10 Advantages and Disadvantages of Collective Bargaining

Collective bargaining is referred to as a process or negotiations between an employer or

organization and a group of employees who are members of a trade union. The union will

negotiate with an employer or a group of businesses on behalf of an employee or employees. It

usually encompasses negotiations on number of hours worked, health and safety, salaries and

grievances, among others.

Although it has been introduced as early as 1891 and have been in existence for more than a

century, not all are for this process. There are advocates for as well as critics of collective

bargaining and both have significant views on why it is good and bad for industries and the

parties involved: the employers and employees. To have a better understanding, let us discuss the

pros and cons of this contentious topic.

List of Advantages of Collective Bargaining

1. It is pro-employees. 

Advocates for collective bargaining posit that with collective bargaining, it will be easier for

employees to fight for their rights as hard-working people. By being members of trade unions,

they will have a voice through the representatives of the unions whose aim is to work for the

betterment of its employee members such as higher wages, shorter working hours, safer

workplaces and better health care.

2. It keeps abusive employees powerless. 

In collective bargaining, employees who normally will not have the means and confidence to

fight for their rights if they are not part of a trade union will have individuals who will challenge

employers who take advantage of their workers. Supporters of collective bargaining say that
employees have better chances to get compensated accordingly or leave their jobs if they want to

without having to worry they will be sued or not get their wages.

3. It prevents employees from going on strikes.

When there are big issues between employees and employers that are not settled, a popular

option for employees are to go on strikes. These actions hamper operations and consequently

cripple businesses. In the end, consumers suffer. With collective bargaining, there is no need for

workers to stop working because they have representatives with them who will work for their

benefits. Moreover, collective bargaining protects employers as well. This is because collective

bargaining will result to an agreement. And normally, this will also be agreed upon if the

negotiations are beneficial for both parties. With collective bargaining, employers are also

protected in a way since business operations will not be totally affected.

4. It gives protection to all employees.

People who are in favor of collective bargaining say that in the contracts signed by the employers

and trade union representatives, all employees in the company will benefit from whatever

conditions are stipulated in the agreement, regardless if they are members of the trade union or

not. Additionally, this gives employees the right to question the policies of the company they

belong to.

5. It provides security and stability.

On the part of employees, this will give them security of tenure since they will not have to worry

about getting terminated unlawfully and in case they will be, they have a support system as well

as representatives to fight for their rights as employees. Conversely, business owners will be able

to project the expenses to finance operations and compensation packages and benefits. This way

their businesses will be more stabilized.

List of Disadvantages of Collective Bargaining

1. It is prone to inequality.

Critics of collective agreement say that this can lead to either the employers or employees

getting less of what they deserve. If representation is weak on the side of employers, chances

are, the business will lose a substantial amount of money from over-compensation or

excessive benefits. On the other hand, if representation for employees is weak, they might

not get employment benefits they should be enjoying.

2. It can be biased to employers. 

Some groups not in favor of collective bargaining argue that this process gives too much power

to employees and leave the employers with tied hands when it comes to running their businesses.

Since trade unions can demand from employers and ask for collective bargaining negotiations,

critics are worried that this practice may become a habit even if in truth, there is nothing irregular

with how these employers run their businesses.

3. It takes a long period of time.

Another disadvantage claimed by anti-collective bargaining is the time it takes for the egotiations

to finish and materialize. They talk about bureaucracy and what it does to the people involved in

the process. Negotiations can take months and even years to finish, excluding the time it will

take to execute the stipulations in the agreement contracts.

4. It can be unfair to senior employees and member employees.

If the issue is about salaries and benefits, say equality in wages, employees who have been

working for long years for an organization are taken advantage of since they will be getting the

same benefits with that of their junior and newer colleagues. For critics, this is not appropriate.

Also, they contend that since that all the benefits included in the collective bargaining agreement
will be handed down even to non-member of the trade union, for example, this is not fair to

members who pay for their dues.

5. It can widen the gap between employers and employees.

Although collective bargaining is aimed to come up with solutions beneficial to both the

management and employees, there are cases where nothing is agreed upon. When talks become

futile, the situation might aggravate instead of mitigate. For the opposing group, this can, at

times, create a barrier between employers and employees instead of a healthier relationship.

Collective bargaining has both advantages and disadvantages which can work for or against the

parties involved. Although mutual benefits can be achieved legally with this, abuse and

inequality can also take place. So long as the benefits outweigh the setbacks and employees get

what they deserve without negative effects on the company’s resources and growth, collective

bargaining can be a good thing.

10 Most Valid Advantages and
Disadvantages of Collective
Bargaining
navajocodetalkersadmin on June 12, 2015 - 5:28 pm in Pros and Cons

Collective bargaining, a term coined in 1891 by economist Sidney Webb. The basics of collective bargaining is
when an entire group of employees negotiate the terms of their employment in a legally binding contract with
their employer. These terms can be how much they get paid, the benefits they are offered, scheduled salary
raises, vacations times, and even work hours. This form of bargaining has been widely used because it is
mutually beneficial for the management as well as the workers, it also promotes clear communication of
standards and expectations. While it may seem like a great option for all businesses to use, there are certainly
issues for both parties involved.

The Advantages of Collective Bargaining

1. Provides Security To Workers
Since collective bargaining contracts are legally binding agreements, the employees can be sure of their work
conditions. As long as all terms are followed, the management cannot go back or change any of the conditions.
2. Prohibits Strikes
This is the security that is provided to the management. Collective bargaining agreements prevent any
employees from striking or not working to try to get different benefits. Strikes can cause huge problems within
a company, so this is a big draw for management to use collective bargaining.
3. Gives Employees A Voice
All of the employees that the agreement will affect are allowed to have a say in the conditions. All voices are
heard, which promotes a much better moral in the workplace. This also ensures that the wants and needs of the
majority are met.
4. Reduces Bias and Favoritism
All too often you hear stories of someone getting additional benefits simply because of their relationship with
their boss or other irrelevant things. This is greatly reduced, and possibly eliminated, with the use of collective
bargaining. It evens the playing field for all employees.
5. Stabilizes The Business
Without the fear of layoffs, or wage cuts, people feel much more stable in their job and position at a company.
The stability also comes in for the management because they can easily determine budgets because all wages
and benefits are clearly laid out.
The Disadvantages of Collective Bargaining
1. Not All People Will Agree
Collective bargaining cater to the needs of the many and disregard the few. The terms in the agreement could
negatively affect employees who have special circumstances or simply do not agree. In this case, these
employees have no say.
2. A Loss of Authority
When employees know exactly how much power management has, and has a say in the things that they can
and cannot do, their role as the authority figure is greatly diminished. Respect suffers immensely when
collective bargaining is used.
3. Bureaucracy Takes Forever
Collective bargaining involves the use of bureaucratic systems. This extends the time that it takes to make
decisions and implement any new policies into the work place, causing time and money for the company.
4. Reduces Managements Hand In Business
Constructive development is hugely hindered when collective bargaining is use. If a policy or term of the
agreement truly needs to be revised or removed, it is nearly impossible to do so. The contract are generally
multi year, which means that this time has to be waited before the changes can be made.
5. Equalized Pay Causes Problems
When you make benefits and pay the same across the board you are begging for issues. Workers who have
worked at the company longer or who are much more skilled than other workers, will feel taken advantages of
with equalized pay that collective bargaining results in.
 Collective Bargaining in Human
Resource Management
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Collective bargaining in Human Resource Management! Learn about:

