collective bargaing

COLLECTIVE BARGAINING

Collective Bargaining is a process involving discussions and negotiations

between two groups representing Labour and Management regarding terms of

employment. Collective Bargaining, a collective and continuous process,

involves formation of bargaining agreements and the implementations of such an

agreement. It is a flexible approach that attempts in achieving peace and

discipline in the Industry. The principle of ‘give and take’ has been infused in the

principle of Collective Bargaining. As workers mainly in the formal sector are

organized, collective bargaining is more commonly in vogue in the formal sector.

Collective bargaining is a technique that has been adopted by the unions and the

managements to reconcile their conflicting interests. It is called ‘collective’

because the employees as a group, select representatives to meet and discuss

differences with the employer. It is called 'collective' also because both the

employer and the employee act as a group rather than as individuals. It is known

as 'bargaining' because the method of reaching an agreement involves

proposals and counter proposals, offers and counter offers and other

negotiations.

Through discussions each party learns more about each other and

misunderstandings are often removed. Although all major differences might not

always be sorted out collective bargaining helps in resolving many minor

differences and there are many cases in which even major disputes have been

settled without work stoppage or outside intervention. Accordingly role of

collective bargaining in conflict resolution is very significant.

Thus collective bargaining:

is a collective process in which representatives of both the management

and employees participate.

is a continuous process which aims at establishing stable relationships

between the parties involved.

not only involves the bargaining agreement, but also involves the

implementation of such an agreement.

Prepared by Mrs. Neha Rathi Faculty of KKPIMS

attempts in achieving discipline in the industry

is a flexible approach, as the parties involved have to adopt a flexible

attitude towards negotiations.

DEFINITION OF COLLECTIVE BARGAINING

Donovan Commission “ A right which is and should be the prerogative of every worker in democratic society”.

Byar & Rue (1991) “ CB is a process that involves the negotiation, drafting, administration and interpretation of a written agreement between an employer and a union for a specific period of time”.

J.T. Dunlop & J.T. Healey “ CB as a mixture of a poker game combining deception, bluff, luck and ability”.

EVOLUTION 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"

CB rose and grew with the trade union movement. Thus Roots of CB lie in Great

Britain where it developed in response to the conditions created by the Industrial

Revolution.

Along with trade unions, the idea of bargaining collectively gained strength in the

early part of the 18th Century.

Initially, the negotiations were carried out at plant level.

By early 1900, industry and national level agreements became quite common.

The idea spread across to France, Germany, and USA. And today, through the

process of CB, organizations have learnt to cope with industrial conflict.

Characteristics OF COLLECTIVE BARGAINING

1. Not equivalent to collective agreement because collective bargaining refers to the process while collective agreement to the possible result.

2. It’s a method use by trade unions to improve the terms and conditions of employment of their members.


3. It seeks to restore the unequal bargaining position between employer and employee.

4. Where it leads to an agreement, it modifies rather than replaces the individual contract of employment.

It is a group process, wherein one group, representing the employers, and the other, representing the employees, sit together to negotiate terms of employment.

Negotiations form an important aspect of the process of collective bargaining i.e., there is considerable scope for discussion, compromise or mutual give and take in collective bargaining.

Collective bargaining is a formalized process by which employers and independent trade unions negotiate terms and conditions of employment and the ways in which certain employment-related issues are to be regulated at national, organizational and workplace levels.

Collective bargaining is a process in the sense that it consists of a number of steps. It begins with the presentation of the charter of demands and ends with reaching an agreement, which would serve as the basic law governing labor management relations over a period of time in an enterprise. Moreover, it is flexible process and not fixed or static. Mutual trust and understanding serve as the by products of harmonious relations between the two parties.

It a bipartite process. This means there are always two parties involved in the process of collective bargaining. The negotiations generally take place between the employees and the management. It is a form of participation.

Collective bargaining is a complementary process i.e. each party needs something that the other party has; labor can increase productivity and management can pay better for their efforts.

Collective bargaining tends to improve the relations between workers and the union on the one hand and the employer on the other.

Collective Bargaining is continuous process. It enables industrial democracy to be effective. It uses cooperation and consensus for settling disputes rather than conflict and confrontation.

Collective bargaining takes into account day to day changes, policies, potentialities, capacities and interests.

It is a political activity frequently undertaken by professional negotiators.

TYPES OF BARGAINING


1. Conjunctive/Distributive Bargaining

Here, the parties try to maximize their respective gains. In this method, the

parties try to settle economic issues through a zero-sum game. Zero-sum game

is where ‘my gain is your loss and your gain is my loss’. Neither party is willing to

yield an inch.

