Collective Bargaining

COLLECTIVE BARGAINING Introduction and Meaning of Collective Bargaining Good relations between the employer and employees are essential for the success of an industry.In order to maintain good industrial relations, it is necessary that industrial disputes are settled quickly and amicably.One of the efficient means of resolving industrial disputes and deciding the employment conditions is Collective Bargaining. (C.B.) C.B. is a process in which the representatives of the employer and of the employees meet and attempt to negotiate a contract governing the employer-employee union relationship. C.B. involves discussion and negotiation between two groups as to the terms and conditions of employment. It is called ‘collective ’ because both the employer and the employee act as a group rather than as individuals. It is known as ‘bargaining’ because the method of reaching an agreement involves proposals and counter proposals, offers and counter offers. C.B. is a rational process which appeals to facts and to logic, reconciles conflicting interests in the light of comman interests of both parties.It is a bipartite and dynamic process. C.B.plays a significant role in improving labour- management relations and in ensuring industrial harmony.The negotiations for C.B. require joint sessions of the representatives of labour and management.These help a lot in promoting a better understanding of each other’s point of view as well as the problems confronting 1

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

Origin The phrase C.B.is said to have been coined by Sydney and Beatrice Webb of Great Britain which is said to be the ‘home of collective bargaining’.The idea of C.B. emerged as a result of industrial conflict and the growth of the trade union movement. In India, the first collective bargaining agreement was concluded in 1920 at the instance of Mahatma Gandhi to regulate labourmanagement relations between a group of employers and their workers in the textile industry in Ahmedabad. Therefore, C.B. is a process of negotiation by collective action by a body of workers regarding their terms and conditions of service such as wage leave, norms of employment, gratuity, bonus and other benefits. The objective is to harmonise labour relations and to promote industrial peace.

Definition of Collective Bargaining What is Collective Bargaining? There are two parties ------- workers and employer in an industrial establishment. Both have conflicting interests. Workers always desire higher wages for the service rendered and also better working conditions at the work-place. On the other hand, employer expects higher and higher productivity in return of the wages paid. There are always some differences between the two groups on variety of matters. These differences/ disputes need settlement to 2

harmonise the industrial relations in the organization.Through collective bargaining, differences/ disputes are resolved on a negotiating table. The term collective bargaining has been defined as under : According to Dale Yoder , “ Collective Bargaining is the term used to describe a situation in which the essential conditions of employment are determined by a bargaining process undertaken by representatives of a group of workers on the one hand and one or more employers on the other hand.’’ In the words of Edwin B.Flippo, “C.B. is a process in which the representatives of labour organization and the representatives of business organization meet and attempt to negotiate a contract or agreement, which specifies the nature of employee- employerunion relationship.” According to John T. Dunlop, the term collective bargaining describes multiple meanings : “C.B. is (i) a system which establishes, revises and administers many of rules which govern the workers’ place of work ; (ii) a procedure which determines the quantum of compensation which employees should receive and which influences the distribution of economic benefits ; (iii) a method of settling disputes and of determining, after its expiry, whether a dispute should be reopened or whether a strike or a lock-out should be resorted to or not.” According to Michael J. Jucius, “ C.B. refers to a process by which employers on the one hand and representatives of employees on the other, attempt to arrive at agreements covering the conditions under which employees will contribute and be compensated for their services.”

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

Features / Characteristics of Collective Bargaining 1- Collective Process : The representatives of both the management and the employees participate in it. Employer is representated by its delegates and , on the other side, employees are representated by their trade union. Both the groups sit together at the negotiating table and reach at some agreement acceptable to both. 2- Continuous Process : It is a continuous process.It does not commence with negotiations and end with an agreement.It establishes regular and stable relationship between the parties involved. It involves not only the negotiation of the contract, but also the administration or application of the contract also.It is a process that goes on for 365 days of the year. 3- Flexible and Mobile : It has fluidity. There is no hard and fast rule for reaching an agreement. There is ample scope for compromise. A spirit of give-and-take works unless final agreement acceptable to both the parties is reached. 4- Bipartite Process : C.B. is a two party process. Both the parties —employers and employees—collectively take some action.There 4

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

Functions of Collective Bargaining Over the past few decades, collective bargaining has come to be accepted as a process of decision – making and as a mechanism for balancing the power between the employers and the employees on a case- by- case basis. Prof. Arthur D. Butler has identified the functions of collective bargaining under the following three heads :

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(1) (2) (3)

C.B. as a technique of long- run social change. C.B. as a peace treaty between two parties in continual conflict. C.B. as a system of industrial jurisprudence. Functions of C.B. Social Change

Industrial Peace

Industrial Democracy

1-Long- Run Social Change : C.B. in its broader aspect is not confined only to the economic relations between employers and employees. Perlman says, “ It is a technique whereby an inferior social class or group carries on a never- slackening pressure for a bigger share in the social soverneignty as well as for more welfare, security and liberty for its individual msmbers. C.B. manifests itself equally in politics, legislation, court litigation, government administration, religion, education and propaganda.” C.B. acts as an agent to bring about the social change,i.e., it contributes towards the change in nteraction patterns, values and normative system of the society at large. The contribution of C.B. towards the process of social change brings to light two important implications : i.

ii.

