Collective bargaining in Human Resource Management! Learn about: 1.Introduction to Collective Bargaining 2. Nature 3. Characteristics of Collective Bargaining 4. Importance 5. Principles of 6. Process of Social Change (Prof. Butler’s Views) 7. Content and Coverage of a Collective Bargaining 8. Forms 9. Developing a Bargaining Relationship and Other Details.
Content:
- Collective Bargaining- Introduction
- Collective Bargaining- Nature
- Collective Bargaining- Characteristics
- Collective Bargaining – Importance
- Collective Bargaining- Principles
- Process of Social Change (Prof. Butler’s Views)
- Collective Bargaining Agreement – Content and Coverage
- Collective Bargaining – Forms or Types
- Developing a Bargaining Relationship
- Collective Bargaining in India
- Collective Bargaining – Recent Trends
- Prerequisites of Successful Collective Bargaining
- Collective Bargaining – Conclusion
Collective Bargaining in Human Resource Management: Types, Role, Process, Scope, Importance and Objectives
1. Collective Bargaining- Introduction:
Collective bargaining is a joint consultation process. It is a process of give and take that happens between the employer and the employees, representing their concerns through a recognized union. Collective bargaining permits employees to participate in setting terms and conditions of employment through a representative union.
In real terms, it is actually a participative process and a consulting technique that is being pressed into service by unions and managements to reconcile their conflicting interests.
It is called collective because the employees, as a group, select representatives to meet and discuss differences with the employer. Collective bargaining is opposite of individual bargaining which takes place between management and a worker, as an individual, apart from his fellow employees.
Collective bargaining plays a significant role in improving labour-management relations and in ensuring industrial harmony. The negotiations for collective bargaining 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 them. Through discussions and interactions, each party learns more about the other, and misunderstandings are often removed. Although, all major differences may not always be sorted out, collective bargaining helps in resolving out many minor differences; and there are many instances in which even major disputes have been settled without any work stoppage or outside intervention.
Accordingly, the role of collective bargaining in conflict resolution is very significant. It builds up safety valves, allowing the opposite group’s excess steam to escape without blowing the whole mechanism to pieces.
1. Collective bargaining implies community of interest. Its meaning and form continue changing and this fluidity makes it difficult to define or comprehend in precise terms. Ludwing Teller has defined collective bargaining “as an agreement between a single employer or an association of employers on the one hand and Labour Union on the other hand which regulates the terms and conditions of employment.”
2. The Encyclopedia Britannica defines that collective bargaining is a negotiation between an employer or group of employers and a group of working people to reach an agreement on working conditions. Collective bargaining is more usually understood to be negotiation between one or more trade unions and an employer or group of association of employers.
Trade Union Organisation gives the working people strength in providing means for the expert representation of demands by skilled officials not dependent on the employers for their jobs. Further, a Union has funds and means of obtaining information outside any one undertaking and can secure for the working people at any one firm the support of their fellows in other firms.
3. Encyclopedia of Social Sciences, “collective bargaining is a process of discussion and negotiation between two parties, one or both of whom is a group of persons acting in concert. The resulting bargain is an understanding as to the terms and conditions under which a continuing service is to be performed…. More specifically, collective bargaining is a procedure by which employers and a group of employees agree upon the conditions of work.”
4. R. F. Hoxie- “Collective bargaining is a mode of fixing the terms of employment by means of bargaining between an organised body of employees and an employer or an association of employers usually acting through organised agents. The essence of collective bargaining is a bargain between interested parties and not a decree from outside parties.”
5. Richardson says- “Collective bargaining takes place when a number of work people enter into a negotiation as a bargaining unit with an employer of group of employers with the object of reaching an agreement on the conditions of the employment of the work people.”
6. Cox defines collective bargaining as “the resolution of industrial problems between the representatives of employers and the freely designated representatives of employees acting collectively with a minimum of government dictation.”
7. According to Selig Perlman- “Collective bargaining is not just a means of raising wages and improving conditions of employment. Nor is it merely democratic government in industry. It is, above all, a technique whereby an inferior social class or group exerts a never-slackening pressure for a bigger share in social sovereignty as well as for more welfare and greater security and liberty for its members. It manifests itself actually in politics, legislation, court litigation, government administration, religion, education and propaganda”.
8. In the words of Ludwing Teller, “The collective bargaining agreement bears in its many provisions the imprints of decades of activity contending for labour equality recognition of the notions underlying collective negotiation. Indeed, in the collective bargaining agreement is to be found a culminating purpose of labour activity.”
Concept and Origin of Collective Bargaining:
The phrase collective bargaining 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 collective bargaining emerged as a result of industrial conflict and the growth of the trade union movement, and was first given currency in the United States by Samuel Gompers.
In India, the first collective bargaining agreement was concluded in 1920 at the instance of Mahatma Gandhi to regulate labour-management relations between a group of employers and their workers in the textile industry in Ahmedabad. The phrase collective bargaining is made up of two words — collective, which implies group action through its representatives; and bargaining, which suggests haggling and / or negotiating.
The phrase, therefore, implies “collective negotiation of a contract between the management’s representatives on one side and those of the workers on the other.” It also implies an original yet flexible position from which one of the negotiating parties, or both, may retreat gracefully to a position of compromise.
In collective bargaining, a give-and-take principle is generally involved, for a rigid, hard or inflexible position does not make for a compromise settlement.
2. Collective Bargaining– Nature:
Collective bargaining may be defined as a process of negotiation and other related pressure tactics (like threats, counter-threats) adopted by the employers and the organised workers represented by their union in order to determine the terms and conditions of employment. In other words, it is a technique adopted by the organisations of workers and employers collectively to resolve their existing or future differences with or without the assistance of a third party.
Its ultimate aim is to reach some settlement acceptable to both the parties involved in industrial relations, although, each of them may try to impose its own terms upon the other through pressure tactics and negotiations. From the concept of collective bargaining, a few important facts pertaining to its nature become clear.
These are:
1. It is carried out on a collective as distinct from an individual basis. That is, collective bargaining is bargaining by groups of people.