1.Introduction to Collective Bargaining 2. Nature 3. Characteristics of
Collective Bargaining 4. Importance 5. Principles of 6. Process of
Social Change (Prof. Butler’s Views) 7. Content and Coverage of a
Collective Bargaining  8. Forms  9. Developing a Bargaining
Relationship and Other Details.
Content:
1. Collective Bargaining- Introduction
2. Collective Bargaining- Nature 
3. Collective Bargaining- Characteristics
4. Collective Bargaining – Importance
5. Collective Bargaining- Principles 
6. Process of Social Change (Prof. Butler’s Views)
7. Collective Bargaining Agreement – Content and Coverage
8. Collective Bargaining – Forms or Types
9. Developing a Bargaining Relationship
10. Collective Bargaining in India
11. Collective Bargaining – Recent Trends
12. Prerequisites of Successful Collective Bargaining
13. Collective Bargaining – Conclusion

Collective Bargaining in Human Resource

Management: Types, Role, Process, Scope, Importance
and Objectives
1. Collective Bargaining- Introduction:
Collective bargaining is a joint consultation process. It is a process of
give and take that happens between the employer and the employees,
representing their concerns through a recognized union. Collective
bargaining permits employees to participate in setting terms and
conditions of employment through a representative union.
In real terms, it is actually a participative process and a consulting
technique that is being pressed into service by unions and
managements to reconcile their conflicting interests.
ADVERTISEMENTS:

It is called collective because the employees, as a group, select

representatives to meet and discuss differences with the employer.
Collective bargaining is opposite of individual bargaining which takes
place between management and a worker, as an individual, apart from
his fellow employees.
Collective bargaining plays a significant role in improving labour-
management relations and in ensuring industrial harmony. The
negotiations for collective bargaining require joint sessions of the
representatives of labour and management.
These help a lot in promoting a better understanding of each other’s
point of view as well as the problems confronting them. Through
discussions and interactions, each party learns more about the other,
and misunderstandings are often removed. Although, all major
differences may not always be sorted out, collective bargaining helps
in resolving out many minor differences; and there are many instances
in which even major disputes have been settled without any work
stoppage or outside intervention.
Accordingly, the role of collective bargaining in conflict resolution is
very significant. It builds up safety valves, allowing the opposite
group’s excess steam to escape without blowing the whole mechanism
to pieces.
ADVERTISEMENTS:

1. Collective bargaining implies community of interest. Its meaning

and form continue changing and this fluidity makes it difficult to
define or comprehend in precise terms. Ludwing Teller has defined
collective bargaining “as an agreement between a single employer or
an association of employers on the one hand and Labour Union on the
other hand which regulates the terms and conditions of employment.”
2. The Encyclopedia Britannica defines that collective bargaining is a
negotiation between an employer or group of employers and a group
of working people to reach an agreement on working conditions.
Collective bargaining is more usually understood to be negotiation
between one or more trade unions and an employer or group of
association of employers.
Trade Union Organisation gives the working people strength in
providing means for the expert representation of demands by skilled
officials not dependent on the employers for their jobs. Further, a
Union has funds and means of obtaining information outside any one
undertaking and can secure for the working people at any one firm the
support of their fellows in other firms.
3. Encyclopedia of Social Sciences, “collective bargaining is a process
of discussion and negotiation between two parties, one or both of
whom is a group of persons acting in concert. The resulting bargain is
an understanding as to the terms and conditions under which a
continuing service is to be performed…. More specifically, collective
bargaining is a procedure by which employers and a group of
employees agree upon the conditions of work.”
ADVERTISEMENTS:

4. R. F. Hoxie- “Collective bargaining is a mode of fixing the terms of

employment by means of bargaining between an organised body of
employees and an employer or an association of employers usually
acting through organised agents. The essence of collective bargaining
is a bargain between interested parties and not a decree from outside
parties.”
5. Richardson says- “Collective bargaining takes place when a number
of work people enter into a negotiation as a bargaining unit with an
employer of group of employers with the object of reaching an
agreement on the conditions of the employment of the work people.”
6. Cox defines collective bargaining as “the resolution of industrial
problems between the representatives of employers and the freely
designated representatives of employees acting collectively with a
minimum of government dictation.”
7. According to Selig Perlman- “Collective bargaining is not just a
means of raising wages and improving conditions of employment. Nor
is it merely democratic government in industry. It is, above all, a
technique whereby an inferior social class or group exerts a never-
slackening pressure for a bigger share in social sovereignty as well as
for more welfare and greater security and liberty for its members. It
manifests itself actually in politics, legislation, court litigation,
government administration, religion, education and propaganda”.
ADVERTISEMENTS:

8. In the words of Ludwing Teller, “The collective bargaining

agreement bears in its many provisions the imprints of decades of
activity contending for labour equality recognition of the notions
underlying collective negotiation. Indeed, in the collective bargaining
agreement is to be found a culminating purpose of labour activity.”
Concept and Origin 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”. The idea of collective bargaining emerged as a
result of industrial conflict and the growth of the trade union
movement, and was first given currency in the United States by
Samuel Gompers.
In India, the first collective bargaining agreement was concluded in
1920 at the instance of Mahatma Gandhi to regulate labour-
management relations between a group of employers and their
workers in the textile industry in Ahmedabad. The phrase collective
bargaining is made up of two words — collective, which implies group
action through its representatives; and bargaining, which suggests
haggling and / or negotiating.
The phrase, therefore, implies “collective negotiation of a contract
between the management’s representatives on one side and those of
the workers on the other.” It also implies an original yet flexible
position from which one of the negotiating parties, or both, may
retreat gracefully to a position of compromise.
In collective bargaining, a give-and-take principle is generally
involved, for a rigid, hard or inflexible position does not make for a
compromise settlement.

