Prerequisites of Collective Bargaining

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Everything you need to know about the pre-requisites for effective collective bargaining. Collective bargaining is an important method of regulating relations between employers and employees.

Collective bargaining involves negotiation, administration and enforcement of the written contracts between the employees and the employers.

Collective bargaining also includes the process of resolving labour-management conflicts. Collective bargaining is a joint decision-making process by employers and employees.

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Therefore, its effectiveness depends on their attitudes and the relevant environment in which collective bargaining takes place. If these factors are conducive, collecting bargaining may be a good mechanism for preventing the emergence of industrial disputes.

The pre-requisites for effective collective bargaining are:-

1. Favourable Political and Social Climate 2. Stability of Trade Unions 3. Approach of Management and Unions 4. Recognition of the Bargaining Agent 5. Deciding the Level of Bargaining 6. Determining the Scope and Coverage of Bargaining

7. Fair Labour Practices 8. Freedom of Association 9. Continuous Dialogue 10. Problem-Solving Attitude 11. Availability of Data 12. Recognition of Union and Willingness to Give and Take.


Prerequisites of Collective Bargaining

Prerequisites for Collective Bargaining – 3 Conditions: Favourable Political & Social Climate, Stability of Trade Unions & Approach of Management & Unions

Collective bargaining is a joint decision-making process by employers and employees. Therefore, its effectiveness depends on their attitudes and the relevant environment in which collective bargaining takes place. If these factors are conducive, collecting bargaining may be a good mechanism for preventing the emergence of industrial disputes.

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From this point of view, the following conditions are essential for effective collective bargaining:

Condition # 1. Favourable Political and Social Climate:

Favourable political and social climate is a necessary condition for effective collective bargaining. The history of the development of collective bargaining throughout the world indicates that it has emerged and progressed in those countries where it has been supported by the government and the public opinion has been favourable for the bargaining as a means for settling terms and conditions of employment.

In fact, many countries have encouraged collective bargaining as a means for settling differences between employers and employees. These countries have the system of adjudication and arbitration but put in operation only when voluntary bargaining fails. As against these countries, some countries influenced by socialistic moves have almost abolished the very basic concept of collective bargaining.

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In India, collective bargaining has not been effective because of the adverse political and legal system though our traditional socio-cultural features which encourage trust, mutuality, tolerance, and participation are more conducive.

Each major political party has sponsored a central trade union and these parties take the favour of employees not based on the merit of the issues of the collective bargaining but based on their political considerations. Similarly, the existence of plethora of legal laws also creates unfavourable climate for bargaining.

Condition # 2. Stability of Trade Unions:

In any democratic country, employees have fundamental rights to organize trade unions or other associations for protecting their interest. The right to organize is a positive feature for collective bargaining as employees may negotiate with management on equal footing. However, mere right to organize does not ensure stability of employees’ associations in the form of trade unions.

The indiscriminate use of the right for organizing leads to multiplicity of trade unions with conflicting approaches, and sometimes even objectives, making the total industrial relations system including collective bargaining unworkable. In India, multiplicity of unions and inter-union rivalry have wrecked the system of collective bargaining. Where it has succeeded, it is due to single union which has been recognized by the management.

Condition # 3. Approach of Management and Unions:

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Collective bargaining is an institutional system of defining and achieving mutuality between employers and employees.

It functions well when:

(a) Management fully accepts it as a mechanism for overcoming differences with employees and union is accepted as an institution to participate in the process on the basis of equality.

(b) The union fully accepts the rights of management to manage and operate the organization and recognizes that the welfare of the employees is linked to the successful operation of the organization.

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(c) The union and management mutually trust each other and have no major ideological differences.

(d) Both the parties adopt flexible approach characterized by ‘give and take’ and the bargaining outcomes as ‘win-win’ phenomenon.

(e) Neither party adopts unfair practices before negotiation, during negotiation, and after negotiation.

To the extent such approaches are adopted by both management and union, the collective bargaining will be effective. If the approach is to defeat the opposite party in negotiation room (the place of battle through the words and approach), neither the meaningful negotiations will be held nor there will be positive outcomes.

Collective bargaining is not merely a mechanism of outwitting another party with the use of debating skill; it is a spirit of mutuality of interests which must prevail over words.


Prerequisites for Collective Bargaining – Pre-Requisites for Successful Collective Bargaining Process

A successful collective bargaining process must have the following prerequisites:

i. Careful thought and selection of the negotiating team is imperative. The team should have a fixed composition, including production, finance and IR experts. It should be headed by a person, preferably a personnel and industrial relations specialist of sufficient seniority who has an adequate brief to commit the enterprise and take decisions without frequent referrals to top management.

ii. It is necessary for the management to recognize the union and to bargain in more good faith, in unionized situation. Unions as representatives of the workers’ interest are a growing phenomenon. This also puts pressure on the union to formulate plans and demands in a systematic manner. Strong unions and progressive managements can help create an atmosphere of mutual confidence.