2. In the bargaining process, the main actors are employees, employers and their associations.
3. The object of collective bargaining is rule-making, i.e., reaching an agreement by specifying the rules pertaining to employment relationship.
4. The main focus of these rules is on the terms and conditions of employment.
5. Collective bargaining is a “civilized bipartite confrontation” between the workers and management with a view to arriving at an agreement, for the object is not ‘warfare’ but ‘compromise’.
6. It is both a device and a procedure used by wage-earners to safeguard their interests; it is an institution or instrument of an industrial organisation for discussion and negotiations between the two parties.
7. It is, moreover, a technique by which an attempt is made to reconcile the needs and objectives of workers and employers and is, therefore, an integral part of an industrial society.
8. The essence of collective bargaining lies in the readiness of the two parties to a dispute to reach an agreement or mutually satisfying settlement. It is concerned about the emotions of the people involved in it as well as with the logic of their interests.
Collective Bargaining Process in India:
Due to the inherent weaknesses in the Trade Unions growth in India such as multiplicity of Trade Unions, affiliation to different political parties, the political domination by politicians professing different ideologies, domination of outsiders in the executive, the Trade Unions are by and large divided.
The employers, on the other hand, are fairly organised and are in a better position at the bargaining counter with the labour leaders. In spite of all weaknesses from which the Trade Unions suffer in India, an attempt has been made under the provisions of the Industrial Disputes Act through the process of collective bargaining.
J. Chandra Shekhar Aiyer in D. N. Banerjee v. P. R. Mukherjee, observes “Hence, having regard to the modern condition of society where capital and labour have organised themselves into groups for the purpose of fighting their disputes, settling them on the basis of the theory that “Union is Strength,’ collect bargaining has come to stay.”
Under the provisions of the Industrial Disputes Act besides arbitration and compulsory adjudication of disputes, provisions exist for the appointment.
Conciliation Officer charged with the duty of mediating in and promoting the settlement of industrial disputes. The main task assigned to the conciliation officer under the scheme of the Act is to go from one camp to the other and to find out the areas of agreement and disagreement and to use his good offices to bring about common understanding between the parties and to use his good offices in order to bring about a settlement of disputes to the satisfaction of the parties.
The memorandum of settlement duly signed by the parties is sent to the appropriate government for publication. A settlement arrived at by agreement between the parties otherwise than in the course of conciliation proceedings also binds the parties to the agreement.
A settlement comes into operation on such date and is binding for such period as is agreed upon by the parties. Dealing with the binding character of a settlement Mr. Justice Chagla in Poona Mazdoor Sabha v. G.K. Dhutia, observed- “Industrial law takes no notice of any private settlement or agreement arrived at between the parties in the course of an industrial dispute……………. an industrial dispute does not end until a settlement is arrived at which has been given a binding effect under the provisions of Section 19(2) and such a settlement proceedings are held under section 12 of the Industrial Disputes Act.”
In Tamil Nadu Electricity Workers Federation v. Madras State Electricity Board, the Madras High Court observed- “The whole theory of organised labour and its statutory recognition in industrial legislation, is based upon the unequal bargaining power that prevails as between the capital employer and in individual workman, or disunited workman. Collective bargaining is the foundation of this movement, and it is in the interest of labour that statutory recognition has been accorded to Trade Unions and their capacity to represent workmen, who are members of such bodies. But, of course, there are limits to this doctrine, for otherwise, it may become a tyranny stifling the freedom of an individual worker. It is not then that every workman must necessarily be a member of the Trade Union, and that outside its fold, he cannot exercise any volition or choice in matters affecting his welfare…”
The principle of collective bargaining has been recognised by the International Labour Organisation.
The Industrial Labour Conference held in 1951 adopted resolution recommending collective agreements which provided that:
1. Machinery appropriate to the conditions existing in each industry should be established by means of agreement or laws or regulations as may be appropriate under national conditions, to negotiate, conclude, revise and review collective agreements, or to be available to assist the parties in the negotiations, conclusions, revision and renewal of collective agreements.
2. The organisation, method of operation and functions of such machinery should be determined by agreements between the parties or by national laws, or regulations as may be appropriate under national conditions.
3. Collective Bargaining- Characteristics:
Randle Observes- “A tree is known by its fruit. Collective bargaining may best be known by its characteristics.”
The main characteristics of collective bargaining are:
1. It is a group action as opposed to individual action and is initiated through the representatives of workers:
On the management side are its delegates at the bargaining table; on the side of the workers is their trade union, which may represent the local plant, the industry membership or nationwide membership.
2. It is flexible and mobile, and not fixed or static:
It has fluidity and ample scope for a compromise, for a mutual give-and-take before the final agreement is reached or the final settlement is arrived at.
Bakke and Kerr observe- “Essentially, a successful collective bargaining is an exercise in graceful retreat — retreat without seeming to retreat. The parties normally ask for more or offer less than they ultimately accept or give. The ‘take-it-or-leave-it’ proposition is not viewed as being within the rules of the game. One of the most damaging criticisms is that a party is adamant in holding to its original position. Before retreating with as much elegance as circumstances permit, each party seeks to withdraw as little as possible. This involves ascertaining the maximum concessions of the opposing negotiator without disclosing one’s own ultimate concession. In this sense, all negotiations are exploratory until the agreement is consummated.”
3. It is a two-party process:
It is a mutual give-and-take rather than a take-it-or-leave-it-method of arriving at the settlement of a dispute as two parties are involved in it. In this connection, Clark Kerr observes- “Collective bargaining can work only with the acceptance by labour and management of their appropriate responsibilities. It can succeed only when both labour and management want it to succeed. ”
4. It is a continuous process:
It provides a mechanism for continuing and organised relationships between management and trade unions. “The heart of collective bargaining is the process for a continuing joint consideration and adjustment of plant problems.”
It does not end with negotiation, but, as Glen Gardiner puts it, “it begins and ends with the writing of a contract. Actually, it is only the beginning of collective bargaining. It goes on for 365 days of the year… The most important part of collective bargaining…is the bargaining that goes on from day to day under the rules established by labour agreements.”
