STUDY MATERIAL – BBA

INDUSTRIAL RELATIONS

COLLECTIVE BARGAINING
Concept
Collective bargaining is a process of negotiating between management and workers
represented by their representatives for determining for mutually agreed terms and conditions of
work which protect the interests of both workers and management.
According to Dale Yoder – “CB is the term used to describe a situation in which the essential
conditions of employment are determined by a bargaining process undertaken by
representatives of a group of workers on one hand and one or more employers on the other.
ILO in 1960 defines CB as – “Negotiation about working conditions and terms of
employment between an employer, a group of employers or one more employers’ organisation
organisatio
on the one hand, and one or more representative workers’ organisation, on the other, with a
view to reaching any agreement.
It means collective negotiation of a contract between the management’s representative on
one side and those of the workers on the other. As both the employer and employee act
collectively and not individually in arriving at an agreement through a process of proposals and
counter proposals, offers and counter offers, it is called as Collective Bargaining.
Nature of Collective Bargaini
Bargaining
• It is carried out on a collective as distinct from an individual basis. That is, CB is
bargaining by groups of people.
• In the process the main actors are employers and their association.
• The objective of CB is rule making i.e. reaching an agreement by specifying
s the rules
pertaining to employment relationship.
• The main focus of these rules is on the terms and conditions of employment.
• CB is a Civilized bipartite conformation between the workers and management with a
view to arriving at an agreement, for the object is not ‘warfare’ but ‘compromise’.
• It is both a device and a procedure used by wage earners to safeguard their interest; it is
an instrument or institution of an industrial organisation for discussion and negotiation
between the two parties.
• It is, moreover, a technique by which an attempt is made to reconcile the needs and
objectives of workers and employers and therefore an integral part of an industrial
society.
• In essence CB lies in the readiness of two parties to a dispute to reach an agreem
agreement or
mutually satisfying settlement. It is concerned about the emotions of the people involved
in it as well as with the logic of their interests.
Characteristics
Joseph Shister has suggested the following important aspects of Collective Bargaining
1. It is a collective process. Representatives of both the parties collectively participate in it.
So involves group relationship.

Dr. Amaresh C Nayak, Asso

Asso. Prof. (HR & OB)
 STUDY MATERIAL – BBA
INDUSTRIAL RELATIONS
2. It is both continuous and evolutionary. It involves not only the negotiations of contract but
also the administration of the contract also.
3. It is a flexible and dynamic process. The parties have to adopt a flexible attitude through
out the process of bargaining.
4. It is a method of partnership of workers in management. It is in fact a way to establish
industrial democracy. It also interac
interacts with socio-economic
economic climate.
5. It is an attempt in achieving and maintaining discipline in industry.
6. It is private but at times involves Govt. action.
Scope of Collective Bargaining
The subjects of agreements generally reveal that the issues can be group
grouped in three
categories and the factors associated with the categories are as follows:
a) Employment and working conditions: wages, bonus, DA, working hours, holidays with
leave etc.
b) Labour welfare, labour recruitment and management matters: retirement benefits,
benefi supply
of subsidized item like food, transport, housing, medical, etc. These are worker interest
oriented matters.
c) Organisational matters: Comprises union recognition, exclusive bargaining rights, check-
check
off schemes, workers participation in management etc. There are union interest oriented
matters.
However,, IIPM, Kolkata has suggested following facts to be included in the CB agreement
i) Purpose, scope and definition of important terms.
ii) The rights and responsibilities of management and trade union.
iii) Wages, bonus, product norms, leave, retiring benefits and other benefits and term and
conditions of service.
iv) Grievance redressed procedure.
v) Methods of machinery for settlement of possible future disputes.
vi) A termination clause.
Importance Of Collective Bargaining
1. Collective bargaining develops better understanding between the employer and
employee.
2. It promotes industrial democracy.
3. It benefits both the employer and employee in organization.
4. It facilitates the speedy implementation of d
decisions
ecisions arrives at a collective negotiation.
Types of Collective Bargaining
There are four types of collective bargaining.
1. Conjunctive bargaining: usually issues related to economic benefits are discussed in this
type of bargaining. In different meetings where the management wishes to increase the

Dr. Amaresh C Nayak, Asso.

