Everything you need to know about collective bargaining. Collective bargaining typically refers to the negotiation, administration and interpretation of a written agreement between two parties that covers a specific period of time.

This agreement or contract lays-out in specific terms the conditions of employment, puts some limits on employees and restricts management’s authority. It is the practice in which union and company representatives meet to negotiate a new labour contract.

Collective bargaining serves a number of important functions. It is a rule making or legislative process in the sense that it formulates terms and conditions under which labour and management may cooperate and work together over a certain stated period.

“Collective bargaining is a process of discussion and negotiation between two parties, one or both of whom is a group of persons acting on concept 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”. – (Encyclopaedia of Social Sciences)


In this article we will discuss about collective bargaining.

Learn about:- 1. Introduction in Collective Bargaining 2. History of Collective Bargaining 3. Definitions 4. Participants 5. Role 6. Functions 7. Types 8. Principles 9. Approaches 10. Advantages and Disadvantages 11. Suggestions for the Effective Functioning 12. Current Trends 13. Collective Bargaining in India.

Collective Bargaining: Meaning, Definitions, Process, Types, Features, Advantages and Disadvantages


  1. Introduction in Collective Bargaining
  2. History of Collective Bargaining
  3. Definitions of Collective Bargaining
  4. Participants in Collective Bargaining
  5. Role of Collective Bargaining
  6. Functions of Collective Bargaining
  7. Types of Collective Bargaining
  8. Principles of Collective Bargaining
  9. Approaches to Collective Bargaining
  10. Advantages and Disadvantages of Collective Bargaining
  11. Suggestions for the Effective Functioning of Collective Bargaining
  12. Current Collective Bargaining Trends
  13. Collective Bargaining in India

Collective Bargaining – Meaning

Collective bargaining typically refers to the negotiation, administration and interpretation of a written agreement between two parties that covers a specific period of time. This agreement or contract lays-out in specific terms the conditions of employment, puts some limits on employees and restricts management’s authority. It is the practice in which union and company representatives meet to negotiate a new labour contract.


Collective bargaining consists of the process of negotiation between representatives of union and employees in respect of terms and conditions of employment of employees, such as wages, hours of work, working conditions and grievance procedures and about the rights and responsibilities of trade unions.

Professor Allan Flanders argues that collective bargaining is primarily a political rather than an economic process. It is power relationship between a trade union organization and the management organization. The agreement arrived at is a compromise settlement of power conflicts.

The process is ‘collective’ because representatives of employees and employers act in groups rather than as individuals solve issues relating to terms and conditions of employment. The term ‘bargaining’ refers to evolving an agreement using methods like negotiations, discussions, exchange of facts and ideas, rather than confrontation.

The process of collective bargaining is bipartite in nature, i.e. the negotiations are between the employers and the employees, without a third party’s intervention. Divergent viewpoints are put forth by the parties concerned, and through negotiations, a settlement is reached. The objective is to arrive at an agreement.


Collective bargaining serves a number of important functions. It is a rule making or legislative process in the sense that it formulates terms and conditions under which labor and management may cooperate and work together over a certain stated period.

It is also a judicial process for in every collective agreement there is a provision or clause regarding the interpretation of the agreement and how any difference of opinion about the intention or scope of a particular clause is to be resolved. It is also an executive process for both management and union undertake to implement the agreement signed.

Thus collective bargaining:

i. Is a collective process in which representatives of both the management and employees participate.


ii. Is a continuous process which aims at establishing stable relationships between the parties involved.

iii. Not only involves the bargaining agreement, but also involves the implementation of such an agreement.

iv. Attempts in achieving discipline in the industry.

v. Is a flexible approach as the parties involved have to adopt a flexible attitude towards negotiations.

Collective Bargaining — History: From Period of Substitution to Post-Economic Reforms and Structural Adjustment

The history of collective bargaining is as old as the history of trade unions in the country. The growth and development of the process of collective bargaining has progressed along with the four phases of trade union development-


i. First phase (1950s-60s)—period of substitution.

ii. Second phase (mid 1960s—79)—period of economic stagnation and political instability.

iii. Third phase (1980-91)—period of uneven economic development.


iv. Fourth phase (1991 onwards)—post-economic reforms and structural adjustment.

