Chapter: 6 Collective Bargaining Rajidul Hoque
Collective Bargaining
Collective Bargaining is a process in which representatives of two groups (employers and employees) meet and
try to negotiate an agreement which specifies the nature of future relationship (pertaining to employment)
between the two. It is termed Collective because both the employer’s negotiators and the employees act as a
group rather than individuals. It is known as Bargaining because the method of reaching an agreement involves
proposals and counter-proposals, offers and counter offers. There should be no outsiders involved in the process
of collective bargaining.
According to Beach, ―Collective Bargaining is concerned with the relations between unions representing
employees and employers (or their representatives). It involves the process of union organization of employees;
negotiation, administration and interpretation of collective agreements covering wages, hours of work and other
conditions of employment; engaging in concerted economic action; and dispute settlement procedures.
According to Dale Yoder, ―Collective Bargaining is the term used to describe a situation in which the
essential conditions of employment are determined by bargaining process undertaken by representatives of a
group of workers on the one hand and of one or more employers on the other.
In the words of Flippo, ―Collective Bargaining is a process in which the representatives of a labour
organization and the representatives of business organization meet and attempt to negotiate a contract or
agreement, which specifies the nature of employee employer-union relationship.
Michael J. Jucious has defined collective bargaining as “a process by which employers, on the one hand, and
representatives of employees, on the other, attempt to arrive at agreements covering the conditions under which
employees will contribute and be compensated for their services”.
ILO Convention No. 154 defines collective bargaining as referring to:
“all negotiations which take place between an employer, a group of employers or one or more employers'
organisations, on the one hand, and one or more workers' organisations, 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 organisations and a workers' organisation or workers'
organisations.” (Article 2)
Objectives of Collective Bargaining
1. To maintain cordial relations between the employer and employees.
2. To protect the interests of the workers through collective action and by preventing unilateral actions from
being taken by the employer.
3. To ensure the participation of trade unions in industry.
4. To avoid the need for government intervention as collective bargaining is a voluntary collective process.
5. To promote Industrial democracy.
Features of Collective Bargaining
1. It is a group or collective action as opposed to individual action. It is initiated through the representatives of
the employees.
2. It is a flexible and dynamic process where-in no party adopts a rigid attitude.
3. It is a continuous process, which provides a mechanism for continuous negotiations and discussions
between management and the trade unions.
Chapter: 6 Collective Bargaining Rajidul Hoque
4. It is a voluntary process without any third-party intervention. Both workers and management voluntarily
participate in the negotiations, discuss and arrive at a solution. That is why it is known as a bipartite process
where workers’ representatives and management get an opportunity for clear, face-to-face communication.
5. It ensures industrial democracy at the workplace; it is a self-run government in action.
6. It is a two-way process. It is a mutual give and take rather than a take home all method of arriving at a
solution to a dispute.
Importance of Collective Bargaining
Collective Bargaining not only includes negotiation, administration and enforcement of the written contracts
between the employees and the employers, but also includes the process of resolving labour-management
conflicts. Thus, collective bargaining is a legally and socially sanctioned way of regulating in the public interest
the forces of power and influence inherent in organized labour and management groups.
Importance of Employees
Collective Bargaining helps the employees:
(i) To develop a sense of self-respect and responsibility among the employees.
(ii) To increase the strength of the workers. Their bargaining capacity as a group increases.
(iii) To increase the morale and productivity of employees.
(iv) To restrict management‘s freedom for arbitrary action against the employees. Unilateral actions by the
management are discouraged.
(v) To strengthen the trade union movement.
Importance to Employers
(i) The workers feel motivated as they can talk to the employers on various matters and bargain for higher
benefits. As a result, their productivity increases.
(ii) It is easier for the management to resolve issues at the bargaining table rather than taking up complaints of
employees individually.
(iii) Collective bargaining promotes a sense of job security among the employees and thereby tends to reduce
cost of labour turnover to management, employees as well as the society at large.
(iv) Collective bargaining opens up the channels of communications between the top and bottom levels of
organization which may be difficult otherwise.
Importance to society
Collective Bargaining helps the society:
(i) To attain industrial peace in the country.
(ii) To establish a harmonious industrial climate which supports the pace of a nation‘s efforts towards economic
and social development since the obstacles to such development can be largely eliminated or reduced. As a
vehicle of industrial peace or harmony, collective bargaining has no equal.
Chapter: 6 Collective Bargaining Rajidul Hoque
(iii) To extend the democratic principle from the political to the industrial field. It builds up a system of
industrial jurisprudence by introducing civil rights in industry and ensures that management is conducted by
rules rather than by arbitrary decisions.
(iv) To check the exploitation of workers by the management.
(v) To distribute equitably the benefits derived from industry among all the participants including the
employees, the unions, the management, the customers, the suppliers and the public.
Types of Collective Bargaining
1. Conjunctive or Distributive Bargaining: In this form of collective bargaining, both the parties the
employee and the employer try to maximize their respective gains. It is based on the principle, “my gain is
your loss, and your gain is my loss” i.e. one party wins over the other. The economic issues such as wages,
bonus, other benefits are discussed, where the employee wishes to have an increased wage or bonus for his
work done, whereas the employer wishes to increase the workload and reduce the wages.
