COLLECTIVE BARGAINING

Collective Bargaining is a process involving discussions and negotiations

between two groups representing Labour and Management regarding terms of
employment.

Collective Bargaining, a collective and continuous process,

involves formation of bargaining agreements and the implementations of such an

agreement. It is a flexible approach that attempts in achieving peace and
discipline in the Industry. The principle of give and take has been infused in the
principle of Collective Bargaining. As workers mainly in the formal sector are
organized, collective bargaining is more commonly in vogue in the formal sector.
Collective bargaining is a technique that has been adopted by the unions and
the managements to reconcile their conflicting interests. It is called collective
because the employees as a group, select representatives to meet and discuss
differences with the employer. It is called 'collective' also 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.
Through

discussions each party learns more about each other and

misunderstandings are often removed. Although all major differences might not
always be sorted out collective bargaining helps in resolving many minor
differences and there are many cases in which even major disputes have been
settled without work stoppage or outside intervention. Accordingly role of
collective bargaining in conflict resolution is very significant.
Thus collective bargaining:

is a collective process in which representatives of both the management

and employees participate.

is a continuous process which aims at establishing stable relationships

between the parties involved.

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not only involves the bargaining agreement, but also involves the
implementation of such an agreement.

attempts in achieving discipline in the industry

is a flexible approach, as the parties involved have to adopt a flexible

attitude towards negotiations.

DEFINITION OF COLLECTIVE BARGAINING

Donovan Commission A right which is and should be the prerogative of every
worker in democratic society.
Byar & Rue (1991) CB is a process that involves the negotiation, drafting,
administration and interpretation of a written agreement between an employer
and a union for a specific period of time.
J.T. Dunlop & J.T. Healey CB as a mixture of a poker game combining
deception, bluff, luck and ability.
EVOLUTION OF COLLECTIVE BARGAINING
The phrase collective bargaining is said to have been coined by Sydney and
Beatrice Webb of Great Britain which is said to be the "home of collective
bargaining"
CB rose and grew with the trade union movement. Thus Roots of CB lie in Great
Britain where it developed in response to the conditions created by the Industrial
Revolution.
Along with trade unions, the idea of bargaining collectively gained strength in the
early part of the 18th Century.
Initially, the negotiations were carried out at plant level.
By early 1900, industry and national level agreements became quite common.
The idea spread across to France, Germany, and USA. And today, through the
process of CB, organizations have learnt to cope with industrial conflict.
Characteristics OF COLLECTIVE BARGAINING
1. Not equivalent to collective agreement because collective bargaining refers to
the process while collective agreement to the possible result.

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2. Its a method use by trade unions to improve the terms and conditions of
employment of their members.
3. It seeks to restore the unequal bargaining position between employer and
employee.
4. Where it leads to an agreement, it modifies rather than replaces the individual
contract of employment.
It is a group process, wherein one group, representing the employers, and the
other, representing the employees, sit together to negotiate terms of
employment.

Negotiations form an important aspect of the process of collective

bargaining i.e., there is considerable scope for discussion, compromise or
mutual give and take in collective bargaining.

Collective bargaining is a formalized process by which employers and

independent trade unions negotiate terms and conditions of employment and the
ways in which certain employment-related issues are to be regulated at national,
organizational and workplace levels.
Collective bargaining is a process in the sense that it consists of a number of
steps. It begins with the presentation of the charter of demands and ends with
reaching an agreement, which would serve as the basic law governing labor
management relations over a period of time in an enterprise. Moreover, it is
flexible process and not fixed or static. Mutual trust and understanding serve as
the by products of harmonious relations between the two parties.
It a bipartite process. This means there are always two parties involved in the
process of collective bargaining. The negotiations generally take place between
the employees and the management. It is a form of participation.
Collective bargaining is a complementary process i.e. each party needs
something that the other party has; labor can increase productivity and
management can pay better for their efforts.
Collective bargaining tends to improve the relations between workers and the
union on the one hand and the employer on the other.
Collective Bargaining is continuous process. It enables industrial democracy to
be effective. It uses cooperation and consensus for settling disputes rather than
conflict and confrontation.
Collective bargaining takes into account day to day changes, policies,
potentialities, capacities and interests.

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It is a political activity frequently undertaken by professional negotiators.

