Collective Bargaining

Introduction
Collective bargaining involves discussions and negotiations between two groups as to the terms and
conditions of employment. It is called ‘collective’ because both the employer and the employee act
as a group rather than as individuals. It is known as ‘bargaining’ because the method of reaching an
agreement involves proposals and counter proposals, offers and counter offers and other
negotiations.

Collective bargaining is a process of negotiation between employers and a group of employees

aimed at agreements to regulate working salaries, working conditions, benefits, and other aspects
of workers' compensation and rights for workers.

The interests of the employees are commonly presented by representatives of a trade union to
which the employees belong.

Brief History
The term "collective bargaining" was first used in 1891 by Beatrice Webb, a founder of the field of
industrial relations in Britain. It refers to the sort of collective negotiations and agreements that had
existed since the rise of trade unions during the 18th century.

Definition
ILO Convention No. 154 defines collective bargaining as referring to:

All negotiations which take place between an employer, a group of employers or one or more
employers' organizations, on the one hand, and one or more workers' organizations, on the other,
for:

a) Determining working conditions and terms of employment; and/or

b) Regulating relations between employers and workers; and/or
c) Regulating relations between employers or their organizations and a workers' organization
or workers' organizations.” (Article 2)

Characteristics
The main characteristics of collective bargaining are:

• It is a group action
• It is flexible
• It is a two-party process
• It is a continuous process
• It is dynamic
• It is industrial democracy
• It is a complementary process
• It is an art
• It is a group action

The representatives of both the management and the employees participate in it. Employer is
represented by its delegates and on the other side employees are represented by their trade
union. Both the groups sit together at the negotiating table and reach at some agreement
acceptable to both.

• It is flexible

It has fluidity. There is no hard and fast rule for reaching an agreement. There is ample scope
for compromise. A spirit of give-and-take works unless final agreement acceptable to both the
parties is reached.

• It is a two-party process

Collective bargaining is a two party process. Both the parties–employers and employees–
collectively take some action. There is no intervention of any third party. It is mutual give — and
—take rather than a take-it-or-leave it method of arriving at the settlement of a dispute.

• It is a continuous process

It is a continuous process. It does not commence with negotiations and end with an agreement.
It establishes regular and stable relationship between the parties involved. It involves not only
the negotiation of the contract, but also the administration or application of the contract also. It
is a process that goes on for 365 days of the year.

• It is dynamic

Collective bargaining is a dynamic process because the way agreements are arrived at; the way
they are implemented, the mental make-up of parties involved keeps changing. As a result, the
concept itself changes, grows and expands overtime. It is scientific, factual and systematic.

• It is industrial democracy

It is based on the principle of industrial democracy where the labor union represents the
workers in negotiations with the employer or employers. It is a joint formulation of company
policy on all matters affecting the labor.

• It is a complementary process

Collective bargaining is essentially a complementary process, i.e., each party needs something
which the other party has, namely, labor can put greater productive effort and management
has the capacity to pay for that effort and to organize and guide it for achieving the
organizational objectives.

• It is an art

Collective bargaining is an art, an advanced form of human relations.

Needs
• Helps in Solving the Industrial Disputes
• Secure a prompt and fair redressal of Grievances.
• Establish Uniform Conditions
• Avoid interruptions
• Laydown fair rates of wages
• Promote the stability and prosperity

Importance
• It develops better understanding between the employer and the employees.
• It is flexible
• It promotes industrial democracy
• It benefits the both-employer and employees
• It is adjustable to the changing conditions
• It facilitates the speedy implementation of decisions arrived at collective negotiation

Collective Bargaining Process

1. Preparing for Negotiations

This may cover a number of areas that its members are most concerned with. It may include a
survey of members or several focus groups. Simply put, the trade union and negotiators look to
find out the key points by which they are to negotiate on. For instance, the lack of local canteen
may be an issue, or alternatively, workers want to get paid extra to work Sundays. Whatever
the key issues, the first stage would be to compile these ready for the negotiation.

