COLLECTIVE BARGAINING

Introduction and Meaning of Collective Bargaining

Good relations between the employer and employees are essential

for the success of an industry.In order to maintain good industrial
relations, it is necessary that industrial disputes are settled quickly
and amicably.One of the efficient means of resolving industrial
disputes and deciding the employment conditions is Collective
Bargaining. (C.B.)

C.B. is a process in which the representatives of the employer and

of the employees meet and attempt to negotiate a contract
governing the employer-employee union relationship.

C.B. involves discussion and negotiation between two groups as to

the terms and conditions of employment.

It is called ‘collective ’ 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.

C.B. is a rational process which appeals to facts and to logic,

reconciles conflicting interests in the light of comman interests of
both parties.It is a bipartite and dynamic process.

C.B.plays a significant role in improving labour- management

relations and in ensuring industrial harmony.The negotiations for
C.B. 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

1
them.Through discussions and interactions, each party learns more
about the other, and misunderstandings are often removed.

Origin

The phrase C.B.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 C.B. emerged as a result of
industrial conflict and the growth of the trade union movement.

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.

Therefore, C.B. is a process of negotiation by collective action by

a body of workers regarding their terms and conditions of service
such as wage leave, norms of employment, gratuity, bonus and
other benefits.

The objective is to harmonise labour relations and to promote

industrial peace.

Definition of Collective Bargaining

What is Collective Bargaining?

There are two parties ------- workers and employer in an industrial

establishment. Both have conflicting interests. Workers always
desire higher wages for the service rendered and also better
working conditions at the work-place. On the other hand, employer
expects higher and higher productivity in return of the wages paid.
There are always some differences between the two groups on
variety of matters. These differences/ disputes need settlement to

2
harmonise the industrial relations in the organization.Through
collective bargaining, differences/ disputes are resolved on a
negotiating table.

The term collective bargaining has been defined as under :

According to Dale Yoder , “ Collective Bargaining is the term used

to describe a situation in which the essential conditions of
employment are determined by a bargaining process undertaken by
representatives of a group of workers on the one hand and one or
more employers on the other hand.’’

In the words of Edwin B.Flippo, “C.B. is a process in which the

representatives of 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.”

According to John T. Dunlop, the term collective bargaining

describes multiple meanings :
“C.B. is (i) a system which establishes, revises and administers
many of rules which govern the workers’ place of work ;
(ii) a procedure which determines the quantum of
compensation which employees should receive and which
influences the distribution of economic benefits ;
(iii) a method of settling disputes and of determining, after
its expiry, whether a dispute should be reopened or whether a strike
or a lock-out should be resorted to or not.”

According to Michael J. Jucius, “ C.B. refers to 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.”

3
Objectives of Collective Bargaining

T he main objectives of collective bargaining are as follows:

(i) To maintain cordial relations between the employer and the
employees.
(ii)To settle disputes/ conflicts relating to wages and working
conditions.
(iii)To protect the interests of workers through collective action.
(iv)To avoid third party intervention in matters relating to
employment.
(v)To resolve the differences between workers and management
through voluntary negotiations and arrive at a consensus.
(vi)To promote industrial democracy.

Features / Characteristics of Collective Bargaining

1- Collective Process : The representatives of both the

management and the employees participate in it. Employer is
representated by its delegates and , on the other side, employees
are representated by their trade union. Both the groups sit together
at the negotiating table and reach at some agreement acceptable to
both.
2- Continuous Process : It is a continuous process.It does not
commence with negotiations and end with an agreement.It
establishes regular and stable relationship between the parties
involved. It involves not only the negotiation of the contract, but
also the administration or application of the contract also.It is a
process that goes on for 365 days of the year.
3- Flexible and Mobile : It has fluidity. There is no hard and fast
rule for reaching an agreement. There is ample scope for
compromise. A spirit of give-and-take works unless final
agreement acceptable to both the parties is reached.
4- Bipartite Process : C.B. is a two party process. Both the parties
—employers and employees—collectively take some action.There

4
is no intervention of any third party. It is mutual give – and –take
rather than a take-it-or-leave it method of arriving at the settlement
of a dispute.
5- Dynamic : C.B. is a dynamic process because the way
agreements are arrived at, the way they are implemented, the
mental make-up of parties involved keeps changing. As a result,
the concept itself changes, grows and expands overtime. It is
scientific, factual and systematic.
6- Industrial Democracy : It is based on the principle of industrial
democracy where the labour union represent the workers in
negotiations with the employer or employers. It is a joint
formulation of company policy on all matters affecting the labour.
7- Complementary Process : C.B. is essentially a complementary
process, i.e., each party needs something which the other party has,
namely, labour can put greater productive effort and management
has the capacity to pay for that effort and to organize and guide it
for achieving the organizational objectives.
8- It is an Art : Collective bargaining is an art , an advanced form
of human relations.
9- Discipline in Industry: C.B. is an attempt in achieving and
maintaining discipline in the industry.
10- Industrial Juris prudence: It is an effective step in promoting
industrial jurisprudence.

Functions of Collective Bargaining

Over the past few decades, collective bargaining has come to be

accepted as a process of decision – making and as a mechanism for
balancing the power between the employers and the employees on
a case- by- case basis.

