Concept and Meaning of collective Bargaining

Concept and Meaning of Collective Bargaining

Labour and Industrial law
Submitted by
ABHISHEK PRATAP SINGH
Roll No. 143070004
Class B.Com.LL.B.(Hons.)
IX Semester
Of
Faculty of Law
Dr.ShakuntalaMisra National Rehabilitation University, Lucknow

Under the guidance of

Vipin Shah Sir
Guest faculty
Faculty of Law
Dr.ShakuntalaMisra National Rehabilitation University, Lucknow

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 Concept and Meaning of collective Bargaining

RESEARCH METHODOLOGY

Aims and objective

The aim of this project is to analyze the process of “Collective Bargaining” and the
objective has been to understand the impact of Collective Bargaining in India.

Scope and limitation

The researcher has limited the scope of the project paper to the concept of collective
bargaining and its impact in India.

Method of analysis

The researcher has endeavored to use a combination of critical and descriptive styles of
writing throughout this project and has cited various cases to critically analyze the theory
of collective bargaining.

Sources of data etc.

The main sources have been Statutes, books, articles on Collective Bargaining, obtained
from the library of NALSAR, Hyderabad and from the library of NLSIU, Bangalore.
Besides these, the researcher has also done extensive research on the internet and referred
to various websites and e-articles related to the Project topic.

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 Concept and Meaning of collective Bargaining

COLLECTIVE BARGAINING IN INDIA

INTRODUCTION
The conflict between the management and the employee is inherent in an industrial
society. One argues for more investment and profits while the other argues for better
standard of living. These two conflicting interests can be adjusted temporarily through
the principle of "give and take"1 The principle of give and take has been infused in the
principle of collective bargaining.

DEFENITIONS OF COLLECTIVE BARGANING

There is no precise definition of “Collective bargaining”. In fact keeping in view the
change in the society with its fast changing social norms the scope and content of
collective also varies from country to country. Nevertheless, Collective bargaining has
been defined by different experts in different ways. It is treated as a method by which
problem of wages and conditions of employment are resolved peacefully and voluntarily
between labour and management.2
According to K. Alexander
“Collective bargaining is a process of bargaining between the employers and their
workers by which they settle their disputes among themselves relating to employment or
non-employment or terms of employment or conditions of labour of the workmen, on the
strength of the sanctions available to each side. Occasionally such bargaining results in
amicable settlement arrived at voluntarily and peaceful between the parties. But quite
often the workers and the employers have to apply sanctions by resorting to the weapons
of strikes and lock-outs to pressurize one another which makes both the sides aware of
the strength of one another and that finally forces each to arrive at a settlement in the
mutual interests. It is thus the strength of the parties which determines the issues rather
than the wordy duals which are largely put on for show as any element of strength in one
party is by the same token an element of weakness in another”.

1 Otto Kahn-Freund, Laboar aad the Law, L mdon, Stevens & Sons, (1977\ .). 49
2 I.L., Labour Law and Labour Relations, N.M. Tripathi (Pvt) Ltd., Bombay, (1968), P.29:

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 Concept and Meaning of collective Bargaining

Convention 154 of International Labour Organization (ILO) under Article 2 says:

For the purpose of this Convention the term collective bargaining extends to all
negotiations which take place between an employer, a group of employers or one or more
employers' organizations, on the one hand, and one or more workers' organizations, on
the other, for –
(a) determining working conditions and terms of employment; and/or
(b) regulating relations between employers and workers; and/or
(c) regulating relations between employers or their organizations and a workers'
organization

ILO has defined collective bargaining as,

“negotiation about working conditions and terms of employment between an employer
and a group of employees or one or more employees’ organizations with a view to
reaching an agreement wherein the terms serve as a code of defining the rights and
obligations of each party in their employment/industrial relations with one another”.

This definition however confines the term collective bargaining as a means of improving
conditions of employment. But in fact, collective bargaining serves something more.

ANALYSIS OF THE CONCEPT OF COLLECTIVE BARGANING

Collective bargaining is concerned with the relations between employers acting through
management and organised labour. It is concerned not only with the negotiation of a
formal labour agreement but also with the day-to-day dealings between management and
the union. Collective bargaining is a voluntary process under which the representatives of
both employers and labour enter into an agreement. The process does not stop as soon as
a bargain is reached at between the employer and the trade union. It is a continuous
process because the contract is only the beginning of collective bargaining. Bargaining
requires an efficient and permanent arrangement for negotiations. No temporary or one-
time arrangements can make the bargaining process successful.