TYPES OF BARGAINING
1. Conjunctive/Distributive Bargaining
Here, the parties try to maximize their respective gains. In this method, the
parties try to settle economic issues through a zero-sum game. Zero-sum game
is where my gain is your loss and your gain is my loss. Neither party is willing to
yield an inch.
2. Co-operative Bargaining
Both parties are more open to coming down from their high horses and cooperating. They are willing to negotiate the terms of employment in a flexible
way. This willingness is because of recession and the need to be able to survive
in such difficult times. This would not be possible without each others support
and hence co-operative bargaining.
TELCO and Ashok Leyland resorted to co-operative bargaining when the
automobile sector was going through a period of recession. Employees may now
be willing to accept a cut in wages in return for job security. Management may
also agree to modernize and bring in new technology and invest in marketing
efforts in a phased manner.
3. Composite Bargaining
Workers

tend

to

argue

that

productivity

bargaining

increases

their

workload. Rationalization, introduction of high technology, tight productivity

norms hit the unions and workers below the belt. As a result, workers tend to
favour composite bargaining. In this method, labour bargains for wages as
usual.
In addition, they also bargain for such issues that, if permitted, may result in
lower employment in some other plant, diluting the bargaining powers of unions.
E.g. Workers demand further equity in matters relating to work norms,
employment levels, manning standards, environmental hazards, sub-contracting
clauses, etc.
We see that workers are no longer solely interested in the monetary aspects to

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the exclusion of work related matters.

Through composite bargaining, unions are able to prevent the dilution of their
powers and ensure justice to workers by putting certain limits on the freedom of
employers.
For the employer, this is the lesser evil when compared to strikes and lockouts.
FUNCTIONS OF COLLECTIVE BARGAINING
1. A market or economic function It determines the terms labor will continue to be
supplied to a company by its present employees or will be supplied in the future
by newly hired workers.
2. A governmental function Bargaining relationship is seen as a mutual
dependency of the parties concerned and the power of each to veto the acts of
the other.
3. A decision making function CB allows the workers through their union
representatives to participate in the determination of the policies which guide
and rule their working lives.

IMPORTANCE OF COLLECTIVE BARGAINING

Collective bargaining includes not only negotiations between the employers and
unions but also includes the process of resolving labor-management conflicts.
Thus, collective bargaining is, essentially, a recognized way of creating a system
of industrial jurisprudence. It acts as a method of introducing civil rights in the
industry, that is, the management should be conducted by rules rather than
arbitrary decision making. It establishes rules which define and restrict the
traditional authority exercised by the management.
Importance to employees
Collective bargaining develops a sense of self respect and responsibility among
the employees.

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It increases the strength of the workforce, thereby, increasing their bargaining

capacity as a group.
Collective bargaining increases the morale and productivity of employees.
It restricts managements freedom for arbitrary action against the employees.
Moreover, unilateral actions by the employer are also discouraged.
Effective collective bargaining machinery strengthens the trade unions
movement.
The workers feel motivated as they can approach the management on various
matters and bargain for higher benefits.
It helps in securing a prompt and fair settlement of grievances. It provides a
flexible means for the adjustment of wages and employment conditions to
economic and technological changes in the industry, as a result of which the
chances for conflicts are reduced.
Importance to employers
It becomes easier for the management to resolve issues at the bargaining level
rather than taking up complaints of individual workers.
Collective bargaining tends to promote a sense of job security among employees
and thereby tends to reduce the cost of labor turnover to management.
Collective bargaining opens up the channel of communication between the
workers and the management and increases worker participation in decision
making.
Collective bargaining plays a vital role in settling and preventing industrial
disputes.
Importance to society
Collective bargaining leads to industrial peace in the country.
It results in establishment of a harmonious industrial climate which supports
which helps the pace of a nations efforts towards economic and social

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development since the obstacles to such a development can be reduced

considerably.
The discrimination and exploitation of workers is constantly being checked.
It provides a method or the regulation of the conditions of employment of those
who are directly concerned about them.
COLLECTIVE BARGAINING PROCESS
The collective bargaining process comprises of five core steps:
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 employers
representatives and the union examine their own situation in order to develop
the issues that they believe will be most important. The first thing to be done is to
determine whether there is actually any reason to negotiate at all. 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.
Discuss: Here, the parties decide the ground rules that will guide the
negotiations. A process well begun is half done and this is no less true in case of
collective bargaining. An environment of mutual trust and understanding is also
created so that the collective bargaining agreement would be reached.
Propose: This phase 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.

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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.
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.
COLLECTIVE BARGAINING AGREEMENT
Collective bargaining generally includes negotiations between the two parties
(employees

representatives

and

employers

representatives).