5. It is dynamic and not static:
Because it is a relatively new concept, and is growing, expanding, and changing. In the past, it used to be emotional, turbulent and sentimental; but now it is scientific, factual and systematic. Its coverage and style have changed.
In this connection, J. M. Clark observes- “Collective bargaining has become, with surprising swiftness, one of the greatest forces in our society. In anything like its present scale and power, it is a new thing. It is a process which transforms pleading into negotiation….which permits employees’ dignity as they participate in the formulation of their terms and conditions of employment…which embraces the democratic ideal and applies it correctly and effectively at the place of work.”
6. It is industrial democracy at work:
Industrial democracy is the government of labour with the consent of the governed—the workers. The principle of arbitrary unilateralism has given way to that of self-government in industry. Collective bargaining is not a mere signing of an agreement granting seniority, vacations and wage increases. It is not a mere sitting around a table, discussing grievances.
Basically, it is democratic. It is a joint formulation of company policy on all matters which directly affect the workers in a plant. It is self-government in action. It is the projection of a management policy which gives the workers the right to be heard. It is the establishment of factory law based on common interest.
7. Collective bargaining is not a competitive process but is essentially a complementary process:
Each party needs something that the other party has, namely, labour can make a greater productive effort and management has the capacity to pay for that effort and to organise and guide it for achieving its objectives. The behavioural scientists have made a distinction between “distributive bargaining” and “integrative bargaining.”
The former is the process of dividing the ‘cake’ which represents the whole produced by the joint efforts of management and labour. In this process, if one party wins something, the other party, to continue the metaphor of the cake, has a relatively smaller size of it. So it is a “win-lose” relationship. In other words, distributive bargaining deals with issues or an issue in which the two or more parties have conflicting or adversary interests.
Integrative bargaining on the other hand is a process by which both parties can win, each contributing something for the benefit of the other party. Such a process develops common objectives, a better understanding of each other’s needs and capabilities, a better respect for each other, and a greater involvement in, or commitment to, the well-being and growth of the enterprise as a whole.
8. It is an art, an advanced form of human relations:
To substantiate this, one need only witness the bluffing, the oratory dramatics, and coyness mixed in an inexplicable fashion which may characterise a bargaining session.
In the words of Davey- “Collective bargaining is a complex process. It involves psychology, politics and power of the work group. It is a process of tough-minded calculus and horse-trading. It is also a collective manifestation of individual and group drives for status and power. It frequently involves a contest between sovereign institutional entities whose survival requirements are, in some instances, related and, in other instances, independent of, or in conflict with, one another.”
4. Importance of Collective Bargaining:
The evolution of mature labour relations characterised by a greater degree of order and stability and sound wage structure are almost invariably associated with some measurable aspects of collective bargaining. On the basis of the experience of advanced countries, where collective bargaining is said to have made considerable advances, we identify some indicators of mature collective bargaining practices.
These indicators are:
1. A high degree at collective bargaining as measured in terms of the proportion of workers covered by collective agreements;
2. Qualitative conduct of the parties to collective bargaining both before a situation warranting negotiations develops and the methods followed at the time of arriving at agreements;
3. The right priorities assigned to different methods in the agreements and their changing pattern over time; and
4. A structure of bargaining with emphasis on central bargaining which is purported to give some order and stability to labour-management relations.
The necessity of collective bargaining is most deeply felt when serious problems have to be solved at the level of an undertaking or of an industry. For this purpose, managements and workers’ organisations have to get together. The labour legislation and enforcement machinery can only provide the setting in which an industry may function; the solution of common problems can only come from the parties which are directly concerned with them.
In this context, “collective agreements provide a climate for smooth progress. The agreement spells out the working relationship between employers’ and workers’ organisations in which a synthesis between the demands from one side and concessions from the other can be given a practical shape.”
(a) The Trade Union’s Point of View:
From the trade union’s point of view, collective bargaining agreements ensure that managements do not take any unilateral action. This is achieved by seeing to it that an employer signs a contract which specifies the conditions of employment during a particular period of time, and which establishes the procedure for the handling of issues and disputes which arise during that period.
In other words, collective bargaining is an employer regulating device, a method of guaranteeing the rights and immunities of the workers by limiting the employer’s freedom of action. With the application of collective bargaining agreements, the status of individual workers is improved, not only in terms of their wage, but also in such non-monetary aspects of their employment as better working conditions and greater job security.
A collective bargaining agreement develops a sense of responsibility and of self- respect among the workers, and is a guarantee against wage cuts. Through collective bargaining, unions attempt to secure a wide variety of economic and non-economic goals. The economic goals include wages, and fringe benefits.
The non-economic goals centre around hours of work, the working conditions, workers’ satisfaction with his job and the protection of the union as a growing institution.
Within the union, there are many actual and potential areas of conflict between different interest groups. The choice of giving priority to the objectives is a difficult task. The important factors in determining which goals to be given priority are- economic conditions affecting the industry, the precedents set by recent agreements, rivalry between unions and union leaders and the dominant groups within the union. The major bargaining tactics are strikes, boycotts and picketing.
(b) The Management’s Point of View:
On the other hand, the management’s collective bargaining goals are- the control of the enterprise, maintaining its ability to manage with a high degree of flexibility and efficiency of operation. The factors determining management’s approach to collective bargaining are: its views on the economic outlook, conditioned by the size of inventory on hand, precedents set by recent agreements, cost structure of the firm and competitive conditions in the industry.
The bargaining techniques of management consist of its control of hiring, promotion, discharge, lay-off and personnel techniques consisting of incentive wage systems, special benefits provided voluntarily by the employer, and a human relation approach to the employees.
To sum up, collective bargaining enables both the parties to:
i. Increase their economic strength for mutual benefit;
ii. Establish uniform conditions of employment with a view to avoid industrial disputes and maintaining stable peace in the industry;
iii. Secure a prompt and fair redressal of grievances;
iv. Avoid interruptions in work which follow strikes, go-slow tactics and similar coercive activities;
v. Lay down fair rates of wages and norms of working conditions;
vi. Achieve an efficient operation of the plant; and
vii. Promote the stability and prosperity of the industry.