2. Collective Bargaining– Nature:
Collective bargaining may be defined as a process of negotiation and
other related pressure tactics (like threats, counter-threats) adopted
by the employers and the organised workers represented by their
union in order to determine the terms and conditions of employment.
In other words, it is a technique adopted by the organisations of
workers and employers collectively to resolve their existing or future
differences with or without the assistance of a third party.
Its ultimate aim is to reach some settlement acceptable to both the
parties involved in industrial relations, although, each of them may try
to impose its own terms upon the other through pressure tactics and
negotiations. From the concept of collective bargaining, a few
important facts pertaining to its nature become clear.
These are:
1. It is carried out on a collective as distinct from an individual basis.
That is, collective bargaining is bargaining by groups of people.
2. In the bargaining process, the main actors are employees,
employers and their associations.
3. The object of collective bargaining is rule-making, i.e., reaching an
agreement by specifying the rules pertaining to employment
relationship.
4. The main focus of these rules is on the terms and conditions of
employment.
5. Collective bargaining is a “civilized bipartite confrontation” between
the workers and management with a view to arriving at an agreement,
for the object is not ‘warfare’ but ‘compromise’.
6. It is both a device and a procedure used by wage-earners to
safeguard their interests; it is an institution or instrument of an
industrial organisation for discussion and negotiations between the
two parties.
7. It is, moreover, a technique by which an attempt is made to
reconcile the needs and objectives of workers and employers and is,
therefore, an integral part of an industrial society.
8. The essence of collective bargaining lies in the readiness of the two
parties to a dispute to reach an agreement or mutually satisfying
settlement. It is concerned about the emotions of the people involved
in it as well as with the logic of their interests.
Collective Bargaining Process in India:
Due to the inherent weaknesses in the Trade Unions growth in India
such as multiplicity of Trade Unions, affiliation to different political
parties, the political domination by politicians professing different
ideologies, domination of outsiders in the executive, the Trade Unions
are by and large divided.
The employers, on the other hand, are fairly organised and are in a
better position at the bargaining counter with the labour leaders. In
spite of all weaknesses from which the Trade Unions suffer in India,
an attempt has been made under the provisions of the Industrial
Disputes Act through the process of collective bargaining.
J. Chandra Shekhar Aiyer in D. N. Banerjee v. P. R. Mukherjee,
observes “Hence, having regard to the modern condition of society
where capital and labour have organised themselves into groups for
the purpose of fighting their disputes, settling them on the basis of the
theory that “Union is Strength,’ collect bargaining has come to stay.”
Under the provisions of the Industrial Disputes Act besides arbitration
and compulsory adjudication of disputes, provisions exist for the
appointment.
Conciliation Officer charged with the duty of mediating in and
promoting the settlement of industrial disputes. The main task
assigned to the conciliation officer under the scheme of the Act is to go
from one camp to the other and to find out the areas of agreement and
disagreement and to use his good offices to bring about common
understanding between the parties and to use his good offices in order
to bring about a settlement of disputes to the satisfaction of the
parties.
The memorandum of settlement duly signed by the parties is sent to
the appropriate government for publication. A settlement arrived at by
agreement between the parties otherwise than in the course of
conciliation proceedings also binds the parties to the agreement.
A settlement comes into operation on such date and is binding for
such period as is agreed upon by the parties. Dealing with the binding
character of a settlement Mr. Justice Chagla in Poona Mazdoor Sabha
v. G.K. Dhutia, observed- “Industrial law takes no notice of any private
settlement or agreement arrived at between the parties in the course of
an industrial dispute……………. an industrial dispute does not end until
a settlement is arrived at which has been given a binding effect under
the provisions of Section 19(2) and such a settlement proceedings are
held under section 12 of the Industrial Disputes Act.”
In Tamil Nadu Electricity Workers Federation v. Madras State
Electricity Board, the Madras High Court observed- “The whole theory
of organised labour and its statutory recognition in industrial
legislation, is based upon the unequal bargaining power that prevails
as between the capital employer and in individual workman, or
disunited workman. Collective bargaining is the foundation of this
movement, and it is in the interest of labour that statutory recognition
has been accorded to Trade Unions and their capacity to represent
workmen, who are members of such bodies. But, of course, there are
limits to this doctrine, for otherwise, it may become a tyranny stifling
the freedom of an individual worker. It is not then that every workman
must necessarily be a member of the Trade Union, and that outside its
fold, he cannot exercise any volition or choice in matters affecting his
welfare…”
The principle of collective bargaining has been recognised by the
International Labour Organisation.
The Industrial Labour Conference held in 1951 adopted
resolution recommending collective agreements which
provided that:
1. Machinery appropriate to the conditions existing in each industry
should be established by means of agreement or laws or regulations as
may be appropriate under national conditions, to negotiate, conclude,
revise and review collective agreements, or to be available to assist the
parties in the negotiations, conclusions, revision and renewal of
collective agreements.
2. The organisation, method of operation and functions of such
machinery should be determined by agreements between the parties
or by national laws, or regulations as may be appropriate under
national conditions.

