Collective Bargaining is the process whereby workers organize collectively and bargain with employers regarding the workplace. In various national labour and employment law contexts collective bargaining takes on a more specific legal meaning.
In a broad sense, however, it is the coming together of workers to negotiate their employment. Collective bargaining is specifically an industrial relations mechanism or tool, and is an aspect of negotiation, applicable to the employment relationship.
Edwin B. Flippo – “Collective bargaining 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 the employer – employee union relationship.”
Learn about:- 1. Introduction to Collective Bargaining 2. Meaning of Collective Bargaining 3. Definitions 4. Scope and Concept 5. Objectives 6. Characteristics 7. Importance 8. Theories 9. Approaches 10. Role 11. Types 12. Levels 13. Factors Inhibiting Collective Bargaining
14. Functions 15. Process 16. Agreement 17. Advantages and Disadvantages 18. Critical Issues 19. Factors Important for the Success of Collective Bargaining 20. Essential Conditions for the Success of Collective Bargaining.
Collective Bargaining: Meaning, Definitions, Objectives, Importance, Theories, Approaches, Types, Functions and Characteristics
- Introduction to Collective Bargaining
- Meaning of Collective Bargaining
- Definitions of Collective Bargaining
- Scope and Concept of Collective Bargaining
- Objectives of Collective Bargaining
- Characteristics of Collective Bargaining
- Importance of Collective Bargaining
- Theories of Collective Bargaining
- Approaches of Collective Bargaining
- Role of Collective Bargaining
- Types of Collective Bargaining
- Levels of Collective Bargaining
- Factor Inhibiting Collective Bargaining
- Functions of Collective Bargaining
- Process of Collective Bargaining
- Collective Bargaining Agreement
- Advantages and Disadvantages of Collective Bargaining
- Critical Issues of Collective Bargaining
- Factors Important for the Success of Collective Bargaining
- Essential Conditions for the Success of Collective Bargaining
Collective Bargaining – Introduction
One of the efficient means of resolving industrial disputes and deciding the employment conditions is collective bargaining.
Collective bargaining is a process in which the representatives of the employer and of the employees meet and attempt to negotiate a contact governing the employer – employee union relationship.
Collective bargaining involves discussion and negotiation between two group as to the term and conditions of employment. It is called “collective” because both the employer and the employee act as a group rather than as individual. It known as “bargaining” because the method of reaching as agreement involves proposals and counter proposals, offer and counter offers. Collective bargaining is a rational process which appeals to facts and to logic, reconciles conflicting interest in the light of common interests of both parties. It is a bipartite and dynamic process.
Collective bargaining refers to the negotiation, administration and interpretation of a written agreement between two parties (at least one of which represents a group that is acting collectively) that covers a specific period of time. The agreement or contract specifies the conditions of employment which include what is expected of employees and the limits to the management’s authority.
The objective of collective bargaining is to agree on contract acceptable to management, union representatives and the members of the union.
1. The final agreement will reflect the problems of the particular workplace and industry in which the contract is negotiated.
2. Management’s representation in collective bargaining talks tends to depend on the size of the organizations. Small firms are represented by the presidents or CEOs. Larger organizations usually have a specialized HRM department with experts in industrial relations. There will be senior IR managers, corporate executives and company lawyers.
3. The unions in large organizations are represented by teams consisting of office-bearers of local union, representatives from national union, and economic/legal experts employed by the unions.
4. Unions in small organizations are represented by local union office bearers and a few specially elected committee members.
5. Government representative will be a third party in crucial negotiations having national impact.
6. Sometimes representatives of financial institutions are included.
In good-faith bargaining proposals of one party are matched with counter proposals of the opposite party and both the parties make sincere and reasonable efforts to reach an agreement. No party is compelled to agree to a proposal or to make any concession. The agreement is a result of mutual understanding and consent.
Violations of good-faith bargaining:
1. Superficial Bargaining – Taking part in a negotiation without any real intention of completing a formal agreement.
2. Procrastination – Delaying to put forth the demands or to suggest appropriate proposals is violation of good-faith.
3. Withholding Information – Not making available the required details such as wages, hours of work and other terms of employment for discussions.
4. Dilatory Factors – Delaying the meeting or refusing to meet with the other party.
5. Concessions – Demanding concessions from the other party.
6. Unilateral Changes in Conditions – Changing the conditions of negotiation without considering the other party’s opinion/consent.
7. Bypassing the Representative – Refusing to negotiate with the representative of the union (or management).
Collective Bargaining – Meaning
Collective Bargaining is a process of joint decision making and represents a democratic way of life in industry. It is the process of negotiation between firm’s and worker’s representatives for the purpose of establishing mutually agreeable conditions of employment. It is a technique adopted by two industries to reach an understanding acceptable to both through the process of discussion and negotiation.
International Labour Organisation (ILO) has defined collective bargaining as, negotiation about working conditions and terms of employment between an employer and a group of employees or one or more employees with a view to reach an agreement wherein the terms serves as a code of defining the rights and obligations of each party in the employment/industrial relations with one another.
Collective Bargaining is the process of negotiating the terms of employment between an employer and a group of workers so as to determine the conditions of employment.
The results of collective bargaining procedures is a Collective Bargaining Agreement.
The agreement consists of conditions of employment working salaries, working conditions, benefits and other aspects of worker’s compensation and rights, retirement benefits, healthcare benefits employee safety, and layoffs. The employee’s interests are commonly presented by representative of a trade union to which the employees belong.
Collective bargaining is concerned with the relationship between a trade union (representatives of workers) and the management (representatives of employers).
The phrase ‘collective bargaining’ consists of two words ‘collective’ which implies – group action through its representatives and bargaining which suggests negotiations.
Thus, the phrase implies collective negotiations of a contract between management’s representatives and the workers.
Collective Bargaining is the process whereby workers organize collectively and bargain with employers regarding the workplace. In various national labour and employment law contexts collective bargaining takes on a more specific legal meaning. In a broad sense, however, it is the coming together of workers to negotiate their employment. Collective bargaining is specifically an industrial relations mechanism or tool, and is an aspect of negotiation, applicable to the employment relationship.
A collective agreement is a labour contract between an employer and one or more unions. Collective bargaining consists of the process of negotiation between representatives of a union and employers (represented by management, in some countries by employers’ organization) in respect of the terms and conditions of employment of employees, such as wages, hours of work, working conditions and grievance- procedures, and about the rights and responsibilities of trade unions.
The parties often refer to the result of the negotiation as a Collective Bargaining Agreement (CBA) or as a Collective Employment Agreement (CEA).
Collective Bargaining – Definitions: Defined by Different Authors like Michael J. Jucius, Edwin B. Flippo, Dale Yoder and J.H. Richardson
Collective bargaining is concerned with the relations between trade unions and the management. Bargaining is collective because chosen representatives of labour and management act is bargaining agent. Both parties sit at the bargaining table where they deliberate, persuade, try to influence, agree and haggle. Eventually they reach an agreement which they record in the form of labour management contract.
Different authors have defined collective bargaining as follows:
According to Michael J. Jucius, “Collective bargaining refers to a process by which employers on the one hand and representative of the employees on the other, attempt to arrive agreement covering the conditions under which employees, will contribute and the compensated for their service.”
According to Edwin B. Flippo, “Collective bargaining is a process in which the representative of labour organisation and the representative of business organisation meet and attempt to negotiate a contract or agreement which specific the nature of the employer – employee union relationship.”
Edwin B. Flippo – “Collective bargaining 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 the employer – employee union relationship.”
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 representative of a group of workers on the one hand and one or more employers on the other.”
J.H. Richardson – “Collective bargaining takes place when a number of work people enter into a negotiation as a bargaining unit with an employer or group of employers with the object of reaching an agreement on working conditions of the employees.”
