collective20bargain-121101002951-phpapp01

5/20/2018 collective20bargain-121101002951-phpapp01

1/16

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 ta!e" has been infused in the

principle of Collective Bargaining. #s wor!ers mainly in the formal sector are

organi$ed, collective bargaining is more commonly in vogue in the formal sector.

Collective bargaining is a techni%ue 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 discussdifferences 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 !nown

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. #lthough all ma'or differences might not

always be sorted out collective bargaining helps in resolving many minor

differences and there are many cases in which even ma'or disputes have been

settled without wor! stoppage or outside intervention. #ccordingly 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.

Prepared by Mrs. Neha Rathi Faculty of KKPIMS Page 1


2/16

not only involves the bargaining agreement, but also involves the

implementation of such an agreement.

attempts in achieving discipline in the industry

is a flexible approach, as the parties involved have to adopt a flexibleattitude towards negotiations.

DEFINITION OF COLLECTIVE BARGAINING

Donovan Commission) # right which is and should be the prerogative of everywor!er 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*.

JT Dun!o" & JT #ea!ey ) CB as a mixture of a po!er game combiningdeception, bluff, luc! and ability*.

EVOL$TION OF COLLECTIVE BARGAINING

The phrase collective bargaining is said to have been coined by ydney and

Beatrice -ebb of reat Britain which is said to be the /home of collective

bargaining/

CB rose and grew with the trade union movement. Thus 0oots of CB lie in reat

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

0evolution.

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

early part of the 12th Century.

Initially, the negotiations were carried out at plant level.

By early 1344, industry and national level agreements became %uite common.

The idea spread across to 5rance, ermany, and 6#. #nd today, through the

process of CB, organi$ations have learnt to cope with industrial conflict.

C%ara'eris'is OF COLLECTIVE BARGAINING

1. 7ot e%uivalent to collective agreement because collective bargaining refers tothe process while collective agreement to the possible result.



3/16

8. It"s a method use by trade unions to improve the terms and conditions ofemployment of their members.

9. It see!s to restore the une%ual bargaining position between employer and

employee.

:. -here it leads to an agreement, it modifies rather than replaces the individualcontract of employment.

It is a group process, wherein one group, representing the employers, and theother, representing the employees, sit together to negotiate terms ofemployment.

7egotiations form an important aspect of the process of collectivebargaining i.e., there is considerable scope for discussion, compromise ormutual give and ta!e in collective bargaining.

Collective bargaining is a formali$ed process by which employers andindependent trade unions negotiate terms and conditions of employment and theways in which certain employment;related issues are to be regulated at national,organi$ational and wor!place levels.

Collective bargaining is a process in the sense that it consists of a number ofsteps. It begins with the presentation of the charter of demands and ends withreaching an agreement, which would serve as the basic law governing labormanagement relations over a period of time in an enterprise. Moreover, it isflexible 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 theprocess of collective bargaining. The negotiations generally ta!e place betweenthe employees and the management. It is a form of participation.

Collective bargaining is a complementary process i.e. each party needssomething that the other party has< labor can increase productivity andmanagement can pay better for their efforts.

Collective bargaining tends to improve the relations between wor!ers and theunion on the one hand and the employer on the other.

Collective Bargaining is continuous process. It enables industrial democracy tobe effective. It uses cooperation and consensus for settling disputes rather thanconflict and confrontation.

Collective bargaining ta!es into account day to day changes, policies,potentialities, capacities and interests.



4/16

It is a political activity fre%uently underta!en by professional negotiators.

T)E* OF BARGAINING

1 Con+un'ive,Dis'ri-u'ive Bar.ainin.

=ere, the parties try to maximi$e their respective gains. In this method, the

parties try to settle economic issues through a $ero;sum game. >ero;sum game

is where my gain is your loss and your gain is my loss". 7either party is willing to

yield an inch.

/ Co0o"era'ive Bar.ainin.

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.

T?LC@ and #sho! Leyland resorted to co;operative bargaining when the

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

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

also agree to moderni$e and bring in new technology and invest in mar!eting

efforts in a phased manner.

Com"osi'e Bar.ainin.-or!ers tend to argue that productivity bargaining increases their

wor!load. 0ationali$ation, introduction of high technology, tight productivity

norms hit the unions and wor!ers below the belt. #s a result, wor!ers 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.

?.g. -or!ers demand further e%uity in matters relating to wor! norms,

employment levels, manning standards, environmental ha$ards, sub;contracting

clauses, etc.

-e see that wor!ers are no longer solely interested in the monetary aspects to



5/16

the exclusion of wor! related matters.

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

powers and ensure 'ustice to wor!ers by putting certain limits on the freedom of

employers.

5or the employer, this is the lesser evil when compared to stri!es and loc!outs.

F$NCTION* OF COLLECTIVE BARGAINING

1. # mar!et or economic function It determines the terms labor will continue to besupplied to a company by its present employees or will be supplied in the futureby newly hired wor!ers.

8. # governmental function Bargaining relationship is seen as a mutualdependency of the parties concerned and the power of each to veto the acts of

the other.

