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AMITY LAW SCHOOL, AMITY UNIVERSITY

LUCKNOW
SESSION- 2021-2024
LABOUR LAWS

TOPIC- COLLECTIVE BARGAINING

SUBMITTED TO:
Ms. Palak Jawa
(Assistant Professor I)
SUBMITTED BY:
TANYA SINGH
LLB (3yrs) 3rd SEMESTER
Enrollment no: A8156121015
&
SAMRIDDHI AGRAWAL
LLB (3 Years),3rd Semester
Enrollment Number: A8156121018

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ACKNOWLEDGEMENT
I would like to express my gratitude to Asst. Prof. Palak Jawa ma’am who gave me the
opportunity to do this project. I am highly indebted to Amity Law School for their guidance and
constant supervision as well as providing information regarding the project and their support in
helping me complete the project

[Tanya Singh , Samriddhi Agrawal]

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TABLE OF CONTENTS

S. No. Contents

1. Introduction

2. History of Collective Bargaining in India

3. Objective of Collective Bargaining

4. Stages of Collective Bargaining

5. Levels of Collective barrhaining

6. Collective Bargaining Agreements in India

7. Collective Bargaining & National

Commission on Labour

8. The National Commission of Labour on

Collective Bargaining

9. Case Laws

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Introduction

Collective Bargaining

Collective bargaining is a process of discussion and negotiation between two parties, one or both
of whom a group of persons is acting in consent. The resulting bargain is an understanding as to
the terms and conditions under which a continuing service is to be performed. More specifically
collective bargaining is a procedure by which employers and a group of employees agree upon
the conditions of work.

Collective bargaining has been defined by the Supreme Court (“SC”) as “the technique by which
dispute as to conditions of employment is resolved amicably by agreement rather than
coercion”.1 It is a process of discussion and negotiation between employer and workers regarding
the terms of employment and working conditions. Workers are generally represented by trade
unions with respect to expressing their grievance concerning service conditions and wages before
the employer and the management.

Employers and employees are the only parties involved in the negotiation process, making
collective bargaining strictly a bipartite procedure2. There is no outside interference. The parties
directly involved control the terms of employment. Only those activities that are conducted
between employers and their employees collectively are considered to be collective bargaining.

ILO (1980) 3defines collective bargaining as an institutional procedure of joint determination of

the rules to govern the terms and conditions of employment of the workers concerned and the
labour management relations itself.

Collective bargaining is a method used by organisations of employees and employers to settle

their disputes together and without the intervention or help of a third party.

The words collective, which denotes united or a group activity, and bargaining, which suggests
negotiating, make form the phrase "collective bargaining." Together, these terms denote group or
collective negotiating. On one side of the negotiation are representatives of management, and on
the other are employees' or labour unions' representatives. Refusing to bargain collectively in
1
Karol Leather Karamchari Sangathan v. Liberty Footwear Company, (1989) 4 SCC 448.
2
Section18,Industrial Disputes Act.
3
International Labour Standards On Collective Bargaining.

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good faith with the employer is considered to be an unfair labour practice as per the provisions of
the Industrial Disputes Act, 1947 (“IDA”)4 . This is generally an effective system as it usually
results in employers undertaking actions to resolve the issues of workers. However, the legal
procedure for pursuing collective bargaining in India is complicated .

4
Section 2 (ran), IDA

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History Of Collective Bargaining In India

The concept of collective bargaining emerged and gained recognition in Beatrice and Sydney's
writings. This movement originated in Great Britain and was used by coal miners as early as
1874. It has been applied in many ways and occasionally has undergone significant changes.
Different countries have given it different traits and patterns.

As the process of industrialisation started late in India the history of collective bargaining also is
not very big compared to its history in developed countries specially Great Britain or USA.
Collective bargaining in India gained ground only after independence, but it started very much
before in the 1920’s in the textile mills of Ahmedabad with the initiative of our great leader
Mahatma Gandhi. The importance of collective bargaining came into existence when the unions
realised that settlement of disputes through industrial courts was wasteful in terms of time,
energy and money and also a hindrance to industrial peace and harmony.

The Royal Commission on labour in 1931 made it clear that collective in true sense was
practiced only in the textile mills o f Ahmedabad.