Collective Bargaining – Scope and Concept
The scope of sectoral or branch collective agreements scope is usually focused on the following main topics:
This covers matters such as – employers’ duties to consult, inform and decide in cooperation with the union; conflicting clauses; and employer. Support for trade union activities by providing them with technical facilities etc.
1. Employment and Working Condition – This covers matter such as, employment contracts and termination of employment principles of redundancy policy in collective redundancies working time and working time schedule and holiday and paid leave.
2. Wages and Remuneration – This covers matter such as – the wage system and minimum wage tariffs, payment for working overtime and for working on holiday extra payment for working and difficult and risky working conditions and right work, and severance payment in the event of collective redundancies.
3. Occupational Safety and Health – This covers matters such as employers’ duties and cooperation with trade union in safety and health issues. Preventive and corrective measure to improve working condition and to reduce risk at work and the establishment of trade union safety and health delegates in companies.
4. Human Resources Development and Other Social Issue – This covers matters such as training and human resources development activities and the creation and utilisation of the social fund in enterprises.
5. Resolution of Conflicts between Management and Trade Unions – This covers the procedures to be applied in the event of serious disagreement between the social partners.
Collective agreements at enterprise and organisation level charge practically the same issue. Some reduction in bargaining scope applies in the civil services, where only sectoral collective agreements are concluded. The actual scope of the topics covered by collective bargaining is illustrated by the finding of a survey conducted by the Research Institute of labour, social affairs and family in 2000. The agreed provisions were often formulated in a general manner and the provision of labour code that set out the employers’ duties and employees’ right regarding social issue.
An important topic in collective bargaining is employer participation. Trade unions have rights to information and consultation on some issue. These rights are stipulated by the labour code and are applied as a rule, prior to dismissals of workers and significant organisational changes.
According to the labour code, employers should also:
a. Decide jointly with the trade union on utilisation of the social fund and on the introduction of working time schedule.
b. Consult with the trade union on terms of employment especially those of women taking care of children and of young and disabled people, on improvements in working conditions and health and safety issue and on any other measure concerning considerable number of employees. And
c. Inform the trade unions about the enterprise’s eco result and its development programmes and perspectives.
Worker participation is generally secured for all employees of an organisation, but until recently only the trade union oganisation was entitled to represent employees’ right and interest.
Collective bargaining is a procedure by which the terms and condition of workers are regulated by agreement between their bargaining agent and employees. The basic objective of collective bargaining is to arrive at an agreement on wages and other conditions of employment. Both the employer and the employee may begin the process with divergent views but ultimately try to reach a compromise, making some sacrifices. As soon as a compromise is reached, the terms of agreement are put into operation.
The underlying idea of collective bargaining is that the employer and employee relations should not be decided unilaterally or with the intervention of any 3rd party. Both parties must reconcile their difference voluntarily through negotiations, yielding some concessions and making sacrifice in the process. Both should bargain from a position of strength, there should be no attempt to exploit the weakness or vulnerability of one party.
With the growth of union movement all over the globe and the emergence of employer’s associations, the collective bargaining process has undergone significant changes. Both parties have, more or less, realised the importance of peaceful co-existence for their mutual benefits and continued progress.
Collective Bargaining – 4 Important Objectives
The objectives of Collective Bargaining are given below:
1. Collective bargaining maintains equal relations – Collective bargaining is a means to bring equality between the workers and the employer.
The bargaining power of an individual worker is quite weaker than the employer. This is because of the fact that, they are illiterate, indebted and backward. This leads to their exploitation and discrimination.
2. Balances the expectations of both the parties – Management always try to expect that they get the most qualified labour at a reasonable wage (Price) so that they can have a margin for investment. Also, the workers look for a steady increment in wages so that, they can feed their families. Moreover, Collective Bargaining balances this conflicting interest through the process of negotiation.
3. Collective bargaining makes rules for both the parties – It performs a rule-making function. Collective agreements govern employment relationships in the bargaining unit and thereby create applied standards. It establishes a certain criteria or format beyond which both employers and workers don’t go.
4. Collective bargaining promotes industrial democracy – The objective of Collective Bargaining is to express the worker’s terms that how they want to be treated with due respect and equal participation in decision making thus, promoting democracy. This is done by the Trade Unions. They put forth the worker’s right to organize, giving heed to their demands and resorting to strikes when their demands are not conceded by their employers. Though, this is done in joint regulation with authoritarian decision making.
Collective Bargaining – 10 Main Characteristics
1. It is a group process, wherein one group, representing the employers, and the other, representing the employees, sit together to negotiate terms of employment.
2. 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.
3. 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.
4. 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 labour 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.
5. It is 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.
6. Collective bargaining is a complementary process i.e. each party needs something that the other party has; labour can increase productivity and management can pay better for their efforts.
7. Collective bargaining tends to improve the relations between workers and the union on the one hand and the employer on the other.
8. 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.
9. Collective bargaining takes into account day to day changes, policies, potentialities, capacities and interests.
10. It is a political activity frequently undertaken by professional negotiators.
Some Other Characteristics of Collective Bargaining:
There are several essential characteristics of collective bargaining, all of which cannot be reflected in a single definition or description of the process:
1. It is not equivalent to collective agreements because collective bargaining refers to the process or means, and collective agreements to the possible result, of bargaining. Collective bargaining may not always lead to a collective agreement.
2. It is a method used 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, because it does not create the employer-employee relationship.
5. The process is bipartite, but in some developing countries the state plays a role in the form of a conciliator where disagreements occur, or where collective bargaining impinges on government policy.
Collective Bargaining – Importance
The following points emphasize the importance of collective bargaining:
1. Forum to Know the Pulse of Employee:
It is a forum wherein employer gets to know the expectations and aspirations of employees and employees too use collective bargaining as a window to see the problems and constraints of the management. Thus this develops a better understanding between the employer and the employees.
2. Promotion of Democratic Approaches:
Since the decision is arrived at consensus at the forum, there is no question of one party imposing its decision on the other. Thus, it promotes a democratic approach in the organization.
3. Industrial Democracy:
It ensures industrial democracy as it recognises the right of employees to be heard. The representatives of employees echo the collective perception and views of the employees at the forum and the management lend their ears. Thus, consulting union representatives is as good as consulting each and every worker. This constitutes industrial democracy.
4. Forum to Convince Workers on Change:
A dynamic environment forces the enterprise to bring in a lot of changes in its functioning. The changes cast their shadow on organizational process. Any change is sure to invite opposition from the employee side. In this context of ever happening change, collective bargaining serves as a right forum to take the workers into confidence before giving effect to such changes.
5. Grievance Redressal:
It helps to secure prompt redressal of grievances.
6. Promoting Good Industrial Relations:
It promotes a good labour-management relations since each party approaches the other very diplomatically.
7. Promoting Industrial Jurisprudence:
Collective bargaining ensures that management is driven by rules and not by arbitrary decisions. Thus, it builds up a system of industrial jurisprudence.
8. Facilitates Flexibility:
It facilitates greater flexibility in determining terms and conditions of service of employees thereby reducing the chances of industrial conflict.
9. Speedy Implementation of Decision:
It provides opportunity for speedy implementation of decisions regarding terms of employment as both parties are involved in decision-making process. Thus, collective bargaining being a form of participative management, serves as an inbuilt mechanism for speedier implementation of decisions.
Collective Bargaining includes negotiations between employer and employees. It is not only a mere process of negotiating with each other on getting things done from others. Moreover, it is a process of resolving labour-management conflicts. It is a method of introducing civil rights in the industry. It tries to bring rules and regulations into the system which defines the authority confined to each party.
