioned in the next wage settlement\

3. Team of Negotiation: The team of negotiation should consist of people who have a
good knowledge of the work profile, i.e., the type of work which is performed in the
factory and has thorough knowledge of Labour Laws, like the Factories Act 1948,
Industrial Dispute Act 1947, etc. The negotiation should consist of -

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  The Operations Manager and Supervisor (because they have in depth
knowledge of the work as well as they can explain about the automation, why
it is required and what changes it will make in production line)

 HR Personnel (have a good knowledge and understanding about the profiles of

the workers, SOPs at the factory and other labour laws)

 Occupier of Factory (because he has the ultimate control over the affairs of the
factory)

4. Training to the Workers: The workers need to be educated about the prospect of
Automation – and the fear of automation needs to be dispelled by educating and
training them in all the needed areas. After proper training of 1 month there will be
evaluation and a benchmark will be set, anyone performing below the benchmark will
be given 2 months to improve, if there is no improvement that will lead to termination.

STAGE 2: Negotiation
Demand: Increase in Wages

 An increase in Rs. 2500/- per person at this point of time is not feasible for the
management. The management should cite examples of the same situation of other
companies and make the workers understand the whole present scenario. The union
must understand that there will be hope for wage increase in the future only if the
company survives not if the company goes under and that reality has to be accepted.

 The option of Performance based Incentives is the only deal feasible for the wellbeing
of both the worker and the company should be clearly put forward. Since the company
is cash strapped, it can only clear dues and guarantee a future if production is resumed
at full speed, as the raw material suppliers have also decreased credit lines.

 The company can provide Health Insurance Coverage of Covid-19 for the workers as
well as their family members.

Demand: Automation and Rationalization of Workforce

Automation is very important for a 50years old comp any to survive in this fast growing
technologically advanced world.
For improvement in employee skills, employees will be undergone training on automation
and improved machinery and those cost will be taken care of by the company if the middle
ground has been achieved regarding wage revision. The workers who can learn the new
technology will survive and the management will give an opportunity to take VRS as well to
the willing workmen.

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STAGE 3: Post – Negotiation
This stage consists of legal formalities after agreement of both the parties on the terms and
conditions.
 Writing of the terms and conditions of the agreement.
 Signing of the agreement by both parties within 31.07.2020
 Implementation of the new wage structure next year after evaluating productivity.