In fact a collective bargaining agreement brings both labour and management together to determine the conditions of employment which, till then, had been decided exclusively by an outside agency like Industrial Tribunal, and paves the way for the closing of the psychological and emotional gap which divides labour and management.
5. Collective Bargaining- Principles:
Arnold F. Campo has laid down certain essential general principles of collective bargaining.
These are:
a. Collective bargaining should be made an educational as well as a bargaining process. It should offer to trade union leaders an opportunity to present to the management the wants, the desires, the grievances and the attitudes of its employees, and make it possible for the management to explain to union leaders and, through them, to its employees, the economic problems which confront it.
b. The management and the trade union must look upon collective bargaining as a means of finding the best possible solution, and not as a means of acquiring as much as one can while conceding the minimum. There must be an honest attempt at solving a problem rather than at a compromise.
c. Both the parties to a dispute should command the respect of each other and should have enough bargaining power to enforce the terms of the agreement that may be arrived at.
There must be mutual confidence, good faith, and a desire to make collective bargaining effective in practice.
d. There should be an honest, able and responsible leadership, for only this kind of leadership will make collective bargaining effective and meaningful.
e. The two parties should meticulously observe and abide by all the national and state laws which are applicable to collective bargaining.
f. Both the parties must bear in mind the fact that collective bargaining is, in a sense, a form of price fixation and that any successful collective bargaining depends, in the last analysis, on whether, the management and the trade union do a good job of ensuring that the price of labour is properly adjusted to other prices.
a. The management must develop and consistently follow a realistic labour policy, which should be accepted and implemented by all its representatives.
b. In order to ensure that the trade union feels that its position in the organisation or factory is secure, the management must grant recognition to it without any reservations and accept it as a constructive force in the organisation and the industry.
c. The management should not assume that employee goodwill will always be there for it. It should periodically examine the rules and regulations by which its labour force is governed. In this way, it will be able to determine the attitudes of its employees, promote their comfort, and gain their goodwill and co-operation.
d. The management should act upon the assumption that, in order to make the trade union a responsible and conservative body, it is essential that it should be fairly treated. It should, moreover, establish such a satisfactory relationship with the trade union and its representatives that the latter will not lightly do anything that is capable of jeopardising that relationship.
e. The management should not wait for the trade union to bring employee grievances to its notice but should rather create the conditions in which the trade union will not do so, and should settle the grievances of the employees even before the trade union brings them to the notice of the management.
The management should deal with only one trade union in the organisation. If two trade unions seek recognition, no negotiations should be undertaken till one of them establishes the fact of having a majority of the membership of the employees in its organisation.
While weighing the economic consequences of collective bargaining, the management should place greater emphasis on social considerations.
a. In view of the rights granted to organised labour, it is essential that trade unions should eliminate racketeering and other undemocratic practices within their own organisations.
b. Trade union leaders should not imagine that their only function is to secure higher wages for their members, and shorter hours of work and better working conditions for them. They and their members have an obligation to assist the management in the elimination of waste and in improving the quality and quantity of production.
c. Trade union leaders should appreciate the economic implications of collective bargaining, for their demands are generally met from the income and resources of the organisation in which their members are employed.
d. Trade union leaders should assist in the removal of such restrictive rules and regulations as are likely to increase costs and prices, reduce the amount that can be paid out as wages, and tend to make for low employment and in the long-run lower the standard of living of all sections of society.
e. Trade unions should resort to strikes only when all other methods of settling a dispute have failed to bring about satisfactory results.
6. Process of Social Change (Prof. Butler’s Views):
Prof Butler has viewed the functions of collective bargaining under these heads- (1) Collective bargaining as a process of social change. (2) Collective bargaining as a peace treaty between two parties in continual conflict. (3) Collective bargaining as a system of industrial jurisprudence. Collective bargaining is a technique of long-run social change, bringing about rearrangements in the power hierarchy ‘ of competing groups.
It is, in its broader aspects, not confined solely to the economic relations between employers and employees. Perlman says- “It is a technique whereby, 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, legislation court litigation, government administration, religion, education and propaganda.”
Collective bargaining 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 recognised in other areas of decision-making. Collective bargaining 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 retained a large measure of power and dignity. These gains have been registered not in one great revolutionary change, but have come about gradually, with each clash between the opposing parties settled with a new compromise somewhat different from the previous settlement.
Peace Treaty:
Collective bargaining 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 demands depends, in part, on how strong it is vis-a-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, including previously unsatisfied demands, and to build up its bargaining strength in anticipation of the next power skirmish.” But in a majority of cases, collective bargaining agreements are signed before either opponent fires a shot.
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 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.
1. It is a rule-making or legislative process, in the sense that it formulates the terms and conditions under which labour and management will co-operate and work together over a certain stated period.
2. It is an executive process, for both management (foremen and supervisory officials) and trade union officials share the responsibility of enforcing the rules.
3. It is a judicial process, for in every collective agreement there is a clause / provision regarding the interpretation of the agreement. Through the grievance procedure, any difference dispute concerning the application of the agreement to particular cases is settled. Where the agreement does not specifically cover the dispute, it may be settled according to the unwritten shop practices.
The decisions in these cases act as precedents in a manager similar to the common laws and interpretation of legislation by the court.
Generally, the objectives and basic philosophy of collective bargaining are well expressed in the agreement itself. In this context, for instance, the Article 1 of the Indian Aluminium
Agreement, reads as- “The purpose of this agreement is to provide orderly collective bargaining relations, to secure a prompt and fair disposal of grievances, to establish fair wages and other working conditions, to maintain a harmonious relationship between the employees and the company, to prevent strikes, lockouts and slowdowns, to attain efficient and uninterrupted operations in the plant, and to promote the stability and prosperity of the industry for the benefit of all those who are dependent on it.”
“To achieve the above objectives, the company and the trade union agree to encourage the highest possible degree of friendly and co-operative relations between their respective representatives at all levels and with and between employees. The company and the union believe that the attainment of this goal depends primarily on the attitudes of the people in their respective organisations at all levels of responsibility. Both the parties believe that a proper attitude must be based on a full understanding of, and regard for, the respective rights and responsibilities of both the company and the union.”