2. Co-operative Bargaining

Both parties are more open to coming down from their high horses and co-

operating. They are willing to negotiate the terms of employment in a flexible

way. This willingness is because of recession and the need to be able to survive

in such difficult times. This would not be possible without each other’s support

and hence co-operative bargaining.

TELCO and Ashok Leyland resorted to co-operative bargaining when the

automobile sector was going through a period of recession. Employees may now

be willing to accept a cut in wages in return for job security. Management may

also agree to modernize and bring in new technology and invest in marketing

efforts in a phased manner.

3. Composite Bargaining

Workers tend to argue that productivity bargaining increases their

workload. Rationalization, introduction of high technology, tight productivity

norms hit the unions and workers below the belt. As a result, workers tend to

favour composite bargaining. In this method, labour bargains for wages as usual.

In addition, they also bargain for such issues that, if permitted, may result in

lower employment in some other plant, diluting the bargaining powers of unions.

E.g. Workers demand further equity in matters relating to work norms,

employment levels, manning standards, environmental hazards, sub-contracting

clauses, etc.

We see that workers are no longer solely interested in the monetary aspects to

the exclusion of work related matters.

Through composite bargaining, unions are able to prevent the dilution of their

powers and ensure justice to workers by putting certain limits on the freedom of


employers.

For the employer, this is the lesser evil when compared to strikes and lockouts.

FUNCTIONS OF COLLECTIVE BARGAINING

1. A market or economic function It determines the terms labor will continue to be supplied to a company by its present employees or will be supplied in the future by newly hired workers.

2. A governmental function Bargaining relationship is seen as a mutual dependency of the parties concerned and the power of each to veto the acts of the other.

3. A decision making function CB allows the workers through their union representatives to participate in the determination of the policies which guide and rule their working lives.

IMPORTANCE OF COLLECTIVE BARGAINING

Collective bargaining includes not only negotiations between the employers and

unions but also includes the process of resolving labor-management conflicts.

Thus, collective bargaining is, essentially, a recognized way of creating a system

of industrial jurisprudence. It acts as a method of introducing civil rights in the

industry, that is, the management should be conducted by rules rather than

arbitrary decision making. It establishes rules which define and restrict the

traditional authority exercised by the management.

Importance to employees

Collective bargaining develops a sense of self respect and responsibility among

the employees.

It increases the strength of the workforce, thereby, increasing their bargaining

capacity as a group.

Collective bargaining increases the morale and productivity of employees.


It restricts management’s freedom for arbitrary action against the employees.

Moreover, unilateral actions by the employer are also discouraged.

Effective collective bargaining machinery strengthens the trade unions

movement.

The workers feel motivated as they can approach the management on various

matters and bargain for higher benefits.

It helps in securing a prompt and fair settlement of grievances. It provides a

flexible means for the adjustment of wages and employment conditions to

economic and technological changes in the industry, as a result of which the

chances for conflicts are reduced.

Importance to employers

It becomes easier for the management to resolve issues at the bargaining level

rather than taking up complaints of individual workers.

Collective bargaining tends to promote a sense of job security among employees

and thereby tends to reduce the cost of labor turnover to management.

Collective bargaining opens up the channel of communication between the

workers and the management and increases worker participation in decision

making.

Collective bargaining plays a vital role in settling and preventing industrial

disputes.

Importance to society

Collective bargaining leads to industrial peace in the country.

It results in establishment of a harmonious industrial climate which supports

which helps the pace of a nation’s efforts towards economic and social

development since the obstacles to such a development can be reduced

considerably.

The discrimination and exploitation of workers is constantly being checked.


It provides a method or the regulation of the conditions of employment of those

who are directly concerned about them.

COLLECTIVE BARGAINING PROCESS

The collective bargaining process comprises of five core steps:

Prepare: This phase involves composition of a negotiation team. The negotiation

team should consist of representatives of both the parties with adequate

knowledge and skills for negotiation. In this phase both the employer’s

representatives and the union examine their own situation in order to develop

the issues that they believe will be most important. The first thing to be done is to

determine whether there is actually any reason to negotiate at all. A correct

understanding of the main issues to be covered and intimate knowledge of

operations, working conditions, production norms and other relevant conditions

is required.

Discuss: Here, the parties decide the ground rules that will guide the

negotiations. A process well begun is half done and this is no less true in case of

collective bargaining. An environment of mutual trust and understanding is also

created so that the collective bargaining agreement would be reached.