Collective Bargaining is beneficial to employees, employers and to the society.
i. It brings a sense of belongingness and unity among the employees.
ii. Collectively employees are able to bargain better for their own benefit.
iii. Collective bargaining increases the morale and productivity of employees.
iv. There is a sense of motivation among the employees as they feel recognized that they have a say in the process of negotiation.
v. Employees are able to have sound system of grievance handling. This is because both the employers and employees sit together to resolve their problems.
vi. Employees are able to save themselves from the authoritarian attitude of employers. They don’t have to abide by what is dictated by the employer.
i. It becomes easier for employers to resolve issues at a common platform rather than listening to individual workers.
ii. Employers are able to get the work done from their workers easily as there is mutual understanding between them.
iii. Collective Bargaining opens up the channel of communication between the workers and the management and increases workers participation in decision making.
iv. It helps in settling disputes.
v. Collective Bargaining reduces the cost of labour – turnover to management as the satisfied employees have lower rate of absenteeism.
i. Collective bargaining leads to industrial peace in the country.
ii. Collective Bargaining results in harmonious and cordial relations between the employers and employees which in turn creates a climate suitable for the economic and social benefits of the nation.
iii. The discrimination and exploitation of workers is substantially reduced which thereby creates enthusiastic and committed workforce and hence benefits the society.
iv. Collective Bargaining provides a method for the regulation of the conditions of employment of workers which creates symmetry in the nation.
v. A nation with harmony in the employer – employee relationship can go miles ahead on the development path.
Collective Bargaining – Theories: Provided by Eminent Thinkers Like Hicks, Carter and Marshall and Nelson
Hicks expressed the bargaining situation in the form of two curves having opposite slopes- ‘an employer’s concession curve’ and a ‘union’s resistance curve’ plotted on a graph where the X axis represents ‘wage rates’.
The employer’s concession curve relates the wages an employer would be willing to pay to avoid a strike to the expected length of strike. The employer’s decision depends upon two factors – wages demanded and expected period of strike.
OZ is the wages the employer is paying at the time of strike. The employer’s concession curve eventually becomes horizontal, i.e., at some point, the employer will prefer to go out of business rather than meet a demand in excess of a certain wage. The union’s resistance curve shows the wage the union will accept rather than take industrial action, expressed as a function of the expected length of strike.
The sacrifice the union is willing to bear (i.e., the length of time they are prepared to maintain industrial action) will vary depending upon the potential gain. The resistance curve also shows that some maximum wage exists beyond which the unions will not contemplate action. At its lower end the union’s resistance curve cuts a line Z.
This represents the time beyond which the union cannot sustain action whatever is being offered. Between the high and low areas of the curve, the slope is less marked. Hicks feels that very often the resistance curve will be horizontal over a considerable part of its length, since there is some level to which in particular they consider themselves entitled. In order to secure this level, they will stand out for a long while, but they will not be much concerned to raise wages above it.
The employer’s concession curve and the union’s resistance curve interact at a point P. The corresponding wage OA will be the highest wage the employer is willing to concede. Anything higher will be refused because he expects any strike intended to secure a higher demand will not last long enough to make any immediate concession worthwhile.
The Hicks model has been criticised by theorists because it is not deterministic and we cannot discover what the precise wage will be. The two functions on the graph provide the boundaries within which the solution should be found. However, this was the first model to formally recognise the fundamental significance of time.
There is one weakness of Hicks theory – it tends to minimise the influence of management. Labour leaders attempt to get the best wage they can based on their estimate of the employer’s concession curve and their ability to sustain a strike. The union is thus an active element in the process while the employer is largely passive.
In 1950, a bargaining theory of wages involving the costs of agreeing and disagreeing was developed by Chamberlain. This model focuses on the concept of bargaining power which is defined as the ability to secure another’s agreement on one’s own terms.
Carter and Marshall, in a presentation based on the Chamberlain theory, express the union and management’s attitude using the following formulae:
Attitudes will be favourable towards settlement whenever the functions are equal to or exceed one.
In this model, both parties are seen to be actively engaged in the process of bargaining.
In a more recent article, Nelson places emphasis on initiative by management.
“Management faced with a labour contract negotiation and a strike threat has two basic alternatives- either offer the employees a concession package which will prevent a strike or offer a lower cost package which may result in strike (with the hope that the eventual labour cost savings over terms of the new contract will at least cover the cost of strike).”
Nelson suggests that the management course of action should be based on an break-even analysis and he produces what he admits to be an overly simplistic model.
Nelson’s diagram shows the estimated strike costs and a line representing labour costs saving, i.e., the difference between the anticipated final wage increase and the original demand. The intersection shows the point in time before which a strike is less costly than concession and after which concession is less damaging than a continuation of the dispute.
The reasoning behind Nelson’s break-even chart is the same as that behind ideas of both Hicks and Chamberlain/but Nelson’s model attempts to formulate the decision problem within the framework that is known by both accountants and management.
Giri believed that internal settlement of disputes was eminently preferable to compulsion from outside and that collective bargaining and voluntary arbitration should be encouraged over compulsory arbitration or adjudication.
(1) Compulsory adjudication/arbitration, introduced for the first time as a result of war-time exigencies and continued thereafter as a measure inevitable in a period of economic uncertainty and emergency, has given a great setback to the growth of trade unionism in the country. The spirit of self-confidence and self-reliance engendered by healthy bargaining has given way to the habit of importunity and litigation. In collective bargaining, even though strikes or lock-outs may take place, matters are settled in a spirit of give and take. Neither party entertains a spirit of humiliation or feels the urge for retaliation and revenge. But this is not the case with compulsory arbitration. Where one party has lost and the other has won, the victor and the vanquished get back to their work in sullen and resentful mood towards each other and neither can forget or forgive the other. Such an attitude of suppressed hostility in one party and of unconcealed satisfaction and triumph in the other may lead to transient truce but not lasting peace.
(2) Compulsory arbitration has cut at the very root of trade union organisation. Unity among men, particularly trade unionists, is the direct outcome of necessity. It stands there as a policeman looking out for signs of discontentment, and at the slightest provocation takes the parties to the court for a dose of costly and not wholly satisfying justice. The moment the back of the policeman is turned, the parties grow red in the face with redoubled determination, and the whole cycle of litigation starts all over again, with the proverbial court delays as well as continued rancour and bitterness. Let trade unions become strong and self-reliant and learn to get on without the assistance of policeman. They will then know how to organise themselves.
(3) Compulsion may be inevitable during war or in times of emergency, but it is inappropriate in times of peace as drugging is to health.
(4) In case of public utility services, to begin with, government should have the power to refer all unresolved disputes for compulsory arbitration, and simultaneously, to prohibit strikes or lock-outs because such services cause immediate and acute suffering to the public. In case of non-public utility services which account for the bulk of commercial and industrial activity, it should be permissible to give full scope for collective bargaining.
Collective Bargaining – 4 Main Approaches: The Piecemeal Approach, The Wholistic Approach, The Basket Approach and The Take-it-or-Leave-it Approach
Collective bargaining is a complex process that varies in each situation, time span, industry and organization. It is a process that calls for skillful negotiation to reach a mutually satisfying agreement. As a matter of fact, various approaches are utilized by the negotiators, depending upon the problems involved.
1. The Piecemeal Approach:
This is a procedure of reaching agreements by considering the demands one by one. It is a commonly adopted technique. The parties take up the demands and issues singly discuss and deliberate, negotiate and agree conclusively on an item and then proceed to the next, repeating the technique till all the demands and issues are settled.
They may still follows some order, such as, ‘easiest’ first, or from the beginning to the end of the Charter of Demands, but necessarily working in a piecemeal fashion. It is the approach that comes naturally to the practical-minded negotiator, who knows that ‘you do a job by finishing the first task before going on to the second, and so on to completion’, typical of workers on the shop floor. Each item on the Charter is treated as a separate issue and argued out, disposed off, and tucked away, then the next item is taken up.