7. Content and Coverage of a Collective Bargaining Agreement:
There is no standard specification of what should be included in a contract and what should not be included, although, certain issues are often sought to be excluded from collective bargaining 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 collective bargaining has increased tremendously in recent years, and many new subjects have been included under it. Randle adds- “The expansion in the scope of collective bargaining has been due to various factors, namely –
a. The growing strength of the unions which have pressurised managements to include new subjects in the agreements;
b. Increased profits have led to a favourable response to the demands of the employees;
c. Increased prices along with increased production have contributed to expansion in the subjects for collective bargaining;
d. The liberal and sympathetic attitude evident in the decisions of the courts and legislative enactments has also favoured this expansion.”
The subject matter covered by the contract generally varies with the maturity of the bargaining relationship between the two parties. 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 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, and management protection. The contract, in the first section, contains the names of the parties to the contract, which recognises the union as the representative of the employees. Usually, the union is the exclusive representative.
Then it contains a union security clause, which means the extent to which the contract protects the union in holding its membership.
The union security 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.
The worker security clause provides for seniority protection, covering promotion, job assignment, and lay-off. The economic items include wages and the fringe benefits.
The contract often includes clauses which offer prerogatives to the management that is the right of the management to make decisions without first conferring with the union. The management exercises unilateral authority within the area covered by the prerogatives; the other decisions must be jointly made with the union. In some cases the provisions state that all things not covered by the contract are reserved for management authority.
In other cases, the provisions spell out the areas in which decisions may be made by the management without first conferring with the union. For example, the following may be specifically reserved: number of employees, nature of goods to be produced, price of final product, location of new plants, dividend policy, accounting and financial techniques, etc.
In other areas, the management may initiate action; but the contract grants the union the right to file a grievance if it believes the action is unjust.
Typical areas in which prerogatives are exercised in this fashion are- scheduling production, introducing new production methods, and setting pay scales for new jobs. Lastly, it includes the clause regulating the procedures of union-management relations and the grievance procedure. Although, not always done, it is better to definitely state the duration of the agreement in one of its clauses.
The National Institute of Personnel Management suggests that the following facts should be included in a collective agreement:
a. The purpose of the agreement, its scope, and the definition of important terms;
b. The rights and responsibilities of the management and of the trade union;
c. Wages, bonus, production norms, leave, retiring benefits, and other benefits and terms and conditions of service;
d. Grievance redressal procedure;
e. Methods of, and machinery for, the settlement of possible future disputes; and
f. A termination clause.
A cursory glance at the agreement reveals that the issues covered under agreements can be grouped in three categories- namely; (a) employment and working conditions; (b) labour welfare, labour recruitment and management matters; and (c) organisational matters. The first two which cover wages, bonus, dearness allowance, retirement benefits, working hours, holidays with leave, supply of subsidised items like food, transport, housing, etc., are worker-interest oriented.
The last category comprising union recognition, exclusive bargaining rights, check-off schemes, workers’ participation in management, etc., are union-interest oriented matters. Some conflict of interest may apparently be involved in these categories but in the final analysis gains of the union may reinforce the gains of workers.
Similarly, gains which satisfy the current worker-oriented demands may strengthen the union by promoting worker loyalty.
It should, however, be noted that the issues of negotiation and agreement through collective bargaining include not only wage rates, but also terms and methods of compensation for overtime works and allowances for dead work; hours of work and the number of paid holidays; call-in-pay, paid sick leave; production norms, technical practices, standards of performance to test the competence of workers; allowance for fatigue; hiring, firing, promotion, lay-off, dismissal and retrenchment; rationalisation, productivity and participation in trade union activities; the workers’ rights and privileges- recognition of trade unions; employment injuries, i.e., measures to be taken for the protection of the life and limbs of employees; bonus for dangerous and unhealthy work; pension; disciplinary proceedings, grievance procedure, workers’ participation in management; gratuity and provident fund; the right of the management to discipline workers; ways of handling materials; fines for infraction of rules; trade union security; machinery for the settlement of disputes; and many more subjects.
Managements and trade unions sometimes co-operative with each other in developing a job evaluation system which facilitates the fixing of wage rates in an undertaking for different categories of workers on the basis of the duties performed by them. In the United States, Sweden and Italy, collective bargaining provides for consultation with the representatives of workers prior to the introduction of new production methods or prior to collective dismissals effected for economic considerations.
It is obvious from the foregoing discussion that collective bargaining covers negotiation, administration, interpretation and application of written agreements between employers and trade unions representing the employees, and indicates the policies and procedures which shall govern the determination and / or fixation of wages, rates of pay, hours of work and other conditions of employment.
In the United States, Great Britain, Germany, Italy, Norway, Sweden and Switzerland, the contents of a collective bargaining agreement are solely determined by the parties themselves. While framing an agreement, the fact that is to be taken into consideration is that the conditions of employment do not fall below a particular standard and that they are not inconsistent with the legal provisions enacted for the purpose.
In some Latin American countries – for example, in Brazil, Columbia and Equador- agreements must necessarily deal with such items as wages, hours of work, rest periods, holidays, the duration of an agreement and the procedure to be adopted for its extension. Other items may be included in collective bargaining agreements provided that they are not contrary to the laws in force. In Canada, these agreements contain the procedures that have to be adopted for the settlement of disputes and the redressal of grievances.
8. Forms of Collective Bargaining:
At the outset, it should be stated that there is a great deal of variation in collective bargaining practices – ranging from an informal oral agreement to a very formal and detailed agreement.
The explanation of this variation is indicated in the words of Kennedy. “In a mixed private-public economy characterised by a great variety of industries, ranging from plantations to, electronics, technologies and managerial attitudes ranging from obsolete to very modern, and unevenly developed, politically divided but predominantly weak labour movement and a framework of policy that does little to mould orderly relations, it stands to reason that union-employer relations will also show large variation in kind and quality.”
Further, what is alarming is not so much the diversity in collective bargaining practices as the underdeveloped nature of the collective bargaining process. Collective bargaining, in the strict sense of the term, is understood to be the process of a positive give-and-take between workers and employers. The spirit of give-and-take and a sense of mutuality and trust should underlie the bargaining process throughout its course.
