BBA-5th Sem

INDUSTRIAL RELATIONS-IR (MT-322)

Module-3

Definition of Collective Bargaining:

 Industrial disputes between the employee and employer can also be

settled by discussion and negotiation between these two parties in order
to arrive at a decision.

 This is also commonly known as collective bargaining as both the

parties eventually agree to follow a decision that they arrive at after a
lot of negotiation and discussion.

 According to Breach, “Collective Bargaining is concerned with the

relations between unions reporting employees and employers (or their
representatives).

“Collective Bargaining is a mode of fixing the terms of employment by means

of bargaining between organized body of employees and an employer or
association of employees acting usually through authorized agents. The
essence of Collective Bargaining is bargaining between interested parties and
not from outside parties”.

Collective Bargaining Involves:

(i) Negotiations

(ii) Drafting

(iii) Administration

(iv) Interpretation of documents written by employers, employees and the union

representatives

(v) Organizational Trade Unions with open mind.

Essential Pre-Requisites for Collective Bargaining:

Effective collective bargaining requires the following prerequisites:

(i) Existence of a strong representative trade union in the industry that believes
in constitutional means for settling the disputes.

(ii) Existence of a fact-finding approach and willingness to use new methods

and tools for the solution of industrial problems. The negotiation should be
based on facts and figures and both the parties should adopt constructive
approach.

(iii) Existence of strong and enlightened management which can integrate the
different parties, i.e., employees, owners, consumers and society or
Government.

(iv) Agreement on basic objectives of the organisation between the employer

and the employees and on mutual rights and liabilities should be there.

(v) In order that collective bargaining functions properly, unfair labour practices
must be avoided by both the parties.

(vi) Proper records for the problem should be maintained.

(vii) Collective bargaining should be best conducted at plant level. It means

if there are more than one plant of the firm, the local management should be
delegated proper authority to negotiate with the local trade union.

(viii) There must be change in the attitude of employers and employees. They
should realise that differences can be resolved peacefully on negotiating table
without the assistance of third party.

Main Features of Collective Bargaining:

Some of the salient features of collective bargaining are:

1. It is a Group Action:

Collective bargaining is a group action as opposed to individual action. Both

the parties of settlement are represented by their groups. Employer is
represented by its delegates and, on the other side; employees are represented
by their trade union.

2. It is a Continuous Process:

Collective bargaining is a continuous process and does not end with one
agreement. It provides a mechanism for continuing and organised relationship
between management and trade union. It is a process that goes on for 365 days
of the year.

3. It is a Bipartite Process:

Collective bargaining is a two party process. Both the parties—employers and

employees— collectively take some action. There is no intervention of any third
party. It is mutual given-and- take rather than take-it-or-leave-it method of
arriving at the settlement of a dispute.

4. It is a Process:

Collective bargaining is a process in the sense that it consists of a number of

steps. The starting point is the presentation of charter of demands by the
workers and the last step is the reaching of an agreement, or a contract which
would serve as the basic law governing labour-management relations over a
period of time in an enterprise.

5. It is Flexible and Mobile and not Fixed or Static:

It has fluidity. There is no hard and fast rule for reaching an agreement. There is
ample scope for compromise. A spirit of give-and-take works unless final
agreement acceptable to both the parties is reached.

6. It is Industrial Democracy at Work:

Collective bargaining is based on the principle of industrial democracy where the
labour union represents the workers in negotiations with the employer or
employers. Industrial democracy is the government of labour with the consent of
the governed—the workers. The principle of arbitrary unilateralism has given
way to that of self-government in industry. Actually, collective bargaining is not
a mere signing of an agreement granting seniority, vacations and wage increase,
by sitting around a table.

7. It is Dynamic:

It is relatively a new concept, and is growing, expanding and changing. In the

past, it used to be emotional, turbulent and sentimental, but now it is scientific,
factual and systematic.

8. It is a Complementary and not a Competitive Process:

Collective bargaining is not a competitive process i.e., labour and management

do not co-opt while negotiating for the same object. It is essentially a
complementary process i.e., each party needs something which the other party
has, namely, labour can put greater productive effort and management has the
capacity to pay for that effort and to organise and guide it for achieving the
enterprise’s objectives.

The behavioural scientists have made a good distinction between “distributive

bargaining” and “integrative bargaining”. The former is the process of dividing
up the cake which represents what has been produced by the joint efforts of
management and labour.

In this process, if one party wins something, the other party, to continue the
metaphor of the cake, has a relatively smaller size of the cake. So it is a win-
lose’ relationship. The integrative bargaining, on the other hand, is the process
where both the parties can win—each party contributing something for the
benefit of the other party.

9. It is an Art:

Collective bargaining is an art, an advanced form of human relations.

Theories of Collective Bargaining:

There are three important concepts on collective bargaining which have

been discussed as follows:

1. The Marketing Concept and the Agreement as a Contract:

The marketing concept views collective bargaining as a contract for the sale of
labour. It is a market or exchange relationship and is justified on the ground that
it gives assurance of voice on the part of the organised workers in the matter of
sale. The same objective rules which apply to
the construction of all commercial contracts are invoked since the union-
management relationship is concerned as a commercial one.