3. Collective Bargaining- Characteristics:

Randle Observes- “A tree is known by its fruit. Collective bargaining
may best be known by its characteristics.”
The main characteristics of collective bargaining are:
1. It is a group action as opposed to individual action and is
initiated through the representatives of workers:
On the management side are its delegates at the bargaining table; on
the side of the workers is their trade union, which may represent the
local plant, the industry membership or nationwide membership.
2. It is flexible and mobile, and not fixed or static:
It has fluidity and ample scope for a compromise, for a mutual give-
and-take before the final agreement is reached or the final settlement
is arrived at.
Bakke and Kerr observe- “Essentially, a successful collective
bargaining is an exercise in graceful retreat — retreat without seeming
to retreat. The parties normally ask for more or offer less than they
ultimately accept or give. The ‘take-it-or-leave-it’ proposition is not
viewed as being within the rules of the game. One of the most
damaging criticisms is that a party is adamant in holding to its original
position. Before retreating with as much elegance as circumstances
permit, each party seeks to withdraw as little as possible. This involves
ascertaining the maximum concessions of the opposing negotiator
without disclosing one’s own ultimate concession. In this sense, all
negotiations are exploratory until the agreement is consummated.”
3. It is a two-party process:
It is a mutual give-and-take rather than a take-it-or-leave-it-method of
arriving at the settlement of a dispute as two parties are involved in it.
In this connection, Clark Kerr observes- “Collective bargaining can
work only with the acceptance by labour and management of their
appropriate responsibilities. It can succeed only when both labour and
management want it to succeed. ”
4. It is a continuous process:
It provides a mechanism for continuing and organised relationships
between management and trade unions. “The heart of collective
bargaining is the process for a continuing joint consideration and
adjustment of plant problems.”
It does not end with negotiation, but, as Glen Gardiner puts it, “it
begins and ends with the writing of a contract. Actually, it is only the
beginning of collective bargaining. It goes on for 365 days of the year…
The most important part of collective bargaining…is the bargaining
that goes on from day to day under the rules established by labour
agreements.”
5. It is dynamic and not static:
Because it is a relatively 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. Its
coverage and style have changed.
In this connection, J. M. Clark observes- “Collective bargaining has
become, with surprising swiftness, one of the greatest forces in our
society. In anything like its present scale and power, it is a new thing.
It is a process which transforms pleading into negotiation….which
permits employees’ dignity as they participate in the formulation of
their terms and conditions of employment…which embraces the
democratic ideal and applies it correctly and effectively at the place of
work.”
6. It is industrial democracy at work:
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. Collective
bargaining is not a mere signing of an agreement granting seniority,
vacations and wage increases. It is not a mere sitting around a table,
discussing grievances.
Basically, it is democratic. It is a joint formulation of company policy
on all matters which directly affect the workers in a plant. It is self-
government in action. It is the projection of a management policy
which gives the workers the right to be heard. It is the establishment
of factory law based on common interest.
7. Collective bargaining is not a competitive process but is
essentially a complementary process:
Each party needs something that the other party has, namely, labour
can make a greater productive effort and management has the capacity
to pay for that effort and to organise and guide it for achieving its
objectives. The behavioural scientists have made a distinction between
“distributive bargaining” and “integrative bargaining.”
The former is the process of dividing the ‘cake’ which represents the
whole 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 it. So it is a “win-
lose” relationship. In other words, distributive bargaining deals with
issues or an issue in which the two or more parties have conflicting or
adversary interests.
Integrative bargaining on the other hand is a process by which both
parties can win, each contributing something for the benefit of the
other party. Such a process develops common objectives, a better
understanding of each other’s needs and capabilities, a better respect
for each other, and a greater involvement in, or commitment to, the
well-being and growth of the enterprise as a whole.
8. It is an art, an advanced form of human relations:
To substantiate this, one need only witness the bluffing, the oratory
dramatics, and coyness mixed in an inexplicable fashion which may
characterise a bargaining session.
In the words of Davey- “Collective bargaining is a complex process. It
involves psychology, politics and power of the work group. It is a
process of tough-minded calculus and horse-trading. It is also a
collective manifestation of individual and group drives for status and
power. It frequently involves a contest between sovereign institutional
entities whose survival requirements are, in some instances, related
and, in other instances, independent of, or in conflict with, one
another.”
4. Importance of Collective Bargaining:
The evolution of mature labour relations characterised by a greater
degree of order and stability and sound wage structure are almost
invariably associated with some measurable aspects of collective
bargaining. On the basis of the experience of advanced countries,
where collective bargaining is said to have made considerable
advances, we identify some indicators of mature collective bargaining
practices.
These indicators are:
1. A high degree at collective bargaining as measured in terms of the
proportion of workers covered by collective agreements;
2. Qualitative conduct of the parties to collective bargaining both
before a situation warranting negotiations develops and the methods
followed at the time of arriving at agreements;
3. The right priorities assigned to different methods in the agreements
and their changing pattern over time; and
4. A structure of bargaining with emphasis on central bargaining
which is purported to give some order and stability to labour-
management relations.
The necessity of collective bargaining is most deeply felt when serious
problems have to be solved at the level of an undertaking or of an
industry. For this purpose, managements and workers’ organisations
have to get together. The labour legislation and enforcement
machinery can only provide the setting in which an industry may
function; the solution of common problems can only come from the
parties which are directly concerned with them.
In this context, “collective agreements provide a climate for smooth
progress. The agreement spells out the working relationship between
employers’ and workers’ organisations in which a synthesis between
the demands from one side and concessions from the other can be
given a practical shape.”
(a) The Trade Union’s Point of View:
From the trade union’s point of view, collective bargaining agreements
ensure that managements do not take any unilateral action. This is
achieved by seeing to it that an employer signs a contract which
specifies the conditions of employment during a particular period of
time, and which establishes the procedure for the handling of issues
and disputes which arise during that period.
In other words, collective bargaining is an employer regulating device,
a method of guaranteeing the rights and immunities of the workers by
limiting the employer’s freedom of action. With the application of
collective bargaining agreements, the status of individual workers is
improved, not only in terms of their wage, but also in such non-
monetary aspects of their employment as better working conditions
and greater job security.
A collective bargaining agreement develops a sense of responsibility
and of self- respect among the workers, and is a guarantee against
wage cuts. Through collective bargaining, unions attempt to secure a
wide variety of economic and non-economic goals. The economic goals
include wages, and fringe benefits.
The non-economic goals centre around hours of work, the working
conditions, workers’ satisfaction with his job and the protection of the
union as a growing institution.
Within the union, there are many actual and potential areas of conflict
between different interest groups. The choice of giving priority to the
objectives is a difficult task. The important factors in determining
which goals to be given priority are- economic conditions affecting the
industry, the precedents set by recent agreements, rivalry between
unions and union leaders and the dominant groups within the union.
The major bargaining tactics are strikes, boycotts and picketing.
(b) The Management’s Point of View:
On the other hand, the management’s collective bargaining goals are-
the control of the enterprise, maintaining its ability to manage with a
high degree of flexibility and efficiency of operation. The factors
determining management’s approach to collective bargaining are: its
views on the economic outlook, conditioned by the size of inventory on
hand, precedents set by recent agreements, cost structure of the firm
and competitive conditions in the industry.
The bargaining techniques of management consist of its control of
hiring, promotion, discharge, lay-off and personnel techniques
consisting of incentive wage systems, special benefits provided
voluntarily by the employer, and a human relation approach to the
employees.
To sum up, collective bargaining enables both the parties to:
i. Increase their economic strength for mutual benefit;
ii. Establish uniform conditions of employment with a view to avoid
industrial disputes and maintaining stable peace in the industry;
iii. Secure a prompt and fair redressal of grievances;
iv. Avoid interruptions in work which follow strikes, go-slow tactics
and similar coercive activities;
v. Lay down fair rates of wages and norms of working conditions;
vi. Achieve an efficient operation of the plant; and
vii. Promote the stability and prosperity of the industry.
In fact a collective bargaining agreement brings both labour and
management together to determine the conditions of employment
which, till then, had been decided exclusively by an outside agency like
Industrial Tribunal, and paves the way for the closing of the
psychological and emotional gap which divides labour and
management.

5. Collective Bargaining- Principles:

Arnold F. Campo has laid down certain essential general principles of
collective bargaining.
These are:
1. For Union and Management:
a. Collective bargaining should be made an educational as well as a
bargaining process. It should offer to trade union leaders an
opportunity to present to the management the wants, the desires, the
grievances and the attitudes of its employees, and make it possible for
the management to explain to union leaders and, through them, to its
employees, the economic problems which confront it.
b. The management and the trade union must look upon collective
bargaining as a means of finding the best possible solution, and not as
a means of acquiring as much as one can while conceding the
minimum. There must be an honest attempt at solving a problem
rather than at a compromise.
c. Both the parties to a dispute should command the respect of each
other and should have enough bargaining power to enforce the terms
of the agreement that may be arrived at.
There must be mutual confidence, good faith, and a desire to make
collective bargaining effective in practice.
d. There should be an honest, able and responsible leadership, for only
this kind of leadership will make collective bargaining effective and
meaningful.
e. The two parties should meticulously observe and abide by all the
national and state laws which are applicable to collective bargaining.
f. Both the parties must bear in mind the fact that collective bargaining
is, in a sense, a form of price fixation and that any successful collective
bargaining depends, in the last analysis, on whether, the management
and the trade union do a good job of ensuring that the price of labour
is properly adjusted to other prices.
2. For the Management:
a. The management must develop and consistently follow a realistic
labour policy, which should be accepted and implemented by all its
representatives.
b. In order to ensure that the trade union feels that its position in the
organisation or factory is secure, the management must grant
recognition to it without any reservations and accept it as a
constructive force in the organisation and the industry.
c. The management should not assume that employee goodwill will
always be there for it. It should periodically examine the rules and
regulations by which its labour force is governed. In this way, it will be
able to determine the attitudes of its employees, promote their
comfort, and gain their goodwill and co-operation.
d. The management should act upon the assumption that, in order to
make the trade union a responsible and conservative body, it is
essential that it should be fairly treated. It should, moreover, establish
such a satisfactory relationship with the trade union and its
representatives that the latter will not lightly do anything that is
capable of jeopardising that relationship.
e. The management should not wait for the trade union to bring
employee grievances to its notice but should rather create the
conditions in which the trade union will not do so, and should settle
the grievances of the employees even before the trade union brings
them to the notice of the management.
The management should deal with only one trade union in the
organisation. If two trade unions seek recognition, no negotiations
should be undertaken till one of them establishes the fact of having a
majority of the membership of the employees in its organisation.
While weighing the economic consequences of collective bargaining,
the management should place greater emphasis on social
considerations.
3. For the Trade Union:
a. In view of the rights granted to organised labour, it is essential that
trade unions should eliminate racketeering and other undemocratic
practices within their own organisations.
b. Trade union leaders should not imagine that their only function is
to secure higher wages for their members, and shorter hours of work
and better working conditions for them. They and their members have
an obligation to assist the management in the elimination of waste and
in improving the quality and quantity of production.
c. Trade union leaders should appreciate the economic implications of
collective bargaining, for their demands are generally met from the
income and resources of the organisation in which their members are
employed.
d. Trade union leaders should assist in the removal of such restrictive
rules and regulations as are likely to increase costs and prices, reduce
the amount that can be paid out as wages, and tend to make for low
employment and in the long-run lower the standard of living of all
sections of society.
e. Trade unions should resort to strikes only when all other methods of
settling a dispute have failed to bring about satisfactory results.

