Collective Bargaining

Definition: Collective Bargaining can be defined as the form

of negotiation amidst employer and the representatives of workers/employees, i.e.
trade union, which establishes the terms and conditions of employment.
Its purpose is to ascertain the working conditions, as well as to regulate the
relations of employer and workers.
Simply put, Collective bargaining is a bipartite process, wherein employers
and a group of employees are the two parties involved for joint decision
making on various matters.
Further, in order to be an effective collective bargaining, good faith must be
present while carrying out the discussion.
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 takes 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 organize 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.
 Collective Bargaining Agreement
Collective Bargaining may lead to the Collective Bargaining Agreement (CBA),
which contains the policies acceptable to both i.e. the company’s management and
workers. It states the terms and conditions of employment and relation amidst
the two parties. Further, CBA is legally binding in nature.
Importance of Collective Bargaining
The importance of collective bargaining is given as under:
 It improves wages and working conditions, as well as it promotes equality.
 It provides a stage to both the parties, i.e. management and workers to stand on
the same level at the negotiation table.
 It is influential in ensuring the adaptability of the companies and economies
during the economic crisis.
 It helps in developing trust and mutual respect between employers, workers and
their organizations.
 It increases stability and productivity in labour relations.
 It benefits both the parties, as the workers get fair remuneration for the work
performed, without impairing the capacity of the employers to work profitably.
 It facilitates the adaptability of the enterprise to a short term rise or falls in
demand.
 It facilitates instant implementation of the decisions, made during the bargaining
process.
 It results in an increased worker’s commitment and enables information sharing.
 It also eliminates income inequality.
 It demonstrates the relative strength of the opposing parties.
Collective Bargaining takes place between employer and workers, to negotiate the
new contracts, as well as to renegotiate the existing ones.
Objectives of Collective Bargaining
Collective Bargaining is an effective way through which the employer and the
trade union can set fair wages and working conditions. It helps in improving the
quality of labour relations. The objectives of collective bargaining are:
 To settle the disputes and conflicts amidst the parties.
 To strengthen and maintain cordial and harmonious relations amidst
management and workers.
 To protect the interest of both the parties involved in the discussion.
 To arrive at a decision or settlement this is mutually beneficial.
 To encourage industrial democracy.
Collective Bargaining Process
The collective bargaining process gives a voice to the wage earners, so that they
collectively bargain with the company, for their rights. The steps are given as
under:
1. If any of the two parties desire negotiation in an agreement, it has to issue a
notice to the other party along with a statement of proposal. Thereafter, the other
party has to revert back to the notice within 10 days from the receipt of the
notice.
2. In case of any difference arising due to such notice and reply, any of the two
parties may request for a conference, which shall start within 10 days from the
date of request.
3. On non-settlement of the dispute, the National Conciliation and Mediation Board
may intervene, on the request of any or both the party or on its own and call the
parties to conciliation meeting.
4. At the time of conciliation proceedings organized by the Board, no party is
allowed to do any act which may disrupt the settlement.
5. The Board will make efforts to settle disputes in a peaceful manner.
The issues which are in general, resolved by way of collective bargaining include:
wages, hours of work, working conditions, paid leaves, holidays, overtime pay,
sick leave, shift length, occupational health and safety, and worker’s discipline and
termination. It aims at reaching an agreement, which governs the employment
terms.
Types of Collective Bargaining
Definition: The Collective Bargaining is the process wherein the unions
(representatives of employees or workers), and the employer (or their
representative) meet to discuss the issues related to wage, the number of working
hours, work environment and the other terms of the employment.
There are four types of Collective Bargaining classified on the basis of their
nature and the objectives, and can be practiced depending on the different
situation requirements.
 Types of Collective Bargaining

1. Conjunctive or Distributive Bargaining: In this form of collective bargaining,

both the parties viz. The employee and the employer try to maximize their
respective gains. It is based on the principle, “my gain is your loss, and your gain
is my loss” i.e. one party wins over the other.
The economic issues such as wages, bonus, other benefits are discussed, where the
employee wishes to have an increased wage or bonus for his work done, whereas
the employer wishes to increase the workload and reduce the wages.

