Collective Bargaining in India:
Procedure and Types
Collective bargaining is a process of discussion and negotiation between an employer and a
trade union culminating in a written agreement and the adjustment of problems arising under
the agreement. The Supreme Court of India has defined the process of collective bargaining as
a technique by which, dispute as to conditions of employment is resolved amicably by
agreement rather than coercion. Workers, who are generally represented by a trade union, use
this medium to express their grievance about various issues such as wages and working
conditions.
Procedure for initiating collective bargaining
1. A charter of demands
The trade union will notify the employer for initiating collective bargaining negotiations. The
representatives of the trade union draft a charter of demands which contains issues related to
terms of employment and the working conditions namely wages and allowances, bonuses,
working hours, benefits, holidays. In some cases, an employer may also notify the trade union
and initiate collective bargaining negotiations.
2. Negotiations
Negotiation is the next step after the submission of the charter of demands by the trade union.
Both the employer and the employee seek opportunities to suggest compromise solutions in
their favour until an agreement is reached. If it impossible to reach out to an agreement, a
third party (mediator / arbitrator) may be brought in from outside. If, even with the assistance
of the third party, no viable solution can be found to resolve the parties’ differences, the trade
union may decide to engage in strikes.
3. Collective bargaining agreement
Pursuant to the negotiations between the parties, a collective bargaining agreement will be
executed between the employer and workmen represented by trade unions, setting out the
terms of employment and the working conditions of labour.
4. Strikes
If both parties fail to reach an agreement because of mutual consensus, the union may go on a
strike, which shall be in accordance with the provisions of the Industrial Disputes Act 1947 (“ID
Act”).
5. Conciliation
Once the conciliation officer receives a notice of strike or lockout, the conciliation proceedings
shall commence. The State Government may appoint a conciliation officer or a Board of
Conciliation to investigate disputes, mediate and promote a settlement. Workers are
prohibited from going on strike during the pendency of such conciliation proceedings.
Conciliation proceeding may have one of the three outcomes, namely (i) a settlement; or (ii) no
settlement; or (iv) reference being made to the appropriate labour court or any other industrial
tribunal.
6. Compulsory arbitration or adjudication
When conciliation and mediation fail, parties may either resort to compulsory or voluntary
arbitration. Arbitration and the recommendations of the arbitrator may be binding to the
parties. Section 7A of the ID Act provides for a labour court or industrial tribunal within a state
to adjudicate protracted industrial disputes such as strikes and lockouts. Section 7B of the ID
Act provides for constitution of national tribunals to resolve disputes involving questions of
national interest or issues concerning more than two states. In the event, a labour dispute is
not resolved by conciliation
and mediation, the employer, and the workers may refer the case by a written agreement to a
labour court, industrial tribunal or national tribunal for adjudication or compulsory arbitration.
The following types of collective bargaining agreements are prevalent in India:
1. Bipartite agreements
These agreements are a result of voluntary negotiations between employer and trade union
and are binding, as per the provisions of the ID Act.
2. Settlements
It is tripartite in nature as it involves the employer, trade union and the conciliation officer.
Settlements arise out of specific disputes which is resolved by a reconciliation officer. If, during
the conciliation proceedings, the conciliation officer believes at any point of time that there is a
possibility of reaching a settlement, then the officer may withdraw himself from the
negotiations. The parties are free to finalise the terms of the agreement and must inform the
conciliation officer within a specified timeframe if such an agreement is reached after his
withdrawal.
3. Consent awards
These are agreements reached while a dispute is pending before an adjudicatory authority.
Such agreement is incorporated in the authority’s award and although the agreement is
reached voluntarily between parties, it becomes binding under the award passed by the
authority.
Conclusion
Refusal by the employer to bargain collectively in good faith is an unfair labour practice as per
the ID Act. Collective bargaining agreements between the trade union and employers are
enforceable under Section 18 of the ID Act. For a successful process of collective bargaining, it
must begin with proposals
rather than demands and the parties should be ready to negotiate and compromise. The
process of collective bargaining enables healthy discussions between workers and employers
and facilitate the growth of industrial relations. Having said that, collective bargaining by trade
unions often tends to be an arm-twisting exercise given the political affiliation of trade unions
in India and it is more about the show of strength by the trade union as opposed to a good
faith effort to negotiate genuine demands of workers.