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 Concept and Meaning of collective Bargaining

Features of Collective Bargaining

The features of collective bargaining are as under:

➢ 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;
➢ 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;
It is a political activity frequently undertaken by professional negotiators
Significance of Collective Bargaining
In an Industrial Establishment to solve the problems arising at the plant or industry level
the need of the collective bargaining is eagerly felt. Through negotiations the solution to
the common problems can be directly found out between the management and workers
and here the collective bargaining plays significant role and its scope is very great. In so
far the determination of terms and conditions of employment are concerned, one
important consequence of collective bargaining has been that it has enabled trade unions
to participate in the decision making process regarding hours of work, wages, working
conditions etc. Earlier the employer used to decide these issues unilaterally, but now they
have become subjects of bilateral negotiations with the advent of collective bargaining.

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 Concept and Meaning of collective Bargaining

Thus an element of industrial democracy has been introduced by collective bargaining in

the field of industrial and labour management.

Functions of Collective Bargaining

The functions of the collective bargaining are as under:

1. Adjustment and balance of power between the management and union when they
are in conflict with each other. This function of the system of collective bargaining is one
of the methods of effecting social change.

2. When two parties are in a state of continuous conflict, it helps in bringing about
compromise, truce or agreement for establishing peace between the parties. Industrial
truce results when two parties to a dispute arrive at a compromise or agreement without
resorting to strike or lock-out. Such truce may be stable or temporary. It depends upon
the parties as to what extent one party is willing to sacrifice and the other party is willing
to accept the demands, or terms. Both the parties are morally bound to implement the
agreement once it is signed.

3. For establishing industrial jurisprudence it analyses the rights and duties of

conflicting parties.

4. It also adjusts labour management disputes apart from performing functions like
negotiation, administration and enforcement of agreements by which union management
relationship is governed.

Subject-matter of Collective Bargaining

Collective bargaining has two pronged concerns:
(1) Chalking out a broad contract of employment relationship between employers and
workers, and
(2) The administration of the contract.

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 Concept and Meaning of collective Bargaining

In fact, it has been recognised as a method of determining the wage rates and other terms
and conditions of employment and of regulating the relations between the management
and organized labour. Collective bargaining includes provisions with respect to hiring,
lay-offs, promotions, transfers, work scheduling, work assignment, wages, welfare
programmes, retirement benefits, discipline, etc.

Pre-requisites for collective bargaining

Effective negotiations and enforcement requires a systematic preparation of the base or
ground for bargaining which involves the following steps:

1. Recognition of the Bargaining Agent: The management should give recognition

to the trade union for participating in the collective bargaining process. In case there is
more than one union, selection could be done through verification of membership by a
government agency giving representation to all the major unions through joint
consultations. Thus, the bargaining agent of the workers should be properly identified
before initiating any action.

2. Deciding the Level of Bargaining: Whether the dealings are confined to

enterprise level, industry level, regional or national level should be decided as the
contents, scope and enforcement agencies differ in each case.

3. Determining the Scope and Coverage of Bargaining: It would be better to have

a clear understanding of what are the issues to be covered under bargaining. Many a time,
bargaining is restricted to wage and working conditions related issues but it would be
advantageous for both the management and union to cover as many issues as possible to
prevent further friction and disputes. Therefore, all the important and interrelated issues
are to be taken for consideration.

4. Spirit of Give and Take: When there is a spirit of give and take between the
management and union, collective bargaining can be an effective technique of settling
industrial disputes.

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 Concept and Meaning of collective Bargaining

5. Good Faith and Mutual Agreement: The parties to collective bargaining should
act in good faith and do the things on the basis of mutual agreement as there is no legal
sanction behind the terms and conditions agreed upon by the parties.

Importance of Collective Bargaining

Collective bargaining is an important method of regulating relations between employers
and employees. It involves negotiation, administration and enforcement of the written
contracts between the employees and the employers. It also includes the process of
resolving labour-management conflicts.

Healthy collective bargaining generates a spirit of self-confidence and self-reliance

among the workers. It is based on a ‘give and take’ policy on both sides. Collective
bargaining leads to increased goodwill and understanding between labour and
management. This in turn helps to create peaceful and comfortable atmosphere in
industrial relations.