6. Process of Social Change (Prof. Butler’s Views):

Prof Butler has viewed the functions of collective bargaining under
these heads- (1) Collective bargaining as a process of social change. (2)
Collective bargaining as a peace treaty between two parties in
continual conflict. (3) Collective bargaining as a system of industrial
jurisprudence. Collective bargaining is a technique of long-run social
change, bringing about rearrangements in the power hierarchy ‘ of
competing groups.
It is, in its broader aspects, not confined solely to the economic
relations between employers and employees. Perlman says- “It is a
technique whereby, an inferior social class or group exerts a never-
slackening pressure for a bigger share in the social sovereignty as well
as more welfare, security and liberty for individual members.
Collective bargaining manifests itself equally in politics, legislation
court litigation, government administration, religion, education and
propaganda.”
Collective bargaining is not an abstract class struggle but is rather
pragmatic and concrete. The inferior class s aim is to acquire a large
measure of economic and political control over crucial decisions in the
areas of its most immediate interest and to be recognised in other
areas of decision-making. Collective bargaining adapts itself to the
changing social, legal and economic environment. It is a source of
stability in a changing environment.
The wage-earners have enhanced their social and economic position—
in absolute terms and in relation to other groups — and at the same
time, the management has retained a large measure of power and
dignity. These gains have been registered not in one great
revolutionary change, but have come about gradually, with each clash
between the opposing parties settled with a new compromise
somewhat different from the previous settlement.
Peace Treaty:
Collective bargaining is a sort of peace treaty between two parties in
continual conflict. However, the settlement between the two parties is
a compromise. The extent to which each side is willing to accept less
than its original bargaining demands depends, in part, on how strong
it is vis-a-vis its opponent.
“The compromise is a temporary truce with neither side being
completely satisfied with the results. Each would like to modify it at
the earliest opportunity. Since the contract is almost always of a short
duration, each begins immediately to prepare a new list of demands,
including previously unsatisfied demands, and to build up its
bargaining strength in anticipation of the next power skirmish.” But in
a majority of cases, collective bargaining agreements are signed before
either opponent fires a shot.
Industrial Jurisprudence:
Collective bargaining creates a system of “industrial jurisprudence”. It
is “a method of introducing civil rights into industry, that is, of
requiring that management be conducted by rules rather than by
arbitrary decisions.” It establishes rules which define and restrict the
traditional authority exercised by employers over their employees,
placing a part of the authority under the joint control of union and
management.
1. It is a rule-making or legislative process, in the sense that it
formulates the terms and conditions under which labour and
management will co-operate and work together over a certain stated
period.
2. It is an executive process, for both management (foremen and
supervisory officials) and trade union officials share the responsibility
of enforcing the rules.
3. It is a judicial process, for in every collective agreement there is a
clause / provision regarding the interpretation of the agreement.
Through the grievance procedure, any difference dispute concerning
the application of the agreement to particular cases is settled. Where
the agreement does not specifically cover the dispute, it may be settled
according to the unwritten shop practices.
The decisions in these cases act as precedents in a manager similar to
the common laws and interpretation of legislation by the court.
Generally, the objectives and basic philosophy of collective bargaining
are well expressed in the agreement itself. In this context, for instance,
the Article 1 of the Indian Aluminium
Agreement, reads as- “The purpose of this agreement is to provide
orderly collective bargaining relations, to secure a prompt and fair
disposal of grievances, to establish fair wages and other working
conditions, to maintain a harmonious relationship between the
employees and the company, to prevent strikes, lockouts and
slowdowns, to attain efficient and uninterrupted operations in the
plant, and to promote the stability and prosperity of the industry for
the benefit of all those who are dependent on it.”
“To achieve the above objectives, the company and the trade union
agree to encourage the highest possible degree of friendly and co-
operative relations between their respective representatives at all
levels and with and between employees. The company and the union
believe that the attainment of this goal depends primarily on the
attitudes of the people in their respective organisations at all levels of
responsibility. Both the parties believe that a proper attitude must be
based on a full understanding of, and regard for, the respective rights
and responsibilities of both the company and the union.”