In this approach, each item is examined individually, giving each demand a thorough consideration on the basis of its merits. This discourages ‘horse trading’ and may preserve an atmosphere of agreement between the parties.
2. The Wholistic Approach:
The wholistic or total approach is another practice commonly resorted to in making agreements. In this approach also the negotiators bargain each demand individually, but the agreement on any particular issue is tentative and dependent upon the completion and signing of the entire contract, unlike in the piecemeal approach.
The bargaining ‘Points’ are offered and discussed, then laid aside as others are brought forward; every question remains open until the whole complex is ready to be gathered into a total agreement. This approach exerts considerable pressure on the parties to reach an agreement on all the issues after taking a total view.
The negotiators may find it desirable to go back and modify ‘agreements’ already reached. Either party may find it profitable to compromise on something already agreed in order to secure more important concessions on issues under consideration. It is also possible that the settlement of one issue might conflict with another one subsequently settled. By constantly looking at the whole complex, the parties are likely to emerge with a better contract.
3. The Basket Approach:
With reference to the concessions to be made and the total cost involved, a third approach known as the ‘lump’ or ‘basket’ approach, also known as ‘package bargaining’ is often adopted by the management and the labour unions. In this approach, the negotiation of the total money benefit to be given, covering both the wages and non-wage demands and issues, is dealt with first.
“Nearly all management negotiators and most union negotiators favour disposing of all labour cost items on a unified and related basis rather than separately. The key decision is generally over how much money be available in total for allocation between wage or salary increases as such and a miscellany of money fringe proposals. Once the total money to be given is agreed and decided, the parties are concerned about its allocation between wages and non-wage demands. The particular ‘mix’ between wages and fringes is usually of great concern to the union but management cannot be indifferent to it, for the particular ‘mix’ determines the additional labour costs at a future date.”
This type of bargaining was more common during World War II. The basket approach presupposes that the management is going to give the union some monetary increase, while the management offers will probably be non-monetary. Therefore, management’s proposals are to be settled as part of the initial ‘deal’ on the basket demanded by the union
4. The Take-it-or-Leave-it Approach:
This approach, also known as Boulewarism, is uncommon today. It was so named after its author, Lemuel R. Boulware, vice-president, public and employee relations of the General Electric Company, where the practice was in existence for about twenty-five years, beginning 1948. In this approach, the company takes the lead in negotiations, laying a package on the table that becomes the basis for final settlement. This effectively puts the offensive in the company’s hands.
It gives them something to sell in the course of negotiations. As practised at General Electric under Boulware, Boulewarism featured essentially a final offer made by the company at the beginning of negotiations.
This method of negotiation… consists of an array of tactics, primarily designed… to arrive at an ‘equitable and just settlement based upon the facts. The tactical array developed by General Electric in its negotiations consisted of five basic elements – (i) company determination of what… was needed by its employees in the agreement; (ii) company establishment of the bargaining agenda and assumption of the initiative in negotiations, generally with the union being precluded from specifying issues; (iii) company presentation of a single offer to the union; (iv) company modification of its offers only in the face of newly established facts; and (v) commencement of an extensive public and employee relations campaign to convince employees and the general public that the company was interested in what was best for its employees.
To be successful, this approach involves a package developed on the basis of carefully researched facts concerning the needs of the workers and a decision whether the offer constitutes a good and fair settlement with nothing held in reserve for ‘horse-trading’. The offer must be artfully timed and responsive to employee needs. The union demands must be fully discussed and explained.
If conditions change, the management must have the courage to offer a new package; and it is obvious that rearrangements and, where appropriate, improvements in the package must be bargained. Although this approach totally weakens the union’s position in bargaining, the management often agrees to make modifications in its position if the union can present convincing evidence to support their demands, but the basic position of the management ordinarily remains the same in the face of both strikes or threats to strike.
Collective Bargaining – Role of Collective Bargaining
The role of collective bargaining may evaluate from the following points of view:
1. From the Management Point of Views:
The main objectives of every management are:
a. To earn higher profit at lower cost and
b. To have maximum utilisation of workers.
To achieve this objective cooperation is required from the side of the employees and collective bargaining is a device to get and promote cooperation. Collective bargaining is the best measure for maintaining the cordial relations strikes, go-slow tactics are avoided which result in increasing the production. It promotes industrial democracy.
2. From the Workers Point of Views:
The management has a tendency to exploit the labour class as they have very poor bargaining power. Individually a worker has no existence. But when they join hands they become a power to protect their interest against the exploitation by the employers. The collective bargaining imposes certain restriction upon the employers. Employers are not free to make and enforce decision at their own will. All important decisions are to be taken through negotiations with the labour unions.
3. From the Trade Union Point of View:
Collective bargaining strengthens the trade union movement because trade unions are the bargaining agent of the workers. The main function of trade union is to protect the interest of the workers through constructive programme. The collective bargaining is one of the devices to attain that objective through negotiations with the employers.
4. From Government Point of View:
Govt. is also affected by the process of collective bargaining. Govt. passes and implements several labour legislations and desires it to be implemented in its true sense. It helps the govt. in the enforcement of these laws, as an amicable agreement can be reached between the employers and employees for implementing legislation provisions.
Moreover as, labour problem are minimised through collective bargaining, industrial peace will be promoted in country without any force.
Collective Bargaining – 4 Important Types: Distributive, Integrative, Attitudinal Restructuring and Intra-Organizational Bargaining
A collective bargaining process generally consists of four types of activities:
1. Distributive bargaining,
2. Integrative bargaining,
3. Attitudinal restructuring and
4. Intra-organizational bargaining.
Type # 1. Distributive Bargaining:
It involves haggling over the distribution of surplus. Under it, the economic issues like wages, salaries and bonus are discussed.
In distributive bargaining, one party’s gain is another party’s loss. This is most commonly explained in terms of a pie. Disputants can work together to make the pie bigger, so there is enough for both of them to have as much as they want, or they can focus on cutting the pie up, trying to get as much as they can for themselves. In general, distributive bargaining tends to be more competitive. This type of bargaining is also known as conjunctive bargaining.
Type # 2. Integrative Bargaining:
This involves negotiation of an issue on which both the parties may gain, or at least neither party loses. For example, representatives of employer and employee sides may bargain over the better training programme or a better job evaluation method. Here, both the parties are trying to make more of something. In general, it tends to be more cooperative than distributive bargaining. This type of bargaining is also known as cooperative bargaining.
Type # 3. Attitudinal Restructuring:
This involves shaping and reshaping some attitudes like trust or distrust, friendliness or hostility between labour and management. When there is a backlog of bitterness between both the parties, attitudinal restructuring is required to maintain smooth and harmonious industrial relations. It develops a bargaining environment and creates trust and cooperation among the parties.
Type # 4. Intra-Organizational Bargaining:
It generally aims at resolving internal conflicts. This is a type of maneuvering to achieve consensus with the workers and management. Even within the union, there may be differences between groups. For example, skilled workers may feel that they are neglected or women workers may feel that their interests are not looked after properly. Within the management also, there may be differences. Trade unions maneuver to achieve consensus among the conflicting groups.
Collective Bargaining – Top 3 Levels: National Level, Sector or Industry Level and Company or Enterprise Level
Collective bargaining operates at three levels:
Level # 1. National Level Bargaining:
Economy wide (national) bargaining is a bipartite or tripartite form of negotiation between union confederations, central employer associations and government agencies. It aims at providing a floor for lower-level bargaining on the terms of employment, often taking into account macroeconomic goals.