According to this theory, employees sell their individual labour only on

terms collectively determined on the basis of contract which has been
made through the process of collective bargaining.

2. The Governmental Concept and the Agreement as Law:

The Governmental Concept views collective bargaining as a constitutional

system in industry. It is a political relationship. The union shares sovereignty
with management over the workers and, as their representative, uses that power
in their interests. The application of the agreement is governed by a weighing of
the relation of the provisions of the agreement to the needs and ethics of the
particular case.

3. The Industrial Relations (Managerial) Concept as Jointly Decided Directives:

The industrial relations concept views collective bargaining as a system of

industrial governance. It is a functional relationship. Group Government
substitutes the State Government. The union representative gets a hand in the
managerial role. Discussions take place in good faith and agreements are arrived
at. The union joins with company officials in reaching decisions on matters in
which both have vital interests. Thus, union representatives and the management
meet each other to arrive at a mutual agreement which they cannot do alone.

Importance of Collective Bargaining:

The collective bargaining advances the mutual understanding between the
two parties i.e., employees and employers.

The role of collective bargaining may be evaluated from the following point of view:

(1) From Management Point of View:

The main object of the organisation is to get the work done by the employees at
work at minimum cost and thus earn a high rate of profits. Maximum utilization
of workers is a must for the effective management. For this purpose co-operation
is required from the side of the employees and collective bargaining is a device
to get and promote co-operation. The labour disputes are mostly attributable to
certain direct or indirect causes and based on rumors, and misconceptions.
Collective bargaining is the best remedial measure for maintaining the cordial
relations.

(2) From Labour and Trade Union Point of View:

Collective bargaining can be made only through the trade unions. Trade unions
are the bargaining agents for the workers. The main function of the trade unions
is to protect the economic and non- economic interests of workers through
constructive programmes and
collective bargaining is one of the devices to attain that objective through
negotiations with the employers, Trade unions may negotiate with the employer
for better employment opportunities and job security through collective
bargaining.

(3) From Government Point of View:

Government is also concerned with the process of collective bargaining.

Government passes and implements several labour legislations and desires it to
be implemented in their true sense. If any person violates the rules and laws, it
enforces them by force.

Collective bargaining prevents the Government from using the force because an
amicable agreement can be reached between employer and employees for
implementing the legislative provisions. Labour problems shall be minimised
through collective bargaining and industrial peace shall be promoted in the
country without any force.

Collective bargaining is a peaceful settlement of any dispute between worker and

employers and therefore it promotes industrial peace and higher productivity
resulting an increase in the Gross National Product or the national income of the
country.
Analysis of the Collective agreement

 A collective agreement is a document regulating business relations in

various fields between an employer and an employee. The settlement
procedure can take place both through an entrepreneur and through a legal
organization. It is also possible otherwise when the contract is concluded
between the collective representative and the trade union. An employment
contract, unlike a collective one, has its own peculiarity: it is always
individual despite the fact that it is based on the principles of collective.
 The collective agreement regulates the professional activity of each
individual employee, defines warranty cases and requirements for the
provision of benefits. Without this legal act, enterprises and organizations
have no right to work, and a fine is imposed on the head for this.
 The Labor Code of the Russian Federation defines such a normative legal
act as an agreement as a document that establishes the general principles of
forming socio-economic relations between an employee and an employer or
their representatives at the intersectoral level of social partnership.

Contents:
 Content of the agreement
 Parties to the agreement
 Registration of collective agreements
 Contractual relations in social partnership

 Content of the agreement

The contract pages must include the following aspects:

 The system of calculating wages.

 Additional bonuses and rewards.
 Conditions of employment, dismissal.
 Conditions for providing rest.
 Restriction in working hours.
 Provision of medical insurance and other health protection for employees.
If it is necessary to combine work with training, the conditions are also prescribed
in the document. Compliance with the interests of the employee and the company’s
management is also taken into account.

The presence of a collective document at the enterprise carries many positive

aspects:

 Remuneration is agreed and ordered.

 There is a material interest.
 Social security is guaranteed.

When the company has established the main indicators of bonuses (surcharges,
allowances), and there is also a set of social support: provision with medical
insurance, an interest-free loan for training, people have an interest in working and
developing.

A mutually beneficial contract is when a specialist gets a job with good working
conditions, increased social protection, and the management gets protection from
personnel leakage.

 Parties to the agreement

The period of concluding a collective agreement between representatives of both
parties cannot be less than 3 years, it is extended and supplemented with new
conditions by general agreement. The executive person and the employer are
recognized as participants in the contract.

The contract regulates issues related to the implementation of the organization’s

labor activity, and all its points are subject to mandatory implementation.

A collective agreement, expressed in a legal form, reduces the volume of document

flow, as it happens when concluding an employment contract. The party of the
employer, not being able to hold a conversation and conclude an agreement with
each participant of the hiring party, regulates the relations according to the norms
of specific regulatory documents. A future employee who has come for
employment is sent to the personnel department, where he receives an individual
employment contract executed in a standard format and referring to collective
norms.