The first collective agreement was made by Dunlop Rubber Company in West Bengal in 1947,
then came the Bata Shoe Company in West Bengal and in 1951, the Indian Aluminium Company
made its five year agreement with employees union in Belur. The Imperial Tobacco company
started with this concept in 1952 and by 1955 many big companies in India like Tata Iron and
Steel Company, Hindustan Lever and many small companies .started with this concept of
collective bargaining. By the end of 1961, 49 companies involving 4.5 lakhs of employees had
started this practice of collective bargaining as a tool for maintaining, peace and harmony in
industrial organisations.

The history of collective bargaining in India shows that the practice of collective bargaining in
true sense was done in private sector, no real attempt was made in public sector except in the
case of Indian Railways. In 1978, Bharat Heavy Electricals Limited made an experiment by
workers representatives.

There has been very little legal support for the growth of this practice. Even after independence
no legal provisions were made for the practice of collective bargaining. There is still no law

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which enforces the use of collective bargaining as a tool for the peace of industrial relations. The
I.L.O. convention number 98 gives importance to the “Rights of Collective Bargaining”.5

5
C098 - Right to Organise and Collective Bargaining Convention, 1949 (No. 98

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The objectives of collective bargaining

The aims and objectives of collective bargaining are as follows:

o Keeping industrial democracy alive.

o Ensuring justice and equality for those from disadvantaged social and economic
backgrounds.
o Preventing the exploitation of the working class.
o Satisfying the reasonable demands of workers for the work they have performed.

Principles Of Collective Bargaining

Collective bargaining plays a vital role in settling and preventing industrial disputes. It is an
important tool for maintaining industrial peace and so the responsibility of its proper
implementation should be of both the employers as well as the employees. Collective bargaining
should enable the union leaders to present to the management their demands and desires and also
create a ground for the management to explain to the union leaders their problems and
difficulties. There must be an honest attempt of solving problems and giving solutions to
problematic issues. To make collective bargaining effective in practice, faith and confidence in
each other should be developed. There should be respect for each other. The representatives of
labour and management should be honest and behave with responsibility.

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Stages of Collective Bargaining in India

Collective bargaining take place at different levels in India collective bargaining agreements
takes place at five different levels.

1) Charter of Demands
Typically, a request for collective bargaining negotiations is communicated to the
employer by the trade union. But in some circumstances, the employer may also start the
process of collective bargaining by informing the union (s). Through numerous
conversations and talks with union members, the trade union's leaders write a "charter of
demands." The charter often addresses matters such to pay, incentives, working
conditions, vacations, perks, and allowances. Although the employer often prefers a
single charter of demands in a workplace with numerous unions, each union is free to
submit its own charter. Either the union or the employer may start the collective
bargaining process at this point. After multiple talks among all of its members, the labour
union produces a charter of demands.
2) Negotiation

Following the submission of the charter of demands by the trade union representatives,
discussions start as the following phase. Both the employer and the trade unions ensure
that data is gathered, policies are developed, and a bargaining strategy is chosen prior to
such negotiations. Following this preparation, negotiations between the employer and the
unions are held, during which the unions' requests are discussed and contested. In the
event that such demands are rejected, the trade union may decide to engage in strikes.

Obviously, the lengthy collective bargaining process necessitates the employer's

interaction with numerous unions. It could take weeks, months, or even years in the
public sector. For instance, the Joint Wage Negotiating Committee for the Steel Industry,
covering workers in four large unions, took more than three years from the date of the
submission of the charter of demands to the Steel Authority of India Ltd.

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(SAIL).6Normally, negotiations involve multiple rounds of haggling. Both the

management and union sides explain the thinking behind their suggestions.

While some clauses are largely the same from one contract to the next, others, like salary,
are negotiated with each one. Both sides may suggest a new topic for negotiation, and the
parties may change some sections.

3) Collective Bargaining Agreement

If the negotiations becomes successful the employer and employees who are represented
by unions will next draft and sign a collective bargaining agreement. It could be set up as
a consent award, memorandum of settlement, or bipartite agreement.