The phrase ‘collective bargaining’ was coined by Sydney and Beatrice Webb, and according to their definition, it is a method by which the trade unions strive to protect and improve the working conditions of the workers. In the initial industrialization era, the workers had to fight with the management for their rights.

In the globalized scenario, the companies are increasingly realizing the need for shedding the anti-labour attitude and working towards building cooperative and cordial relationship with the trade unions and workers.

Since the onset of industrial revolution, the managements have the single point agenda of improving the productivity and functional efficiency. Initially, experiments had been carried out by Frederick Taylor and other management theorists, who believed in scientific management.


The approach of scienti­fically measuring time, work, etc. had only resulted in marginal improvement and over a period of time it got negated. These developments were increasingly perceived as another method of exploitation by the union leaders and employees.

The advent of human relations concept has led to the basic thought that employees are human beings and they deserve to be treated properly and not like machines. It is here that the human approach has assumed significance in union-management relations.

The organizations after a lot of exploration and experimentation have come to a consensus that the only way to improve productivity and maintain cordial industrial climate is to engender a sense of commitment and involvement among the employees. But to inculcate commitment, it is essential that the employees are involved in the day-to-day management of affairs for bringing in the feeling of being a stakeholder in the organization.

The organizations have for this purpose decided to democratize and decentralize the decision-making process and thus pave the way for the process of participation of workers in the management.

The advent of democratic governments has led to hopes and aspirations among the employees for industrial democracy and thus workers’ parti­cipation in management (WPM) has assumed more significance. It implies that the organization follows participative and consultative decision making processes, especially in matters pertinent to wages, working conditions, and jobs of workers.

It is an indication of mental and emotional involvement of an employee or groups of employees, which would ultimately encourage their contribution to the goals and objectives of the organization.


Workers’ participation in management tries to reduce the dichotomy created by industrial revolutions, which led to watertight compartments called management and operational workers or personnel. It tries to bring in synergy by addressing the hopes and aspirations of the workers of being involved in the decision making processes relating to wages and conditions.

The participation enhances the employee’s ability to influence decision makers and the decision making process at different levels of hierarchy and also motivates the employee to assume responsibility for his or her action. The participation can mainly occur at three levels, that is, shop-floor level, departmental level, and board level.

Collective Bargaining – Definitions: By Eminent Authors, Encyclopedia of Social Sciences and ILO

The collective bargaining is another form of involving the employees in the decision making exercise of the organization. In this process, the terms and conditions of employment are determined by mutual agreement between employer and employees. The idea behind this is that the employer and employee should not make decisions unilaterally or with the intervention of any third party. It is a bipartite in nature because only the employer and the employees are involved in the bargaining process.

Collective bargaining is a process of negotiations between two or more parties mainly employees or trade unions as representatives of employees and employers or association of employers if applicable to discuss the issue relating to the terms and conditions of employment in the industry.

The discussion takes place relating to terms and conditions of employment may include such as – wage and salary scales, allowances, benefits, working conditions, working hours, leave, health and safety measures, training, promotion, transfer, overtime, facilities, opportunities for development or betterment, rewards, recognitions, discipline, increments, bonus, etc.

The concerned parties at the decided place and time participate in discuss in peaceful environment and try to reach to and an agreement over the issue of conflict or difference. The solution to problem can be given through negotiation and maintain good relations by removing differences.


This process is called collective bargaining. This process has been used in European and USA countries for solutions of the labour problems time-to-time. Now in the present, time it is used in developing countries like India, Brazil, South Korea and Malaysia.

Collective Bargaining, an essential element of economic democracy is a ‘two party’ procedure to arrive at a mutually agreed solution.

“Collective bargaining is essentially a process in which employees act as a group in seeking to shape conditions and relationships in their employment.” (Dale Yoder)

“Collective bargaining is a method by which trade unions protect and improve the conditions of their members working lives.” (Sydney and Beatrice who coined the phrase ‘collective bargaining’)

According to Harbinson, collective bargaining is “a process of accommodation between two institutions which have both common and conflicting interests”.

