Definition

• Collective bargaining is a type of negotiation used by employees to

work with their employers.
• During a collective bargaining period, workers' representatives
approach the employer and attempt to negotiate a contract which
both sides can agree with.
• Typical issues covered in a labor contract are hours, wages,
benefits, working conditions, and the rules of the workplace.
• Once both sides have reached a contract that they find agreeable,
it is signed and kept in place for a set period of time, most
commonly three years.
• The final contract is called a collective
bargaining agreement, to reflect the fact
that it is the result of a collective
bargaining effort.
• The parties often refer to the result of
negotiation as a Collective Bargaining
Agreement (CBA) / as a Collective
Employment Agreement (CEA).
 Features:
Features:
Itisisaacollective
It collectiveprocess.
process.
Therepresentatives
The representativesof ofboth
bothworkers
workersand
and
managementparticipate
management participateininbargaining.
bargaining.
II.It
II. Itisisaacontinuous
continuousprocess.
process.It Itestablishes
establishes
regularand
regular andstable
stablerelationship
relationshipbetween
betweenthethe
partiesinvolved.
parties involved.It Itinvolves
involvesnot
notonly
onlythe
the
negotiationof
negotiation ofthe
thecontract,
contract,butbutalso
alsothe
the
administrationof
administration ofthe
thecontract.
contract.
III.It
III. Itisisaaflexible
flexibleand
anddynamic
dynamicprocess.
process.The
The
partieshave
parties haveto toadopt
adoptaaflexible
flexibleattitude
attitude
throughthe
through theprocess
processof ofbargaining.
bargaining.
IV.It
IV. Itisisaamethod
methodof ofpartnership
partnershipof ofworkers
workersinin
management
management
 Importanceto
Importance tosociety
society
Collectivebargaining
Collective bargainingleads
leadsto toindustrial
industrial
peaceininthe
peace thecountry.
country.
Itresults
It resultsininestablishment
establishmentof ofaa
harmoniousindustrial
harmonious industrialclimate
climatewhich
which
supports,which
supports, whichhelps
helpsthethepace
paceof
ofaa
nation’sefforts
nation’s effortstowards
towardseconomic
economicandand
socialdevelopment
social developmentsince sincethe
the
obstaclesto
obstacles tosuch
suchaadevelopment
developmentcan can
bereduced
be reducedconsiderably.
considerably.
Thediscrimination
The discriminationandandexploitation
exploitationofof
workersisisconstantly
workers constantlybeing
beingchecked.
checked.
Itprovides
It providesaamethod
methodor orthe
theregulation
regulation
ofthe
of theconditions
conditionsof ofemployment
employmentof of
thosewho
those whoarearedirectly
directlyconcerned
concerned
aboutthem.
about them.
 Importance to
Importance to employers
employers
Itbecomes
It becomeseasier
easierforforthethemanagement
managementto toresolve
resolve
issuesat
issues atthe
thebargaining
bargaininglevel levelrather
ratherthan
thantaking
taking
upcomplaints
up complaintsof ofindividual
individualworkers.
workers.
Collectivebargaining
Collective bargainingtendstendsto topromote
promoteaasensesenseofof
jobsecurity
job securityamong
amongemployees
employeesand andthereby
therebytends
tends
toreduce
to reducethethecost
costof oflabor
laborturnover
turnoverto to
management.
management.
Collectivebargaining
Collective bargainingopens opensup upthe
thechannel
channelof of
communicationbetween
communication betweenthe theworkers
workersand andthe
the
managementand
management andincreases
increasesworkerworkerparticipation
participation
inindecision