A comparative analysis of the collective agreement and the agreement allows you
to find similarities and highlight differences.
Along with the collective agreement, there is an agreement that differs in that it
regulates economic and social relations with the participation of a representative of
the state level, since there is funding from the state budget to fulfill the obligations
of the employer.

Each branch of production has its own conditions of socio-economic relations,

which are regulated from above and are mandatory. A significant difference
between the agreement and the collective agreement is that the signing of the
clauses of the agreement is a prerequisite. And an agreement is a regulatory act that
regulates relations in the social sphere, between industries, professions or
territories. Financial resources are allocated to support industrial production and
compliance with the requirements that are prescribed and strictly regulated.

 Registration of collective agreements

The procedure for preparing documents is carried out by approving the text by two
parties: the employer and the representative from the team. An authorized
representative from the state body is necessarily present at the negotiations to
resolve all issues related to the signing process.

An important point that can be noted as a mandatory point of implementation after

signing is the procedure in the relevant body or its department, the registration
procedure. It must be carried out within 1 calendar week from the date of signing
the contract or signing the agreement.

The obligations of the parties on such basic issues as remuneration, work and rest
regime, additional pension insurance, admission, dismissal, bonuses, benefits,
compensation are mutually necessary.

 Contractual relations in social partnership

The agreements can be as follows:

 Territorial-benefits for certain employees: remuneration, guarantees,

compensation, on the territory of the relevant municipality.
 Industry-benefits for employees of a specific industry, for socially oriented
protection.
 Regional — the subjects of the Russian Federation participate.
 Interregional — two or more subjects of the Russian Federation.
 General-general principles at the federal level for all industries.
The signing of a collective agreement is a prerequisite for both parties. It makes no
sense to violate this mutually beneficial legal act, which is agreed and signed by
both parties. This excludes labor disputes at the judicial level, conflicts and strikes.

With mutual agreement on the main economic and social issues, lawsuits are
completely excluded, since approval and approval takes place with the
participation of both interested parties.

Essentials of Successful Collective Bargaining

Essential # 1. Favourable Political Climate:

If collective bargaining has to be fully effective a favourable political
climate must exist. The government and the public opinion must be
convinced that collective bargaining is the best method of regulating
employment conditions. The government should remove all legislative
restrictions which hamper collective bargaining.

It can also confer a right to bargain collectively, lay down the form and
content of collective agreement, register these agreements and assist in
their enforcement. However, the role of government has to be minimum
because collective bargaining is a two way process more concerned with
micro aspects.

Essential # 2. Strong and Stable Unions:

Collective bargaining is not possible if employees are not free to form
trade unions as they please. A strong and representative trade union is
required to bargain with the employer on equal basis. The employers can
easily ignore a weak union on the plea that it hardly represents the
workers.
Trade unions must be stable and strong enough to honour the collective
bargaining agreement. It should have sufficient number of members to
justify entering into collective bargaining agreements.

Essential # 3. Recognition:
A trade union may be stable and strong, but until it is given recognition
by the management, it will hardly have any impact. Collective bargaining
cannot exist or begin until union is recognised and regarded as an
integral part of industrial relations. It is in the interest of an employer to
recognise a strong union to avoid strikes and to safeguard against
undercutting labour standards.

Essential # 4. Willingness to Give and Take:

Both employers and union leaders should negotiate in a spirit of
compromise and reciprocity. If either of the party adopts an adamant
attitude, bargaining will not be possible. Willingness to give and take
does not mean that concessions made by one side must be marked by
equal concession by the other side. Exaggerated demands must be toned
down to reach an agreement.

Essential # 5. Negotiator’s Authority:

The procedures must be developed to ensure that negotiators have full
authority to bind their constituents. If bargaining representatives have to
refer constantly back to their respective organisations, it makes
bargaining process ridiculous and ineffective, because parties know by
experience that bargaining team is only a show piece and not the real
authority.
Essential # 6. Fair Practices:
Both the employers and trade unions should avoid unfair labour
practices. Collective bargaining is possible only in an atmosphere of
mutual trust and recognition.

Management must recognise and accept the workers’ right to organise

and fight for justice. Similarly, workers and their union must recognise
and accept the employers’ right to manage. In the absence of such
recognition, collective bargaining is a mere trial of strength.

Essential # 7. Positive Attitude:

The negotiating teams should have a problem solving and positive
attitude rather than a fighting approach. There has to be greater
emphasis on mutual accommodation rather than on conflict or
uncompromising attitude. Conflicting attitudes do not lead to amicable
labour relations rather it may foster union militancy as the union reacts
by engaging in pressure tactics.

Essential # 8. Continuous Dialogue:

A dead end must be avoided in negotiations and the talks should
continue. As long as talks continue, agreement can be possible. At times,
it may be necessary to leave highly controversial issues for the time being
and narrow down the field of disagreement on other matters.

Essential # 9. Availability of Data:

The employer must ensure that all the required records are available.
Facts and figures relating to employees and their working conditions
provide a rational basis for negotiations. But unless, the trade union
believes in the data and accepts the same, collective bargaining process
may be hampered.