Asso Prof. (HR & OB)
 STUDY MATERIAL – BBA
INDUSTRIAL RELATIONS
workload, the union expects increase in wages and bonus etc. this con be regarded as
conjunctive or distributive
tributive bargaining.
2. Co-operative
operative bargaining: here both the management and the workers union join together
to resolve problems of common interest with mutual understanding of the problem. When
the industry is in difficulty, namely economic crisis, shortage of power or raw material, over
staffing etc. both the parties would sit together and reach an amicable solution.
3. Productive bargaining: it is a bargaining usually initiated by the management to make the
workers contribute to higher productivity by giving them incentives or encouragements the
managementent can make the workers work hard and attain prescribed standards which would
help increased productivity and ensure extra benefits to workers.
4. Composite bargaining: under this type of bargaining workers not only demand higher
wages but also express their concern over working conditions, environmental issues, and
recruitment and training policies.
Forms of Collective Bargaining
Broadly speaking CB may assume the following forms:
i) It may be a single plant bargaining – The bargaining may be between managem
management a
single trade union, for example-
example NALCO & INTUC.
ii) Multiple Plant Bargaining – The bargaining may be between a single company or
establishment having several plants and the workers employed in all these plants. For
example – SAIL and unions in SAIL plants
iii) Multiple employer bargaining – the bargaining may be between all the trade unions of
worker in the same industries through their federal organisation and the employer
federation. Example – Textile, steel.
However, In India Collective Bargaining has been classified under the following four
categories, as such
i) Agreements drawn up after direct negotiation between labour and management are
purely of voluntary character.
ii) Agreements that are negotiated by officers during conciliation are called settl settlement
under the Industrial Disputes Act, 1947.
iii) Agreements concluded by parties with referring to Board of Conciliation and signed by
them.
iv) Agreement negotiated by parties on a voluntary basis when disputes are sub juiced
which are later submitted to Indust
Industrial
rial Tribunals, Labour Courts or Labour Arbitration for
incorporation into the documents as part of award.
Functions of Collection Bargaining
The CB serves a number of important functions as given below:
1. Rule making – It is a rule making or legislative process in the sense that it formulates
terms and conditions under which labour and management may cooperate and to work
together over a certain stated period.

Dr. Amaresh C Nayak, Asso.

Asso Prof. (HR & OB)
 STUDY MATERIAL – BBA
INDUSTRIAL RELATIONS
2. A Judicial Process – It is also a judicial process for in every collective agreements there
is a provision or clause regarding the interpretation of the agreement and how any
difference of opinion about the intension or scope of a particular clause is to be resolved.
3. An Executive Process – It is also an executive process as both management and union
undertake to implement the agreement signed.
Again John Dunlop & Derek Bok has listed the following five important functions of collective
bargaining.
i) Establishing the rules of work place.
ii) Determining the form of compensation.
iii) Standardizing compensation.
iv) Determining
etermining priorities on each side.
v) Redesigning the machinery of bargaining.
The Process of Bargaining::
1. Pre negotiation: this is the first stage involved in a bargaining process. In other words it
refers to home work for negotiation of both the parties. The
The management and workers need
to make preparation for bargaining.
2. Negotiation: once the first stage is completed both the parties come to the negotiation table,
at a time and place for this purpose. Negotiation process starts by the union representatives
delivering an extravagant and long list of demands. The management counters the union
demands by offering little more than what was agreed in the previous contract. Here each
group compromises by giving some of its demands so that an agreement can be arrived.
arriv
3. Agreement or Contract: after both parties have arrived at an informal agreement it is written.
The written form of the agreement usually consists of the terms and conditions of
agreement, the date from which it comes into effect, the names of the signatories
signa of the
agreement. When the agreement is prepared it is send to the labourers and management for
its ratification and approval. The collective agreement is variously known as “labour
contract”, “union contract”, “labour management agreement”. Union members
m and members
of management all received the copies of the agreement or contract.
4. Implementation of agreement: once an agreement is ratified and approved next is its
implementation. The agreement can be made on temporary basis. In such cases before its i
expiry both parties consult each other for its renewal. The union may always demand the
renewal of such agreements which benefits workers before expiry. Management on the
other hand may reject this demand taking the financial position of the organizatio
organization into
consideration. As a result this may again lead to negotiation. So this collective bargaining is
a continuous process.
Theories of Bargaining
There are four simple collective bargaining models.
A. Walton & Mekersie Theory

Dr. Amaresh C Nayak, Asso.