However, in practice, collective bargaining, by and large, follows only when confrontation takes place between the union and the management, making it appear as a form of conflict-a way to present workers’ demand and to obtain employer’s compliance with such demands.
What is expected under a strict collective bargaining situation is the starting of negotiations before or immediately after the expiry of the contract agreement. But, in most cases, negotiations start after a labour relations situation has developed. Moreover, collective bargaining has emerged as part of the struggle against employers.
However, broadly speaking, collective bargaining may assume the following forms:
1. It may be a single plant bargaining, that is, bargaining may be between management and a single trade union. This type of collective bargaining prevails in the United States and India.
2. It may be a multiple plant bargaining, that is, bargaining may be between a single factory or establishment having several plants and the workers employed in all these plants.
3. It may be a multiple employer bargaining, that is, bargaining between all the trade unions of workers in the same industry through their federal organisations, and the employers’ federation. This is possible both at the local and regional levels and is generally resorted to in the textile industry.
In India, collective bargaining has been classified under four categories.
These are:
1. Agreements which are negotiated by officers during the course of conciliation proceedings and are called settlements under the Industrial Disputes Act.
2. Agreements which are concluded by the parties themselves without reference to a Board of Conciliation and are signed by them. Copies of such agreements, however, are sent to appropriate governments and to conciliation officers.
3. Agreements which are negotiated by the parties on a voluntary basis when disputes are sub judice and which are later submitted to industrial tribunals, labour courts or labour arbitrators for incorporation into the documents as parts of awards. These are known as consent awards.
(These three types of agreements are, strictly speaking, memoranda of settlements, and are binding on the parties under the provisions of the Industrial Disputes Act.)
4. Agreements which are drawn up after direct negotiation between labour and management and are purely voluntary in character. These depend for their enforcement on moral force and on the goodwill and co-operation of the parties.
9. Developing a Bargaining Relationship:
The first step in collective bargaining is to develop a regular and systematic procedure for bargaining. This step consists of three activities, namely- (i) To decide who or which union is to be recognised as the representative of the workers for bargaining purposes; (ii) To decide what should be the level of bargaining; and (iii) To decide what should be the scope and coverage of issues under collective bargaining.
1. Recognition of the Bargaining Agent:
In those organisations in which there is a single trade union, that union is generally granted recognition to represent the workers. But where there is more than one union, any of these criteria may be used for identifying the representative union, namely-
a. Selection of the representative union by secret ballot;
b. Selection through verification of membership by some government agency;
c. Bargaining with a joint committee of all major unions;
d. Bargaining with a negotiation committee in which different unions would be represented in proportion to their verified membership; and
e. Bargaining with a negotiation committee which consists of elected representative of every department of the organisation selected by secret ballot, irrespective of their union affiliations.
The secret ballot system is widely used in countries like the United States, West Germany, etc. In India, the AITUC, BMS, UTUC and CITU have supported this method; but the INTUC opposed it. The National Commission on Labour has preferred to leave the determination of the representative union to the proposed Industrial Relations Commission, emphasised the use of either secret ballot or the verification procedure for that purpose.
The attempt to form a joint committee may be opposed by the largest or the recognised union (if there is one), which may claim the right to speak on behalf of all the employees of the undertaking or industry. The Bargaining Committee with proportional strength of the unions should be attempted only when the largest union is still a minority union, and there are other strong rivals to it.
If the secret ballot or verification conducted by an independent statutory authority indicates that any particular union has got an absolute majority of eligible employees, it should be given recognition as the “Sole Bargaining Agent”, and the other unions may be given the right to represent their members’ grievances.
2. Level of Bargaining:
Collective bargaining is possible at practically all levels, namely, at the level of the enterprise, at the level of the entire industry in the country, that is, at the national level-, or it may be at the level of the industry in a particular region, that is, regional industry level. From the point of view of an individual establishment, enterprise-level bargaining is generally useful in that the settlement is tailored to the conditions of the concern, e.g., its capacity to pay, its market conditions and objectives, etc.
The modern trend is to cover a large number of units in an industry so that, settlements are applicable to the entire industry or to the industry in a particular region.
3. Scope and Coverage of Collective Bargaining:
Though, in many organisations bargaining is struck only on specific issues like wage increase, bonus, or seniority, promotion, etc., yet it is considered advantageous, both for the management and the trade unions, to cover as many issues of interests to both parties as possible.
10. Collective Bargaining in India:
The story of collective bargaining is the story of the rise and growth of trade unionism itself. It had its roots in Great Britain and developed in response to conditions created by the Industrial Revolution. In early part of 18th century when trade unions came into existence, the idea of bargaining collectively gained strength. Initially, the negotiations were carried out at plant level. By early 1900, industry and national level agreements were quite common.
Slowly but steadily the idea spread to France, Germany, USA. After a century of rapid growth, collective bargaining has more or less, become the gospel of industrial relations. It is being increasingly viewed as a social invention that has institutionalised industrial conflict. In other words, it is through the process of collective bargaining that organisations have learnt to cope with industrial conflict.
In India, trade unions have come to occupy the centre stage only after 1900. In 1918, Gandhiji, as the leader of the Ahmedabad Textile workers, advocated the resolution of conflict through collective bargaining agreements. For another 10 years, this method of setting disputes did not gain popularity. The legal steps taken by the government after the Second World War revived interest in the subject once again.
The legislative measures included the setting up of a machinery for negotiations, conciliation and arbitration. Basic conflicting issues concurring wages and conditions of employment were sought to be resolved through voluntary means. After Independence, with the spread of trade unionism, collective bargaining agreements have become popular. A large majority of disputes were resolved through this mechanism.
Most agreements were concluded at the plant level. In centres like Mumbai, Ahmedabad industry level agreements were quite common – thanks to the legal blessings extended by the respective State Acts. The agreements were found in industries such as chemicals, petroleum, tea, coal, oil, aluminum, etc. In ports and docks, banking and insurance, collective agreements at the national level were also arrived at.