Propose: This phase involves the initial opening statements and the possible

options that exist to resolve them. In a word, this phase could be described as

‘brainstorming’. The exchange of messages takes place and opinion of both the

parties is sought.


Bargain: Negotiations are easy if a problem solving attitude is adopted. This

stage comprises the time when ‘what ifs’ and ‘supposals’ are set forth and the

drafting of agreements take place.

Settlement: Once the parties are through with the bargaining process, a

consensual agreement is reached upon wherein both the parties agree to a

common decision regarding the problem or the issue. This stage is described as

consisting of effective joint implementation of the agreement through shared

visions, strategic planning and negotiated change.

COLLECTIVE BARGAINING AGREEMENT

Collective bargaining generally includes negotiations between the two parties

(employees’ representatives and employer’s representatives). Collective

bargaining consists of negotiations between an employer and a group of

employees that determine the conditions of employment. Often employees are

represented in the bargaining by a union or other labor organization.

The result of collective bargaining procedure is called the collective bargaining

agreement (CBA).


Collective agreements are written documents regarding working conditions and

terms of employment concluded between an employer and the union.

The CBA maybe described in a number of ways. It is a compromise between the

self-interest of the two parties that they have agreed upon as a guide to their

relationships on certain matters for a specified period of time.

The contents of the agreement would depend on what is agreed upon and on

the subject matter. The following examples are of some general application:

The date of commencement of the agreement

Its duration - when it will terminate or may be terminated, and how it can

be terminated

A definition of terms which may otherwise be ambiguous

The procedure for settling disputes regarding interpretation, as well as

other disputes. This may also include the issue of trade union action and

lock-out, i.e. in what circumstances such action may or may not be

permitted.

The consequences in the event of breaches of the agreement

As regards wages, exactly how conversion of employees' wages to the

new scales is to be effected.

The contents of CBA vary considerably from plant to plant and from industry to

industry. Usually, they cover items relating to wages, working conditions, working

hours, fringe benefits and job security.

Legally, a CBA binds only the parties to it and the persons on behalf of whom

they were acting. It often happens that all workers in a given undertaking may

not belong to the union which signed the agreement or they are non – unionized.

Therefore, in a number of countries the law provides for compulsory coverage of

agreements or settlements on employers and all the employees in an

establishment. The implementation and supervision of collective agreements, in


some countries, depends on the good faith of the parties. They are “gentlemen’s

agreements” without any legal sanction, for instance, in the United Kingdom.

In India, there are three types of agreements, namely

1. voluntary agreements,

2. settlements, and

3. Consent awards.

Collective agreements are voluntary when they are a result of direct

negotiations between the parties on themselves for their implementation.

Settlements are collective agreements that are backed by the interventions of

government agencies. Consent awards are agreements reached between the

parties when the matters in dispute are under reference to industrial tribunals/

courts.

CBA may be in the form of procedural agreements or substantive

agreements.

Procedural agreements deal with the relationship between workers and

management and the procedures to be adopted for resolving individual or group

disputes. This will normally include procedures in respect of individual

grievances, disputes and discipline. Frequently, procedural agreements are put

into the company rule book which provides information on the overall terms and

conditions of employment and codes of behavior.

Substantive agreement deals with specific issues, such as basic pay, overtime

premiums, bonus arrangements, holiday entitlements, hours of work, etc. In

many companies, agreements have a fixed time scale and a collective

bargaining process will review the procedural agreement when negotiations take

place on pay and conditions of employment.

When agreement is reached one of the following two courses may be adopted:


- Set out the agreement reached in a letter to the union and, on confirmation,

prepare a draft agreement.

- Alternatively provide the union with a draft agreement. This would be the better

course of action as the actual agreement reached will be clearer. It also leaves

less room for further negotiations between the time agreement is reached and

the draft agreement is approved.

The signing of an agreement does not ensure its successful implementation.

Managers and supervisors should be acquainted with the agreement through the

most appropriate means. A combination of written and oral communication is

often useful.

CONDITIONS FOR SUCCESSFUL COLLECTIVE BARGAINING

Trade Union Recognition

The existence of the freedom of association does not necessarily mean that

there would automatically be recognition of unions for bargaining purposes.

Especially in systems where there is a multiplicity of trade unions, there should

be some pre-determined objective criteria operative within the industrial relations

system to decide when and how a union should be recognised for collective

bargaining purposes. The accepted principle is to recognise the most

representative union, but what criteria is used to decide it and by whom may

differ from system to system. In some systems the issue would be determined by

requiring the union to have not less than a stipulated percentage of the workers

in the enterprise or category in its membership. The representativeness may be

decided by a referendum in the workplace or by an outside certifying authority

(such as a labour department or an indepenedent statutory body). There could

be a condition that once certified as the bargaining agent, there cannot be a

change of agent for a prescribed period (e.g. one or two years) in order to

ensure the stability of the process.