Principles of Collective Bargaining

As mentioned before that the collective bargaining has succeeded in introducing
industrial democracy in industrial and labour managements. Industrial democracy implies
that the majority union should have the right to sole representation i.e. the right to speak
and act for all workers and to enter into agreements with the employer. There are certain
principles which have to be followed by both the management and workers for collective
bargaining. These principles are as follows:

1. There should be a realization on the part of both unions and managements that for
taking wiser an more expedient decisions, collective bargaining is a proper method.

2. An opportunity should be provided to trade union leaders for putting their

complaints, demands, needs, etc. before the managements and the management should

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 Concept and Meaning of collective Bargaining

explain to them the circumstances and make efforts to redress the grievances/complaints
of the workers.

3. The presence of genuine spirit of mutual trust, goodwill and bargaining should be
there on the part of both the parties;

4. Competence for bargaining with mutual respect and implementation of the

agreement arrive at should be possessed by both the parties.

5. The parties to collective bargaining should be honest and the agreement should be
conducted by these honest, competent and reasonable leaders;

6. Keeping in view the changing circumstances, it is desirable that the management

should change their policies and should keep in view the dignity of the workers.
Appropriate labour policy should be adopted by the management and this policy to be
followed by all employees. Necessary precautions must be taken.

7. If there are more than one union the management should enter into negotiation
with union having majority representation.

8. It is equally desirable on the part of the union to raise reasonable demands. They
should not put up such demands as are beyond the paying capacity of the establishment
or may be against the national policies.

Scope of Collective Bargaining

The growth of collective bargaining is associated with the recognition of trade unionism.
With the growth of trade unions and industrialization the scope of collective bargaining is
expanding. Initially collective bargaining was used for determining hours of work, wages
and terms of employment, but now within its purview are included the issues like leave
with pay, regulation of forced leave, pension, seniority promotions, sickness and

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 Concept and Meaning of collective Bargaining

maternity benefits, etc. Since in the field of bargaining collective action is now common,
collective bargaining has assumed an institutional form. In the words of C.W. Randle:

“The subject matter of collective bargaining had broadened until it has virtually
eliminated the field of the management prerogatives. The area pattern of bargaining has
moved from simple style plant bargaining to region-wise and finally to dynamic nature of
the scope of collective bargaining. At the same time, they show how important
negotiation has become as an institution. And the future holds promise of an even greater
role for collective”.

Advantages and Disadvantages of Collective Bargaining

Advantages of Collective Bargaining

According to National Commission Report on labour collective bargaining has been
preferred over compulsory adjudication system for several reasons:

(a) It is a system based on bipartite agreements, and as such, superior to any

arrangement involving third party intervention in matters which essentially concern
employees and workers;
(b) It is quick and efficient method of settlement of industrial disputes; and
(c) It is democratic method of settlement of industrial disputes;

Disadvantages of Collective Bargaining

Two vital defects in collective bargaining have been pointed out by Willcox. These
defects are:

(a) There are situations in which a serious strike and prolonged strike simply cannot
be tolerated.
(b) The second great flaw in collective bargaining as a solvent for labour disputes is
the lack of representation of the public interest at the bargaining table. Whether prices

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 Concept and Meaning of collective Bargaining

can be raised without strangling and ability to sell goods or services, unions and
companies are in a position to agree on wage increase that will cause higher prices, then
the consumer must shoulder the full burden of their agreement3

Levels of Collective Bargaining

Collective bargaining operates at three levels:
1. National level
2. Sector or industry level
3. Company/enterprise level

Economy-wide (national) bargaining is a bipartite or tripartite form of negotiation

between union confederations, central employer associations and government agencies. It
aims at providing a floor for lower-level bargaining on the terms of employment, often
taking into account macroeconomic goals

Sectoral bargaining, which aims at the standardization of the terms of employment in

one industry, includes a range of bargaining patterns. Bargaining may be either broadly
or narrowly defined in terms of the industrial activities covered and may be either split up
according to territorial subunits or conducted nationally.

Company/enterprise level, this bargaining level involves the company and/or

establishment. As a supplementary type of bargaining, it emphasizes the point that
bargaining levels need not be mutually exclusive.

3 [ALJ, (1965) p.39]

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 Concept and Meaning of collective Bargaining

COLLECTIVE BARGANING IN INDIA

Collective Bargaining in India has been the subject-matter of industrial adjudication since
long and has been defined by our Law Courts. In Kamal Leather Karamchari Sangathan
v. Liberty Footwear Company 4 the Supreme Court observed that, "Collective bargaining
is a technique by which dispute as to conditions of employment is resolved amicably by
agreement rather than coercion".