4) Strikes
The union(s) may go on strike if both parties are unable to come to a collective
bargaining agreement. Employees in the public utility industry are required by the IDA to
give a strike notice of six weeks, and they have fourteen days (a "cooling off period")
following that notice to strike.7The IDA prohibits both parties from engaging in any form
of industrial action while the conciliation is ongoing and until seven days after the end of
the conciliation process or two months after the end of the legal process, whichever
comes first.8
5) Conciliation
When the conciliation officer receives a notice of a strike or lockout, a conciliation
proceeding is started. The state government may appoint a conciliation commissioner to
look into the disputes, mediate, and encourage settlement during the "cooling off
period."9 On the other hand, it may also appoint a Board of Conciliation, which shall be
appointed equally in both parties' favour and shall be made up of a chairman and either
two or four members.10Strikes are not permitted while the conciliation process is in

6
P.D. Shenoy, Voluntary bipartite approaches towards industrial peace: Indian experience (Bangkok, ILO, 1991),
pp. 17-26.
7
Section 22 of the IDA.
8
Section 23 of the IDA.
9
Section 4 of the IDA

10
Section 5 of the IDA

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progress. Conciliation proceedings are concluded with one of the following

recommendations:
(i) a settlement,
(ii) (ii) no settlement or
(iii) (iii) reference to a labour court or an industrial tribunal.11

6) Compulsory Arbitration or Adjudication by Labour Courts, Industrial

Tribunals and National Tribunals

Parties have the option of resorting to either voluntary or required arbitration when
consultation and mediation have failed. In the instance of voluntary arbitration, the state or
the federal government names a Board of Arbitrators, which is made up of a trade union
representation and an employer representative. When compulsory arbitration is used, both
parties agree to have the dispute arbitrated by a third party, usually a government official.
Arbitration may be compulsory because the arbitrator makes recommendations to the parties
without their consent, and both parties must accept the conditions recommended by the
arbitrator.

Section 7A of the IDA provides for a labour court or industrial tribunal within each state
government consisting of one person appointed to adjudicate prolonged industrial disputes,
such as strikes and lockouts. Section 7B provides for the constitution of national tribunals by
the central government for the adjudication of industrial disputes that involve questions of
national interest or issues related to more than one state. In such a case, the government
appoints one person to the national tribunal and can appoint two other advisers.

Employer and employees may, by written agreement, send a labour dispute to a labour court,
industrial tribunal, or national tribunal for adjudication or mandatory arbitration if it cannot
be resolved through conciliation and mediation. Within six months of the inquiry's start, a
final decision must be made about the labour dispute.12The appropriate government office
and conciliation officer receive a copy of the arbitration agreement that has been signed by

11
Section 20 of the IDA
12
Govt. of India: Section 36 of the Industrial Dispute Act, 1947 (New Delhi, Govt. of India, 1947),

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all parties, and the government is then required to publish the decision in the Official Gazette
within one month of receiving the document.13

13
Ibid at p.5

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Levels of Collective Bargaining in India

In India, collective bargaining usually takes place at three levels :

i. National-level industry bargaining

The national union and the employer's organisation typically engage in collective bargaining
at the national level. 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.Representatives from both parties meet to negotiate on crucial and
fundamental topics. At the national level, pay, D.A., or shift allowance difficulties are all
possible. All industries and all industrial workers accept issues when national bargaining
takes place. The homogeneity and standardisation of pay and wage structures are benefits of
negotiation at this level. Conflict and inequity are avoided. When the workforce is small and
homogenous, this degree of negotiation is widely accepted. The problem with this type of
bargaining is that it is not possible under Indian conditions because of the large size of the
country and lack of homogeneity of the work force. If the perspective of the state government
differs from that of the  central government, collective bargaining often suffers in the public
sector. Pay Commissions modify pay scales for central government employees, while
Compensation Boards decide wage increases for a number of industrial sectors, including
journalists and other newspaper staff. Government-created tripartite committees known as
pay boards are responsible for setting wages. They comprise delegates from independents,
workers, and employees. 

ii. Industry-cum regional bargaining

When collective bargaining occurs at the industry level, employers' organisations from one
industry negotiate together with their labour unions. These unions are set up as industry
federations based on certain industries. Basic pay, allowances, production capacity,
production standards, and working conditions specific to that industry are all topics of
discussion during discussions and bargaining. A single industry benefits from uniform labour
costs and working conditions thanks to industry-level bargaining. Industry-level negotiations
may also be combined with regional negotiations. Plant level agreements are frequently
added on top of industry-level bargaining agreements. Industry level bargaining over a period