“Collective bargaining is a process of discussion and negotiation between two parties, one or both of whom is a group of persons acting on concept 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”. (Encyclopaedia of Social Sciences)


Collective bargaining means, “Negotiations about working conditions and terms of Collective bargaining employment between an employer and a group of employees or one or more employees organisation with a view to reaching an agreement, wherein the terms serve as a code of defining the rights and obligations of each party in their employment relations with one another – Fix a large number of detailed conditions of employment; and during its validity, none of the matters it deals with, can in normal circumstances, be given as a group for a dispute concerning an individual worker.” (ILO)

Collective bargaining is “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”. (Cox)

Collective bargaining can be defined as – “a process where workers’ representative and management’s representative meet and treat at the bargaining table to determine the arrangement of the working relationship between an employer and employees in the workplace” (Salamon, and Leap). This involves setting the terms and conditions of employment, putting systems in place to settle any conflict that may arise and determining employees’ contribution to organizing the daily work activities.

Collective bargaining is “a process in which the representatives of the employer and employees meet and attempt to negotiate a contract governing the employer-employee union relationship” (Fisher, Schoenfeldt and Shaw). The collective bargaining process has always been known for its outcome, as it always ends up determining die relationship between the union and the employer in regard to wages, benefits, hours and working conditions, etc.

Collective bargaining, as a technique for the fulfilment of the needs and objective of workers and employers, is an integral part of industrial society. It is in fact an extension of the principles and practices of democracy to industry. It is a dynamic process and is constantly expanding. However, “collective bargaining is a powerful instrument for either good or evil. Its results will depend upon wisdom and farsightedness with which the bargains are made.”

Collective Bargaining – 4 Main Participants: Employer, Employees, Government and Financial Institutions

Earlier, the two parties i.e., employer and employees participated in the collective bargaining. In the situation of non-settlement of the issues, the third party-the government-came into picture.


The size of representation of the management in the collective bargaining tends to depend on the size of the organization. In a small firm, for instance, the president of the company often discharges this responsibility. In medium-sized organizations, the personnel manager, who is often supported by outside legal assistance, typically completes bargaining.

In large organizations, there is usually a sophisticated personnel department with full-time industrial relations experts. In such cases, we can expect management to be represented by the senior manager for industrial relations, corporate executives, and company lawyers-with support provided by legal and economic specialists in wage and salary administration, labour law: fringe benefits and so forth.

A bargaining team constituted of the officers of the local union local shop stewards, and some representation from the national union usually represents the union side. Again, as with management, representation is modified to reflect the size of the bargaining unit.

In a small firm or for local negotiations covering special issues at the plant level for a nationwide organization, bargaining representatives for the union might be the local officers and a few specially elected committee members.

The third participant in the collective bargaining process is the government. In addition to providing the rules under which management and labor bargain, government provides a watchful eye on the two parties to ensure that the rules are followed, and it stands ready to intervene if an agreement on acceptable terms cannot be reached and the impasse undermines the nation’s well- being and peaceful process.

Another participant to the collective bargaining is the presence of financial institutions and more particularly banks. Although not directly involved in negotiations, the banks set limits on the amount that the company can spend in upcoming negotiations. Exceeding that amount may cause the banks to call in the loans that had been made to the company. These results in placing a ceiling on what management can spend.

Collective Bargaining – Role in Setting and Preventing Industrial Disputes

On the basis of the experience of the advanced countries, where collective bargaining is said to have made considerable advances, to identify some indicators of mature collective bargaining practices.


Collective bargaining plays a vital role in setting and preventing industrial disputes.