Level # 2. Sector or Industry Level Bargaining:
Sectorial bargaining, which aims at the standardization of the terms of employment in one industry, includes a range of bargaining patterns. Bargaining may be either broadly or narrowly defined in terms of the industrial activities covered and may be either split up according to territorial subunits or conducted nationally.
Level # 3. Company/Enterprise Level Bargaining:
The third bargaining level involves the company and/or establishment. As a supplementary type of bargaining, it emphasizes the point that bargaining levels need not be mutually exclusive.
Types of Collective Bargaining-Features/Hallmarks:
1. Plant Level CB:
a. Here negotiations and agreements are settled between the management and the union representatives.
b. Scope of collective bargaining is confined to the micro-level problems with no involvement of other unions in other organizations or industries.
2. Industry Level CB:
a. Here organizations in a particular industry who face similar IR problems follow this type of CB.
b. Agreements/contracts signed at this level is applicable for all organizations in the industry and also various unions coming under the purview of the industry.
3. National Level CB:
a. Here the common problems of all workers cutting across the industries, regions, and even sectors are discussed between representatives of National Trade Unions and representatives of industry and business community.
b. E.g.- (a) 1951-Agreement between INTUC and management to “rationalize work practices” (b) 1956-Agreement between Trade unions (HMS) and Indian Tea Planter’s Association on bonus for plantation workers.
Collective Bargaining – 6 Main Factors: Employer’s Reluctance, Multiple Union, Non-Recognition, Weak Unions, Political Interference & Inadequate Interventions
The process of collective bargaining in India is not very encouraging whatever bargaining take place; it is limited to a few large plants only. Several factors are responsible for this state of affairs.
They are described as follows:
1. Employer’s Reluctance – There is reluctance on the part of employers to accept collective bargaining. They do not appreciate the fact that union have come to stay with almost equal bargaining strength. Such negative attitudes have come in the way of negotiating with union voluntarily.
2. Multiple Union – Another problem is multiplicity of union in most of the industrial organization. No union enjoys the support of the majority of workers in the plant. Moreover, rivalry among the trade union does not allow to create the proper atmosphere for collective bargaining.
3. Non-Recognition – There is a lack of definite procedure to determine which union is to be recognised to serve as a bargaining agent on behalf of the workers.
4. Weak Unions – Just about 10% of the total work-force in India is unionised. The trade union membership rarely includes a majority of workers. In addition, unions have to live with poor finance as well. These factors reduce the bargaining strength of unions in India.
5. Political Interference – There has been very close association between the trade union and political parties. As a result, trade union movement has not encouraged collective bargaining but has learned towards political orientation.
6. Inadequate Interventions – The regulatory framework covering the industrial relation scene is quite light, learning way little room for bargaining to flourish on a voluntary basis. In case there is a war of nerves between management and workers govt. steps into resolve the issue. More often, industrial disputes are sought to be settled by inviting the political leaders to mediate and help the parties arrive, at agreements. This inhibits the growth of collective bargaining.
Collective Bargaining – 3 Important Functions (According to Arthur D. Butler)
According to Arthur D. Butler, collective bargaining performs three important functions:
1. Technique of long run social change,
2. Peace treaty between two parties in continual conflict,
3. System of industrial jurisprudence.
1. Technique of Long Run Social Change:
In a broader sense, collective bargaining is not confined only to the eco relation between employers and employees rather it is a technique of long run social charge bringing about rearrangements in the power hierarchy of competing group.
According to Seling Perlmom- It is a technique where by an inferior social class or group exerts a never slackening pressure for a bigger share in the social sovereignty as well as more welfare, security and liberty for individual members. Collective bargaining manifests itself equally in politics, legislations, court litigations govt. administration, religion, education and propaganda.
The contribution of collective bargaining towards the process of social changes brings to light two important implications:
a. Collective bargaining is not an abstract class struggle but is rather pragmatic and concrete. The inferior class does not attempt to abolish the old ruling class but merely to become equal with it. It aims to acquire a large measure of economic political control over crucial decision in the area of its most immediate interest and to be recognised in other areas of decision making.
b. To process change initiate by collected bargaining is a source of stability in the changing environment wages earners have enhanced their social and eco position and at the same time management has retained a large measure of power dignity.
These gains were not registered in one great revolutionary change, but rather step by step, with each class between opposing parties settled with a new compromise somewhat different from previous settlement. Thus, collective bargaining accomplishes long run stability on the basis of day to day adjustment in relation between management and labour.
2. Peace Treaty:
Collective bargaining is a sort of peace treaty between two parties in continual conflict. This conflict is smoothened by the compromises. Compromises represents a state to which each side is prepared to descend from the original stand.
This receding from original position may come about in two major ways:
a. Compromise with Combative Aspects
b. Compromise without Combative Aspects
a. Compromise with Combative Aspects:
When combative aspects of parties are in operation the outcome of struggle depends on the parties’ relative strength. The extent to which each side is willing to accept less them its original bargaining demand depends, in part, on how strong it feels relative to its opponent. The compromise then is a temporary truce with neither side being completely satisfied with the result. Since the contract is always of limited duration each begins immediately to prepare a new list of demands including previously unsatisfied demands and to build up its bargaining strength in anticipation of next power skirmish.
b. Compromise without Combative Aspects:
The compromise reached between two parties is not always the culmination of continuous strength struggle and antagonistic attitudes. A tranquil stability is achieved in the process of controlling economic charges. The union starts first of all to make changes and improvement in its relation with the employers. Once a truce has been signed the union stabilities working condition by presenting the status defined in the contract.
3. Industrial Jurisprudence:
Collective bargaining creates a system of industrial jurisprudence. It is a method of introducing civil rights into industry. That is of requiring that management be conducted by rules rather than arbitrary decisions. It establishes a rule which defines and restricts the traditional authority exercised by employer over their employees placing a part of authority under the joint control of union and management.
a. It is 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.
b. It is an executive process, for both management and trade union officials share the responsibility of enforcing the rules.
c. It is judicial process for in every collective agreement there is a provision regarding the interpretation of the agreements.
Collective Bargaining – Encompasses the Following Stages
In practice, the process of collective bargaining encompasses the following stages:
Stage # 1. Charter of Demands:
The bipartite collective bargaining process usually starts with a charter of demands presented by the union (on behalf of their constituent members) to the management.
The whole process of collective bargaining depends upon the nature of demands. Nature of demands influence the selection of negotiating team, the size and composition of the negotiating team, the period of negotiation and the period of agreement etc.
Some demands need immediate decisions while others can be postponed. Some demands are minor and can be met with the other party’s acceptance on its presentation; while other demands require the complete process of collective bargaining.
Stage # 2. Negotiating Team:
The negotiating team consists of both the representatives of the workers and the management. On management side, the negotiating team consists of the Personnel manager, the Production manager or the Company lawyer. On the workers’ side, the negotiating team consists of the office-bearers of the trade union. It is not essential that the number of representatives on both sides are equal; as decisions are not taken by majority of vote.
Members of the negotiating team should have correct understanding of the demands made, the knowledge of operations, the working conditions, production norms etc. They should have adequate job knowledge and skill for negotiations. They should represent their parties truly with full authority to speak for them and make decisions.
Stage # 3. Bargaining Power:
Each party in the bargaining process will weigh its strengths and weaknesses. Each party will determine the magnitude of concessions which it can give to the other party. The volume of concessions will depend upon the estimated loss of each party in case the agreement is not reached and there arises strikes or lockouts. Management will estimate the cost of the work stoppage (due to strikes or lockouts) and the union will work out the estimated loss of wages.
Stage # 4. Bargaining Procedure:
Generally, the union’s charter of demands ranging from wage hike to improvement in working conditions to the personnel policies are discussed at the bargaining table. Usually the negotiations are presided over by the chief-negotiator who is from the management side. The chief negotiator presents the problem, analysis its intensity and listens views of both the parties.