9. # decision ma!ing function CB allows the wor!ers through their unionrepresentatives to participate in the determination of the policies which guideand rule their wor!ing lives.

I2)ORTANCE OF COLLECTIVE BARGAINING

Collective bargaining includes not only negotiations between the employers andunions but also includes the process of resolving labor;management conflicts.

Thus, collective bargaining is, essentially, a recogni$ed way of creating a system

of industrial 'urisprudence. 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 ma!ing. It establishes rules which define and restrict the

traditional authority exercised by the management.

Im"or'ane 'o em"!oyees

Collective bargaining develops a sense of self respect and responsibility among

the employees.



6/16

It increases the strength of the wor!force, 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.

?ffective collective bargaining machinery strengthens the trade unions

movement.

The wor!ers 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 ad'ustment of wages and employment conditions to

economic and technological changes in the industry, as a result of which thechances for conflicts are reduced.

Im"or'ane 'o em"!oyers

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

rather than ta!ing up complaints of individual wor!ers.

Collective bargaining tends to promote a sense of 'ob 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

wor!ers and the management and increases wor!er participation in decision

ma!ing.

Collective bargaining plays a vital role in settling and preventing industrial

disputes.

Im"or'ane 'o soie'y

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



7/16

development since the obstacles to such a development can be reduced

considerably.

The discrimination and exploitation of wor!ers is constantly being chec!ed.

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

who are directly concerned about them.

COLLECTIVE BARGAINING )ROCE**

The collective bargaining process comprises of five core steps(

)re"are3This phase involves composition of a negotiation team. The negotiation

team should consist of representatives of both the parties with ade%uate

!nowledge and s!ills for negotiation. In this phase both the employer"s

representatives and the union examine their own situation in order to developthe 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. # correct

understanding of the main issues to be covered and intimate !nowledge of

operations, wor!ing conditions, production norms and other relevant conditions

is re%uired.

Disuss3 =ere, the parties decide the ground rules that will guide the

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

collective bargaining. #n environment of mutual trust and understanding is also

created so that the collective bargaining agreement would be reached.

)ro"ose3 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 ta!es place and opinion of both the

parties is sought.



8/16

Bar.ain3 7egotiations 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 ta!e place.

*e''!emen'3 @nce 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 'oint implementation of the agreement through shared

visions, strategic planning and negotiated change.

COLLECTIVE BARGAINING AGREE2ENT

Collective bargaining generally includes negotiations between the two parties

Aemployees" representatives and employer"s representatives+. Collective

bargaining consists of negotiations between an employer and a group of

employees that determine the conditions of employment. @ften employees arerepresented in the bargaining by a union or other labor organi$ation.

The result of collective bargaining procedure is called the collective bargaining

agreement ACB#+.



9/16

Collective agreements are written documents regarding wor!ing conditions and

terms of employment concluded between an employer and the union.

The CB# 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 agreementwould depend on what is agreed upon and on

the sub'ect 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

# 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

loc!;out, i.e. in what circumstances such action may or may not be

permitted.

The conse%uences in the event of breaches of the agreement

#s regards wages, exactly how conversion of employees& wages to the

new scales is to be effected.

The contents of CB# vary considerably from plant to plant and from industry to

industry. 6sually, they cover items relating to wages, wor!ing conditions, wor!ing

hours, fringe benefits and 'ob security.

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

they were acting. It often happens that all wor!ers in a given underta!ing may

not belong to the union which signed the agreement or they are non unioni$ed.

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



10/16

some countries, depends on the good faith of the parties. They are )gentlemen"s

agreements* without any legal sanction, for instance, in the 6nited ingdom.

In India, there are three types of agreements, namely

1. voluntary agreements,

8. 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.

Settlementsare collective agreements that are bac!ed by the interventions of

government agencies. Consent awardsare agreements reached between theparties when the matters in dispute are under reference to industrial tribunalsD

courts.

CB# may be in the form of procedural agreements or substantive

agreements.

Procedural agreements deal with the relationship between wor!ers 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. 5re%uently, procedural agreements are put

into the company rule boo! which provides information on the overall terms and

conditions of employment and codes of behavior.

Substantive agreementdeals with specific issues, such as basic pay, overtime

premiums, bonus arrangements, holiday entitlements, hours of wor!, etc. In

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

bargaining process will review the procedural agreement when negotiations ta!e

place on pay and conditions of employment.

-hen agreement is reached one of the following two courses may be adopted(



11/16

; et out the agreement reached in a letter to the union and, on confirmation,

prepare a draft agreement.

; #lternatively 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 ac%uainted with the agreement through the

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

often useful.

CONDITION* FOR *$CCE**F$L COLLECTIVE BARGAININGTra4e $nion Reo.ni'ion

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

there would automatically be recognition of unions for bargaining purposes.

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

be some pre;determined ob'ective 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

re%uiring the union to have not less than a stipulated percentage of the wor!ers

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

decided by a referendum in the wor!place or by an outside certifying authority

Asuch 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 Ae.g. one or two years+ in order to

ensure the stability of the process.

