Unit 2

 Collec ve Bargaining: Significance, types & procedure of

Collec ve bargaining Discipline
 The Industrial Employment (Standing Orders) Act 1961,
 Misconduct, Disciplinary Ac on,
 Types of Punishments,
 Code of Discipline,
 Domes c Enquiry,
 Grievance Handling in IR: Grievance Se lement Procedure,
 Industrial Disputes,
 Preven ve & Se lement Machinery in India.
 Employee Par cipa on and Empowerment: Objec ves,
Employee Par cipa on, Advantages of Employee
Par cipa on,
 Employee Par cipa on in India
 Methods of Par cipa on
 Employee Empowerment.
 Case Studies
COLLECTIVE BARGAINING- MEANING, CONCEPT, FUNCTIONS, NATURE, TYPES, ELEMENTS,
PROCESS, CONDITIONS FOR SUCCESS OF COLLECTIVE BARGAINING

MEANING -AND CONCEPT OF COLLECTIVE BARGAINING

The Term “Collec ve Bargaining” Originated in the wri ngs of Sidney and Beatrice Webb, the famed
historian of the Bri sh labour movement, Towards the end of the nineteenth century. It was first
given currency in the United States by Samuel Gompers. Collec ve Bargaining is a process of joint
decision-making and basically represents a democra c way of life in industry. It establishes a culture
of binarism and joint consulta on in industry and a flexible method of adjustment to economic and
technical changes in an industry. It helps in establishing industrial peace without disrup ng either the
exis ng arrangements or the produc on ac vi es.

Collec ve bargaining has been defined in the Encyclopaedia of Social Sciences, as “a process of
discussion and nego a on between two par es, one or both of whom is a group of persons ac ng in
concert. The resul ng bargain is an understanding as to the terms and condi ons under which a
con nuing service is to be performed.…More specifically, collec ve bargaining is a procedure by
which employers and a group of employees agree upon the condi ons of work.

collec ve bargaining defines as a ‘social-control technique for reflec ng and transmi ng the basic
power rela onships which underlie the conflict of interest in an industrial rela ons system.’ The
defini on emphasises important characteris cs of collec ve bargaining, that it is concerned with the
applica on of power in the adjustment of inherent conflicts of interest. The Webbs described
collec ve bargaining as an economic ins tu on, with trade unionism ac ng as a labour cartel by
controlling entry into the trade.

FUNCTIONS OF COLLECTIVE BARGAINING

Collec ve bargaining serves a number of important func ons. It is a rule making or legisla ve
process in the sense that it formulates terms and condi ons under which labour and management
may cooperate and work together over a certain stated period.

It is also a judicial process for in every collec ve agreement there is a provision or clause regarding
the interpreta on of the agreement and how any difference of opinion about the inten on or scope
of a par cular clause is to be resolved. It is also an execu ve process as both management and union
undertake to implement the agreement signed. John Dunlop and Derek Bok have listed five
important func ons of collec ve bargaining:

(i) Establishing the rules of the workplace

(ii) Determining the form of compensa on
(iii) Standardising compensa on
(iv) Determining priori es on each side and
(v) Redesigning the machinery of bargaining.

According to Flanders (1974) collec ve bargaining serves two employers’ interests. One is market
control. By nego a ng pay and condi ons that are more or less standard, employers effec vely take
the costs of one of the most important factors of produc on out of compe on. The second interest
served by collec ve bargaining is a contribu on to managerial control.
NATURE OF COLLECTIVE BARGAINING

The essen al characteris c of collec ve bargaining is that employees do not nego ate individually
and on their own behalf, but do so collec vely through representa ves. It can only exist and func on
in the following circumstances:

l If employees iden fy a commonality of purpose, organise and act in concert. l If management is

prepared to recognise their organisa on and accept a change in the employment rela onship which
removes, or at least constraints, its ability to deal with employees on an individual basis. Joseph
Shister has opined that collec ve bargaining can best be analysed by lis ng its principal
characteris cs. He lists five characteris cs;