Each side presents its case to the best of its ability—the management giving its prognosis to the state of industry, its capacity to pay and the consequent constraints; the union demanding wage increase to meet the expectations of the workers, to meet the high cost of living and the acceptance of similar wage hikes by other industrialists.
There can be three types of negotiating procedures:
(i) Haggling-bargaining – This is the orthodox procedure of labour-negotiations. Each issue is settled one by one. Each item arises as a separate issue, is argued out, disposed of and tucked away. Then attention is turned to the next.
(ii) Boulwarism-Bargaining – Here the company makes an extensive communication programme to get the views of employees. It explains to the workers the company’s policies and objectives and make them understand that whatsoever the company is doing, it is doing so voluntarily and not because the union forced it to do so.
(iii) Continuous bargaining – This approach calls for both the parties to explore difficult bargaining problems in joint meetings over a long period of time. Negotiations are not postponed till the last minute, but efforts go on, over a long period, to resolve the issue.
Stage # 5. Collecting Bargaining Agreement:
The usual outcome of collective bargaining is the agreement. An agreement is a written statement of the terms and conditions arrived at by the collective bargaining process. The agreement should be printed and circulated among all the workers so that they know exactly what has been agreed upon between the management and the trade union. After signing the agreement, the contract becomes binding upon both the parties.
Stage # 6. Implementation of the Contract:
The progress of collective bargaining is not measured by mere signing of the contract. Rather it is the administration/implementation of the contract which makes it all the more important. Bargaining cannot progress until and unless the right attitudes are formed by both the parties. Both parties should sincerely try to implement the contract in an unbiased manner.
Bargaining agreement may be made on temporary basis. Before the expiry of the agreement, both the parties should consult each other and renew or terminate the agreement depending upon the circumstances. At this stage, management may reject the demand for renewal due to the change in circumstances. Such situation may again lead to negotiation. So the collective bargaining agreement is a continuous process.
Collective Bargaining Agreement: Features, Elements, Functions, Types, Advantages and Duration
Collective Bargaining Agreement is the agreement arrived at between the representatives of a trade union and the employer. In other words, it is an agreement between a single employer or an association of employers and the labour union which regulates the conditions of employment.
It provides a constitutional framework by which the parties to collective bargaining can make, apply and monitor, on a continuous basis, the industrial relations affecting themselves and those on whose behalf they negotiate. Further, a Collective Bargaining.
Agreement constitutes the sum total of obligations of the parties to the agreement obligations that are not only legal but also moral. Collective Agreements have a strong moral force the parties cannot breach their terms except in case of real pressure.
The collective agreement explicitly defines the scope of the respective rights and duties of the union and the management. In general terms, the management is guaranteed the right of administrative initiative, i.e., the right to make initial decision and to put these decisions into effect.
The union, in turn, has the right to protest and seek redress from a decision, usually with the explicit understanding that, if the management is found to be in error, under the grievance procedure, full restitution will be made to the union. But the management has the authority to get the job done.
Features of Collective Bargaining Agreement:
1. It is a special kind of a commercial agreement.
2. It is negotiated collectively between the trade unions acting on behalf of the company.
3. It may be written or unwritten.
4. It contains the duties of both-the employer and employee, the terms and conditions which both the parties must adhere to.
5. It is usually updated on a yearly basis.
Elements of Collective Bargaining Agreement:
i. The conditions of employment including the working hours, working conditions, benefits, vacations and holidays, wages & overtime payment.
ii. Procedures which are to be undertaken in order to resolve disputes and conflicts as quickly and effectively as possible.
iii. Legal rights of both the parties involved.
Functions of Collective Agreements:
The function of a collective agreement as a whole is to determine the terms and conditions of employment and to lay down the rules and limits on management prerogatives in offering employment and in the management of people so that employment relationships are formalised.
When employment relationships-become formalised, the collective agreement expands to cover four basic functions, namely (1) union security and management rights, (2) wage and effort bargain, (3) individual security, and (4) administration. These four functions are part of every collective agreement. But while some agreements explicitly define these functions others need a careful examination of the practices of the parties under the agreement to identify these functions.
1. Union Security and Management Rights:
Every agreement constitutes recognition by one party or the other, and defines their relationship who speaks for whom, with what authority, for how long, and when or in what conditions. The members of a bargaining unit are the people for whom the union, recognised by the management as the sole representative or an exclusive bargaining agent, speaks for the duration stipulated by the parties in the agreement which is renewable generally after the expiry of the period, and in some cases during the period any time before the expiry date, ordinarily for wage adjustments.
The management rights provisions in the agreements do not contain management rights clauses on the ground that all rights not specifically bargained away belong to the management. But most companies find it more practical to insert reminders that certain specific areas of action and decision-making remain within the management’s domain.
Broadly, the management often needs to retain three types of rights, viz.:
(a) Freedom to select the business objectives.
(b) Freedom to determine the use to which the material assets of the enterprise will be put, and
(c) Power to discipline employees for the right reasons.
2. The Wage and Effort Bargain:
This is the heart of the agreement. It tells the employee how much pay he will get for how much work on a given job. It tells the management how much it will cost, in money terms, to get the desired performance and production.
This function consists of:
(a) Determining pay for time worked, i.e., wage rates and wage differentials, using the techniques of standard job evaluation procedure.
(b) Establishing standards for task performance, i.e., effort bargain, which is present in every agreement, generally by implication. Standards may take a concrete form, as in time studies, or they may be loose and undefined. If the management is careless about the standards, employees may set them by default. Standards determine the intensity of each hour worked, and the performance expected under the existing working conditions.
Once the standards are set, they may be altered only with a change in working conditions, technology, and methods of working. The effort bargain makes such stipulations as, (i) rules for setting standards or making time studies, (ii) crew size, manning tables, (iii) quotas, and (iv) work rules, including safety rules, applying to the task.
(c) Determining the premium pay for jobs, namely, overtime pay, shift differentials or allowances, hazard allowances, etc.
(d) Specifying pay for time not worked, i.e. fringe benefits or perks; these are inescapable but at the same time predictable fixed labour costs.
(e) Making provisions for contingent benefits, which constitute variable costs. Not every employee gets these benefits, which include death relief, health and welfare plans, involuntary unemployment benefits, etc.
3. Individual Security:
“The wage and effort bargain is the fundamental contract offered to the employee when he accepts his job. It obligates the management to pay him according to the terms set down. In turn, it obligates the employee to perform as specified in the agreement, or as decided by the management in day-to-day operations. But it contains no guarantee of continuance; every employee wants some guarantee of continuity of employment.
Broadly speaking, this attitude coincides with management interests, because the company does not want excessive turnover. Thus there has to be an accommodation of company and employee interest. This is done by laying down the job rights stipulating seniority—protective, opportunity and privilege seniority. But union agreements rarely make seniority the sole determinant of job rights.
The seniority criterion is clubbed together with merit or ability to do the job, particularly where questions of opportunity seniority are involved. Individual security also requires adoption of a process of grievance handling, and communication of its operational details to the employees covered by the agreement.
This refers to the setting up of a machinery to enforce agreement terms and put the process into effect, including the delegation of the requisite authority to specific individuals who are given certain responsibilities in connection with the agreement. Part of this machinery is internal, involving only employees, and the other part is external, involving outsiders like union representatives, government officials and arbitrators. In other words, the agreement provides for on-the-job representation through union officials in general and shop stewards in particular, and arbitration of grievances by outside arbitrators.