7. Content and Coverage of a Collective Bargaining Agreement:

There is no standard specification of what should be included in a
contract and what should not be included, although, certain issues are
often sought to be excluded from collective bargaining and retained
for discussion and disposal by the management.
Taylor observes- “The essence of free collective bargaining is that the
scope of the relationship, the procedures for negotiation and joint
dealing, and the substantive terms of employment are all private
matters to be worked out by unions and management without
government interference or direction.”
The scope of collective bargaining has increased tremendously in
recent years, and many new subjects have been included under it.
Randle adds- “The expansion in the scope of collective bargaining has
been due to various factors, namely –
a. The growing strength of the unions which have pressurised
managements to include new subjects in the agreements;
b. Increased profits have led to a favourable response to the demands
of the employees;
c. Increased prices along with increased production have contributed
to expansion in the subjects for collective bargaining;
d. The liberal and sympathetic attitude evident in the decisions of the
courts and legislative enactments has also favoured this expansion.”
The subject matter covered by the contract generally varies with the
maturity of the bargaining relationship between the two parties. As the
bargaining relationship matures and the two parties grow in mutual
trust and confidence, the agreement acts as a framework for peacefully
settling day-to-day disputes. And when new contracts are negotiated,
additional subjects are brought under collective bargaining.
The contract provisions may be divided into four categories- union
security, worker security, economic factors, and management
protection. The contract, in the first section, contains the names of the
parties to the contract, which recognises the union as the
representative of the employees. Usually, the union is the exclusive
representative.
Then it contains a union security clause, which means the extent to
which the contract protects the union in holding its membership.
The union security clause may vary from mere recognition at one
extreme to the ‘closed shop’ at the other. In many contracts a “check-
off” clause is also included, which requires the employer to deduct the
union dues from the employee’s pay and forward them directly to the
union.
The worker security clause provides for seniority protection, covering
promotion, job assignment, and lay-off. The economic items include
wages and the fringe benefits.
The contract often includes clauses which offer prerogatives to the
management that is the right of the management to make decisions
without first conferring with the union. The management exercises
unilateral authority within the area covered by the prerogatives; the
other decisions must be jointly made with the union. In some cases the
provisions state that all things not covered by the contract are reserved
for management authority.
In other cases, the provisions spell out the areas in which decisions
may be made by the management without first conferring with the
union. For example, the following may be specifically reserved:
number of employees, nature of goods to be produced, price of final
product, location of new plants, dividend policy, accounting and
financial techniques, etc.
In other areas, the management may initiate action; but the contract
grants the union the right to file a grievance if it believes the action is
unjust.
Typical areas in which prerogatives are exercised in this fashion are-
scheduling production, introducing new production methods, and
setting pay scales for new jobs. Lastly, it includes the clause regulating
the procedures of union-management relations and the grievance
procedure. Although, not always done, it is better to definitely state
the duration of the agreement in one of its clauses.
The National Institute of Personnel Management suggests
that the following facts should be included in a collective
agreement:
a. The purpose of the agreement, its scope, and the definition of
important terms;
b. The rights and responsibilities of the management and of the trade
union;
c. Wages, bonus, production norms, leave, retiring benefits, and other
benefits and terms and conditions of service;
d. Grievance redressal procedure;
e. Methods of, and machinery for, the settlement of possible future
disputes; and
f. A termination clause.
A cursory glance at the agreement reveals that the issues covered
under agreements can be grouped in three categories- namely; (a)
employment and working conditions; (b) labour welfare, labour
recruitment and management matters; and (c) organisational matters.
The first two which cover wages, bonus, dearness allowance,
retirement benefits, working hours, holidays with leave, supply of
subsidised items like food, transport, housing, etc., are worker-interest
oriented.
The last category comprising union recognition, exclusive bargaining
rights, check-off schemes, workers’ participation in management, etc.,
are union-interest oriented matters. Some conflict of interest may
apparently be involved in these categories but in the final analysis
gains of the union may reinforce the gains of workers.
Similarly, gains which satisfy the current worker-oriented demands
may strengthen the union by promoting worker loyalty.
It should, however, be noted that the issues of negotiation and
agreement through collective bargaining include not only wage rates,
but also terms and methods of compensation for overtime works and
allowances for dead work; hours of work and the number of paid
holidays; call-in-pay, paid sick leave; production norms, technical
practices, standards of performance to test the competence of workers;
allowance for fatigue; hiring, firing, promotion, lay-off, dismissal and
retrenchment; rationalisation, productivity and participation in trade
union activities; the workers’ rights and privileges- recognition of
trade unions; employment injuries, i.e., measures to be taken for the
protection of the life and limbs of employees; bonus for dangerous and
unhealthy work; pension; disciplinary proceedings, grievance
procedure, workers’ participation in management; gratuity and
provident fund; the right of the management to discipline workers;
ways of handling materials; fines for infraction of rules; trade union
security; machinery for the settlement of disputes; and many more
subjects.
Managements and trade unions sometimes co-operative with each
other in developing a job evaluation system which facilitates the fixing
of wage rates in an undertaking for different categories of workers on
the basis of the duties performed by them. In the United States,
Sweden and Italy, collective bargaining provides for consultation with
the representatives of workers prior to the introduction of new
production methods or prior to collective dismissals effected for
economic considerations.
It is obvious from the foregoing discussion that collective bargaining
covers negotiation, administration, interpretation and application of
written agreements between employers and trade unions representing
the employees, and indicates the policies and procedures which shall
govern the determination and / or fixation of wages, rates of pay,
hours of work and other conditions of employment.
In the United States, Great Britain, Germany, Italy, Norway, Sweden
and Switzerland, the contents of a collective bargaining agreement are
solely determined by the parties themselves. While framing an
agreement, the fact that is to be taken into consideration is that the
conditions of employment do not fall below a particular standard and
that they are not inconsistent with the legal provisions enacted for the
purpose.
In some Latin American countries – for example, in Brazil, Columbia
and Equador- agreements must necessarily deal with such items as
wages, hours of work, rest periods, holidays, the duration of an
agreement and the procedure to be adopted for its extension. Other
items may be included in collective bargaining agreements provided
that they are not contrary to the laws in force. In Canada, these
agreements contain the procedures that have to be adopted for the
settlement of disputes and the redressal of grievances.

8. Forms of Collective Bargaining:

At the outset, it should be stated that there is a great deal of variation
in collective bargaining practices – ranging from an informal oral
agreement to a very formal and detailed agreement.
The explanation of this variation is indicated in the words of Kennedy.
“In a mixed private-public economy characterised by a great variety of
industries, ranging from plantations to, electronics, technologies and
managerial attitudes ranging from obsolete to very modern, and
unevenly developed, politically divided but predominantly weak
labour movement and a framework of policy that does little to mould
orderly relations, it stands to reason that union-employer relations
will also show large variation in kind and quality.”
Further, what is alarming is not so much the diversity in collective
bargaining practices as the underdeveloped nature of the collective
bargaining process. Collective bargaining, in the strict sense of the
term, is understood to be the process of a positive give-and-take
between workers and employers. The spirit of give-and-take and a
sense of mutuality and trust should underlie the bargaining process
throughout its course.
However, in practice, collective bargaining, by and large, follows only
when confrontation takes place between the union and the
management, making it appear as a form of conflict-a way to present
workers’ demand and to obtain employer’s compliance with such
demands.
What is expected under a strict collective bargaining situation is the
starting of negotiations before or immediately after the expiry of the
contract agreement. But, in most cases, negotiations start after a
labour relations situation has developed. Moreover, collective
bargaining has emerged as part of the struggle against employers.
However, broadly speaking, collective bargaining may
assume the following forms:
1. It may be a single plant bargaining, that is, bargaining may be
between management and a single trade union. This type of collective
bargaining prevails in the United States and India.
2. It may be a multiple plant bargaining, that is, bargaining may be
between a single factory or establishment having several plants and
the workers employed in all these plants.
3. It may be a multiple employer bargaining, that is, bargaining
between all the trade unions of workers in the same industry through
their federal organisations, and the employers’ federation. This is
possible both at the local and regional levels and is generally resorted
to in the textile industry.
In India, collective bargaining has been classified under four
categories.
These are:
1. Agreements which are negotiated by officers during the course of
conciliation proceedings and are called settlements under the
Industrial Disputes Act.
2. Agreements which are concluded by the parties themselves without
reference to a Board of Conciliation and are signed by them. Copies of
such agreements, however, are sent to appropriate governments and
to conciliation officers.
3. Agreements which are negotiated by the parties on a voluntary basis
when disputes are sub judice and which are later submitted to
industrial tribunals, labour courts or labour arbitrators for
incorporation into the documents as parts of awards. These are known
as consent awards.
(These three types of agreements are, strictly speaking, memoranda of
settlements, and are binding on the parties under the provisions of the
Industrial Disputes Act.)
4. Agreements which are drawn up after direct negotiation between
labour and management and are purely voluntary in character. These
depend for their enforcement on moral force and on the goodwill and
co-operation of the parties.