(i) Collec ve bargaining involves group rela onships;

(ii) It is both con nuous and evolu onary;
(iii) It interacts with the socio-economic climate;
(iv) It varies from se ng to se ng. In collec ve bargaining, the employer does not deal with
workers directly, but he deals with a collec ve authorised ins tu on. It is an ins tu onal
mechanism for:
a) Fixing up the price of labour services;
b) establishing a system of industrial jurisprudence; and
c) Providing a machinery for the representa on of individual and group interests.

It covers the en re range of organised rela onship between union and management, including
nego a on, administra on, interpreta on, applica on and enforcement of wri en agreements. It
sets forth joint understandings as to policies and procedures governing wages, rates of pay, hours of
work and other condi ons of employment. It is recognised as the central ins tu on or ‘heart’ of
industrial rela ons in all democra c na ons

Collec ve bargaining is essen ally a mul dimensional ins tu on. It is also an important means of
extending industrial democracy to employees within the workplace. Several condi ons are necessary
for its emergence and survival. These include freedom of associa on for employees to organise into
trade unions, which are independent both of their employers and of the state, employer recogni on,
bargaining in good faith, and mutual acceptance of the agreements entered into by employers and.
employees. For Clegg, collec ve bargaining covers both the nego a on and the administra on of
agreements. He holds that collec ve bargaining is the principal influence on union behaviour. He
iden fies six dimensions of collec ve bargaining as: extent, level, depth, union security, degree of
control and scope. Further, he argues that the dimensions of collec ve bargaining are themselves
mainly determined by the structures of management and of employers’ organisa ons.

TYPES OF COLLECTIVE BARGAINING

There are two types of bargaining exercises. One is known as conjunc ve or distribu ve bargaining
and the other integra ve or coopera ve bargaining. Though both aim at joint decision-making, their
processes are dissimilar.

Distribu ve bargaining has the func on of resolving pure conflicts of interest. It serves to allocate
fixed sums of resources and hence o en has a “win-lose” quality. In distribu ve bargaining, the
rela onship is a forced one, in which the a ainment of one party’s goal appears to be in basic
conflict with that of the other. It deals with issues in which par es have conflic ng interests and each
party uses its coercive power to a maximum extent possible. In such a situa on, one party’s gain is
the other’s loss.
Wage bargaining is an obvious example of distribu ve or conjunc ve bargaining. In contrast to the
win-lose syndrome of distribu ve bargaining, integra ve bargaining is concerned with the solu on of
problems confron ng both par es. It is a situa on where neither party can gain unless the other
gains as well. Integra ve bargaining has the func on of finding common or complementary interests
and solving problems confron ng both partners. It serves to op mise the poten al for joint gains
and hence o en has a “win-win” quality. It makes a problem-solving approach in which both the
par es make a posi ve joint effort to their mutual sa sfac on. Produc vity bargaining is an instance
of integra ve bargaining.

ELEMENTS OF COLLECTIVE BARGAINING

There are three elements in the system of collec ve bargaining:

1) Issues for Considera on: The issues pertaining to union recogni on and union security come up
for considera on when the organisa on of workers are weak and they struggle for recogni on by the
employers. The issues which are generally taken up for considera on are on several aspects of
employment rela onship, such as wages, fringe benefits, working condi ons, and personnel ma ers
such as promo on, transfer, discharge and dismissal.

2) The Procedure for Considera on: The bargaining machinery and procedure for considera on of
various issues differ in rela on to whether the two par es, employers, managements and workers
and their unions, conduct bargaining on their own or whether a third party, such as the government
intervenes to bring about a se lement between them.