iii. The members of the bargaining teams must have open minds, to listen and appreciate the other’s concern and point of view and to have some flexibility in making adjustments to the demands made.

iv. It is necessary to study adequately or do ‘homework’ on the demands presented by gathering data on wages and welfare benefits in similar industries in the geographical area.

v. Both the management and the union should be able to identify grievances, safety and hygiene problems on a routine basis and take appropriate remedial steps.

vi. Trade unions must encourage internal union democracy and have period consultations with the rank and file members.

vii. Trade unions should equally be concerned with both quantity of work output as agreed upon and quality of work, both leading up to a consistent concern for the viability of the firm and its products/services.

viii. Strikes/lockouts should be resorted to, in the ultimate analysis. Periodic discussions may be necessary between the management and the unions to interpret the provisions of the contract and clarify doubts.


Prerequisites for Collective Bargaining – Recommended by National Commission of Labour

According to A. Flanders, there are certain conditions which must be satisfied before collective bargaining can survive as a viable process. These are- The parties must attain a sufficient degree of organization; Mutual recognition – the parties must be ready to enter into agreements with each other; The agreements must generally be observed and implemented by those to whom they apply.

The collective bargaining relation is between the organized bodies as distinct from the contract of employment reached between workers and employers in the 19th century. The organizations of workers or trade unions are formed to protect and promote the interests of workers through collective bargaining.

So long as trade unions remain organizationally and financially weak, their ability to bargain with employers is weakened and impaired. Workers’ effectiveness in bargaining is dependent on their organizational strength.

The employers, workers and their trade unions must realize that for a successful collective bargaining relationship they must develop a considerable degree of consensus, support and co-operation. They must recognize each other and also recognize that accommodation and adjustment between them are necessary for the achievement of their goals.

The next condition relates to the sanctions behind the agreement and also the sanctions required ensure the observance of rules regarding the employment relationship incorporated in the agreement. The main issue in this regard is whether the parties themselves conform to the rules or whether they will seek the help of a third party – the government.

In terms of these pre-requisites, collective bargaining is practiced in different countries at different stages of the organizational growth of the parties involved, the nature and extent of mutual recognition and the sanctions required to ensure the observance of the agreements.

Recommendations of the National Commission of Labour for Successful Functioning of Collective Bargaining:

National Commission of Labour in 1969, made the following recommendations after considering the problem.

(a) Government intervention in Industrial relations particularly in the settlement of industrial disputes should be reduced gradually to the minimum possible extent. Compulsory adjudication of disputes should be used only as a last resort.

(b) Trade unions should be strengthened both organisationally and financially by amending the Trade Union Act of 1926 to make registration of unions compulsory, enhance the union membership fee, and reduce the presence of outsiders in the union executive and among the office-bearers and increase the minimum number of members in respect of union applying for registration.

(c) Legal provision may be made either by a separate legislation or by amending an existing enactment for-

(1) Compulsory recognition of trade unions and certification of unions as bargaining agents.

(2) Prohibition and penalisation of unfair labour practices.

(3) Bargaining in good faith by both employers and unions.

(4) Conferring legal validity and legitimacy on collective agreements.

Recommendations of NCL, 1969:

The National Commission on Labour offered the following recommendations:

1. Good Faith:

In the absence of arrangements for statutory recognition of unions except in some States and provisions which require employers and workers to bargain in ‘good faith’, it is no surprise that reaching of collective agreements has not made much headway in our country. Nonetheless, the record of collective agreements has not been as unsatisfactory as it is popularly believed. Its extension to a wider area is certainly desirable.

2. Adjudication:

There is a case for shift in emphasis and increasingly greater scope for and reliance on collective bargaining. Any sudden change replacing adjudication by a system of collective bargaining is neither called for nor is practicable. The process has to be gradual. A beginning has to be made in the move towards collective bargaining by declaring that it will acquire primacy in the procedure of settling industrial disputes.

3. Congenial Condition:

Conditions have to be created to promote collective bargaining. The most important among them is statutory recognition of a representative union as the sole bargaining agent. The place strikes/lock-out should have in the overall scheme of industrial relations needs to be defined; collective bargaining cannot exist without the right to strike/lock-out.


Prerequisites for Collective Bargaining – Equal Bargaining Power, Free Consultation, Representative Union, Mutual Confidence, Proactive Approach and a Few Others

(i) Equal bargaining power – Constructive consultation between trade union and management is possible only when the bargaining power of two parties is relatively equal and is exercised with responsibility and discrimination.

(ii) Free consultation – Two parties of collective bargaining accept the principle of ‘free consultation’ and ‘free enterprise’ consistent with the advancement of public interest.

(iii) Representative union – The willing acceptance by management to recognise representative union for this purpose.

(iv) Mutual confidence – Both the parties must have mutual confidence, good faith and a desire to make collective bargaining machinery a success.

(v) Proactive approach – Management should not await the union to raise problems but should make every reasonable effort to prevent them from arising and to remove them promptly when they arise. Thus management should have proactive approach.