According to the Court, the Industrial Disputes Act, 1947, seeks to achieve social justice
on the basis of colIective bargaining. In an earlier judgment in Titagarh Jute Co. Ltd. v.
Sriram Tiwari5 the Calcutta High Court clarified that this policy of the legislature is also
implicit in the definition of 'industrial dispute'.

In Bharat Iron Works v. Bhagubhai Balubbai Patel 6 it was held that 'Collective
bargaining, being the order of the day in the democratic social welfare State, legitimate
trade union activities, which must shun all kinds of physical threats, coercion or violence,
must march with a spirit of tolerance, understanding and grace in dealings on the part of
the employer. Such activities can flow in healthy channel only on mutual cooperation
between the employer and the employees and cannot be considered as irksome by the
management in the best interests of its business.

PROBLEMS RELATING TO COLLECTIVE BARGAINING IN INDIA

The collective bargaining scene in India is not very encouraging. The major emphasis of
both union and employers is to settle the disputes through adjudication rather than sorting
out the issues among themselves.
Whatever bargaining takes place, it is limited to large plants only. Smaller organisations
generally do not prefer this form of handling the issues.

4 AIR 1990 SC 247

5 (1979) Lab I.C. 523 (Cal)]
6 (1976) Lab. I.C. 4 [S.C]

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 Concept and Meaning of collective Bargaining

As discussed in the previous chapter, several factors are responsible for this state of
affairs. These are listed below:

I.Due to the dominance of outsiders in trade unionism in the country, there is multiplicity
of unions which are weak and unstable, and do not represent majority of the employees.
Moreover, there are inter-union rivalries, which further hinder the process of collective
bargaining between the labour and the management.

II.Since most of the trade unions are having political affiliations, they continue to be
dominated by politicians, who use the unions and their members to meet their political
ends.

III. There is a lack of definite procedure to determine which union is to be recognised to

serve as a bargaining agent on behalf of the workers

IV.In India, the law provides an easy access to adjudication. Under the Industrial Disputes
Act, the parties to the dispute may request the Government to refer the matter to
adjudication and the Government will constitute the adjudication machinery, i.e., labour
court or industrial tribunal. Thus, the faith in the collective bargaining process is
discouraged.

There has been very close association between the trade unions and political parties. As a
result, trade union movement has leaned towards political orientations rather than
collective bargaining.
Conclusion: To promote Collective bargaining in our country what is needed is firstly, a
bold realistic Government approach with full commitment to it and secondly, a favorable
environment to promote competence on the part of the employers and trade union to
negotiate with each other, Collective bargaining has made considerable headway in our
country which is recently characterized by signing of agreements, settlements between
the parties. It has resulted in considerable signing economic gains to both blue collared
and white collared workers.

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 Concept and Meaning of collective Bargaining

BIBLIOGRAPHY

Books referred..
1) Bhagoliwal, T.N., Economics of Labour& Industrial Relations, 1989, Sahitya
Bhawan, Agra.
2) Goswami, V.G., Labour and Industrial Law, 2004 Central Law Agency,
Allahabad.
3) Teller Ludwig, Labour Disputes and Collective Bargaining, Vol I, 1940 Barker
Voorhis& co. INC New York.
4) Coutinho,V.B, Strike in Industrial Conflict: A Critical and Comparitive Study,
1993, 5th edn.
5) Fred Witney et al; Labour Relations Law, 7th edn 1990.
6) Boone, Louis E., and Kurtz, David L. (1999). Contemporary Business. Fort Worth,
TX: Dryden Press.
7)Davey, Harold W. (1972). Contemporary Collective Bargaining. Englewood Cliffs, NJ:
Prentice-Hall.
8)Miernyk, William H. (1965). The Economics of Labor and Collective Bargaining.
Boston: Heath.
9)Voos, Paula B., ed. (1994). Contemporary Collective Bargaining in the Private Sector.
Madison, WI: Industrial Relations Research Association.
9)Wray, Ralph D., Luft, Roger L., and Highland, Patrick J. (1996). Fundamentals of
Human Relations. Cincinnati, OH: South-Western Educational Publishing.
[Article by: PAULA DEA LEE]

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