COLLECTIVE BARGAINING

Introduction:
An individual is free to bargain for himself and safeguard his own interest. The phrase collective bargaining
consists of two words collective which implies group action through its representative and bargaining
which suggests negotiation. The phrase therefore implies collective negotiations of a contract between
managements representatives on one side and those of the workers on the other.
Objective:
To harmonize labour relations and promote industrial enterprise peace by creating equality of bargaining
power between the labour and the management.
Definition:
Collective bargaining is an agreement between a single employer or an association of employers on the
one hand and a labour union on the other, which regulates the terms and conditions of employment.
-Tudwig Teller
Collective bargaining is a negotiation about working conditions and terms of employment between an
employer and a group of employees or one or more employees organizations with a view to reaching
agreement wherein the terms serve as a code of defining the rights and obligations of each party in their
employment relations with one another, fix a large number of detailed conditions of employment and
derivatives, validity, none of the matters it deals with, can in normal circumstances be given as a ground for
a dispute concerning an industrial worker.
-ILO
TRADE UNION
A trade union or labor union is an organization of workers that have banded together to achieve
common goals such as better working conditions. The trade union, through its leadership, bargains with the
employer on behalf of union members (rank and file members) and negotiates labour contracts (collective
bargaining) with employers. This may include the negotiation of wages, work rules, complaint procedures,
rules governing hiring, firing and promotion of workers, benefits, workplace safety and policies. The
agreements negotiated by the union leaders are binding on the rank and file members and the employer
and in some cases on other non-member workers.
ACTIVITIES
Over the last three hundred years, many trade unions have developed into a number of forms, influenced
by differing political objectives. Activities of trade unions vary, but may include:

Provision of benefits to members: Early trade unions, like Friendly Societies, often provided a
range of benefits to insure members against unemployment, ill health, old age and funeral
expenses. In many developed countries, these functions have been assumed by the state;
however, the provision of professional training, legal advice and representation for members is still
an important benefit of trade union membership.
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Collective bargaining: Where trade unions are able to operate openly and are recognized by
employers, they may negotiate with employers over wages and working conditions.
Industrial action: Trade unions may enforce strikes or resistance to lockouts in furtherance of
particular goals.
Political activity: Trade unions may promote legislation favorable to the interests of their members
or workers as a whole. To this end they may pursue campaigns, undertake lobbying, or financially
support individual candidates or parties (such as the Labour Party in Britain) for public office.

Prerequisites of collective bargaining:

1. Existence of a truly representative and strong trade union.
2. Existence of a progressive management.
3. Absence of any external pressure either on the employer or on the worker to come to the kind of
agreement desired by the authority exerting the pressure.
4. Existence of a measure of parties of strength or bargaining power between the trade union and
management.
5. Delegation of authority to an officer involved in negotiation.
6. Acceptance of a fact finding approach by the management as well as the union.
Characteristics of collective bargaining:
1. It is a group action as opposed to individual action and is initiated through the representatives of
workers.
2. It is flexible and mobile and not fixed or static. It has fluidity and ample scope for compromise for a
mutual give and take, before the final agreement is reached or the final settlement is arrived at.
3. It is a two party process. It is mutual give and take rather than take-it or leave-it method of arriving
at the settlement of a dispute. Both parties are involved in it.
4. It is a continuous process which provides mechanism for continuing and organized relationship
between management and trade union.
5. It is dynamic 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.
6. It is an industrial democracy at work; the government of labour with the consent of the governed
the worker.

PRINCIPLES OF COLLECTIVE BARGAINING

FOR THE MANAGEMENT
The management must develop and consistently follow a realistic labour policy, which
should be accepted and carried out by its representatives.
The management must grant recognition to the trade union/association without any
reservations and accept it as a constructive force in the organization.

The management should not assure the employee goodwill will always exist. It should
periodically examined the rule and regulations to determine the attitudes and degree of
comfort of its employees and gain their goodwill and co-operation.
The management should extend fair treatment to the trade union in order to make it a
responsible and conservative body.
The management should not wait for the trade union to bring employee grievances to its
notice but should rather create the conditions in which employees can approach the
management themselves, without involving the trade union.
The management should deal only with the one trade union or association in the
organization.
While weighing economic consequencies of collective bargaining the management should
place greater emphasis on social considerations.