Specifically its importance is evident from the following:

(i) Increase the economic strength of unions and management;

(ii) Establish uniform conditions of employment with a view to avoiding 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;

(viii) It provides a method for the regulation of the conditions of employment of those who are directly concerned about them;

(ix) It provides a solution to the problem of sickness in industry, and ensure old age pension benefits and other fringe benefits;

(x) It creates new and varied procedures for the solution of the problems as and when they arise — problems which vex industrial relations; and its form can be adjusted to meet new situations. Since basic standards are laid down, the employee is assured that he will be required to work under the stipulated audit;

(xi) It provides a flexible means for the adjustment of wages and employment conditions to economic and technological changes in the industry, as a result of which the chances for conflicts are reduced;

(xii) As a vehicle of industrial peace, collective bargaining has no equal. It is the most important and significant aspect of labour-management relations, and extends the democratic principle from the political to the industrial field;

(xiii) It builds up a system of industrial jurisprudence by introducing civil rights in industry. In other words, it ensures that management is conducted by rules rather than by arbitrary decisions.

The main features of collective bargaining are:

i. It is essentially a group action and is initiated by the representatives of workers.

ii. The process is flexible and it provides for both parties a scope for Compromise and facilitates a mutual give and take environment for final agreement or settlement. According to Bakke and Kerr, ‘Essentially, a successful collective bargaining is an exercise in graceful retreat—without seeming to retreat.’

iii. It is a two-party process, where both strive to arrive at an agreement for settling a dispute, devoid of animosity and mutual hatred.

iv. It is a continuous process, which provides for building and sustaining relationships between the management and trade unions with the common objective of resolving employee grievances and plant problems.

v. It reflects implementation of industrial democracy. The workers are provided with an opportunity for self-governance and a powerful tool which holds a check for arbitrariness and unilateralism.

Collective Bargaining – Top 11 Functions: Economic Strength, Uniformity, Fair Redressal, Norms, Efficiency, Stability, Regulation, Solution, New Procedures and a Few More

Collective bargaining plays an important role in preventing industrial disputes, settling industrial disputes and maintaining industrial peace by performing the following functions:

(i) Economic strength – Increase the economic strength of employees and management.

(ii) Uniformity – Establish uniform conditions of employment.

(iii) Fair redressal – Secure a prompt and fair redressal of grievances.

(iv) Norms – Lay down fair rates of wages and other norms of working conditions.

(v) Efficiency – Achieve an efficient functioning of the organisation.

(vi) Stability – Promote the stability and prosperity of the company.

(vii) Regulation – It provides a method of the regulation of the conditions of employment of those who are directly concerned about them.

(viii) Solution – It provides a solution to the problem of sickness in industry, and ensures old age pension benefits and other fringe benefits.

(ix) New procedures – It creates new and varied procedures for the solution of the problems as and when they arise problems which vex industrial relations; and its form can be adjusted to meet new situations. Since basic standards are laid down, the employee is assured that he will be required to work under the stipulated conditions incorporated in the agreement; and the employer is protected from unfair competition by those who are engaged in a similar industry.

(x) Flexible means – It provides a flexible means for the adjustment of wages and employment conditions to economic and technological changes in the industry, as a result of which the changes for conflicts are reduced.

(xi) Democratic principles – As a vehicle of industrial peace, collective bargaining is the most important and significant aspect of labour-management relations, and extends the democratic principle from the political to the industrial field.

(xii) Industrial Jurisprudence – It builds up a system of industrial jurisprudence by introducing civil rights in industry. In other words, it ensures that management is conducted by rules rather than by arbitrary decisions.

Prof. Dunlop is of the opinion that collective bargaining is:

(i) Rules – A system which establishes revises and administers many of the rules which govern the workers’ place of work;

(ii) Compensation – A procedure which determines the quantum of compensation which employees should receive and which influences the distribution of economic ills; and

(iii) Dispute settlement – A method of settling disputes during the pendency of an agreement and of determining, after its expiry, whether a dispute should be re-opened and whether a strike or a lockout should be resorted to or not.

Collective Bargaining – Top 4 Types: Distributive, Integrative, Attitudinal and Intra-Organizational Bargaining

There are four types of collective bargaining:

Type # i. Distributive Bargaining:

It involves haggling over the distribution of surplus. Under it, the economic issues like wages, salaries and bonus are discussed. In distributive bargaining, one party’s gain is another party’s loss. This is most commonly explained in terms of a pie. Dispu­tants can work together to make the pie bigger, so there is enough for both of them to have as much as they want, or they can focus on cutting the pie up, trying to get as much as they can for themselves. In general, distributive bargaining tends to be more competitive. This type of bargaining is also known as conjunctive bargaining.