Collective

bargaining consists of negotiations between an employer and a group of

employees that determine the conditions of employment. Often employees are
represented in the bargaining by a union or other labor organization.
The result of collective bargaining procedure is called the collective bargaining
agreement (CBA).

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Collective agreements are written documents regarding working conditions and

terms of employment concluded between an employer and the union.
The CBA maybe described in a number of ways. It is a compromise between the
self-interest of the two parties that they have agreed upon as a guide to their
relationships on certain matters for a specified period of time.
The contents of the agreement would depend on what is agreed upon and on
the subject matter. The following examples are of some general application:

The date of commencement of the agreement

Its duration - when it will terminate or may be terminated, and how it can
be terminated

A definition of terms which may otherwise be ambiguous

The procedure for settling disputes regarding interpretation, as well as

other disputes. This may also include the issue of trade union action and
lock-out, i.e. in what circumstances such action may or may not be
permitted.

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.

The contents of CBA vary considerably from plant to plant and from industry to
industry. Usually, they cover items relating to wages, working conditions, working
hours, fringe benefits and job security.
Legally, a CBA binds only the parties to it and the persons on behalf of whom
they were acting. It often happens that all workers in a given undertaking may
not belong to the union which signed the agreement or they are non unionized.
Therefore, in a number of countries the law provides for compulsory coverage of
agreements or settlements on employers and all the employees in an
establishment. The implementation and supervision of collective agreements, in

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some countries, depends on the good faith of the parties. They are gentlemens
agreements without any legal sanction, for instance, in the United Kingdom.
In India, there are three types of agreements, namely
1. voluntary agreements,
2. settlements, and
3.

Consent awards.

Collective agreements are voluntary when they are a result of direct

negotiations between the parties on themselves for their implementation.
Settlements are collective agreements that are backed by the interventions of
government agencies. Consent awards are agreements reached between the
parties when the matters in dispute are under reference to industrial tribunals/
courts.
CBA may be in the form of procedural agreements or substantive
agreements.
Procedural agreements deal with the relationship between workers and
management and the procedures to be adopted for resolving individual or group
disputes. This will normally include procedures in respect of individual
grievances, disputes and discipline. Frequently, procedural agreements are put
into the company rule book which provides information on the overall terms and
conditions of employment and codes of behavior.
Substantive agreement deals with specific issues, such as basic pay, overtime
premiums, bonus arrangements, holiday entitlements, hours of work, etc. 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.
When agreement is reached one of the following two courses may be adopted:

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- Set out the agreement reached in a letter to the union and, on confirmation,
prepare a draft agreement.
- Alternatively provide the union with a draft agreement. This would be the better
course of action as the actual agreement reached will be clearer. It also leaves
less room for further negotiations between the time agreement is reached and
the draft agreement is approved.
The signing of an agreement does not ensure its successful implementation.
Managers and supervisors should be acquainted with the agreement through the
most appropriate means. A combination of written and oral communication is
often useful.
CONDITIONS FOR SUCCESSFUL COLLECTIVE BARGAINING
Trade Union Recognition
The existence of the freedom of association does not necessarily mean that
there would automatically be recognition of unions for bargaining purposes.
Especially in systems where there is a multiplicity of trade unions, there should
be some pre-determined objective criteria operative within the industrial relations
system to decide when and how a union should be recognised for collective
bargaining purposes. The accepted principle is to recognise the most
representative union, but what criteria is used to decide it and by whom may
differ from system to system. In some systems the issue would be determined by
requiring the union to have not less than a stipulated percentage of the workers
in the enterprise or category in its membership. The representativeness may be
decided by a referendum in the workplace or by an outside certifying authority
(such as a labour department or an indepenedent statutory body). There could
be a condition that once certified as the bargaining agent, there cannot be a
change of agent for a prescribed period (e.g. one or two years) in order to
ensure the stability of the process.
Observance of Agreements

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Especially in developing countries where there is a multiplicity of unions, unions

are sometimes unable to secure observance of agreements by their members.
Where a labour law system provides for sanctions for breaches of agreements,
the labour administration authorities may be reluctant to impose sanctions on
workers.