2. Co-operative or Integrative Bargaining: Both the employee and the employer

sit together and try to resolve the problems of their common interest and reach to
an amicable solution. In the case of economic crisis, such as recession, which is
beyond the control of either party, may enter into a mutual agreement with
respect to the working terms.
For example, the workers may agree for the low wages or the management may
agree to adopt the modernized methods, so as to have an increased production.

3. Productivity Bargaining: This type of bargaining is done by the management,

where the workers are given the incentives or the bonus for the increased
productivity. The workers get encouraged and work very hard to reach beyond
the standard level of productivity to gain the additional benefits.
 Through this form of collective bargaining, both the employer and the employee
enjoy the benefits in the form of increased production and the increased pay
respectively.
4. Composite Bargaining: In this type of collective bargaining, along with the
demand for increased wages the workers also express their concern over the
working conditions, recruitment and training policies, environmental issues,
mergers and amalgamations with other firms, pricing policies, etc. with the
intention to safeguard their interest and protect the dilution of their powers.
Thus, the purpose of the Collective Bargaining is to reach a mutual agreement
between the employee and the employer with respect to the employment terms
and enjoy a long term relationship with each other.
Process of Collective Bargaining
Definition: The Collective Bargaining is a technique to reach a mutual
agreement between the employer and the employee. Here the representatives of
both the parties viz. The union and the employer meet and discuss the economic
issues such as wage, bonus, number of working hours and other employment
terms.
The process of collective bargaining comprises of five steps that are followed by
both the employee and the employer to reach an amicable solution.
Process of Collective Bargaining

1. Preparation: At the very first step, both the representatives of each party prepare
the negotiations to be carried out during the meeting. Each member should be
well versed with the issues to be raised at the meeting and should have adequate
knowledge of the labor laws.
 The management should be well prepared with the proposals of change required
in the employment terms and be ready with the statistical figures to justify its
stand.
On the other hand, the union must gather adequate information regarding the
financial position of the business along with its ability to pay and prepare a
detailed report on the issues and the desires of the workers.
2. Discuss: Here, both the parties decide the ground rules that will guide the
negotiations and the prime negotiator is from the management team who will
lead the discussion. Also, the issues for which the meeting is held, are identified at
this stage.
The issues could be related to the wages, supplementary economic benefits (pension
plans, health insurance, paid holidays, etc.), Institutional issues(rights and duties,
ESOP plan), Administrative issues (health and safety, technological changes, job
security, working conditions).
3. Propose: At this stage, the chief negotiator begins the conversation with an
opening statement and then both the parties put forth their initial demands. This
session can be called as a brainstorming, where each party gives their opinion that
leads to arguments and counter arguments.
4. Bargain: The negotiation begins at this stage, where each party tries to win over
the other. The negotiation can go for days until a final agreement is reached.
Sometimes, both the parties reach an amicable solution soon, but at times to settle
down the dispute the third party intervenes into the negotiation in the form of
arbitration or adjudication.
5. Settlement: This is the final stage of the collective bargaining process, where
both the parties agree on a common solution to the problem discussed so far.
Hence, a mutual agreement is formed between the employee and the employer
which is to be signed by each party to give the decision a universal acceptance.
Thus, to get the dispute settled the management must follow these steps
systematically and give equal chance to the workers to speak out their minds.
Bipartite Committees and Tripartite Committees
It is a system of IR that focuses on resolving the issues between the employer and
employees. It is a consultative and not negotiating process. The machinery
comprises two important constituents as given below:
Work committee:
 It is constituted under the Industrial Dispute Act, 1947, in any industrial
establishment in which one hundred or more workmen are employed or
have been employed on any day in the preceding twelve months. It consists
 of equal number of representatives of employers and employees. Their
mandate lies in the day-to-day functioning at the shop floor level.
Joint Management Council (IMC):
 It is constituted at plant level and consists of equal number of
representatives of employers and employees. It shouldn't have more than
12 members. The plant should employ at least 500 workers. The mandate
of JMC lies in providing administrative welfare measures. Wages, bonus,
personal problems of the workers are outside the scope of JMC.
Tripartite Committees:
It is a system of Industrial Relations (IR) that involves government, employer,
and worker representatives.
Some of the important Tripartite bodies in India are
Indian Labour Conference:

 It is the apex level tripartite consultative committee in the Ministry of

Labour and Employment to advise the Government on the issues
concerning working class of the country. All the 12 Central Trade Union
Organisations, Central Organisations of employers, all State Governments
and Union Territories and Central Ministries/Departments concerned
with the agenda items, are the members of the ILC.