FOR TRADE UNION

In views of the rights granted to organized labour, the trade union should eliminate
racketeering and other undemocratic practices within their own organization.
Trade union leaders should appreciate the economic implications of collective
bargaining for their demands are generally met from the income and resources of the
organizations in which their members are employed.
Trade union leaders should not imagine that their only function is to secure higher
wages, shorter hours of work and better working conditions for their members. 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.
Trade union leaders should assist in the removal of such restrictive rules and
regulations that are likely to increase costs and prices and reduce the amount that can
be paid out as wages.
Trade union leaders should restore to strike only when all other methods of the
settlement of a dispute have failed.
FOR THE BOTH UNION AND MANAGEMENT
Collective bargaining should be made an education as well as bargaining process. It should
offer to trade union leaders an opportunity to present to the management the wants, desires,
grivances, and 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 it is
confronted with.
The management and trade union should look upon collective bargaining as a means of finding
the best possible solutions and not as a means of acquiring as much as one can while
conceding the minimum. There must be an honest attempt at solving problems.
Both parties to a dispute should command the respect of each other and should have enough
bargaining power to enforce the terms of agreement that they may arrive at.
There must be mutual confidence and good faith, and a desire to make collective bargaining
effective in practice.
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There should be an honest, able and responsible leadership, for only this kind of leadership will
make collective bargaining effective and meaningful.
The two parties should meticulously observe and abide by all the national and state laws which
are applicable to collective bargaining.
Both parties must bear in mind the fact that the collective bargaining is, in a sense, a form of
price fixation and that the success of any collective bargaining depends, in the final 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.

LABOUR AND EMPLOYMENT LAWS OF INDIA

LABOUR is any valuable service rendered by a human agent in the production of wealth, other
than accumulating and providing capital.
The labour enactments in India, is divided into 5 broad categories, viz. Working
Conditions, Industrial Relations, Wage, Welfare and Social Securities.The enactments are all based
upon Constitution of India and the resolutions taken in ILO conventions from time to time.
Indian labour law refers to laws regulating employment. There over fifty national laws
and many more state-level laws. Traditionally Indian Governments at federal and state
level have sought to ensure a high degree of protection for workers through enforesement
of labour laws.
While conforming to the essentials of the laws of contracts, a contract of employment
must adhere also to the provisions of applicable labour laws and the rules contained under
the Standing Orders of the establishment.
Indian labour laws divide industry into two broad categories:
1. Factory
Factories are regulated by the provisions of the Factories Act, 1948 (the said Act). All
Industrial establishments employing 10 or more persons and carrying manufacturing
activities with the aid of power come within the definition of Factory. The said Act
makes provisions for the health, safety, welfare, working hours and leave of workers in
factories. The said Act is enforced by the State Government through their Factory
inspectorates. The said Act empowers the State Governments to frame rules, so that
the local conditions prevailing in the State are appropriately reflected in the
enforcement. The said Act puts special emphasis on welfare, health and safety of
workers. The said Act is instrumental in strengthening the provisions relating to safety
and health at work, providing for statutory health surveys, requiring appointment of
safety officers, establishment of canteen, crches, and welfare committees etc. in large
factories.
The said Act also provides specific safe guards against use and handling of hazardous
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substance by occupiers of factories and laying down of emergency standards and

measures.
2. The Shops & Establishment Act
The Shops and Establishment Act is a state legislation act and each state has framed its
own rules for the Act. The object of this Act is to provide statutory obligation and rights
to employees and employers in the unauthorized sector of employment, i.e., shops and
establishments. This Act is applicable to all persons employed in an establishment with or
without wages, except the members of the employers family.
This Act lays down the following rules:
Working hours per day and week.
Guidelines for spread-over, rest interval, opening and closing hours, closed days,
national and religious holidays, overtime work.
Employment of children, young persons and women.
Rules for annual leave, maternity leave, sickness and casual leave, etc.
Rules for employment and termination of service.