decisionmaking.
making.
Collectivebargaining
Collective bargainingplaysplaysaavital
vitalrole
roleininsettling
settling
andpreventing
and preventingindustrial
industrialdisputes.
disputes.
 Importance to
Importance to employees
employees
Collective bargaining
Collective bargaining develops
develops aa sense
sense of of self
self respect
respect Impass
and responsibility
and responsibility among
among the the employees.
employees.
It increases
It increases the the strength
strength ofof the
the workforce,
workforce, thereby,
thereby, e
increasing their
increasing their bargaining
bargaining capacity
capacity as as aa group.
group.
Collective bargaining
Collective bargaining increases
increases the the morale
morale andand
productivity of
productivity of employees.
employees.
It restricts
It restricts management’s
management’s freedom
freedom for for arbitrary
arbitrary
action against
action against the
the employees..
employees..
The workers
The workers feelfeel motivated
motivated as as they
they can
can approach
approach thethe
management on
management on various
various matters
matters and and bargain
bargain for
for
higher benefits.
higher benefits.
It helps
It helps inin securing
securing aa prompt
prompt andand fair
fair settlement
settlement of of
grievances.
grievances.
It provides
It provides aa flexible
flexible means
means forfor the
the adjustment
adjustment of of
wages and
wages and employment
employment conditions
conditions to to economic
economic andand
technological changes
technological changes inin the
the industry,
industry, as as aa result
result
of which
of which thethe chances
chances for
for conflicts
conflicts areare reduced.
reduced.
 Collective Bargaining
Process
• In many companies, agreements have a fixed
time scale and a collective bargaining process
will review the procedural agreement when
negotiations take place on pay and conditions
of employment.
 (1) Prepare
• This phase involves composition of a negotiation team.
• The negotiation team should consist of representatives
of both the parties with adequate knowledge and skills
for negotiation.
• In this phase both the employer’s representatives and
the union examine their own situation in order to
develop the issues that they believe will be most
important.
• A correct understanding of the main
issues to be covered and intimate
knowledge of operations, working
conditions production norms and
other relevant conditions is
required.
 (2) Discuss
• The parties decide the
ground rules that will guide
the negotiations.
• An environment of mutual
trust and understanding is
also created so that the
collective bargaining
agreement would be
reached.
 (3) Propose
• It involves the initial opening
statements and the possible options
that exist to resolve them. In a word,
this phase could be described as
‘brainstorming’. The exchange of
messages takes place and opinion of
both the parties is sought.
 (4) Bargain
• Negotiations are easy if a problem
solving attitude is adopted.
• This stage comprises the time when
‘what ifs’ and ‘supposals’ are set forth
and the drafting of agreements take
place.
 (5)Settlement
• Once the parties are through with the
bargaining process, a consensual
agreement is reached upon wherein both
the parties agree to a common decision
regarding the problem or the issue.
• This stage is described as consisting of
effective joint implementation of the
agreement through shared visions,
strategic planning and negotiated
change.
 Contents of Collective Bargaining
Agreement
• The date of commencement of the agreement