Where

there

is

frequent

non-observance

of

agreements

or

understandings reached through the collective bargaining process, the party not
in default would lose faith in the process.
Support of Labour Administration Authorities
Support by the labour administration authorities is necessary for successful
collective bargaining. This implies that they will:
Provide the necessary climate for it. For instance, they should provide effective
conciliation services in the event of a breakdown in the process, and even
provide the necessary legal framework for it to operate in where necessary, e.g.
provision for the registration of agreements, will not support a party in breach of
agreements concluded consequent to collective bargaining.
As far as is practicable, secure observance of collective bargaining agreements.
Provide methods for the settlement of disputes arising out of collective
bargaining if the parties themselves have not so provided.
Good Faith
Collective bargaining is workable only if the parties bargain in good faith. If not,
there will be only the process of bargaining without a result viz. an agreement.
Good faith is more likely where certain attitudes are shared among employers,
workers and their organizations e.g. a belief and faith in the value of compromise
through dialogue, in the process of collective bargaining, and in the productive
nature of the relationship collective bargaining requires and develops. Strong
organizations of workers and employers contribute to bargaining in good faith,

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because there would be some parity in the bargaining strength of the two
parties.
Proper Internal Communication
Both the management and union should keep their managers and members
respectively well informed, as a lack of proper communication and information
can lead to misunderstandings and even to strikes. Sometimes managers and
supervisors who are ill-informed may inadvertently mislead workers who work
under them about the current state of negotiations, the management's objectives
and so on. In fact, it is necessary to involve managers in deciding on objectives
and solutions, and such participation is likely to ensure greater acceptance - and
therefore better implementation - by them.
TRENDS IN COLLECTIVE BARGAINING
In recent years, in India as in almost elsewhere, collective bargaining has
faced the challenges stemming from falling trade union membership, increasing
individualization of labour relations and the difficult quest for greater
competitiveness and flexibility in a situation of economic globalization. In this
context, certain trends in India could be enumerated as follows:

Coverage of collective bargaining is high in the formal sector and very low
portion of workers in the informal sector are covered by collective
agreements.

Bargaining at the enterprise level is increasing

Other forms of bargaining and new issues

Bargaining in the public sector largely staying at the same level.

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Other forms of bargaining like individual employer-employee bargaining,

work councils, bargaining on individual work contracts, bargaining directly
with workers representatives, work place consultations based on
performance targets etc. are on the increase.

The new issues in the bargaining are bankruptcy, equality, careerdevelopments, leisure time, evaluation systems etc. and overall the
issues covered in collective bargaining are broadening.

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.

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.

Today because of the weakening unions, collective bargaining is not

highly practiced, yet at the other end there are organisations which take
care of the workers well enough so that collective bargaining is not highly
required.

Collective bargaining in India

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In India, the workers working in the formal sector, who constitute only seven
percent of the total workforce are generally, in a position to gain from the
collective bargaining mechanism and the vast majority of the workers engaged in
the informal sector are largely untouched by this instrument in its standard form
for improvement of their terms of employment. Generally, all enterprises which
are either registered under the purview of any one of the acts like the Indian
Factories Act, 1948, Mines and Minerals (Regulations and Development) Act,
1957, Plantation Labour Act, 1951 the Companies Act, 1956 the Central/ State
Sales Tax Act, Shops and Establishments Acts of the State Governments are
defined as part of the organized sector. Also included are all government
companies, Departmental Enterprises and Public Sector Corporations. Also, all
workers in the agricultural sectors except those working in the plantations are
regarded as informal sector workers.
In India, Collective Bargaining and rise in Trade Unionism came into existence
mainly in the early 20 th century. The movement got impetus from Constitutional,
statutory and voluntary provisions. Article 19(c) of the Indian Constitution
guarantees freedom of association as a fundamental right. The Trade Unions
Act passed in 1926 provides for registration of Trade Unions of employers and
workers and in certain respects, it defines the law relating to registered Trade
Unions. It confers legal and corporate status on registered Trade Unions. The
Amendment to the Trade Unions (Amendments) Act, 1926 in 2001, enforced with
effect from 9th January 2002 provides for reducing multiplicity of Trade Unions,
orderly growth of Trade Unions and promoting internal democracy.
In India, trade unions gained prominence much later only after 1900. In 1918,
Gandhiji - as the leader of the Ahmedabad textile workers advocated the
resolution of conflict through CB agreements.
But the idea gathered interest only after the Second World War.

The

Government of that time took steps like setting up of machinery for negotiations,
conciliation and arbitration. The trade union movement and also CB agreements
became popular after Indian independence.

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Moving from agreements at the plant level, such agreements spread to

industries such as chemicals, petroleum, tea, coal, oil and aluminum. In ports
and docks, banking and insurance, collective agreements were arrived at, right
at the national level.
FACTORS AFFECTING CB
1. Use of contingency worker and employee leasing.
2. Technological changes
3. International forces- less expensive foreign worker.
4. Economic conditions
5.Heavily governed by its political forces and legal regulations

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