(vi) Problem solving, not legalism – An emphasis upon a problem solving approach with de- emphasis upon excessive legalism.

(vii) Quick disposal – Dispose of the issues in the same meeting and minimise of the pending of items.

(viii) Desire to settle – Desire of the management to settle the issues to the satisfaction of employees. This does not mean that management must relinquish its right to direct the company or that it must accede to all union demands.

(ix) Union cooperation – Unions must understand the economic implications of collective bargaining and realise that union demands must be met from the income and resources of the organisation.

(x) Mutual respect – Both the parties should respect the rights and responsibilities of each other.

(xi) No unfair practices – The process of bargaining should be free from unfair practices.

(xii) Unanimity among workers – Before entering into negotiations, there must be unanimity among workers. At least the representatives of workers should be able to represent the opinion or demands of majority of workers.

(xiii) Positive attitudes – The attitudes of the parties (involved) should be positive. Both the parties should reach the negotiating table with an intention to find better solutions.

(xiv) Give and gain – The parties involved in collective bargaining should be prepared to give away something in order to gain something.

(xv) Respect previous agreements – Both the parties to collective bargaining should observe and follow the terms and conditions of previous agreements that are reached. Collective Bargaining, being a continuous process, can be effective only with the successful implementation of previous agreements. Any lapse on the part of any party concerned shows its effect on present process.

(xvi) Clarity of implications – The representatives of both the parties should fully understand and be clear about the problems and their implications.

(xvii) Beyond salaries – The workers can make effective use of collective bargaining process to achieve participative management and good working conditions. They should not confine collective bargaining for mere monetary benefits.


Prerequisites for Collective Bargaining – Recognition of the Bargaining Agent, Deciding the Level of Bargaining & Determining the Scope and Coverage of Bargaining

Collective bargaining is an important method of regulating relations between employers and employees. It involves negotiation, administration and enforcement of the written contracts between the employees and the employers. It also includes the process of resolving labour-management conflicts.

The important pre-requisites for effective collective bargaining are:

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. Please note that all the three points are needed for applying collective bargaining effectively.


Prerequisites for Collective Bargaining – 8 Important Pre-Requisites: Favourable Political Climate, Fair Labour Practices, Freedom of Association and a Few Others

Collective bargaining is the process where terms and conditions of employment are determined by mutual agreement between the management and the workers. According to Jucissous, “Collective Bargaining refers to a process by which employers on the one hand and representative of employees on the other, attempt to arrive at agreement covering the conditions under which employees will contribute and be compensated for their services”.

It 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.

In order to make collective bargaining effective the following pre-requisites must be satisfied:

Pre-Requisite # 1. A Favourable Political Climate:

Collective bargaining is the best method of regulating employment condition. Therefore, government remove all legislative restriction which hamper collective bargaining. It can also confer a right to bargain collectively lay down the form and content of collective agreement register. These agreements assist in their enforcement.

Pre-Requisite # 2. Fair Labour Practices:

Both the employer and the trade union should avoid unfair labour practices. Collective bargaining is possible only in an atmosphere of mutual recognition and respect. Management must recognize and accept the worker’s right to organise and fight for justice. Similarly worker and their union must recognise and accept the employer’s right to manage. In the absence of such recognition, collective bargaining is a mere trial of strength.

Pre-Requisite # 3. Freedom of Association:

Collective bargaining is not possible if employees are not free to form trade union as they please. A strong trade union, is required to bargain with the employer for their own interest, an equal basis. Trade union must be stable and strong enough to honour the collective bargaining agreement. In some of the countries government opposed, the action taken by employers against the right of workers to form their union.

Pre-Requisite # 4. Continuous Dialogue:

For successful collective bargaining, continuous dialogue between the employer and employee is necessary. As highly controversial issues are easily solved through continuous dialogue.

Pre-Requisite # 5. Problem-Solving Attitude:

For successful collective bargaining, both employer and employee must adopt a problem-solving approach rather than fighting approach. The teams should consist of persons with an analytical mind, objective outlook and cool temper. And they have an intimate knowledge of operation, working condition and other relevant factors. They must have full authority to speak and take decision on behalf of their sides.

Pre-Requisite # 6. Availability of Data:

The employer must ensure that all the required records are readily available. Facts and figures concerning rates of pay, fringe benefits, manpower forecast, technological changes etc. provide a rational basis for negotiations. But unless the trade union believes in the data and accepts the same, collective bargaining process may be hampered.

Pre-Requisite # 7. Recognition of Union:

Employers should be required by law to give recognition to representative trade union. It is in the interest of an employer to recognise a strong union, to avoid strikes and to safeguard against undercutting labour standards.

Pre-Requisite # 8. Willingness to Give and Take:

Both employers and union leaders should bargain in a spirit of compromise and reciprocity. If either party adopts an adamant attitude, bargaining will not be possible. Willingness to give and take does not mean that concession made by one side must be marked by equal concession by the other side. One party may win concessions over the other depending upon their relative strength. But exaggerated demands must be toned down to reach an agreement.


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