O-servane o5 A.reemen's



12/16

?specially in developing countries where there is a multiplicity of unions, unions

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

-here a labour law system provides for sanctions for breaches of agreements,

the labour administration authorities may be reluctant to impose sanctions on

wor!ers. -here there is fre%uent non;observance of agreements or

understandings reached through the collective bargaining process, the party not

in default would lose faith in the process.

*u""or' o5 La-our A4minis'ra'ion Au'%ori'ies

upport by the labour administration authorities is necessary for successfulcollective bargaining. This implies that they will(

Erovide the necessary climate for it. 5or instance, they should provide effective

conciliation services in the event of a brea!down in the process, and even

provide the necessary legal framewor! 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 conse%uent to collective bargaining.

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

Erovide methods for the settlement of disputes arising out of collective

bargaining if the parties themselves have not so provided.

Goo4 Fai'%

Collective bargaining is wor!able only if the parties bargain in good faith. If not,

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

ood faith is more li!ely where certain attitudes are shared among employers,

wor!ers and their organi$ations 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 re%uires and develops. trong

organi$ations of wor!ers and employers contribute to bargaining in good faith,



13/16

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

parties.

)ro"er In'erna! Communia'ion

Both the management and union should !eep their managers and members

respectively well informed, as a lac! of proper communication and information

can lead to misunderstandings and even to stri!es. ometimes managers and

supervisors who are ill;informed may inadvertently mislead wor!ers who wor!

under them about the current state of negotiations, the management&s ob'ectives

and so on. In fact, it is necessary to involve managers in deciding on ob'ectives

and solutions, and such participation is li!ely to ensure greater acceptance ; andtherefore better implementation ; by them.

TREND* 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

individuali$ation of labour relations and the difficult %uest for greater

competitiveness and flexibility in a situation of economic globali$ation. 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 wor!ers in the informal sector are covered by collective

agreements.

Bargaining at the enterprise level is increasing

@ther forms of bargaining and new issues

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



14/16

@ther forms of bargaining li!e individual employer;employee bargaining,

wor! councils, bargaining on individual wor! contracts, bargaining directly

with wor!ers" representatives, wor! place consultations based on

performance targets etc. are on the increase.

The new issues in the bargaining are ban!ruptcy, e%uality, career;

developments, leisure time, evaluation systems etc. and overall the

issues covered in collective bargaining are broadening.

)ERCE)TION* ON COLLECTIVE BARGAINING

CB essentially means negotiations between the labour and management

CB should 'ust 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.

@nce both the parties !now what they want, negotiations become easier

and better.

@bviously all the above mentioned conditions are re%uired 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 framewor! and as a guide to their relationships on certain matters

for a specified period of time.

Today because of the wea!ening unions, collective bargaining is not

highly practiced, yet at the other end there are organisations which ta!e

care of the wor!ers well enough so that collective bargaining is not highlyre%uired.

Co!!e'ive -ar.ainin. in In4ia



15/16

In India, the wor!ers wor!ing in the formal sector, who constitute only seven

percent of the total wor!force are generally, in a position to gain from the

collective bargaining mechanism and the vast ma'ority of the wor!ers engaged in

the informal sector are largely untouched by this instrument in its standard form

for improvement of their terms of employment. enerally, all enterprises which

are either registered under the purview of any one of the acts li!e the Indian

5actories #ct, 13:2, Mines and Minerals A0egulations and Fevelopment+ #ct,

13GH, Elantation Labour #ct, 13G1 the Companies #ct, 13G the CentralD tate

ales Tax #ct, hops and ?stablishments #cts of the tate overnments are

defined as part of the organi$ed sector. #lso included are all government

companies, Fepartmental ?nterprises and Eublic ector Corporations. #lso, all

wor!ers in the agricultural sectors except those wor!ing in the plantations areregarded as informal sector wor!ers.

In India, Collective Bargaining and rise in Trade 6nionism came into existence

mainly in the early 84thcentury. The movement got impetus from Constitutional,

statutory and voluntary provisions. #rticle 13Ac+ of the Indian Constitution

guarantees freedom of association as a fundamental right. The Trade 6nions

#ct passed in 138 provides for registration of Trade 6nions of employers and

wor!ers and in certain respects, it defines the law relating to registered Trade

6nions. It confers legal and corporate status on registered Trade 6nions. The

#mendment to the Trade 6nions A#mendments+ #ct, 138 in 8441, enforced with

effect from 3th January 8448provides for reducing multiplicity of Trade 6nions,

orderly growth of Trade 6nions and promoting internal democracy.

In India, trade unions gained prominence much later only after 1344. In 1312,

andhi'i ; as the leader of the #hmedabad textile wor!ers advocated the

resolution of conflict through CB agreements.

But the idea gathered interest only after the econd -orld -ar. The

overnment of that time too! steps li!e setting up of machinery for negotiations,

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

became popular after Indian independence.



16/16

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

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

and doc!s, ban!ing and insurance, collective agreements were arrived at, right

at the national level.

FACTOR* AFFECTING CB

1. 6se of contingency wor!er and employee leasing.8. Technological changes9. International forces; less expensive foreign wor!er.:. ?conomic conditionsG.=eavily governed by its political forces and legal regulations


collective20bargain-121101002951-phpapp01

Documents