Collective Bargaining

Collective Bargaining
• “Collective Bargaining is a process in which the representatives of a labour
organization & the representatives of business organization meet and
attempt to negotiate a contract or agreement, which specifies the nature
of employee-employer union relationship”.
– FLIPPO
• Process involving discussions and negotiations

• ‘collective’ – group

• 'bargaining' – proposals and counter proposals

• to reconcile their conflicting interests

• is a flexible approach
 AIMS AND OBJECTIVES OF COLLECTIVE BARGAINING:
UPHOLDING INDUSTRIAL DEMOCRACY

Ensuring equality and justice for socially and economically

backwards groups

Protecting the working class from exploitation

Meeting the legitimate expectations of labourers regarding the

work they have undertaken
COLLECTIVE BARGAINING IN INDIA
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”.

It is a process of discussion and negotiation between employer

and workers regarding the terms of employment and working
conditions.
 Evolution Of Collective Bargaining

• Coined by Sydney and Beatrice Webb

• Industrial Revolution – Great Britain

• The Indian Scenario:

– Gandhiji - the leader of the Ahmedabad textile
workers
– Idea gathered interest only after the Second World
War
– GOI took steps like setting up of machinery for
negotiations, conciliation and arbitration.
 Types Of Bargaining

• Conjunctive/Distributive
Bargaining - zero-sum game;
win – lose

• Co-operative Bargaining -
more open to coming down
from their high horses; win –
win.
Collective Bargaining Process
• Prepare

• Discuss

• Propose

• Bargain

• Settlement
Stages of Collective Bargaining in India
A. Charter of Demands

Typically, the trade union notifies the employer of a call for

collective bargaining negotiations. However, in certain cases
the employer may also initiate the collective bargaining
process by notifying the union(s) The representatives of the
trade union draft a “charter of demands” through various
discussions and consultations with union members. The
charter typically contains issues relating to wages, bonuses,
working hours, benefits, allowances, terms of employment,
holidays, etc.
B. Negotiation
As a next step, negotiations begin after the submission of the
charter of demands by the representatives of the trade union.

Prior to such negotiations, both the employer and the trade unions
prepare for such negotiations by ensuring collection of data, policy
formulation and deciding the strategy in the negotiations.

After such preparation, the negotiations take place wherein the

trade unions and the employer engage in debates and discussions
pertaining to the demands made by the trade unions.

In the event that such demands are rejected, the trade union may
decide to engage in strikes
C. Collective Bargaining Agreement
A collective bargaining agreement will be drawn up and entered into
between the employer and workmen represented by trade unions.

It may be structured as bipartite agreement, memorandum of

settlement or consent award.

D. Strikes
If both parties fail to reach a collective agreement, the union(s) may
go on strike.
As per the IDA, public utility sector employees must provide six
weeks’ notice of a strike, or may strike fourteen days after providing
such notice (a ‘cooling off period’).
E. Conciliation

A conciliation proceeding begins once the conciliation officer

receives a notice of strike or lockout.

During the ‘cooling off period’, the state government may appoint
a conciliation officer to investigate the disputes, mediate and
promote settlement.

On the other hand, it may also appoint a Board of Conciliation

which shall be appointed in equal numbers on the
recommendation of both parties, and shall be composed of a
chairman and either two or four members.

No strikes may be conducted during the course of the conciliation

proceeding
F. Compulsory Arbitration or Adjudication by
Labour Courts, Industrial Tribunals and
National Tribunals
When conciliation and mediation fails, parties may either go for
voluntary or compulsory arbitration. In the case of voluntary
arbitration, either the state or central government appoints a Board
of Arbitrators, which consists of a representative from the trade union
and a representative from the employer.

In the case of compulsory arbitration, both parties submit the dispute

to a mutually-agreed third party for arbitration, which is typically a
government officer. 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
Levels of Collective Bargaining in India

In India, collective bargaining typically takes place at three level:

1.National-level industry bargaining

It 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.
In these industries, the CTUO do not typically provide any
guidelines on a charter of demands including an increase of wage
or improvement of working conditions; instead, both sides – the
government and trade unions – set up a “coordination committee”
to engage in the collective bargaining proceedings.
ii. Industry-cum regional bargaining

It is peculiar to industries where the private sector dominates, such

as cotton, jute, textiles, engineering, tea plantation, ports and docks.

Bargaining generally occurs in two stages:

company-wide agreements are formed, which are then
supplemented with regional (i.e. plant-level) agreements.

Basic wage rates and other benefits are usually decided at the
company level, while certain allowances, incentives etc., are decided
at the regional or plant level, taking into account the particular
circumstances, needs etc., of the employees
iii. Enterprise or plant-level bargaining

This practices differ from case to case because there is no uniform

collective bargaining procedure. Typically, the bargaining council (or
negotiating committee) is constituted by a proportional
representation of many unions in an establishment.

