Collective Bargaining – 01


  • Collective bargaining is a process of negotiating between management and workers represented by their representatives for determining mutually agreed terms and conditions of work which protect the interest of both workers and the management.
  • Collective bargaining has been defined by the Supreme Court (“SC”) as “the technique by which dispute as to conditions of employment is resolved amicably by agreement rather than coercion”.


  • It is a process of discussion and negotiation between employer and workers regarding terms of employment and working conditions. Workers are generally represented by trade unions with respect to expressing their grievance concerning service conditions and wages before the employer and the management.
  • It is perceived as a process both by employers and employees and important machinery to settle differences on the work-related issues. The need for collective bargaining in India arose, particularly after World War II.
  • Modernization, the need for quality, and increased productivity are important for competing in the international market. Modernization may cause the introduction of modern automatic machinery and may require high skilled labours. Thus modernization results in the displacement, laying off, and retrenchment of workers.
  • Such condition results in hostility between the workers and the management.  In such a case, management and workers must come together and use the concept of collective bargaining. Collective agreements provide the climate for the smooth working of the business.

The Need for Collective Bargaining:

  • An individual worker under financial constraint cannot bargain with the cash-rich employer. In such a situation, the individual may be tempted to accept undesirable conditions including low remuneration. Here there is a fear of loss of a job in the minds of the worker. This fear may be due to the ignorance, illiteracy and industry-specific skill factors. Sometimes employers are in a position to control the bulk demands for the labours, and they may through combined action, force the workers to accept low wages.
  • Collective bargaining allows workers to band together into larger groups like trade unions, create a louder voice that can help provide the benefits for the workers and employers.
  • Determination of wages can be settled by the demand and supply in the market but issues like the length of working day, health and safety of workers, speed operations, security of job can only be settled by negotiation.
  • The problem of good human and industrial relations can be tackled successfully by the collective bargaining process.

Types Of Bargaining:

  • Distributive Bargaining: This bargaining involves handling wages, salaries, bonus and other financial issues. In this activity, both the parties face a win/lose situation.
  • Integrative Bargaining: This bargaining involves handling better job evaluation procedures, better performance appraisal methods or training programmes etc. In this bargaining both the parties may gain or at least neither party loses.
  • Attitudinal structuring: This bargaining involves shaping opponents’ perceptions about the nature of the issues to be negotiated by cultivating an atmosphere of friendliness, mutual respect, trust, and cooperation.  Attitudinal structuring is required to maintain smooth and harmonious industrial relations.
  • Intra-Organisational Bargaining: It is a process of bringing consensus within the groups themselves.

Indian Classification of Collective Bargaining:

  • Agreements which are negotiated by officers during the course of conciliation proceedings and are called Settlements under the Industrial Disputes Act.
  • Agreements which are concluded by the parties themselves without reference to a Board of conciliation and are signed by them. Copies of such agreements are, however, sent to appropriate governments and to conciliation officers.
  • Agreements which are negotiated by the parties on a voluntary basis when disputes are subjudice 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.
  • Agreements which arrived at after direct negotiations between labour and management and are purely voluntary in character. These depend for their enforcement on moral force and on the goodwill and cooperation of the parties.

Objectives of Collective Bargaining:

  • To foster and maintain cordial relations between the employer/management and employees.
  • To protect the interests of the workers and employer through collective action and by preventing unilateral actions from being taken by either party.
  • To keep outside the government interventions
  • To promote industrial democracy.

Characteristics of Collective Bargaining: 

  • It is a group or collective action as opposed to individual action. It is initiated through the representatives of the employees (trade union members).
  • It is two way give and take process because its outcome is mutually beneficial. The negotiation arrived at is acceptable to both parties: the employer and the employees. Hence it creates a stable relationship.
  • It is a voluntary bipartite and continuous process without any third-party intervention.
  • It is a flexible and dynamic process wherein no party adopts a rigid attitude. It changes as per the conditions prevailed at the time of negotiations.
  • It ensures industrial democracy at the workplace. Both the employer and the employees who best know their problems, participate in the negotiation process.
  • It is a practical way of solving issues between the employer and the employee.
  • It involves balancing of strength and power.
  • The decision taken by collective bargaining can be implemented speedily.

Prerequisites of Collective Bargaining:

Right to Organise and Right to Collective Bargain:

  • The success of collective bargaining depends upon the extent to which, the workers enjoy the right to organize and bargain.
  • There should be the effective enjoyment of the freedom of association by the employee in accordance with the principles set out in the “Freedom of association and the protection of the right to organize convention”
  • The workers and the employer’s organization should be free and sufficiently strong but also relatively equal in strength.

Presence of Strong Independent Trade Union:

  • Collective bargaining will only be successful when the workers have the freedom to form a stable and strong trade union. If the trade union is weak, employers can say that it does not represent the workers and will refuse to negotiate with it.
  • The fragmentation of the unions, inter-union and intra-union rivalries hinders the progress of the collective bargaining process.

Recognition of Trade Union:

  • The trade union and the employer should recognize each other. There may be many unions of workers but only one of them having the majority is recognized by the employer.
  • The collective bargaining can take place only if the employers recognize trade unions or the workers association for that purpose.
  • The refusal of the employer to recognize the trade union or the complications can create conflict and hamper the process of collective bargaining.

Keeping Aside Prejudice:

  • Both parties involved in collective bargaining must not have any prejudice about each other. Due to the prejudice, there may be a deficiency of trust among themselves.

The Attitude of Employers and Rade Unions:

  • The attitude of the parties involved is a crucial factor in the success of bargaining. Collective bargaining is impossible between the parties which are rigid, non-compromising and close-minded.
  • Both parties should have faith in each other. They should have a compromising and flexible attitude.

A Give and Take Policy:

  • The difference between two parties can be adjusted only by compromise so that an agreement can be reached. Neither side should be too rigid on its demand. Hence the attitude of to give and take should be followed by both the parties.
  • Unions should not rigidly insist upon unreasonable demands and should be ready to reduce its demands to come to an agreement. While the employer should take a practical and humanitarian approach towards reasonable demands of the employee.

A Favourable Political Environment:

  • A favourable political climate is essential for successful collective bargaining. When the government encourages collective bargaining as the best method of regulating conditions of employment, then it guarantees the success of collective bargaining.
  • If government policy is to restrict trade union activities, there can be no collective bargaining.

Unfair Labour Practices:

  • Sometimes both the employers and the trade unions use unfair labour practices. These will restrict the development of collective bargaining. To create an atmosphere of goodwill both parties should avoid unfair labour practices.

Written Agreements:

  • The issues to be discussed should be agreed first before proceeding for collective bargaining to avoid future confusion.
  • The agreement must be observed by those to whom they apply.
  • Only strong unions or association can agree on the points of collective bargaining.

A Suitable Framework:

  • The machinery for effective collective bargaining has been laid down either by the legislation of the country or by mutual agreement. Therefore setting up of the well organized negotiating bodies for the purpose of collective bargaining is of immense importance.

Subject Matter of Collective Bargaining

  • Rights and responsibilities of the management and of the trade union.
  • Wages, bonus and other allowances including profit sharing.
  • Hours of work, rest intervals.
  • Production norms
  • Leave and other facilities
  • terms and conditions of service.
  • retirement benefits
  • Grievance redressal system.
  • The procedure of joint consultation
  • The procedure of settling disputes.
  • Purpose, scope and duration of the agreement
  • Differences in interpretation of the agreement
  • the definition of important terms.
  • Annual holidays and pays
  • Termination, discharge, suspension and dismissal clauses.
  • Prohibition of strikes and lockouts in the period of the agreement.

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