9. Developing a Bargaining Relationship:

The first step in collective bargaining is to develop a regular and
systematic procedure for bargaining. This step consists of three
activities, namely- (i) To decide who or which union is to be
recognised as the representative of the workers for bargaining
purposes; (ii) To decide what should be the level of bargaining; and
(iii) To decide what should be the scope and coverage of issues under
collective bargaining.
1. Recognition of the Bargaining Agent:
In those organisations in which there is a single trade union, that
union is generally granted recognition to represent the workers. But
where there is more than one union, any of these criteria may be used
for identifying the representative union, namely-
a. Selection of the representative union by secret ballot;
b. Selection through verification of membership by some government
agency;
c. Bargaining with a joint committee of all major unions;
d. Bargaining with a negotiation committee in which different unions
would be represented in proportion to their verified membership; and
e. Bargaining with a negotiation committee which consists of elected
representative of every department of the organisation selected by
secret ballot, irrespective of their union affiliations.
The secret ballot system is widely used in countries like the United
States, West Germany, etc. In India, the AITUC, BMS, UTUC and
CITU have supported this method; but the INTUC opposed it. The
National Commission on Labour has preferred to leave the
determination of the representative union to the proposed Industrial
Relations Commission, emphasised the use of either secret ballot or
the verification procedure for that purpose.
The attempt to form a joint committee may be opposed by the largest
or the recognised union (if there is one), which may claim the right to
speak on behalf of all the employees of the undertaking or industry.
The Bargaining Committee with proportional strength of the unions
should be attempted only when the largest union is still a minority
union, and there are other strong rivals to it.
If the secret ballot or verification conducted by an independent
statutory authority indicates that any particular union has got an
absolute majority of eligible employees, it should be given recognition
as the “Sole Bargaining Agent”, and the other unions may be given the
right to represent their members’ grievances.
2. Level of Bargaining:
Collective bargaining is possible at practically all levels, namely, at the
level of the enterprise, at the level of the entire industry in the country,
that is, at the national level-, or it may be at the level of the industry in
a particular region, that is, regional industry level. From the point of
view of an individual establishment, enterprise-level bargaining is
generally useful in that the settlement is tailored to the conditions of
the concern, e.g., its capacity to pay, its market conditions and
objectives, etc.
The modern trend is to cover a large number of units in an industry so
that, settlements are applicable to the entire industry or to the
industry in a particular region.
3. Scope and Coverage of Collective Bargaining:
Though, in many organisations bargaining is struck only on specific
issues like wage increase, bonus, or seniority, promotion, etc., yet it is
considered advantageous, both for the management and the trade
unions, to cover as many issues of interests to both parties as possible.

10. Collective Bargaining in India:

The story of collective bargaining is the story of the rise and growth of
trade unionism itself. It had its roots in Great Britain and developed in
response to conditions created by the Industrial Revolution. In early
part of 18th century when trade unions came into existence, the idea of
bargaining collectively gained strength. Initially, the negotiations were
carried out at plant level. By early 1900, industry and national level
agreements were quite common.
Slowly but steadily the idea spread to France, Germany, USA. After a
century of rapid growth, collective bargaining has more or less,
become the gospel of industrial relations. It is being increasingly
viewed as a social invention that has institutionalised industrial
conflict. In other words, it is through the process of collective
bargaining that organisations have learnt to cope with industrial
conflict.
In India, trade unions have come to occupy the centre stage only after
1900. In 1918, Gandhiji, as the leader of the Ahmedabad Textile
workers, advocated the resolution of conflict through collective
bargaining agreements. For another 10 years, this method of setting
disputes did not gain popularity. The legal steps taken by the
government after the Second World War revived interest in the subject
once again.
The legislative measures included the setting up of a machinery for
negotiations, conciliation and arbitration. Basic conflicting issues
concurring wages and conditions of employment were sought to be
resolved through voluntary means. After Independence, with the
spread of trade unionism, collective bargaining agreements have
become popular. A large majority of disputes were resolved through
this mechanism.
Most agreements were concluded at the plant level. In centres like
Mumbai, Ahmedabad industry level agreements were quite common –
thanks to the legal blessings extended by the respective State Acts. The
agreements were found in industries such as chemicals, petroleum,
tea, coal, oil, aluminum, etc. In ports and docks, banking and
insurance, collective agreements at the national level were also arrived
at.
Changing Scenario:
In most industrialised economies, company unions and centralised
bargaining is giving way to decentralised bargaining carried out at the
plant level. Local factors have become more important to unions than
political ideology or nationwide worker solidarity across several
industries. In India also, the role of national level federation of unions
and employers’ organisations is limited in collective bargaining.
Strictly speaking, the process is centred around a handful of
employers’ associations and trade unions. For example, the
Confederation of Indian Industry till the early 90s represented the
claims of member employers from the Engineering Industry. In
traditional industries such as Jute, the entrepreneurs themselves
conduct the negotiations with unions.
In places like Bangalore and Hyderabad, unions and employers have
preferred to set up joint co-ordination committees to deal with
collective bargaining. In sectors like coal, steel, ports and docks such
co-ordination committees are quite common while carrying out the
nation-cum-industry-wide bargaining.
As far as steel industry is concerned, there are 240 trade unions
organised into several trade union federations within the public sector
steel company, Steel Authority of India Ltd (SAIL).
Every three or four years the National Joint Consultative forum for
Steel Industry (NJCS) enters into agreements (so far 5 such
agreements were concluded since early 70s) on behalf of SAIL,
Rashtriya Ispat Nigam (Visakhapatnam) and TISCO (which
incidentally has only one recognised trade union.) A plant level
agreement supplements the above national agreement to cover those
unique aspects concerning the plant which were not covered at the
national level.
Public sector collective bargaining in India refers to collective
bargaining in industrial and commercial undertakings owned by
Central and State Governments including those in finance and
banking sector. Employees in departmental undertakings (Railways,
Post and Telegraphs, etc.) are governed by pay commission awards.
The average wages and benefits bargained at the national level for
lower level public sector employees were found to be higher when
compared to the employees in the organised private sector. Of course,
at higher levels of management the private sector employees got
relatively better wages.
In some sectors (media, sugar, etc.) the wage boards still decide the
wages and working conditions. In the Cement industry, arbitration has
replaced collective bargaining over wage-related issues. There are
interesting contradictions in the collective bargaining scene in India.
Over 80 different unions may represent a single firm. Some large
multi-plant firms such as BHEL, SAIL and departmental undertakings
such as Railways have to live with over a hundred unions each.
The bargaining process in public sector especially has become quite
coercive and demanding so as to appease the claims of different
sections of workers having ties with different unions. Due to recession,
computerisation, cutthroat competition etc., many large firms have
resorted to productivity bargaining to a limited extent and unions had
to yield ground owing to their own helplessness in fighting till the end
in a fruitless battle.
Some of the drastic measures ‘mutually agreed’ as essential for
survival in recession-hit companies (Jaipur Metal and Electricals Ltd.,
Kamani Tubes, Kirloskar Oil Engines, Bata India Ltd., Philips,
Walchandnagar Industries, Metal Box, etc.) included-
i. Cut in pay and allowances;
ii. Freeze in DA, changes in incentive payments;
iii. Lay-off / retrenchment;
iv. Early retirement;
v. Change in work norms;
vi. Retraining, relocating, etc.
In future, trade unions and management may have to be guided by
market forces (survival of the fittest, cost-effective global
manufacturing, high-tech / high quality service-oriented approach,
customer- centred marketing and manufacturing processes) while
sharing the gains from industry. Political, ideological concerns may
have to take the back seat.
The full potential and gravity of technology-led growth needs to be
appreciated by both management and labour while they try to draw
concessions from each other at the negotiating table. Concession
bargaining may rule the scene till industry gains stature and status in
the global marketplace.
11. Recent Trends in Collective Bargaining:
In India, the workers working in the formal sector, who constitute only
seven per cent 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 organised 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. The Directorate
General of Employment and Training (DGET), Ministry of Labour and
Employments considers all organisations in the public sector
irrespective of their size and non-agricultural establishments in the
private sector employing ten workers or more as organised sector.
In India, Collective Bargaining and rise in Trade Unionism came into
existence mainly in the early 20th 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 9.1.2002 provides for reducing multiplicity
of Trade Unions, orderly growth of Trade Unions and promoting
internal democracy. India has not ratified ILO Conventions No.87
(Freedom of Association and protection of the right to organise) and
No.98 (right to organise and collective bargaining) due to “technical
difficulties”.
In India, in the formal sector, some important forms of collective
bargaining agreements concluded at various levels – Plant, Industry,
Sectoral, Regional and National level are-
1. Sectoral Collective Bargaining at National Level:
Since the early 1970s, sectoral bargaining has been occurring at
national level mainly in industries where the Government is a
dominant player. These include banks and coal (employing
approximately 8 lakh workers each), steel and ports and docks
(employing two-and-half lakh each).
2. Industry-Cum-Region-Wide Agreements:
Agreements of this nature are found in Cotton, Jute, Textiles,
Engineering and Tea which are dominated by the Indian Private
Sector. But such agreements are not binding on enterprise
management in the respective industries / regions unless they
authorise the respective employer associations in writing to bargain on
their behalf.
3. Decentralized Agreements; Enterprise or Plant Level:
In the rest of the industries, whereas the employers press for
decentralised negotiations at plant level, the unions insist on
bargaining at least at company level where the employees are formed
into federations combining several plants / locations. However, in
some cases, the employers in multi-unit private sector enterprises
bargain with trade union federations at company level.
In recent years, in India as in almost elsewhere, collective bargaining
has faced the challenges stemming from falling trade union
membership, increasing individualisation of labour relations and the
difficult quest for greater competitiveness and flexibility in a situation
of economic globalisation.
In this context, certain trends in India could be enumerated as
follows- (i) 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, (ii) Bargaining at the enterprise level
is increasing, (iii) Other forms of bargaining and new issues- (a)
Bargaining in the public sector largely staying at the same level, (b)
Other forms of bargaining like individual employer-employee
bargaining, work councils, bargaining on individual work contracts,
bargaining directly with workers’ representatives, workplace
consultations based on performance targets, etc. are on the increase,
(c) The new issues in the bargaining are bankruptcy, equality career-
developments, leisure time, evaluation systems, etc. and overall the
issues covered in collective bargaining are broadening.