It is therefore easier for the management to negotiate with one

bargaining agent if multiple unions at the company can form such a
single entity.

If not, the management will then have to negotiate individually with

each registered union
Levels At Which Collective Bargaining Is
Undertaken

Enterprise Or Plant Level

Industry-Cum-Region wide Agreements

Sectoral Collective Bargaining At National Level

 Contents of Collective Bargaining
Agreements
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.

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 :-

Term / Duration of the memorandum of settlement as may be

agreed between the parties
Settlement terms which, typically, may be with respect to
wages, benefits, allowances, arrears with respect to payment to
workers, concessions, works hours, overtime etc.

Conditions with respect to strikes and lockouts by trade unions

and employers respectively

Obligations of workmen

Obligations of employer

Penalties with respect to non-compliance of the obligations of

workmen and employers

Dispute resolution

Miscellaneous clauses including severability, notice, etc.

 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.
 Conditions For Successful Collective
Bargaining

• Trade Union Recognition

• Observance of Agreements

• Support of Labour Administration

Authorities

• Good Faith

• Proper Internal Communication

example of a successful collective bargaining agreement:

The employees at JK Steel Pvt Ltd. do not received paid vacation. The employees
are all a part of a labor union and decide to come together to demand paid
vacation time from the company’s upper management.

First, the employees go to the labor union board to explain their demands and to
ask for help. Then, with the help of labour lawyers, they bring their demands to
upper management. They explain that they want a minimum of three weeks’
vacation for all full-time employees with extra vacation days given to those who
have more tenure in the company.

The JK Steel’s management decides that paid vacation time is a reasonable

request from their employees, but that the company’s budget does not include
enough money to compensate for three full weeks of vacation. Instead, they
propose that each employee will receive two weeks.

Employees of the JK Steel review the negotiations and agree to the two-week
vacation time offer. The measure is finalized and placed into a collective
bargaining agreement to be filed and certified so that it can be legally binding.
 PERCEPTIONS ON COLLECTIVE
BARGAINING
• CB essentially means negotiations between the labour and
management
• CB should just not stop at the negotiations but also go on to be
implemented; otherwise the entire process of CB will be rendered
futile.
• It is mostly the formal sector that benefits out of the CB process.
• The parties have to adopt a flexible attitude throughout the process
of bargaining
• It is based on give and take approach and take or leave approach.
• Once both the parties know what they want, negotiations become
easier and better.
• Obviously all the above mentioned conditions are required
successful for CB but the most essential among them is the “good
faith”
• CB agreement is a written format and it is essential because that
acts as a legal framework and as a guide to their relationships on
certain matters for a specified period of time.

• Collective bargaining is not highly practiced in India, several factors

are responsible for this:
•
• Multiple unions
• Defective laws
• Mediation by political leaders

• Organizations understand the importance of human resources

hence they take care of the workers well enough so that collective
bargaining is not highly required. It is also because most MNC’s are
setting up their plants in India, because of which compensation
levels have gone up so also the terms of employment has become
favourable in most parts of the country.

• It is necessary to create a win – win situation for both the parties, if

this is not done, the process of CB just acts as a temporary solution.
Also, if CB is used as a temporary solution, it would in fact create an
environment of distrust.
 WHAT HAPPENS IF THE PARTIES
CANNOT AGREE?
• If the parties cannot reach an agreement, they can ask the
Ministry of Labour to appoint a conciliator.

• The parties can choose to ask an arbitrator to decide on the

issues in dispute.

• Parties who cannot reach an agreement and who do not

proceed by way of arbitration can be in a strike or a lockout
position once conciliation has failed.
WHAT IS A STRIKE?
A strike is when all the employees of a bargaining unit stop
working or refuse to perform some of their duties in such a way to
slow down the output of their employer during a labour dispute.

WHAT IS A LOCKOUT?
A lockout is when the employer closes the workplace or suspends
work for certain employees during a labour dispute.

A lockout or a strike usually ends when the parties agree on the

terms of a new collective agreement and conclude collective
bargaining.
 ADVANTAGES OF COLLECTIVE BARGAINING

Being a part of a group helps employees to voice their demands

and negotiate better with their employers.

It is harder for employers to dismiss the demands of a unified large

group of employees or a trade union in comparison with individual
employees.

It helps to improve the workplace conditions for employees.

It makes the rights and obligations of both employers and

employees clear.
 DISADVANTAGES OF COLLECTIVE BARGAINING
It is a long complicated process as the union of employees and the
employers go back and forth while negotiating.
It is time-consuming and requires both parties to take time off of
their work.
Another issue that stands as a hindrance to the effectiveness of this
process is the presence of multiple trade unions in India.

Sometimes the inter-union rivalry gets in the way of negotiating for

better working conditions.

Most trade unions are also backed by or associated with a political

party. Oftentimes, it is the decision of the party that influences the
trade union’s demands.

There is no way to determine which union represents the

employees.