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by time have become less effective because of the different levels of performance, different
levels of technology and productivity and so standard wages and allowances are not possible
as issues at industry-level bargaining.
The two tier bargaining or a combination of industry level and plant level bargaining has
become a common practice in the steel and jute industry where industry level bargaining has
been supplemented by plant level agreements. This has also been the case with Indian Banks
Association (IBA).

iii. Enterprise or plant-level bargaining

Because there is no standard process for collective bargaining, methods vary from case to
case. Typically, a proportional representation of numerous unions within an establishment
makes up the bargaining council (or negotiating committee). Therefore, if several unions at
the company can come together to form such a single body, it is simpler for management to
bargain with one bargaining agent.

If not, management will then need to hold separate talks with each recognised union.
Employers typically push for plant-level bargaining in the private sector because
homogeneity in pay negotiations may be disregarded and the bargaining power of trade
unions can be diminished. Additionally, because the financial capacity of the corporation is
significantly higher and labour disputes can be resolved more effectively at the plant level,
trade unions insist on it. Trade unions can typically face a dilemma in decentralised
plant-level bargaining if the business is having a managerial crisis from market failures or the
management is reluctant to negotiate with the unions.

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Collective Bargaining Agreements in India

Types of Collective Bargaining Agreements
In India, collective bargaining agreements are divided into three classes :
o Bipartite (or voluntary) agreements
Bipartite (or voluntary) agreements are created during discussions that are optional
between the union and the company. Such agreements are legally obligatory in
accordance with IDA.14Due to the fact that the agreement was reached freely by both
parties, implementation is typically not an issue.
o Settlements15
Settlements are tripartite in nature, as they involve the employer, trade union and
conciliation officer. They arise from a specific dispute, which is then referred to an
officer for reconciliation. If during the reconciliation process, the officer feels that the
parties’ viewpoints have indeed been reconciled, and that an agreement
is possible, he may withdraw himself. If the parties finalise an agreement after the
officer’s withdrawal, it is reported back to the officer within a specified time and the
matter is settled. However, it should be noted that the forms of settlement are more
limited in nature than bipartite agreements, because they must relate to the specific issues
referred to the conciliation officer.
o Consent awards
Consent awards are agreements reached while a dispute is pending before a compulsory
adjudicatory authority, and incorporated into the authority’s award. Even though the
agreement is reached voluntarily, it becomes part of the binding award pronounced by the
authority constituted for the purpose.

14
Section 18 of the IDA.
15
As per section 2 (gg) (p) of IDA, a “settlement” means a settlement arrived at in the course of conciliation
proceeding and includes a written agreement between the employer and workmen arrived at otherwise than in the
course of conciliation proceeding where such agreement has been signed by the parties thereto in such manner as
may be prescribed and a copy thereof has been sent to an officer authorised in this behalf by the appropriate
Government and the conciliation officer.

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2. Elements of a collective bargaining agreement

As a part of collective bargaining mechanism, employers and workmen represented by

trade unions enter into collective bargaining agreements typically structured as memorandum
of settlements which enumerate the various clauses that govern the relationship between the
workmen represented by trade unions and employers. The IDA, under section 18(1) of the
IDA, provides that such settlements entered into between workmen represented by trade
unions and employers would be binding upon the parties.

Typically, clauses in the memorandum of settlement pertain to the following:

o Term / Duration of the memorandum of settlement as may be agreed between

the parties
o Settlement terms which, typically, may be with respect to wages, benefits,
allowances, arrears with respect to payment to workers, concessions, works
hours, overtime etc.
o Conditions with respect to strikes and lockouts by trade unions and employers
respectively
o Obligations of workmen Obligations of employer
o Penalties with respect to non-compliance of the obligations of workmen and
employers
o Dispute resolution
o Miscellaneous clauses including severability, notice, etc.