In both the areas the agreement has to make provision for:
(a) Payment for time spent by stewards in handling grievances,
(b) Time off the job for stewards to confer with the employees and supervisors,
(c) Union officials to visit workers on the shop floor,
(d) Composition of a panel of arbitrators, and
(e) Duties and powers of arbitrators is determining the grievances.
Types of Collective Agreement:
Types of Collective Bargaining Agreements in India:
1. Bipartite Agreements:
These are the most important types of collective agreements because they represent a dynamic relationship that is evolving in establishment concerned without any pressure from outside. The bipartite agreements are drawn up in voluntary negotiation between management and union.
Usually the agreement reached by the bipartite voluntarily has the same binding force as settlement reached in conciliation proceedings. The implementation of these types of agreements are also not a problem because both the parties feel confident of their ability to reach the agreement.
It is tripartite in nature because usually it is reached by conciliation, i.e., it arises out of dispute referred to the appropriate labour department and the conciliation officer plays an important role in bringing about conciliation of the differing viewpoints of the parties. And if during the process of conciliation, the conciliation officer feels that there is possibility of reaching settlement, he withdraws himself from the scene.
Then the parties are to finalize the terms of the agreement and should report back to conciliation officer within a specified time. But the forms of settlement are more limited in nature than bipartite voluntary agreements, because they strictly relate to the issues referred to the conciliation officer.
3. Consent Award:
Here the negotiation takes place between the parties when the dispute is actually pending before one of the compulsory ab judicatory authorities and the agreement is incorporated to the authority’s award. Thus though the agreement is reached voluntarily between the parties, it becomes part of the binding award pronounced by an authority constituted for the purpose.
The idea of national or industry-wide agreements and that too on a particular pattern may appear to be a more ideal system to active industrial relations through collective bargaining but the experience of various countries shows that it is not possible to be dogmatic about the ideal type of collective bargaining as it largely depends upon the background, traditions and local factors of a particular region or a country.
Duration of Collective Bargaining Agreements:
The duration of Collective Bargaining Agreements vary widely.
The trade unions generally prefer shorter contracts whereas the managements favor longer contracts.
In the US the period of contracts is 1 to 3 years or more with option to review.
In the UK, these are “Opened” contracts which can be negotiated on notice at any time.
In the Scandinavian countries, contracts are for 1 year which can renewed. In India, the position of Collective Bargaining Agreements is not clear. However, from a study of 114 contracts in 1961, the Employers Federation of India showed that majority of CBAS vary from 1 to 5 years, with a strong favor towards a longer contract depending upon the employer’s capability for a stronger bargaining process.
Advantage of Long-Term Contract over the Short Term Contract:
1. It imparts stability to labour-management relations.
2. It helps in planning production and expansion programmer based on fixed labour costs.
Benefits of Effective Collective Bargaining Agreement:
Collective Bargaining Agreement is as important to the management as it is to the union and addresses the needs of both.
1. The employers and the union negotiate and co-operate in good faith in order to reach an agreement, which is mutually beneficial, thus, breeding a sense of goodwill.
2. The rights and responsibility of both the parties are set out and therefore, the interest of both can be protected.
3. The process leads to better working conditions and more efficient performance.
In a nut shell, CBA is a step forward for both the parties, leading to a smoother performance, better working conditions and a better relationship between the employees and the management.
Collective Bargaining – Advantages and Disadvantages
1. Provides security to workers – Collective bargaining provides security to workers as it becomes easier for employees to fight for their rights. By being members of the trade union, they have a common voice which works for their betterment in the form of higher wages, shorter working hours, better health care etc.
2. Prohibits strikes – There are certain issues between employees and employer that are not settled and employees go on strikes. With collective bargaining, there is no need for workers to stop working and go on strikes as they have representatives with them who work for their benefits. Moreover, collective bargaining also protects employers because its task is to arrive at a mutual agreement which is unbiased and beneficial for both the parties.
3. Helps increase wages and productivity – Happy and satisfied employees are more than willing to perform better if they know that they are paid right and treated well. This increases their morale and they work with greater level of enthusiasm leading to larger profits.
4. Reduces bias and favoritism – Collective bargaining works for both the employers and employees. The agreement is mutually agreed upon between both the parties neither being biased nor favorable to either of them.
5. Stabilizes the business – Collective bargaining helps in stabilizing business as both the employers and employees mutually agree upon things which removes the chances of strikes and shutting down of work and hence stabilizing the business.
6. Transparent process – Although negotiations happen behind the closed doors but the results are very transparent and unbiased. Whatever is discussed is put into writing which serves as reference materials for just decisions.
1. Negative effect – Collective bargaining can affect the workers in a negative way also. This is because it caters to the need of many people but still, there are a few people who are disregarded and ignored. As a result, there can be dissatisfaction and negativity among the employees.
2. Can be biased to employers – Some groups which are not in favour of collective bargaining argue that this process gives too much power to employees and leave the employers with tied hands when it comes to running their businesses. This is because, it becomes a regular practice for employees to get things done in their favour.
3. Long procedure – The agreements which are the result of collective bargaining takes a lot of time from negotiations to materialized results. The negotiations may take months or even years to finish.
4. Can widen the gap between employers and employees – Although collective bargaining is aimed to come up with solutions beneficial to both the management and employees, there are cases where nothing is agreed upon. When things go wrong, situation might get aggravated instead of being mitigated. This can create barriers between employers and employees instead of a healthier relationship.
5. Can benefit only those who are part of the union – It is very sad that collective bargaining tend to benefit only those who are a part of the trade union. The representative of union get wage mark-up over their non-unionized counterparts.
Hence, collective bargaining has both advantages and disadvantages which can work for or against the parties involved. It can have both negative and positive effects for the growth of a company.
Collective Bargaining – Critical Issues: Poor Status of Industrial Workers, Fragmented and Immature Trade Union, Multiple Trade Unions, Conservatism and a Few Others
Although the growth of Collective Bargaining in India has been increasing, still there are various critical issues involved in its implementation. It developed first as a method to resolve conflicts and then as a process of wage fixation, other terms and conditions and only recently, it has emerged as a method of determining and regulating the mutual relations other than wages. Yet, wages continue to be the main concern for both the parties.
The issues involved are as follows:
1. Poor Status of Industrial Workers:
Although our country has become highly industrialized and a large number of workers are engaged in these industries, still, a large number of average workers continue to be illiterate. They do not have mature political consciousness i.e., they are controlled by outside leaders who are active workers of different parties.
Moreover, these workers still remain irrational in their thinking and approach. They consider their employer as formal masters even when they share cordial relations. The workers keep on shifting their loyalty from one union to another or one leader to another frequently especially in the Mumbai region.
2. Fragmented and Immature Trade Union:
For successful collective bargaining, presence of a stable trade union, free from political and other interferences is very crucial. But unfortunately over the last sixty years, the trade union in all employments have come to a halt. However, we can’t say that the labour movement has become stable, but its role has been decreasing.
Another problem is the fragmentation of labour union. Fragmentation is very deep and widely spread out. As a result, positive labour management relations have not been developed as much, as we expected.
3. Multiple Trade Unions:
Nowadays, political parties and trade unions desire to be associated with each other. Trade Unions want to be linked with political parties to secure better leadership and hence better bargaining power with political pressure. On the other side, political parties desire association with trade unions to secure the support of more workers and their family.
This desire on the part of the workers and the political parties has resulted in the formation of multiple unions leading to inter-union quarrels (squabbles).
4. Absence of a Negotiating Agent:
Creation of a negotiating agent of the workmen by giving recognition to the most representative union is the most important issue in the development of collective bargaining.
Recognition is of three types:
(a) Informal Recognition – In this, the Labour Union awares the employer of the views of employees on the working conditions, rules and regulations and orders issued by management from time to time.
(b) Formal Recognition – Here, the workers organization – has the right to be consulted in any matter affecting its members.