Type # ii. Integrative Bargaining:

This involves negotiation of an issue on which both the parties may gain, or at least neither party loses. For example, representatives of employer and employee sides may bargain over the better training programme or a better job evaluation method. Here, both the parties are trying to make more of something. In general, it tends to be more cooperative than distributive bargaining.

This type of bargaining is also known as cooperative bargaining. The integrative strategies require that both management and the union drop combative atti­tudes and adopt a genuine interest in the joint exploration of solutions to common problems. To work effectively, integrative bargaining must become a way of life for the two parties that include continual efforts to improve relationships through regular discussions of problems at all levels and willingness to attempt to settle these problems with third party interventions.

Solutions to the most difficult problems can be approached by establishing special committees, whose members are drawn from both management and labour to study the issues and deter­mine the facts.

Type # iii. Attitudinal Restructuring:

This involves shaping and reshaping some attitudes like trust or distrust, friendliness or hostility between labour and management. When there is a backlog of bitterness between both the parties, attitudinal restructuring is required to maintain smooth and harmonious industrial relations. It develops a bargaining environment and creates trust and cooperation among the parties.

Type # iv. Intra-Organizational Bargaining:

It generally aims at resolving internal conflicts. This is a type of manoeuvring to achieve consensus with the workers and management. Even within the union, there may be differences between groups.

For example, skilled workers may feel that they are neglected or women workers may feel that their interests are not looked after properly. Within the management also, there may be differences. Trade unions manoeuvre to achieve consensus among the conflicting groups.

Collective Bargaining – 2 General Principles Laid Down by Arnold F. Gampo: For Union & Management and Trade Union

Arnold F. Gampo has laid down certain essential general principles of collective bargaining.

These are:

Principle # 1. For Union and Management:

(a) Collective bargaining should be made an educational as well as a bargaining process.

(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.

(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.

(d) There must be mutual confidence, good faith and a desire to make collective bargaining effective in practice.

(e) The two parties should meticulously observe and abide by all the national and state laws which are applicable to collective bargaining.

(f) There should be an honest, able and responsible leadership. For only this kind of leadership will make collective bargaining effective and meaningful.

(g) There must be mutual, understanding between two parties.

For the Management:

(a) The management must develop and consistently follow a realistic labour policy, which should be accepted and implemented by all its representatives.

(b) The management should not assume that employee goodwill will always be there for it.

(c) 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 management.

(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.

(e) While weighing the economic consequences of collective bargaining the management should place greater emphasis on social considerations.

(f) The management should deal with only one trade union in the organisation.

Principle # 2. For the Trade Union:

(a) In view of the rights granted to organized labour, it is essential that trade unions should eliminate racketeering and other undemocratic practices within their organisation.

(b) 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.

(c) 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.

(d) Trade unions should resort to strikes only when all other methods of settling a dispute have failed to bring about satisfactory results.

(e) 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.  

Collective Bargaining – 3 Important Approaches towards Industrial System: Process of Social Balance, Peace Treaty and Industrial Jurisprudence

Approaches to collective bargaining indicate the way in which collective bargaining is perceived by different parties involved in it. This is true for any type of bargaining whether it is related to social system, political system, or industrial system.

Collective bargaining has been viewed from three perspectives, particularly in industrial system:

1. As a process of social balance.

2. As a peace treaty between conflicting parties.

3. As a system of industrial jurisprudence.

1. Process of Social Balance:

In a society, there are so many groups with each group exercising power over others in the social exchange process. Though society intends to distribute power equally among different groups for smooth enacting of social exchanges, several factors emerge which result in unequal distribution of power.

In order to overcome this inequality, various social groups form coalitions to derive more power to bargain with a powerful group. Same phenomenon takes place in an industrial system where workers unite through unions and bargain with management about what they perceive to be their rights. This is the real spirit behind collective bargaining. However, in a narrow sense, this approach is treated as means for settling industrial disputes.