Changing Scenario:
In most industrialised economies, company unions and centralised bargaining is giving way to decentralised bargaining carried out at the plant level. Local factors have become more important to unions than political ideology or nationwide worker solidarity across several industries. In India also, the role of national level federation of unions and employers’ organisations is limited in collective bargaining.
Strictly speaking, the process is centred around a handful of employers’ associations and trade unions. For example, the Confederation of Indian Industry till the early 90s represented the claims of member employers from the Engineering Industry. In traditional industries such as Jute, the entrepreneurs themselves conduct the negotiations with unions.
In places like Bangalore and Hyderabad, unions and employers have preferred to set up joint co-ordination committees to deal with collective bargaining. In sectors like coal, steel, ports and docks such co-ordination committees are quite common while carrying out the nation-cum-industry-wide bargaining.
As far as steel industry is concerned, there are 240 trade unions organised into several trade union federations within the public sector steel company, Steel Authority of India Ltd (SAIL).
Every three or four years the National Joint Consultative forum for Steel Industry (NJCS) enters into agreements (so far 5 such agreements were concluded since early 70s) on behalf of SAIL, Rashtriya Ispat Nigam (Visakhapatnam) and TISCO (which incidentally has only one recognised trade union.) A plant level agreement supplements the above national agreement to cover those unique aspects concerning the plant which were not covered at the national level.
Public sector collective bargaining in India refers to collective bargaining in industrial and commercial undertakings owned by Central and State Governments including those in finance and banking sector. Employees in departmental undertakings (Railways, Post and Telegraphs, etc.) are governed by pay commission awards.
The average wages and benefits bargained at the national level for lower level public sector employees were found to be higher when compared to the employees in the organised private sector. Of course, at higher levels of management the private sector employees got relatively better wages.
In some sectors (media, sugar, etc.) the wage boards still decide the wages and working conditions. In the Cement industry, arbitration has replaced collective bargaining over wage-related issues. There are interesting contradictions in the collective bargaining scene in India. Over 80 different unions may represent a single firm. Some large multi-plant firms such as BHEL, SAIL and departmental undertakings such as Railways have to live with over a hundred unions each.
The bargaining process in public sector especially has become quite coercive and demanding so as to appease the claims of different sections of workers having ties with different unions. Due to recession, computerisation, cutthroat competition etc., many large firms have resorted to productivity bargaining to a limited extent and unions had to yield ground owing to their own helplessness in fighting till the end in a fruitless battle.
Some of the drastic measures ‘mutually agreed’ as essential for survival in recession-hit companies (Jaipur Metal and Electricals Ltd., Kamani Tubes, Kirloskar Oil Engines, Bata India Ltd., Philips, Walchandnagar Industries, Metal Box, etc.) included-
i. Cut in pay and allowances;
ii. Freeze in DA, changes in incentive payments;
iii. Lay-off / retrenchment;
iv. Early retirement;
v. Change in work norms;
vi. Retraining, relocating, etc.
In future, trade unions and management may have to be guided by market forces (survival of the fittest, cost-effective global manufacturing, high-tech / high quality service-oriented approach, customer- centred marketing and manufacturing processes) while sharing the gains from industry. Political, ideological concerns may have to take the back seat.
The full potential and gravity of technology-led growth needs to be appreciated by both management and labour while they try to draw concessions from each other at the negotiating table. Concession bargaining may rule the scene till industry gains stature and status in the global marketplace.
11. Recent Trends in Collective Bargaining:
In India, the workers working in the formal sector, who constitute only seven per cent of the total workforce are generally, in a position to gain from the collective bargaining mechanism and the vast majority of the workers engaged in the informal sector are largely untouched by this instrument in its standard form for improvement of their terms of employment.
Generally, all enterprises which are either registered under the purview of any one of the acts like the Indian Factories Act, 1948, Mines and Minerals (Regulations and Development) Act, 1957, Plantation Labour Act, 1951 the Companies Act, 1956 the Central / State Sales Tax Act, Shops and Establishments Acts of the State Governments are defined as part of the organised sector. Also included are all government companies, Departmental Enterprises and Public Sector Corporations.
Also, all workers in the agricultural sectors except those working in the plantations are regarded as informal sector workers. The Directorate General of Employment and Training (DGET), Ministry of Labour and Employments considers all organisations in the public sector irrespective of their size and non-agricultural establishments in the private sector employing ten workers or more as organised sector.
In India, Collective Bargaining and rise in Trade Unionism came into existence mainly in the early 20th century. The movement got impetus from constitutional, statutory and voluntary provisions. Article 19(c) of the Indian Constitution guarantees freedom of association as a fundamental right.
The Trade Unions Act passed in 1926 provides for registration of Trade Unions of employers and workers and in certain respects, it defines the law relating to registered Trade Unions.
It confers legal and corporate status on registered Trade Unions. The Amendment to the Trade Unions (Amendments) Act, 1926 in 2001 enforced with effect from 9.1.2002 provides for reducing multiplicity of Trade Unions, orderly growth of Trade Unions and promoting internal democracy. India has not ratified ILO Conventions No.87 (Freedom of Association and protection of the right to organise) and No.98 (right to organise and collective bargaining) due to “technical difficulties”.
In India, in the formal sector, some important forms of collective bargaining agreements concluded at various levels – Plant, Industry, Sectoral, Regional and National level are-
1. Sectoral Collective Bargaining at National Level:
Since the early 1970s, sectoral bargaining has been occurring at national level mainly in industries where the Government is a dominant player. These include banks and coal (employing approximately 8 lakh workers each), steel and ports and docks (employing two-and-half lakh each).
2. Industry-Cum-Region-Wide Agreements:
Agreements of this nature are found in Cotton, Jute, Textiles, Engineering and Tea which are dominated by the Indian Private Sector. But such agreements are not binding on enterprise management in the respective industries / regions unless they authorise the respective employer associations in writing to bargain on their behalf.
3. Decentralized Agreements; Enterprise or Plant Level:
In the rest of the industries, whereas the employers press for decentralised negotiations at plant level, the unions insist on bargaining at least at company level where the employees are formed into federations combining several plants / locations. However, in some cases, the employers in multi-unit private sector enterprises bargain with trade union federations at company level.