C.B. is not an abstract class struggle, but is rather pragmatic and concrete. The inferior class’s aim is to acquire a large measure of economic and political control over crucial decisions in the areas of its most immediate interest, and to be recognized in other areas of decision- making. C.B. adapts itself to the changing social, legal and economic environment. It is a source of stability in a changing environment. The wage- earners have enhanced their social and economic position --- in absolute terms and in relation to other groups --- and at the same time , the management has attained a large measure of power and dignity.These gains were not registered in one great revolutionary change, but 6

rather step by step, with each clash between opposing parties settled with a new compromise somewhat different from previous settlement. Thus C.B. accomplishes long-run stability on the basis of day by day adjustments in relation between management and labour. 2- Peace Treaty : C.B. is a sort of peace treaty between two parties in continual conflict. However, the settlement between the two parties is a compromise. The extent to which each side is willing to accept less than its original bargaining demand depends, in part, on how strong it is vis-à-vis its opponent. “The compromise is a temporary truce with neither side being completely satisfied with the results. Each would like to modify it at the earliest opportunity. Since the contract is almost always of a short duration, each begins immediately to prepare a new list of demands, and to build up its bargaining strength in anticipation of the next power skirmish.’’ But in a majority of cases, C.B. agreements are signed before either opponent fires a shot. 3- Industrial Juris prudence : C.B. creates a system of ‘industrial jurisprudence’. It is a method of introducing civil rights into industry,i.e., of requiring that management be conducted by rules rather than by arbitrary decisions.’’It establishes rules which define and restrict the traditional authority exercised by employers over their employees, placing a part of the authority under the joint control of union and management. --- It is a rule- making or legislative process, in the sense that it formulates the terms and conditions under which labour and management will cooperate and work together over a certain stated period. --- It is an executive process, for both management and trade union officials share the responsibility of enforing the rules. --- It is a judicial process, for in every collective agreement there is a clause/ provision regarding the interpretation of the agreement.

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Scope of Collective Bargaining There is no standard specification of what should not be included, although certain issues are often sought to be excluded from C.B. and retained for discussion and disposal by the management. Taylor observes : “ The essence of free collective bargaining is that the scope of the relationship, the procedures for negotiation and joint dealing, and the substantive terms of employment are all private matters to be worked out by unions and management without government interference or direction.’’ The scope of C.B. has increased tremendously in recent years, and many new subjects have been included under it. Randle adds : “The expansion in the scope of C.B. has been due to various factors, namely : (i) The growing strength of the unions which have pressurized managements to include new subjects in the agreements ; . (ii) Increased profits have led to a favourable response to the demands of the employees ; (iii) Increased prices alongwith increased production have contributed to expansion in the subjects for C.B. ; (iv) The liberal and sympathetic attitude evident in the decisions of the courts and legislative enactments have also favoured this expansion.’’

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As the bargaining relationship matures and the two parties grow in mutual trust and confidence, the agreement acts as a framework for peacefully settling day-to-day disputes. And when the new contracts are negotiated, additional subjects are brought under collective bargaining. The contract provisions may be divided into four categories : --- union security --- worker security --- economic factors ---management protection. Union security : A union security clause means the extent to which the contract protects the union in holding its membership. This clause may vary from mere recognition at one extreme to the ‘closed shop’ at the other. In many contracts, a “check-off’’ clause is also included, which requires the employer to deduct the union dues from the employee’s pay and forward them directly to the union. Worker security : This clause provides for seniority protection, covering promotion, job assignment and lay-off. Economic factors : The economic items include wages and the fringe benefits.

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

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iii.

iv. v. vi.

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

More than 50 issues have been included in the collective bargaining agreements. The issues covered under agreements can be grouped in three categories: a) employment and working conditions; b) labour welfare, labour recruitment and management matters; c) organizational matters. The first two which cover wages, bonus, D.A., retirement benefits, working hours, holidays with leave, supply of subsidized items like food, transport, housing, etc. are workerinterest oriented. The last category comprising union recognition, exclusive bargaining rights, check-off schemes, workers participation in management, etc. are union-interest oriented matters.

Essential Prerequisites of Successful Collective Bargaining The following pre-requisites are essential for C.B. to be successful :

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

Stages And Bargaining Process

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

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