The main central laws dealing with labor issues are given below: 1. Minimum Wages Act 1948
2. Industrial Employment (Standing orders) Act 1946
3. Payment of Wages Act 1936
4. Workmens Compensation Act 1923
5. Industrial Disputes Act 1947
6. Employees Provident Fund and Miscellaneous Provisions Act 1952
7. Payment of Bonus Act 1965
8. Payment of Gratuity Act 1972
9. Maternity Benefit Act 1961
Minimum Wages Act 1948
The Minimum Wages Act prescribes minimum wages for all employees in all
establishments or working at home in certain employments specified in the schedule of
the Act. Central and State Governments revise minimum wages specified in the schedule.
The Minimum Wages Act 1948 has classified workers as unskilled, semi-skilled, skilled;
and highly skilled.
Industrial Employment (Standing orders) Act 1946
The Industrial Employment Act requires employers in industrial establishments to clearly
define the conditions of employment by issuing standing orders duly certified. Model
standing orders issued under the Act deal with classification of workmen, holidays, shifts,
payment of wages, leaves, termination etc. Generally, the workers are classified as
apprentice/trainee;
casual;
temporary;
substitute;
probationer;
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 permanent; and
fixed period employees
Payment of Wages Act 1936
Under the Payment of Wages Act 1936 the following are the common obligations of the
employer:
Every employer is primarily responsible for payment of wages to employees. The
employer should fix the wage period (which may be per day, per week or per
month) but in no case it should exceed one month;
Every employer should make timely payment of wages. If the employment of any
person is being terminated, those wages should be paid within two days of the
date of termination; and
The employer should pay the wages in cash, i.e. in current coins or currency
notes. However wages may also be paid either by cheque or by crediting in
employees bank account after obtaining written consent.
Workmens Compensation Act 1923
The employer must pay compensation for an accident suffered by an employee during the
course of employment and in accordance with the Act. The employer must submit a
statement to the Commissioner (within 30 days of receiving the notice) giving the
circumstances attending the death of a worker as result of an accident and indicating
whether the employer is liable to deposit any compensation for the same. It should also
submit an accident report to the Commissioner within seven days of the accident.
Industrial Disputes Act 1947
The Industrial Disputes act 1947 provides for the investigation and settlement of
industrial disputes in an industrial establishment relating to lockouts, layoffs,
retrenchment etc. It provides the machinery for the reconciliation and adjudication of
disputes or differences between the employees and the employers. Industrial undertaking
includes an undertaking carrying any business, trade, manufacture etc.
The Act lays down the conditions that shall be complied before the termination/retrenchment or
layoff of a workman who has been in continuous service for not less than one year under an employer.
The workman shall be given one months notice in writing, indicating the reasons for retrenchment and
the period of the notice that has expired or the workman has been paid, in lieu of such notice, wages
for the period of the notice. The workman shall also be paid compensation equivalent to 15 days
average pay for each completed year of continuous service. A notice shall also be served on the
appropriate government.
Employees Provident Funds and Miscellaneous Provisions Act 1952
This Act seeks to ensure the financial security of the employees in an establishment by
providing for a system of compulsory savings. The Act provides for establishments of a
contributory Provident Fund in which employees contribution shall be at least equal to
the contribution payable by the employer. Minimum contribution by the employees shall
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be 10-12% of the wages. This amount is payable to the employee after retirement and
could also be withdrawn partly for certain specified purposes.
Payment of Bonus Act 1965
The payment of Bonus Act provides for the payment of bonus to persons employed in
certain establishments on the basis of profits or on the basis of production or productivity.
The Act is applicable to establishments employing 20 or more persons. The minimum
bonus, which an employer is required to pay even if he suffers losses during the
accounting year is 8.33% of the salary.
Payment of Gratuity Act 1972
The Payment of Gratuity Act provides for a scheme for the payment of gratuity to all
employees in all establishments employing ten or more employees to all types of
workers. Gratuity is payable to an employee on his retirement/resignation at the rate of 15
days salary of the employee for each completed year of service subject to a maximum of
Rs. 350,000.
Maternity Benefit Act 1961
The Maternity Benefit Act regulates the employment of the women in certain
establishments for a prescribed period before and after child birth and provides certain
other benefits. The Act does not apply to any factory or other establishment to which the
Employees State Insurance Act 1948 is applicable. Every women employee who has
actually worked in an establishment for a period of at least 80 days during the 12 months
immediately proceeding the date of her expected delivery, is entitled to receive maternity
benefits under the Act. The employer is thus required to pay maternity benefits and/or medical bonus
and allow maternity leave and nursing breaks.