• Its duration

• A definition of terms

• The procedure for settling disputes

regarding interpretation, as well as other
disputes.

• The consequences in the event of breaches of

the agreement

• As regards wages, exactly how conversion of

employees' wages to the new scales is to be
effected.
Levels of collective
bargaining
 Economy-wide
(national)
• Bargaining is a bipartite or
tripartite form of negotiation
between union confederations,
central employer associations
and government agencies.
• It aims at providing a floor
for lower-level bargaining on
the terms of employment,
often taking into account
macroeconomic goals.
(b) Sectoral bargaining:
• It aims at the standardization of the terms of
employment in one industry, includes a range of
bargaining patterns.
• Bargaining may be either broadly or narrowly defined
in terms of the industrial activities covered and may
be either split up according to territorial subunits or
conducted nationally.

• (c) Enterprise Level:

• It involves the company and/or
establishment.
• It emphasizes the point that bargaining
levels need not be mutually exclusive.
 Conditions For Successful
Collective Bargaining

• Trade Union Recognition

• Observance of Agreements

• Support of Labour Administration

Authorities

• Good Faith

• Proper Internal Communication

 Problems of
Problems of Collective
Collective Bargaining
Bargaining
I.I. Dueto
Due tothe
thedominance
dominanceof ofoutsiders
outsidersinintrade
tradeunionism
unionisminin
thecountry,
the country,there
thereisismultiplicity
multiplicityofofunions
unionswhich
whichareare
weakand
weak andunstable,
unstable,andanddodonot
notrepresent
representmajority
majorityof of
theemployees.
the employees.Moreover,
Moreover,therethereareareinter-union
inter-union
rivalries,which
rivalries, whichfurther
furtherhinder
hinderthetheprocess
processof of
collectivebargaining
collective bargainingbetween
betweenthe thelabor
laborand
andthe
the
management.
management.
II. Trade
II. Tradeunions
unionsare
arehaving
havingpolitical
politicalaffiliations,
affiliations,they
they
continueto
continue tobe
bedominated
dominatedby bypoliticians,
politicians,whowhouse
usethethe
unionsand
unions andtheir
theirmembers
membersto tomeet
meettheir
theirpolitical
politicalends.
ends.
III. There
III. Thereisisaalack
lackofofdefinite
definiteprocedure
procedureto todetermine
determine
whichunion
which unionisisto
tobe
berecognized
recognizedto toserve
serveas asaa
bargainingagent
bargaining agentononbehalf
behalfofofthe
theworkers
workers
IV. There
IV. Therehashasbeen
beenvery
veryclose
closeassociation
associationbetween
betweenthe the
tradeunions
trade unionsand
andpolitical
politicalparties.
parties.AsAsaaresult,
result,trade
trade
unionmovement
union movementhas hasleaned
leanedtowards
towardspolitical
political
orientationsrather
orientations ratherthan
thancollective
collectivebargaining.
bargaining.
 CASE DETAILS
• The case study is about the labor problems of the
Philips India Limited’s PIL 1998 Salt Lake factory
Kolkata India.

• Two unions active at PIL Philips Employee Union

(PEU) and Peace Workers Union (PWU).
• The differences with workers led to declining production
and losses.
• PILs management decided to sell the factory

• The Union objected and made a counter bid highlighting

the problems between PIL and its workers the case
examines the reasons behind the conflict
SALT LAKE FACTORY FOCUS AND EXPANSION

• The company even expected to win the Philips

Worldwide Award for quality.

• The Company wanted to become the source of Philips

Exports in Asia Focus basically on its audio and video
based products.
• The company relocated its audio product line to Pune in
spite of the move that resulted in the displacement of 600
workers there were no signs of discord largely due to the
unions involvement in the overall process.

• Slowdown in the CTV market demand made the workers to

think about their job due to this workers raised voices
against the management and asked for a hike in wage.
• The difference resulted in 20 month long battle over the
wages hikes issue, go slow tactics of workers declining
production and huge loss for the company.
• In May 1998 PIL announced to stop production in June
1998.
• A series of negotiations, the unions and the management
came to a reasonable agreement on the issue of wage
structure.
 SELLING TROUBLES
• PIL decided to have a common manufacturing unit and
integrated technology to reduce cost
• Videocon approached PIL as buyer but had reservations
about over staffed and under utilized plant.
• PIL reduces workforce modernized plant spending Rs 7.1
crores.
• Videocon confirms Kitchen Appliances India Limited as its
nominee for buying the plant.
• PILs plan of selling the CTV unit Claimed the price of
Rs 90 million was quite low against valuation of 300
million by Dalal Consultants independent values.
• Workers approached the Videocon to withdraw from
the deal.
• They refused, workers filled petition in the Kolkata
High Court challenging the sale agreement.
 JUDGMENT DAY
• The Supreme Court finally passed judgment on the
controversial Philips case in favor of PIL.
• The judgment dismissed the review appeal filed by the
workers.
• The Company transferred to Videocon Workers employment
was taken over by Kitchen Appliances.
• The transfer of ownership did not interrupt the services of
workmen. Kitchen Appliances started functioning from
March 2001.
• The factory has been designed by Videocon as a major center to
meet the requirement of the eastern region market and export to
East Asia countries.
• The judgment said that though the workers can demand for their
rights, they had no say in any of the policy decision made by the
company, if their interest were not adversely affected.
• The Supreme Court’s decision repeats the position which Philips
has maintained all long that the transaction will benefit the
Philips’ shareholders.
 CONCLUSION

• Supreme Court’s decision seemed to be a typical

case of “All’s Well That Ends Well”.

• The transactions benefited to the shareholders.

• How far the Salt Lake workers agreed with this

remains unanswered!!