Observance of Agreements


Especially in developing countries where there is a multiplicity of unions, unions

are sometimes unable to secure observance of agreements by their members.

Where a labour law system provides for sanctions for breaches of agreements,

the labour administration authorities may be reluctant to impose sanctions on

workers. Where there is frequent non-observance of agreements or

understandings reached through the collective bargaining process, the party not

in default would lose faith in the process.

Support of Labour Administration Authorities

Support by the labour administration authorities is necessary for successful

collective bargaining. This implies that they will:

Provide the necessary climate for it. For instance, they should provide effective

conciliation services in the event of a breakdown in the process, and even

provide the necessary legal framework for it to operate in where necessary, e.g.

provision for the registration of agreements, will not support a party in breach of

agreements concluded consequent to collective bargaining.

As far as is practicable, secure observance of collective bargaining agreements.

Provide methods for the settlement of disputes arising out of collective

bargaining if the parties themselves have not so provided.

Good Faith

Collective bargaining is workable only if the parties bargain in good faith. If not,

there will be only the process of bargaining without a result viz. an agreement.

Good faith is more likely where certain attitudes are shared among employers,

workers and their organizations e.g. a belief and faith in the value of compromise

through dialogue, in the process of collective bargaining, and in the productive

nature of the relationship collective bargaining requires and develops. Strong

organizations of workers and employers contribute to bargaining in good faith,


because there would be some parity in the bargaining strength of the two

parties.

Proper Internal Communication

Both the management and union should keep their managers and members

respectively well informed, as a lack of proper communication and information

can lead to misunderstandings and even to strikes. Sometimes managers and

supervisors who are ill-informed may inadvertently mislead workers who work

under them about the current state of negotiations, the management's objectives

and so on. In fact, it is necessary to involve managers in deciding on objectives

and solutions, and such participation is likely to ensure greater acceptance - and

therefore better implementation - by them.

TRENDS IN COLLECTIVE BARGAINING

In recent years, in India as in almost elsewhere, collective bargaining has

faced the challenges stemming from falling trade union membership, increasing

individualization of labour relations and the difficult quest for greater

competitiveness and flexibility in a situation of economic globalization. In this

context, certain trends in India could be enumerated as follows:

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.

Bargaining at the enterprise level is increasing

Other forms of bargaining and new issues

Bargaining in the public sector largely staying at the same level.


Other forms of bargaining like individual employer-employee bargaining,

work councils, bargaining on individual work contracts, bargaining directly

with workers’ representatives, work place consultations based on

performance targets etc. are on the increase.

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.

PERCEPTIONS ON COLLECTIVE BARGAINING

CB essentially means negotiations between the labour and management

CB should just not stop at the negotiations but also go on to be

implemented; otherwise the entire process of CB will be rendered futile.

It is mostly the formal sector that benefits out of the CB process.

Once both the parties know what they want, negotiations become easier

and better.

Obviously all the above mentioned conditions are required successful for

CB but the most essential among them is the “good faith”

CB agreement is a written format and it is essential because that acts as

a legal framework and as a guide to their relationships on certain matters

for a specified period of time.

Today because of the weakening unions, collective bargaining is not

highly practiced, yet at the other end there are organisations which take

care of the workers well enough so that collective bargaining is not highly

required.

Collective bargaining in India

In India, the workers working in the formal sector, who constitute only seven

percent 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 organized 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.

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 9th January 2002 provides for reducing multiplicity of Trade

Unions, orderly growth of Trade Unions and promoting internal democracy.

In India, trade unions gained prominence much later – only after 1900. In 1918,

Gandhiji - as the leader of the Ahmedabad textile workers – advocated the

resolution of conflict through CB agreements.

But the idea gathered interest only after the Second World War. The

Government of that time took steps like setting up of machinery for negotiations,

conciliation and arbitration. The trade union movement and also CB agreements

became popular after Indian independence.

Moving from agreements at the plant level, such agreements spread to

industries such as chemicals, petroleum, tea, coal, oil and aluminum. In ports


and docks, banking and insurance, collective agreements were arrived at, right

at the national level.

FACTORS AFFECTING CB

1. Use of contingency worker and employee leasing. 2. Technological changes 3. International forces- less expensive foreign worker. 4. Economic conditions 5.Heavily governed by its political forces and legal regulations


collective bargaing

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