12. Prerequisites of Successful Collective Bargaining:

For making collective bargaining more pragmatic and
meaningful, following steps must be taken into
consideration:
1. There must be a change in the attitude of employers and employees.
They should realise that the collective bargaining approach does not
imply litigation, as it does under adjudication. It is an approach which
indicates that the two parties are determined to resolve their
differences in their respective claims in a peaceful manner, relying
only on their own strength and resources; they should not look to a
third party for the solution of their problems.
Collective bargaining is best conducted at plant level. The bargaining
agents of both the parties should be determined to arrive at an agreed
solution of their respective problems. The employers should be
represented by the management and the workers by their trade union.
Both should know which one is the recognised union, in case there is
more than one in a plant. The bargaining agent must be recognised in
proper manner.
The employers and employees should enter upon negotiations on
points of difference or on demands with a view to reaching an
agreement. The trade union should not make or put forward
unreasonable demands. Any refusal to negotiate on the part of either
side should be looked upon as an unfair practice. Rigid attitudes are
out of place in a collective bargaining system.
2. Negotiations can be successful only when the parties rely on facts
and figures to support their point of view. The trade union should be
assisted by such specialists as economists, productivity experts and
professionals, so that, their case is properly presented to the
representatives of the management.
In order to bring this to pass, the organisational set-up of a trade
union will have to be changed; and the latter should adopt a
constructive approach at the bargaining table rather than the present
agitational or litigation-oriented approach.
3. To ensure that collective bargaining functions properly, unfair
labour practices should be avoided and abandoned by both sides. The
negotiations between the management and the recognised trade union
will then be conducted in an atmosphere of goodwill, which will not be
vitiated by malpractices, and neither side would take advantage of the
other by resorting to unfair practices.
4. When negotiations result in an agreement, the terms of the contract
should be put down in writing and embodied in a document. When no
agreement is reached, the parties should agree to conciliation,
mediation or arbitration. If no settlement is arrived at even then, the
workers should be free to go on a strike, and the employers should be
at liberty to declare a lockout. To restrict this right is to inhibit and
defeat the very process of collective bargaining.
5. Once an agreement is reached, it must be honoured and fairly
implemented. No strike or lockout should be permitted in respect of
issues which have already been covered in the contract; and the trade
union should not be allowed to raise fresh demands.
6. A provision for arbitration should be incorporated in the agreement,
which should become operative when there is any disagreement on the
interpretation of its terms and conditions. The disputes arising out of
the agreement should be referred to an agreed third party with a view
to arriving at a final and binding decision.
In order to ensure that collective bargaining becomes more effective in
India than what it is at present, the Indian Institute of Personnel
Management has suggested that the following prerequisites needs to
be developed-
1. A truly representative, enlightened and strong trade union should
come into being and should function on strictly constitutional lines;
2. There should be progressive and strong management which is
conscious of its obligations and responsibilities to the owners of the
business, to the employees, the consumers and the country;
3. There should be unanimity between labour and management on the
basic objectives of the organisation and of the workers, and a mutual
recognition of their rights and obligations;
4. When there are several units of the company, there should be
adequate delegation of authority to the local management; and
A fact-finding approach and a willingness to use new tools – for
example, industrial engineering — should be adopted for the solution
of industrial problems.
These conditions must necessarily exist if collective bargaining is to
become meaningful and effective. If any or all of them do not exist, the
obstacles should be removed by legislative enactments or by the
adoption of other suitable measures.
The National Commission on Labour on Collective
Bargaining:
The recommendations of the 1st National Commission on
Labour (1969) on collective bargaining are reproduced
below:
1. In the absence of arrangements for statutory recognition of unions
except in some States and provisions which required employers and
workers to bargain in ‘good faith,’ it is no surprise that reaching of
collective agreements has not made much headway in our country.
Nonetheless, the record of collective agreements has not been as
unsatisfactory as it is popularly believed. Its extension to a wider area
is certainly desirable.
2. There is a case for shift in emphasis and increasingly greater scope
for and reliance on collective bargaining. Any sudden change replacing
adjudication by a system of collective bargaining is neither called for
nor is practicable. The process has to be gradual. A beginning has to
make in the move towards collective bargaining by declaring that it
will acquire primacy in the procedure of settling industrial disputes.
3. Conditions have to be created to promote collective bargaining. The
most important among them is statutory recognition of a
representative union as the sole bargaining agent. The place which
strikes / lockout should have in the overall scheme of industrial
relations needs to be defined; collective bargaining cannot exist
without the right to strike / lockout.

13. Collective Bargaining – Conclusion:

Not only is there little genuine voluntary collective bargaining in
Indian industry, but that little is at an early stage of development.
Whatever, collective bargaining emerged initially has been purely a
matter between the plant level union and the plant management. The
negotiations either at the state or at the industry level are yet not
frequent. The collective bargaining has not decentralised beyond the
plant level because crafts unions are absent.
There are three important reasons as to why collective
bargaining has not gone beyond the plant level:
(a) The varying sizes of the plants / firms and the consequent
dissimilarities in productiveness and technologies which do not permit
uniform employment conditions;
(b) The absence of homogeneous labour market owing to lack of
uniform skills and pattern of training which does not promote free
mobility of labour market owing to lack of uniform skills and pattern
of training which does not promote free mobility of labour so that,
uniform employment conditions could be evolved for the industry as a
whole; and
(c) The plant union leadership which at present enjoys enormous
powers and faces prospects of political climb is reluctant to get
integrated into an industry wise union where its powers are likely to be
restricted.