2. Peace Treaty:

Treaty is a kind of agreement between two or more parties. The concept of treaty is frequently used in political and other systems. Peace treaty is a kind of negotiated agreement between two or more conflicting parties to settle their differences and maintain peace among them.

In an industrial system, collective bargaining is used as a peace treaty between labour and management. Like any other treaty, agreement arrived at collective bargaining between labour and management has a definite life period.

3. Industrial Jurisprudence:

The term jurisprudence means science of human law. Applied in the context of industrial system, industrial jurisprudence means the application of civil rights in the industry. Collective bargaining creates a system of industrial jurisprudence in which it is expected that management deals with labour by rules rather than by arbitrary decisions. Rules provide standards for actions to be taken by organizational members.

There are two types of rules — substantive and procedural. Substantive rules regulate the relationships between individuals and may be of three types — economic relationship rules which set down the terms on which existing as well as prospective labour force will offer their labour, political relationship rules which stipulate who may exercise power on whom and for what purpose, and social relationship rules which provide standards of behaviours based on shared interests, sentiments, beliefs, and values of various groups of employees.

Procedural rules set out the procedures that govern the behaviour of two groups — management as representative of employer and union as representative of labour. Industrial jurisprudence implies following of both these rules in the mutual dealing between management and labour.

Collective Bargaining Advantages and Disadvantages

Advantages of Collective Bargaining:

The main advantages of collective bargaining are as follows:

1. Effective in Protecting and Promoting Interests of Workers:

Collective bargaining has contributed much towards protecting and promoting the interests of workers, especially in regard to the terms and conditions of employment. Unions in many countries of the world have successfully contracted agreements with employers, for higher wages, improved fringe benefits and cash allowances, job security, better physical working conditions, social security benefits and so on. In many cases, the benefits accruing to the workers through collective bargaining have been much better than those available or expected under legislation or industrial awards.

2. Control of Management’s Autocracy:

Collective bargaining has increasingly usurped the prerogatives traditionally enjoyed by the employers of unilaterally laying down the terms and conditions of employment of their employees. Apart from wages, hours of work and working conditions, many more subjects have come within the ambit of collective agreements. Thus, collective bargaining has tended to impose a substantial check on employers’ autocracy in taking decision over matters of concern of their employees.

3. Promotion of Durable Industrial Peace:

Where the terms and conditions of employment of employees are determined by mutual agreement and understanding between the employer and the union representing the employees, the scope of further differences over the subjects of agreement is considerably minimised. Besides, the parties are placed in a better position to understand and appreciate their respective problems and difficulties, which results in the development of a co-operative environment in the enterprise.

Solution of a contentious issue imposed from outside, such as an adjudication authority, may not satisfy either or both the parties. Besides, most collective agreements also provide for grievance procedure for redressing grievances arising out of the interpretation or application of collective agreements. Thus, collective bargaining is expected to ensure durable industrial peace in enterprises.

4. Conducive to the Enhancement of Managerial Efficiency:

Collective bargaining enables managers to understand the problems of the employees in the right perspective. Similarly, the union is also enabled to understand the genuine problems facing the management and the enterprise. Negotiations taking place in frank and free atmosphere can reveal the areas of deficiencies in managerial practices and thereby enable managers to adopt appropriate measures to rectify them. Besides, the suggestions of the trade union may provide a useful feedback.

5. Establishment of Industrial Rules and Creation of Labour Standards:

Collective bargaining has also been helpful in the establishment of industrial rules and creation of useful labour standards. The rules and norms embodied in the labour contract of one firm often lead to the establishment of similar rules and norms in other firms, and the process goes on continuing.

In this way, a sort of uniformity in industrial rules and labour standards is established on a wide scale. It has been experienced that labour standards uniformly embodied in collective agreements of several firms on major issues of concern of a large bulk of workers such as bonus, gratuity, provident fund and so on have provided the basis for the adoption of legislation for ensuring their wider coverage.