2. Identifying Bargaining Issues

Once a list of key items is highlighted by the unions members, it compiles them down into an
official document which is then passed onto the relevant party/parties. These are also known as
‘key demands’. It may include items that are ‘red lines’ by which the negotiation must start
with. Often this would be wages or key benefits to the employee. So if these are not met,
negotiations will fall down. There may also be some conditions by which the unions would ask
their members to strike if certain criteria is not agreed upon or met. For instance, this may be a
set minimum wage or a higher wage for overtime.

3. Negotiations Procedure

There may be sit down meetings, emails, or phone calls whereby the details of a deal are
discussed. Both sides may request certain parts of the deal be left out, whilst the employer may
request some to be included in. As part of the process, both parties may take time to gather
information on whether a specific course of action would be best. For instance, an increase in
an employee’s salary by 10 percent is going to cost the company. So the negotiators would have
to see whether this is financially possible. In turn, the negotiation will continue in a circular
fashion until an agreement is reached or negotiations completely break down.
4. Reaching the Agreement

An agreement is usually reached in principle and it is at this stage by which the more intricate
details are hammered out. Legal wording, and binding agreement are put into place so both
parties are liable. Any legal documents are then signed. In short, this stage is where the
agreement is put into place and the final details are arranged.

5. Ratifying the Agreement

The-outcome of collective bargaining process is the preparation of an Agreement. When the

bargaining issues are solved then it is put on a paper. Legal terminology should be avoided as
much as possible. The agreement should be signed by both the parties and communicated to all
concerned. In our country it is called a ‘Settlement’ within the meaning of Section 2(p) of the
Industrial Disputes Act., 1947.

6. Administration of the Agreement

It is at this stage by which unions will look to hold the employer to account and ensure the
agreement is being implemented. For instance, are workers getting paid the agreed minimum
salary? Or, has the firm built the newly requested canteen on time and to an agreed upon
quality. Furthermore, some agreements may have a set expiry date by which another set of
negotiations will take place. So the collective bargaining system can be seen as a continuous
process.

Causes for Failure of CB

• Weak Unions

• Problems from Government

• Legal Problems

• Attitude of Management

• Employers’ Uncertainty about who is the Recognized Bargaining Agent

• Statutory Fixation of Conditions of Work

• Political Interference

• Weak Unions

Collective bargaining process mainly depends on the strength of unions. Indian unions are
marked with multiplicity, inter and intra-union rivalry, weak financial position and non-
recognition. Weak trade unions cannot initiate strong arguments during negotiations.

• Problems from Government

The government has not been making any strong efforts for the development of collective
bargaining. The regulatory framework covering the industrial relations scene is quite tight,
leaving very little room for bargaining to flourish on a voluntary basis.
• Legal Problems

Now adjudication is easily accessible. No attempt has been made by the government to
rationalise or simplify the multifarious laws covering labour management relations.

• Attitude of Management

Employers have failed to read the writing on the wall. They do not appreciate the fact that
unions have come to stay with almost equal bargaining strength. Such negative attitudes have
come in the way of negotiating with unions voluntarily.

• Employers’ Uncertainty about who is the Recognized Bargaining Agent

Employers quite often are not very sure about who is the recognised bargaining agent. When
there are multiple unions, bargaining with one union may prove to be a tough battle.

• Statutory Fixation of Conditions of Work

Areas of collective bargaining have not grown in view of the encouragement given to wage
boards, pay commissions, statutory fixation of other conditions of work and social security
measures.

• Political Interference

Almost all unions are associated with some political party or the other. The political parties
interfere in the smooth functioning of the union.

US Steel Collective Bargaining

In 2018, an agreement was reached between United States Steel Corporation and United
Steelworkers (USW). It was a four-year agreement which will be reviewed in 2022. The
agreement included a signing bonus of $4,000 per member, a 14 percent increase in wages over
four years, and increased pension contributions.

It follows years of stagnant pay as the company suffered from low steel prices. However, it
benefited from President Trumps steel tariffs which have pushed up steel prices in the
subsequent years. In turn, the unions pressured the firm for greater distribution of its higher
profits.

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