 The first meeting of the Indian Labour Conference (then called Tripartite
National Labour Conference) was held in 1942. The agenda of the ILC is
finalised by the Standing Labour Committee which is again a tripartite
body after detailed discussions.

 As recommended by the National Labour Conference held in 17-18th

September 1982, only Trade Union Organisations, which have, a
membership of more than five lakhs spread over four states and four
industries are given representation in the ILC. It meets once a year. It
advises the Government of India after taking into account suggestions
made by the provincial government, the states and representative of the
organisations of workers and employers.

Standing Labour Committee:

 The Standing Labour Committee (SLC), a tripartite body is a precursor to

the Indian Labour Conference (ILC). All the 12 Central Trade Union
 Organisations, Central Organisations of employers, all State Governments
and Union Territories and Central Ministries/Departments concerned
with the agenda items, are the members of the ILC and SLC.

 SIC meets as and when it is required. It has the responsibility of laying

down the agenda of the ILC. It considers and examines such questions as
may be referred to it by the central government and to render advice,
taking into account the suggestions made by various governments, workers
and employers.
Committee on Conventions:
 It is a tripartite body set up in 1954 in order to work on the IL conventions
and recommendations.

 It examines the conventions and recommendations of ILO that have not

been ratified by India.

 It makes suggestions for a speedy and phased implementation of IL

recommendations and conventions.
Industrial Committees:
 These were established post the eighth session of Indian Conference (ILC)
and the first Industrial cement, leathers and tanneries manufacture,
building and construction industry, gas and power, banking, road
legislation and other matters connected with labour policy and
administration.
Other Committees:
Steering Committee on Wages:
 It was set up in 1956 and consists of representatives of state government,
employers, workers and an economist.

 It was established to study wages, production and prices in India.

National Productivity Council (NPC):
 NPC is a national level organisation to promote productivity culture in
India.

 Established by the Ministry of Industry, Government of India in 1958, it is

an autonomous, multipartite, apart from technical and professional
institutions and other interest.

 NPC is a constituent of the Tokyo-based Asian Productivity Organisation

(APO), an Inter Govern- mental Body, of which the Government of India is
 a founder member. It aims to provide solutions towards accelerating
productivity, enhancing competitiveness, increasing profits, augmenting
safety and reliability and ensuring better quality.
Central Boards of Workers Education:
 It is an autonomous body under the Ministry of Labour and Employment,
Government of India and is registered under the Societies Registration Act,
1860.

 It was started in 1958 and gets grants-in-aid from the Ministry of Labour
and Employment to operate its activities.

 It aims at achieving the objectives of creating and increasing awareness and

educating the workforce for their effective participation in the socio-
economic development of the country.

 Workers Education covers a whole range of skills and knowledge, which

contribute to the harmonious development of a worker's personality, his
role in the society and the knowledge and attitudes required for such roles.

There are two important aspects of industrial relations in the modern industrial
society. These are:
(i) Co-operation
(ii) Conflict.
Cooperation-
 Modern industrial production is based upon cooperation between labour
and capital.
 labour stands for the workers who works in the factories, mines, and other
industrial establishments or services.
 Capital stands for the owners of business enterprises who supply the
capital and own the final products. The owners of business enterprises offer
employment, wages and other amenities of life to the workers.
 The workers in their turn offer their services. Thus, there is a fair degree of
give and take and serving of mutual interests which is at the base of
cooperation between the two.
Conflict-
 Conflict is inherent in the industrial relations set up.
 The problems of industrial relations, such as Strikes and lock-outs,
industrial discipline, hiring and firing, promotion and transfer, payment of
wages, bonus and fringe-benefits have become essentially acute and
demand understanding and constructive solutions.