In recent years, in India as in almost elsewhere, collective bargaining has faced the challenges stemming from falling trade union membership, increasing individualisation of labour relations and the difficult quest for greater competitiveness and flexibility in a situation of economic globalisation.
In this context, certain trends in India could be enumerated as follows- (i) Coverage of collective bargaining is high in the formal sector and very low portion of workers in the informal sector are covered by collective agreements, (ii) Bargaining at the enterprise level is increasing, (iii) Other forms of bargaining and new issues- (a) Bargaining in the public sector largely staying at the same level, (b) Other forms of bargaining like individual employer-employee bargaining, work councils, bargaining on individual work contracts, bargaining directly with workers’ representatives, workplace consultations based on performance targets, etc. are on the increase, (c) The new issues in the bargaining are bankruptcy, equality career-developments, leisure time, evaluation systems, etc. and overall the issues covered in collective bargaining are broadening.
12. Prerequisites of Successful Collective Bargaining:
For making collective bargaining more pragmatic and meaningful, following steps must be taken into consideration:
1. There must be a change in the attitude of employers and employees. They should realise that the collective bargaining approach does not imply litigation, as it does under adjudication. It is an approach which indicates that the two parties are determined to resolve their differences in their respective claims in a peaceful manner, relying only on their own strength and resources; they should not look to a third party for the solution of their problems.
Collective bargaining is best conducted at plant level. The bargaining agents of both the parties should be determined to arrive at an agreed solution of their respective problems. The employers should be represented by the management and the workers by their trade union. Both should know which one is the recognised union, in case there is more than one in a plant. The bargaining agent must be recognised in proper manner.
The employers and employees should enter upon negotiations on points of difference or on demands with a view to reaching an agreement. The trade union should not make or put forward unreasonable demands. Any refusal to negotiate on the part of either side should be looked upon as an unfair practice. Rigid attitudes are out of place in a collective bargaining system.
2. Negotiations can be successful only when the parties rely on facts and figures to support their point of view. The trade union should be assisted by such specialists as economists, productivity experts and professionals, so that, their case is properly presented to the representatives of the management.
In order to bring this to pass, the organisational set-up of a trade union will have to be changed; and the latter should adopt a constructive approach at the bargaining table rather than the present agitational or litigation-oriented approach.
3. To ensure that collective bargaining functions properly, unfair labour practices should be avoided and abandoned by both sides. The negotiations between the management and the recognised trade union will then be conducted in an atmosphere of goodwill, which will not be vitiated by malpractices, and neither side would take advantage of the other by resorting to unfair practices.
4. When negotiations result in an agreement, the terms of the contract should be put down in writing and embodied in a document. When no agreement is reached, the parties should agree to conciliation, mediation or arbitration. If no settlement is arrived at even then, the workers should be free to go on a strike, and the employers should be at liberty to declare a lockout. To restrict this right is to inhibit and defeat the very process of collective bargaining.
5. Once an agreement is reached, it must be honoured and fairly implemented. No strike or lockout should be permitted in respect of issues which have already been covered in the contract; and the trade union should not be allowed to raise fresh demands.
6. A provision for arbitration should be incorporated in the agreement, which should become operative when there is any disagreement on the interpretation of its terms and conditions. The disputes arising out of the agreement should be referred to an agreed third party with a view to arriving at a final and binding decision.
In order to ensure that collective bargaining becomes more effective in India than what it is at present, the Indian Institute of Personnel Management has suggested that the following prerequisites needs to be developed-
1. A truly representative, enlightened and strong trade union should come into being and should function on strictly constitutional lines;
2. There should be progressive and strong management which is conscious of its obligations and responsibilities to the owners of the business, to the employees, the consumers and the country;
3. There should be unanimity between labour and management on the basic objectives of the organisation and of the workers, and a mutual recognition of their rights and obligations;
4. When there are several units of the company, there should be adequate delegation of authority to the local management; and
A fact-finding approach and a willingness to use new tools – for example, industrial engineering — should be adopted for the solution of industrial problems.
These conditions must necessarily exist if collective bargaining is to become meaningful and effective. If any or all of them do not exist, the obstacles should be removed by legislative enactments or by the adoption of other suitable measures.
The National Commission on Labour on Collective Bargaining:
The recommendations of the 1st National Commission on Labour (1969) on collective bargaining are reproduced below:
1. In the absence of arrangements for statutory recognition of unions except in some States and provisions which required employers and workers to bargain in ‘good faith,’ it is no surprise that reaching of collective agreements has not made much headway in our country. Nonetheless, the record of collective agreements has not been as unsatisfactory as it is popularly believed. Its extension to a wider area is certainly desirable.
2. There is a case for shift in emphasis and increasingly greater scope for and reliance on collective bargaining. Any sudden change replacing adjudication by a system of collective bargaining is neither called for nor is practicable. The process has to be gradual. A beginning has to make in the move towards collective bargaining by declaring that it will acquire primacy in the procedure of settling industrial disputes.
3. Conditions have to be created to promote collective bargaining. The most important among them is statutory recognition of a representative union as the sole bargaining agent. The place which strikes / lockout should have in the overall scheme of industrial relations needs to be defined; collective bargaining cannot exist without the right to strike / lockout.
13. Collective Bargaining – Conclusion:
Not only is there little genuine voluntary collective bargaining in Indian industry, but that little is at an early stage of development. Whatever, collective bargaining emerged initially has been purely a matter between the plant level union and the plant management. The negotiations either at the state or at the industry level are yet not frequent. The collective bargaining has not decentralised beyond the plant level because crafts unions are absent.
There are three important reasons as to why collective bargaining has not gone beyond the plant level:
(a) The varying sizes of the plants / firms and the consequent dissimilarities in productiveness and technologies which do not permit uniform employment conditions;
(b) The absence of homogeneous labour market owing to lack of uniform skills and pattern of training which does not promote free mobility of labour market owing to lack of uniform skills and pattern of training which does not promote free mobility of labour so that, uniform employment conditions could be evolved for the industry as a whole; and
(c) The plant union leadership which at present enjoys enormous powers and faces prospects of political climb is reluctant to get integrated into an industry wise union where its powers are likely to be restricted.