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Collective Bargaining And National Commission On Labour

There is a strong perception that the National Commission on Labour favours collective
bargaining more generally. This is demonstrated by the 1969 recommendation that
government involvement in labour relations, particularly in the resolution of labour disputes,
be steadily decreased to the barest minimum. According to the National Commission on
Labour, mandatory adjudication of disputes should only be used as a last resort. Reducing the
role of government in maintaining labour relations also calls for management and the unions
to work together to maintain positive labour relations.The other recommendation which says
that compulsory adjudication of disputes should be the last resort also demands the collective
efforts to solve the disputes and a rational bargaining procedure which can satisfy the
demands of both the parties to the disputes the management and the unions must be
implemented. The National Commission on Labour also gave importance to the role of Trade
Unions in the process of collective bargaining making a legal provision either by a separate
legislation or by amending in existing enactment for:

o Compulsory recognition of trade unions and certification of unions as bargaining

agents.
o Bargaining in good faith by both employees and unions.
o Conferring legal validity and legitimacy on collective agreements.

Such provisions are there in the Maharashtra Recognition of Trade Unions and Prevention of
Unfair. Labour Practices Act of 1972, but this Act is applicable only to Maharashtra there is a
need to enforce this type of act to the whole of India. The National Commission on Labour
also emphasis on the education of workers so that the unions have leaders from within the
industries as this would reduce the dependence on political leadership of unions and thereby
make collective bargaining more meaningful and problem related.

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The National Commission Of Labour On Collective Bargaining

The recommendations of the Labour(1969) on collective bargaining were

o In the absence of arrangements for statutory recognition of unions except in some States
and provisions which required employers and a workers to bargain in good faith, it is no
surprise that reaching of collective agreements has not made much headway in our
country. Nonetheless, the record of collective agreements has not been as unsatisfactory
as it is popularly believed. Its extension to a wider area is certainly desirable.
o There is a case for shift in emphasis and increasingly greater scope for and reliance on
collective bargaining. Any sudden change replacing adjudication by a system of
collective bargaining is neither called for nor is practicable. The process has to be
gradual. A beginning has to make in the move towards collective bargaining by declaring
that it will acquire primacy in the procedure of settling industrial disputes.
o Conditions have to be crated to promote collective bargaining. The most important
among them is statutory recognition of a representative union as the sole bargaining
agent. The place which strikes/lockouts should have in the overall scheme of industrial
relations needs to be defined, collective bargaining cannot exist without the right to
strike/lockout.

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CASE LAWS
16
In the case of Workmen of Dimakuchi Tea Estate vs. The Management of Dimakuchi Tea
Estate, the examination of the salient provisions of the Act shows that the principal objects of
the Act are –

“(1) the promotion of measures for securing and preserving amity and good relations between the
employer and workmen; (2) an investigation and settlement of industrial disputes, between
employers and employers, employers and workmen, or workmen and workmen, with a right of
representation by a registered trade union or federation of trade unions or association of
employers or a federation of associations of employers;….and (5) collective bargaining”.

Further, in Karnal Leather Karamchari Sanghatan (Regd.) vs. Respondent:Liberty

Footwear Company (Regd.) and Ors, the Court laid down that the Act (Industrial Disputes
Act, 1947) seeks to achieve social justice on the basis of collective bargaining. The voluntary
arbitration is a part of infrastructure of dispensation of justice in the industrial adjudication. The
arbitrator thus falls within the rainbow of statutory tribunals. When a dispute is referred to
arbitration, it is therefore, necessary that the workers must be made aware of the dispute as well
as the arbitrator whose award ultimately would bind them. They must know what is referred to
arbitration, who is their arbitrator and what is in store for them. They must have an opportunity
to share their views with each other and if necessary to place the same before the arbitrator. This
is the need for collective bargaining and there cannot be collective bargaining without involving
the workers. The Union only helps the workers in resolving their disputes with management but
ultimately it would be for the workers to take decision and suggest remedies. It seems to us
therefore, that the arbitration agreement must be published before the arbitrator considers the
merits of the dispute. Non-compliance of this requirement would be fatal to the arbitral award.

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Indian Legal Services

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In the case of Amalgamated Coffee Estates Ltd. vs. Workmen, the Apex Court held that the
process of negotiated settlements is at the heart of the solution of the collective disputes. Unlike
a settlement in the course of conciliation proceedings, a bipartite settlement with a

majority union is equally binding if it is held to be fair and reasonable. Likewise, Central
Provinces Transport Services vs. Patwardhan, the Court held that the Industrial Disputes Act
essentially deals with collective disputes.