3) Collec ve Agreements and their Implementa on: The term “collec ve agreement” means all
agreements in wri ng regarding working condi ons and terms of employment concluded between
an employer, a group of employers or one or more employers’ organisa ons, on the one hand, and
one or more representa ve workers’ organisa ons or, in the absence of such organisa ons, the
representa ves of the workers duly elected and authorised by them in accordance with na onal laws
and regula ons.

BARGAINING PROCESS

Collec ve bargaining is a two-edged sword; what is won may also be lost. Today’s collec ve bargaining
process is based upon statutory law. What makes collec ve bargaining possible in this context is that
both labour and management have an ul mate harmony of interest; that is, the desire to assure that
the firm for which they work – and from which they are both paid – will remain in business. In order
to stay in business, it must be compe ve with other firms.

The bargaining process includes prepara on of ini al demands, nego a ons, and se lement.
Adequate prepara on for bargaining is o en the key to success –prepara on for nego a ons is a
comprehensive on-going job for both the management and the union.

Prepara on allows each bargaining team to determine their bargaining objec ves; a nego a ng team
to defend its proposals; and to an cipate the opponent’s demands. Among the more important steps
to pre-nego a on prepara ons are the following:

1) Coordina ng prepara ons among persons responsible for gathering and analysing informa on
relevant to the bargaining process.

2) Selec on of a chief nego ator and bargaining team members.

3) Reviewing previous nego a ons because it provides insights into the opponent’s bargaining tac cs
and probable demands.

4) Gathering data on internal opera ons and policies of comparable firms through wage and salary
surveys.

5) Formulate proposals and priori es.

6) Select a suitable site for nego a ons.

7) Organise the relevant informa on in a bargaining book for easy access at the bargaining table.

8) No fy the opponent the intent to bargain by serving required no ce.

One of the most difficult aspects of the collec ve bargaining process is to determine appropriate
bargaining units. The principle to be followed is that there should exist a community of interest among
the employees to be represented. Otherwise, a single bargaining agent would find it impossible to
represent all of their interests equally well.

The first step in the collec ve bargaining process is establishing a rela onship for on-going
nego a ons and the formula on of agreements covering condi ons in the workplace. It is obvious
that a great deal of effort can go into the process of establishing a collec ve bargaining rela onship. It
is an anxiety producing process and that each step may involve bi er conflict between the par es.
Some mes, this conflict escalates to li ga on; and some mes it even spills over to violence. Hence,
one of its objec ves should be promo on of ra onal and harmonious rela ons between employers
and unions.

The second step in the bargaining process relates to the scope of bargaining, i.e., the ma ers on which
to bargain. It consists of three broad categories of items – subjects over which bargaining is mandatory,
subjects considered illegal or prohibited, and subjects on which bargaining is permi ed but not
required. In case of subjects, which are mandatory, the relevant statute or common law makes it unfair
labour prac ce or breach of good faith to refuse to bargain over them. The second category of items
in the scope of bargaining is prac ces considered illegal or prohibited. These are the ma ers that
cannot be bargained under law. Falling between these two categories are items upon which bargaining
is Bargaining Process and Agreements permi ed, but not required. Either side may refuse to discuss
such a ma er. To do so is not considered a breach of fair labour prac ce or good faith.

The third step in the bargaining process is careful structuring. Many observers agree that some
structural aspects are crucial in facilita ng the ability to reach agreements. The personnel department
should take the ini a ve of forming a nego a ng team consis ng of two or three members, besides
the industrial rela ons expert. The management team should include representa ves of the
departments, a personnel specialist, and some one competent to assess the various proposals and
counter proposals. The bargaining teams should also be balanced in terms of number of individuals
present. Both the sides should agree in advance on the ming, loca on, and length of bargaining
sessions.

An agenda should be prepared indica ng which items are to be taken up first – economic or non-
economic. A decision must be made as to whether to treat each item separately, or to seek to bargain
an en re package at once. The task of management team should range from formula on of
management’s charter of demands to the full par cipa on in the actual bargaining sessions; and above
all, the prepara on of the dra of the se lement and, then, the readiness to nego ate.