Asso Prof. (HR & OB)
 STUDY MATERIAL – BBA
INDUSTRIAL RELATIONS
According to Walton & Meker
Mekersie
sie Theory of collecting bargaining it has four sub processes,
which are as described below.
i) Distributive Bargaining – This applies to situations in which union and management
goals are in conflict.
ii) Integrative Bargaining - Refers to bargaining issues
ues that are not necessarily in conflict
with those of the other party.
iii) Attitudinal Structuring – In this process the bargaining parties cultivate friendliness, trust,
respect and cooperation.
iv) Intra-organisational
organisational Bargaining – Here the focus is on interaction between the union and
management.
It is seen that all these above four-sub
four sub process interact to help shape the final outcome
of collective negotiation as well as the long-term
long term relationship between union and management.
B. Bargaining Range Theory
ry
The Bargaining Range Theory was developed by Late Professor A.C. Pigou. According to
this theory the labour and management establish upper and lower wage limits within which a
final settlement is made. The Union’s upper limit represents its ideal wage. Management offers
a wage that is well below that is acceptable to union. From these two extremes both the teams
processed through a series of proposal and counter proposals. The union gradually reduces its
wage demands while management raises its wage offe offer.
According to this theory, the exact settlement point will depend on the bargaining skill and
strength of union and management negotiation.
C. Chamberlain Model
Conceptually the Chamberlain model is simple but very insightful of bargaining. This model
focuses upon the determinants of bargaining power and the way in which changes in these
determinants lead to settlement in the majority of CB situation.
Chamberlain defines bargaining power – as the ability to secure your opponents agreement
to your term. This unions bargaining power can be defined as management’s willingness to
agree to the union’s term or demands. But what determines the willingness (or unwillingness) of
management to agree to the union’s terms? The answer depends upon how costly disagreeing
disagree
will be relative to how costly agreeing will.

MCD
UBP =
MCA

Where UBP is Union’s Bargaining Power

MCD is Management’s perceived cost of disagreeing with the union term
MCA is Managements perceived cost of agreeing with the unions’ term

Dr. Amaresh C Nayak, Asso.

Asso Prof. (HR & OB)
 STUDY MATERIAL – BBA
INDUSTRIAL RELATIONS
If management estimates that it is more costly to agree than to disagree, which means, if the
unions bargaining power is less than one. Management will choose to disagree and reject
unions’ term. If management judges that it is more costly to disagree,
disagree, which means unions
bargaining power is more than one, management will choose to agree.
Again
UCD
MBP =
UCA
Where MBP is Management’s Bargaining Power
UCD is Union’s perceived cost of disagreeing with the management’s term
UCA is Union’s perceived cost of agreeing with the management’s term
Here if union believes it is more costly to agree than to disagree, the union will disagree with
managements offer. It means when managements bargaining power is less than one, the union
chooses to reject
ct the management offer.
D. Hick’s Bargaining Model
The Hick’s Bargaining model focuses on the length and cost of work stoppages. Prof. John
Hicks of Oxford proposed that union and management balance costs and benefit of work
stoppages when making concessions
concessions during bargaining. Each side makes concessions to avoid
a work stoppage. There is a relation between the wages that one or the other party will accept
the length of strike that would be establishing that wage. The employer may concede more in
order to avoid a strike, which will rise with the length of strike anticipated.
Essentials of Successful Collective Bargaining
Following conditions must be fulfilled to make collective bargaining successful.

Strong and Stable union: a strong and stable union is essential for the success of
collective bargaining. The employers can easily ignore a weak union. The question of
entering into negotiations with such a weak union does not arise because agreement with
such a union will hardly be honoured by a large section of workforce.

Recognition: the recognition by the management of the representative trade union as a
bargaining agent is of paramount significance. A trade union may be strong and stable, but
until it is given recognition it will hardly have any impact. Collective bargaining cannot exist
or begin until union is recognized.

Permanent bargaining machinery: among other thing the bargaining machinery must be
efficient and permanent. No adhoc arrangements are satisfactory. As for m
machinery being
efficient, it has two aspects:
1. Availability of full information.
2. Selection of proper representation.

Dr. Amaresh C Nayak, Asso.

Asso Prof. (HR & OB)
 STUDY MATERIAL – BBA
INDUSTRIAL RELATIONS

Mutual accommodation: there has to be a greater emphasis on mutual accommodation
rather than conflict or uncompromising attitude. Conflictin
Conflicting
g attitude does not lead to
amicable labour relations. The approach must be mutual “give and take” rather than “take
and leave”.

Political climate: if collective bargaining has to be fully effective, a favorable political
climate must exist. The government does every thing to facilitate bargaining process such as
providing machinery for the settlement of disputes, mediation, and conciliation. But the role
of government has to be minimum.

Dr. Amaresh C Nayak, Asso.

Asso Prof. (HR & OB)