2. Co-operative or Integrative Bargaining: Both the employee and the employer sit together and try to
resolve the problems of their common interest and reach to an amicable solution. In the case of economic
crisis, such as recession, which is beyond the control of either party, may enter into a mutual agreement with
respect to the working terms. For example, the workers may agree for the low wages or the management
may agree to adopt the modernized methods, so as to have an increased production.
3. Productivity Bargaining: This type of bargaining is done by the management, where the workers are given
the incentives or the bonus for the increased productivity. The workers get encouraged and work very hard
to reach beyond the standard level of productivity to gain the additional benefits. Through this form of
collective bargaining, both the employer and the employee enjoy the benefits in the form of increased
production and the increased pay respectively.
4. Composite Bargaining: In this type of collective bargaining, along with the demand for increased wages
the workers also express their concern over the working conditions, recruitment and training policies,
environmental issues, mergers and amalgamations with other firms, pricing policies, etc. with the intention
to safeguard their interest and protect the dilution of their powers.
Necessary Conditions for Effective Collective Bargaining
1. Favorable Political and Social Climate: That existence of a favorable political and social climate is a
necessary condition for effective collective bargaining, is well confirmed by the history of collective bargaining
Chapter: 6 Collective Bargaining Rajidul Hoque
worldwide. Collective bargaining has made headways in settling industrial disputes in the countries where it has
been duly supported by the government and favored by the public.
2. Trade Unions: Like in a democratic country like ours, employees should have fundamental rights to form
trade unions for protecting their interests. More the stronger trade union, more effective collective bargaining
and vice versa. The employer should also recognize a trade union and its representatives.
3. Problem Solving Attitude: Both the parties while negotiating should adopt a problem solving, or say
compromising attitude to reach an agreement. Neither party should adopt an adamant or fighting aide. The
negotiating teams should follow give and take approach. It means that one party may win concessions over the
other depending upon their relative strengths.
4. Availability of Data: Data and information serve as inputs for decision-making. Hence, the availability of
required data serves as a pre-requisite tor successful collective bargaining. While the employer Ike available
data required for collective discussion, their union representatives also must accept and trust on data supplied by
the employer.
5. Continuous Dialogue: Collective bargaining sometimes may not reach to an agreement. In- stead, there may
be deadlock, or say bargaining impasse. In such case, dialogue must not end but continue with problem solving
approach. Keeping the controversial issues aside for the time being may help narrow down disagreement and
continue the dialogue. Possibility for agreement may increase with continuation of dialogue.
Process of Collective Bargaining
1. Preparation: At the very first step, both the representatives of each party prepare the negotiations to be
carried out during the meeting. Each member should be well versed with the issues to be raised at the
meeting and should have adequate knowledge of the labor laws. The management should be well prepared
with the proposals of change required in the employment terms and be ready with the statistical figures to
justify its stand. On the other hand, the union must gather adequate information regarding the financial
position of the business along with its ability to pay and prepare a detailed report on the issues and the
desires of the workers.
2. Discuss: Here, both the parties decide the ground rules that will guide the negotiations and the prime
negotiator is from the management team who will lead the discussion. Also, the issues for which the
meeting is held, are identified at this stage.
Chapter: 6 Collective Bargaining Rajidul Hoque
3. Propose: At this stage, the chief negotiator begins the conversation with an opening statement and then both
the parties put forth their initial demands. This session can be called as a brainstorming, where each party
gives their opinion that leads to arguments and counter arguments.
4. Bargain: The negotiation begins at this stage, where each party tries to win over the other. The negotiation
can go for days until a final agreement is reached. Sometimes, both the parties reach an amicable solution
soon, but at times to settle down the dispute the third party intervenes into the negotiation in the form of
arbitration or adjudication.
5. Settlement: This is the final stage of the collective bargaining process, where both the parties agree on a
common solution to the problem discussed so far. Hence, a mutual agreement is formed between the
employee and the employer which is to be signed by each party to give the decision a universal acceptance.
Element of collective bargaining
There are three elements in the system of collective bargaining;
1) Issues for consideration: - the issues pertaining to union recognition and union security, for consideration
when the organization of workers is weak and they struggle for recognition by the employers. The issues
which are generally taken up for consideration. Are on several aspects of employment relationship, such as
wages, fringe benefits, working conditions and personnel matters such as promotion, transfer, discharge and
dismissal.
2) The procedure of consideration: - the bargaining machinery and procedure for consideration of various
issues differ in relation to whether the two parties employers, managements and workers and the unions,
conduct bargaining on their own are whether a third party, such as govt. interviews to bring about a
settlement between them.
3) Collective agreements and their implementations:- the term collective agreement means all agreements
in writing regarding working conditions and terms of employment concluded between an employer, a group
of employers or one or more employers organizations, on the one hand, and one or more representatives
workers organizations or, in the absence of such organizations, the representatives of the workers duly
elected and authorised them in accordance with national law and regulations on the other.
Pre-requisites for Collective Bargaining
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.