(c) Exclusive Recognition – In this, the employer compulsorily allow the union to negotiate with him freely and fearlessly the terms and conditions of employment and working and abide by them for the given period.
5. Go – Slow Technique Rather than ‘Strike’:
Nowadays workers have adopted ‘Go – slow’ technique as an alternative to strike for collective bargaining. ‘Go – slow’ or ‘slowdown’ is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of duties.
Over the years, workers have realized that management (employers) do not find facing strikes as a problem in unfavorable market conditions. Hence, they don’t go on strike, rather choose ‘go-slow’ option as an effective tool for negotiation.
‘Go-slow’ option is a simple and powerful tool to force the employers and management to agree to the demands of workers in Indian industries.
The employers in many industries are conserved and paternalistic in attitude.
There is a strong reluctance among them to delegate authority to employees. They believe that the workers should accept what is told to them and not question their employers.
This paternalistic attitude of employers often makes a mockery of collective bargaining. This obscure outlook and unwillingness to analyse issues in a rational way renders collective bargaining, a futile exercise.
7. Large Number of Protective Legislations:
The Indian state has a strong belief in paternalism (rigid rules & dictatorship), which results in a large number of protective labour legislation. The state is busy in taking over the tasks of securing rights, obligations and facilities what we call as the ‘statutory measures’ rather than encouraging the democratic process of collective bargaining.
To conclude, the problems and issues that have affected the development of collective bargaining in India are both structural and attitudinal. This is due to the employers, the labour unions and most importantly, the state. Though, India is a democratic state, still it looks at collective bargaining as a negative process. These issues are complex and large in number. Therefore, they can’t be tackled in isolation and needs an integrated approach.
Collective Bargaining – Factors Important for its Success: Trade Union Recognition, Good Faith, Process of Negotiation and a Few Others
Factor # 1. Pluralism and the Freedom of Association:
A pluralistic outlook involves the acceptance within a political system of pressure groups (e.g. religious groups, unions, business associations, political parties) with specific interests with which a government has dialogue, with a view to effecting compromises by making concessions.
Pluralism implies a process of bargaining between these groups, and between one and more of them on the one hand and the government on the other. There can, therefore, be no meaningful collective bargaining without the freedom of association accorded to both employers and workers.
Factor # 2. 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 recognized for collective bargaining purposes.
The accepted principle is to recognize the most representative union, but what criteria is used to decide it and by whom may differ from system to system.
Factor # 3. Support of Labour Administration Authorities:
Support by the labour administration authorities is necessary for successful collective bargaining.
This implies that they will:
(i) 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.
(ii) Will not support a party in breach of agreements concluded consequent to collective bargaining.
(iii) As far as is practicable, secure observance of collective bargaining agreements.
(iv) Provide methods for the settlement of disputes arising out of collective bargaining if the parties themselves have not so provided.
Factor # 4. 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.
Factor # 5. 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.
Factor # 6. Negotiation in Industrial Relations:
Collective bargaining and negotiations are often used synonymously. But in reality negotiation is actually considered to be a part of the collective bargaining process. Negotiation has been described by Walton and McKersieas as “the deliberate interaction of two or more complex social units which are attempting to define or redefine the terms of their interdependence”.
Gottschalk had defined negotiation as “an occasion where one or more representatives of the two or more parties interact in an explicit attempt to reach a jointly acceptable position on one or more divisive issues”. In industrial relations, negotiation is used a process for resolving conflict between two or more parties whereby both or all modify their demands to achieve a mutually acceptable compromise.
Factor # 7. Prerequisites for Negotiation:
The requirements for an effective negotiation process are as follows:
i. There should be mutual dependence between the conflicting parties.
ii. Some interests must be shared and others opposed.
iii. On party should not have, or be unwilling to use, coercive power in the conventional “command and control” strategy.
Factor # 8. Process of Negotiation:
During negotiation, the conflicting parties involved move from their ideal position to a settlement point that is mutually acceptable. The position of this settlement point depends on the relative bargaining strength and skills of the negotiator. Here one of the parties might have to move more or less as compared to the other one.
Collective Bargaining – Essential Conditions for its Success
Collective bargaining can succeed only when the management and the trade unions realise their responsibilities and are desirous to make it success. It can flourish in a co-ordinal, friendly, peaceful and liberal environment. They must proceed with a feeling of mutual accommodation and adjustment after the conclusion of the agreement. At the same time, occurrence of strikes or lockouts does not imply failure of collective bargaining process.
Strikes and lockouts, within certain rules of fair conduct are accepted as integral part of the process of collective bargaining. Lack of such right may make the trade union a weak bargainer, because there will be little inducement for the employer to work out the settlement.
The success of collective bargaining depends upon the following conditions:
(i) Existence of a well-organized and fully recognized trade union is the primary condition for the successful process of collective bargaining. The union participating in the collective bargaining process should be strong, democratic and enlightened. The weak and fragmented unions are regarded as alien outside force by the management.
(ii) There should be willingness to give and take by both the parties. If either of the parties adopts on adamant attitude, the bargaining will not be possible. The trade unions should refrain from putting forward exaggerated demands. An emphasis on accommodation rather than conflict should be the spirit of negotiations.
(iii) Collective bargaining is possible only in an atmosphere of mutual trust and recognition. Both the employers and trade unions should avoid unfair labour practices otherwise the whole atmosphere of collective bargaining gets vitiated, bitter and strained. Trust and openness are very essential for meaningful discussions.
(iv) An on-going process of collective bargaining makes it easier to find the solutions of conflicting interests. The representatives of employers and unions should hold meetings at regular intervals to consider the matters of common interest.
(v) The effectiveness of collective bargaining cannot be attained without maturity of leadership of both sides on the bargaining table. They must have the intelligence to distinguish between basically important and trivial issues. The negotiators should possess such qualities as skill, experience, intelligence, honesty, resourcefulness and technical know-how.
(vi) The negotiators must have a problem-solving and positive attitude rather than a fighting approach. Conflicting attitudes do not lead to amicable solutions rather it may foster agitations and pressure tactics.
(vii) A deadlock must be avoided in the process of negotiations. A total rejection of all the demands of the union or rejection of some important demands by the management lead to deadlock. At times, it may be necessary to leave highly controversial issues for the time being. But as far as possible, efforts should be made to continue talks. Channels of communication should be kept open, to the greatest possible extent.
(viii) Intelligent collective bargaining demands specialised training of the negotiators. The increasingly technical complexity of collective bargaining requires expert professional advice, experience and skill on the part of the negotiators.
Conditions for Success of Collective Bargaining as per the Reports of National Commission on Labour:
Collective bargaining is like a double edge weapon which is to be used with full care.
The following pre-requisites should be kept in mind for the successful working of trade unions:
(i) There must be strong, mature and honest people from both sides to do the negotiation.
(ii) It is highly desirable that the negotiation should be based on facts, and figures and both the parties should always keep a constructive approach.
(iii) If an organization has got more than one plant or unit, the collective bargaining should be entered at the plant level and the local management should be delegated proper authority to negotiate with the local trade union.
(iv) In order to have cordial relations and faith on collective bargaining, any type of unfair labour practices must be avoided by both the parties.
(v) It is essential that both the parties should be highly flexible in their approach. No party should take any rigid attitude. They should sit on negotiation table with a view to reach an agreement.
(vi) After an agreement has been finalized, it must be given a legal shape and a copy of that should be given to every member.
(vii) The implementation of the agreement should be with a cheerful and supportive attitude in totality.
Collective bargaining is a systematized and an institutionalized representative process. It is a fair and democratic attempt at solving mutual disputes. It provides method for regulation of conditions of employment. It generally leads to better mutual understanding.