Disadvantages of Collective Bargaining:

Collective bargaining also results in certain disadvantages to the parties to negotiate:

i. Strikes:

The strike creates a dilemma for those who have accepted the institution of collective bargaining because it is difficult to have collective bargaining without the right to strike. At the same time strikes can inflict considerable damage on the public image. Much attention has been given to the problem of how to maintain collective bargaining while preventing the damage that might be inflicted upon by the strikes. No effective solution has been found yet.

ii. Based on Power and Conflict:

Collective bargaining is based on power and conflict and does the most for the people who need it least. The stronger workers in the labor market could protect the income of their skills while the weakest workers in the work force have very limited ability to form unions and hence are unable to gain the benefits of collective bargaining.

iii. Lacks Safeguards for Public Interest:

Collective bargaining does not contain sufficient safeguards for the public interest, which might be ignored by collusion between strong unions and employers to fix prices. In the U.S.A., where collective bargaining is a feature of industrial relations, it is claimed that it has impeded the economy’s growth, imparted an upward drift to the general price level and periodically imperilled the nation’s health and safety.

Collective Bargaining Suggestions for the Effective Functioning: Change in Attitude, Efficient at Plant Level, Concentrate on Differences and a Few More

Suggestion # 1. Change in Attitude:

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 on their respective claims in a peaceful manner relying only on their own strength and resources; they do not look to a third party for the solution of their problems.

Suggestion # 2. Efficient at Plant Level:

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; and this union, recognised in the proper manner, should be the sole bargaining agent of all the workers in an organisation.

Suggestion # 3. Concentrate on Differences:

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.

Suggestion # 4. Rely on Facts:

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 representative 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 agitation or litigation oriented approach.

Suggestion # 5. Avoid Unfair Labour Practices:

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.

Suggestion # 6. Written Agreement:

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 lock-out. To restrict this right is to inhibit and defeat the very process of collective bargaining.

Suggestion # 7. Honour the Agreement:

Once an agreement is reached, it must be honoured and fairly implemented. No strike or lock-out 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.

Suggestion # 8. Provision of Arbitration:

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.

Collective Bargaining Current Trends in Different Countries like USA, Britain, France, Netherlands and Australia

In no country can it be said that collective bargaining has been entirely at the industry or enterprise level, since each system has a mix of both, even though not in equal measure. However, industrialized market economies have generally practiced bargaining at the industry level, except in the U.S.A. where there has been more bargaining at the plant or enterprise level. Industry level bargaining in the U.S.A. has mainly been in specific sectors such as coal, steel, trucking and construction.

During the last decade there has been a move towards more enterprise level bargaining in many countries due to numerous reasons. There has been a decline in union membership in several countries such as the USA, Britain, France, Netherlands and Australia. Increasing unemployment and difficult business conditions have made employers reluctant to commit to wage policies at the industry or national level.

The emergence of governments in some industrialized countries more favorably disposed towards private enterprise has resulted in allowing market forces to operate, thus weakening negotiations at the national level. Many employers view centralized bargaining as facilitating a more equal distribution of incomes (which is one reason why many unions prefer centralized bargaining), but as depriving employers of the ability to use pay as an instrument for productivity improvement and to compensate for skills and performance.

Strategic compensation systems are workable only if introduced at the enterprise level to match the goals sought to be achieved. In Sweden, which has been an extreme case of centralized bargaining, one of the strategies of the Swedish employers during the last ten years has been to decentralize collective bargaining.

Germany, another country well- known for centralized bargaining, is displaying a tendency towards decentralized bargaining. The push by employers for flexibility in the context of increasing global competition has resulted in many flexibility issues such as new working time arrangements, a typical contracts and pay systems being needed to be dealt with largely at the enterprise level.

Compared with industrialized countries, collective bargaining in Asia has been minimal. There has been an increasing tendency towards bargaining on wages and terms and conditions, which has sometimes resulted in some form of arrangements among governments, employers and unions which lay down certain guidelines as in Singapore, and the Accords from 1983 onwards in Australia.

Asia has had a mixture of industry and enterprise level bargaining, with the latter predominating. Apart from low unionization rates in several Asian countries which militate against industry level bargaining, increased competition and the need for flexibility does not make industry level bargaining popular in Asia.

The Japanese have demonstrated how a combination of enterprise level bargaining and shop floor level mechanisms enable enterprises to adapt to rapidly changing business conditions and also to increase productivity.