In absence of good faith bargaining has been found to include:

1) An unwillingness to make counter proposals.

2) Constantly changing posi ons in bargaining.

3) The use of delaying tac cs.

4) Withdrawal of concessions a er they have been made.

5) Unilateral ac ons over topics of bargaining.

6) Refusal to furnish necessary data for nego a ons.

Steps to improve the process of collec ve bargaining are:

• Begin the process of nego a ons with proposals, not demands.

• Avoid taking public posi ons for or against certain proposals in advance of nego a ons.

• Avoid taking strike votes before the process of nego a on begins.

• Give nego ators proper authority to bargain.

• Avoid unnecessary delays in beginning nego a ons and in conduc ng them.

• Insist on offering facts and arguments.

• Make plenty of proposals to enhance the opportuni es to find compromises. Be prepared to

compromise.

• Be prepared to get results gradually.

• Preserve good manners and keep discussion focused on relevant issues.

• Be prepared to stand for a long and hard strike or lockout (as the case may be) in order to force a
se lement jus fied by facts and arguments.

CONDITIONS FOR SUCCESS OF COLLECTIVE BARGAINING

The success of collec ve bargaining depends upon the following factors:

1) The union par cipa ng in the collec ve bargaining process must be strong, democra c and
enlightened. The weak and fragmented state of the unions, smallness and instability of their
membership, rivalries, and company formed and dominated trade unions are some of the reasons for
the undeveloped state of collec ve bargaining. Collec ve bargaining cannot become fully effec ve if
management con nues to regard the union as an alien outside force.

2) One of the principles for establishing and promo ng collec ve bargaining is to give voluntary
recogni on to trade unions as one of the contrac ng par es. It may also have the posi ve benefit of
improving industrial rela ons, produc on and produc vity.

3) There should be willingness to give and take by both the par es and interest on the part of both
to reach an agreement and to make collec ve bargaining work. The trade unions should refrain from
pu ng forward exaggerated demands. Both the par es must realise that collec ve bargaining
nego a ons are by their very nature a part of compromise process. An emphasis on accommoda on
rather than conflict is necessary.
4) The whole atmosphere of collec ve bargaining gets vi ated, rela ons become bi er and strained
and nego a ons more difficult, if one or both the par es engage in unfair prac ces. Both the union
and the management therefore, must desist from commi ng unfair prac ces and must have a
healthy regard for their mutual rights and responsibili es. Trust and openness are very essen al for
meaningful discussion.

5) Collec ve bargaining usually takes place when there are differences between the par es on certain
issues. But in order to make the collec ve bargaining process more successful, it is essen al on the
part of the representa ves of employers and unions to hold mee ngs at regular intervals to consider
ma ers of common interest. Such an on-going process would enable them to understand one
another’s problem be er and make it easier to find solu ons to ques ons on which their interests
conflict.

6) Effec ve collec ve bargaining presupposes an intelligent understanding of both management and

union of the needs, aspira ons, objec ves and problems of the other party. Union leaders must have
full knowledge of the economics of the plant or industry concerned. Management must have a
developed awareness of the nature of the union as a poli cal ins tu on opera ng in an economic
environment.

7) The effec veness of collec ve bargaining cannot be a ained without maturity of leadership on
both sides of the bargaining table. The nego ators should have such quali es as experience, skill,
intelligence, resourcefulness, honesty and technical know-how. They must have the capacity to
dis nguish between basically important and trivial issues. They must know when it is wise or necessary
to compromise and when it may be fatal to concede the demands.

8) Intelligent collec ve bargaining demands specialised training. The increasingly technical complexity
of the collec ve bargaining agenda requires expert professional advice, experience and skill on the
part of the nego ators.

9) Both management and the union o en find it difficult to locate the men on the other side of the
table who are authorised to nego ate. For proper nego a ons, it is necessary to know the persons
empowered to act for the company and the union respec vely.