Prof. Arthur D. Butler has identified the functions of collective

bargaining under the following three heads :

5
 (1) C.B. as a technique of long- run social change.
(2) C.B. as a peace treaty between two parties in continual
conflict.
(3) C.B. as a system of industrial jurisprudence.

Functions of C.B.

Social Change Industrial Peace Industrial Democracy

1-Long- Run Social Change : C.B. in its broader aspect is not

confined only to the economic relations between employers and
employees. Perlman says, “ It is a technique whereby an inferior
social class or group carries on a never- slackening pressure for a
bigger share in the social soverneignty as well as for more welfare,
security and liberty for its individual msmbers. C.B. manifests
itself equally in politics, legislation, court litigation, government
administration, religion, education and propaganda.”
C.B. acts as an agent to bring about the social change,i.e., it
contributes towards the change in nteraction patterns, values and
normative system of the society at large.
The contribution of C.B. towards the process of social change
brings to light two important implications :

i. C.B. 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 recognized in other areas of decision- making.
ii. C.B. 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
attained a large measure of power and dignity.These gains
were not registered in one great revolutionary change, but

6
 rather step by step, with each clash between opposing parties
settled with a new compromise somewhat different from
previous settlement. Thus C.B. accomplishes long-run
stability on the basis of day by day adjustments in relation
between management and labour.

2- Peace Treaty : C.B. 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 demand depends, in part, on
how strong it is vis-à-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, and to build up its bargaining strength in anticipation of
the next power skirmish.’’ But in a majority of cases, C.B.
agreements are signed before either opponent fires a shot.

3- Industrial Juris prudence : C.B. creates a system of ‘industrial

jurisprudence’. It is a method of introducing civil rights into
industry,i.e., 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.
--- It is a rule- making or legislative process, in the sense that it
formulates the terms and conditions under which labour and
management will cooperate and work together over a certain stated
period.
--- It is an executive process, for both management and trade union
officials share the responsibility of enforing the rules.
--- It is a judicial process, for in every collective agreement there is
a clause/ provision regarding the interpretation of the agreement.

7
Scope of Collective Bargaining

There is no standard specification of what should not be included,

although certain issues are often sought to be excluded from C.B.
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 C.B. has increased tremendously in recent years, and

many new subjects have been included under it.

Randle adds : “The expansion in the scope of C.B. has been due to
various factors, namely :
(i) The growing strength of the unions which have
pressurized managements to include new subjects in the
agreements ;
.
(ii) Increased profits have led to a favourable response to
the demands of the employees ;
(iii) Increased prices alongwith increased production have
contributed to expansion in the subjects for C.B. ;
(iv) The liberal and sympathetic attitude evident in the
decisions of the courts and legislative enactments have
also favoured this expansion.’’

8
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 the 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
---management protection.

Union security : A union security clause means the extent to

which the contract protects the union in holding its membership.
This 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.
Worker security : This clause provides for seniority protection,
covering promotion, job assignment and lay-off.
Economic factors : The economic items include wages and the
fringe benefits.

The National Institute of Personnel Management, Calcutta

suggested the following subject- matter to be included in a
collective bargaining agreement :
i. The purpose of agreement, its scope and the definition of
important of important terms;
ii. The rights and responsibilities of the management and of
the trade union;

9
iii. Wages, bonus, production norms, leave, retirement
benefits and other benefits and terms & conditions of
service;
iv. Grievance redressal procedure ;
v. Methods of, and machinery for, the settlement of possible
future disputes;
vi. A termination clause.

More than 50 issues have been included in the collective

bargaining agreements.

The issues covered under agreements can be grouped in three

categories:
a) employment and working conditions;
b) labour welfare, labour recruitment and management
matters;
c) organizational matters.

The first two which cover wages, bonus, D.A., retirement

benefits, working hours, holidays with leave, supply of
subsidized 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.

Essential Prerequisites of Successful Collective

Bargaining

The following pre-requisites are essential for C.B. to be

successful :

10
 1. Existence of a strong representative trade union in the
industry that believes in constitutional means for settling
the disputes.
2. Existence of strong and enlightened management which
can integrate the different parties, i.e., employees, owners,
consumers and society or government.
3. Agreement on basic objectives of the organition between
the employer and the employees and on mutual rights &
liabilities should be there.
4. Existence of a fact- finding approach and willingness to
use new methods and tools for the solution of industrial
problems.
5. Negotiations should be based on facts and figures and both
the parties should adopt constructive approach.
6. Proper records for the problem should be maintained.
7. C.B. should be best conducted at plant level. It means if
there are more than one plant of the firm, the local
management should be delegated proper authority to
negotiate with the local trade union.
8. In order that C.B. functions properly , unfair labour
practices must be avoided by both the parties.
9. There must be change in the attitude of employers and
employees.They should realize that differences can be
resolved peacefully on negotiating table without the
assistance of third party.
10. No party should take rigid attitude. They should enter into
negotiation with a view to reaching an agreement.
11. When agreement is reached after negotiations, it must be
in writing incorporating all terms of the contract.
12. Once an agreement is reached, it must be honoured and
fairly implemented.
Stages And Bargaining Process

11
The C.B. process generally starts as soon as the charter of
demands is presented by the trade unions on behalf of their
members to the management. The provisions of existing
agreement continue till a new agreement is signed and enforced.
Usually , there are two stages in collective bargaining :
[A] The negotiation stage
[B] The stage of contract administration.

Negotiation Stage :

12