In most countries, therefore, the tendency is to see the enterprise as the centre of gravity of industrial relations. It is likely that some of the main concerns of employers such as productivity, quality, performance, skills development, the need to be competitive and to make rapid changes to adapt to the global marketplace, will eventually result in less centralized collective bargaining.

Collective Bargaining in India – With Assessment

Collective bargaining is an experiment in industrial democracy. It is pre-requisite for successful and peaceful industrial relations. However, its progress in India has not been very satisfactory. Here as also in many other countries it got some impacts from statutory provisions which laid down general principles of negotiation, procedures for collective agreements and the character of representation of the parties negotiating disputes.

Among the voluntary measures, tripartite conference, joint consultative board, industrial committees and working parties at the industrial level have played a vital role in the development of collective agreements concerned. They have been entered at the plant level as well as at industry level. In Bombay and Ahmedabad, industrial level agreements are more common.

Collective agreements concluded in India may broadly be placed under three types:

(a) Agreements which have been drawn up after direct negotiations between the parties and are purely in nature for purpose of their implementation.

(b) Agreements which combine the elements of voluntaries and compulsion both.

(c) Agreements which acquire legal status because of successful discussion, between the parties and under legal reference to industrial tribunals or courts.

From the industrial point of view, cotton textile industry, plantation industry, coal industry, chemicals, petroleum, oil refining and distribution, automobiles and electric equipment manufacturing industry are the examples where voluntary agreements have been common. In port industry port level agreements have been concluded, while in banking and insurance industry, industry level agreements have been more common.

Collective bargaining has made recently its headway in railways and post and telegraphs too. Thus the record of reaching at a collective agreement has not been on the whole, unsatisfactory, though its extension to a wider area is certainly desirable.

Assessment of Collective Bargaining in India:

Except for the industrial relations legislation in some states where arrangements for recognition of unions exit, there has been lack of statutory recognition of unions for the country as a whole. There is also the lack of provisions requiring employers and workers to bargain in “good faith”. It is therefore no surprise that collective agreements have not made much headway in the country so far. Some historical factors have also stood in the way of collective agreements having a greater share in maintaining industrial harmony.

Collective bargaining in India is gradually extending its area and given proper impetus, it is capable of leading the country to industrial peace and prosperity. It follows therefore that conditions have to be created for the success of the technique of collective bargaining for promoting industrial peace.

An important pre­requisite of it is the encouragement to strong and powerful trade unions and evolution of satisfactory arrangements for union recognition by statute as also the creation of conditions in which such arrangements have a chance to succeed. It is difficult to place reliance on the process of collective bargaining without satisfying its pre-requisite adequately.

On the other hand, collective bargaining as it has developed in the West may not be quite suitable for India; it cannot appropriately co-exist with the concept of a planned economy where certain specified production targets have to be fulfilled.

Though it is argued that collective bargaining has grown in India due to the statutory provisions, voluntary measures, Industrial Truce Resolution of 1962 and the amendments to the Industrial Disputes Act, 1947, but its success is limited.

The causes for its limited success are:

(a) Problems with Unions – Collective bargaining process mainly depend on the strength of unions. But still there are not many strong unions in India. Indian unions are marked with multiplicity, inter- and intra-union rivalry, weak financial position and non-recognition. Weak trade unions cannot initiate strong arguments during negotiations. There is usually no unanimous decision among workers to be presented at the negotiating table.

(b) Problems from Government – The government has not been making any strong effects for the development of collective bargaining. The government has imposed many restrictions regarding strikes and lockouts, which is an obstacle for the development of collective bargaining process.

(c) Political Interference – Interference of political leaders in all aspects of union matters has increased over the years. Almost all unions are associating themselves with some political party or the other. And there are many such unions. To protect their own unions all political parties interfere into the matters, creating their union rivalries.

(d) Legal Problems – Now adjudication is easily accessible. As such now collective bargaining process is losing its importance.

(e) Management Attitude – In India managements have negative attitude towards unions. They do not appreciate their workers joining unions. As strong unions are a must for collective bargaining process such an attitude of management hampers the process.