CHANAKYA NATIONAL LAW UNIVERSITY

NYAYA NAGAR, MITHAPUR, PATNA-800001

IMPACT OF COLLECTIVE BARGAINING ON

HUMAN RESOURCE MANAGEMENT

SUBMITTED TO: MISS KIRTI

FACULTY, HRM

SUBMITTED BY: ANKIT KUMAR

ROLL – 2007

B.B.A.L.L.B.(1ST YEAR)

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ACKNOWLEDGEMENT

All praises to Almighty , the most Gracious, the most Beneficent and the most

Merciful, who enabled me to complete this assignment.

I feel great pleasure in expressing my since gratitude to my teacher, for her

guidance and support for providing me an opportunity to complete a productive

research study of my topic

“IMPACT OF COLLECTIVE BARGAINING ON INDUSTRIAL DISPUTE

IN AN ORGANISATION ”.

My special thanks and acknowledgments to MISS KIRTI, Faculty of Human

Resource Management for providing me all relative information, guidance and

support to compile the practical study at Chanakya National Law University , Patna.

I will keep my hopes alive for the success of given task to submit this report to my

honorable teacher , whose guidance; support and encouragement enable me to

complete this assignment.

AIMS AND OBJECTIVES

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The objectives of the study cannot be overemphasized .The main
objectives are ;
1. To know what is collective bargaining and the process
involved in it.
2. To emphasize upon the importance of collective bargaining
in industrial dispute in an organization.

HYPOTHESIS
The researcher is employed in the use of books and internet
materials in order to study over the topic. The researcher also
explained in the project on how the method used to gather
data intends to emphasize that collective bargaining is an
important tool in resolving industrial disputes.

SOURCES OF DATA
The researcher will be relying on both primary and secondary
sources to complete the project.
1.Primary sources : Books
2. Secondary sources : Material available on the internet

CONTENT
S

 Title page…...………………………………………………………………………… 1

 Acknowledgement………………………………………………………….. ……. 2

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 Aims and objectives ; hypothesis ;……………………………………………

sources of data …………………………………………… 3

 Contents...……………………………………………. …………………………….. 4

 COLLECTIVE BARGAINING PROCESS……….…………………………………….. 5-6

 Collective bargaining process comprises of five core steps……… 6-7

 Bargaining Form And Tactics …………………………………………………. 8-9

 Characteristics of Collective Bargaining ……………………………….. 10-11

 Importance of Collective Bargaining………………………………………. 12-14

 Levels of Collective Bargaining……………………………………………….. 15

 Bargaining Dead Locks…………………………………………………………… 16-17

 Practical Study of the organization………………………….……………… 17-23

 Introduction……………………………………………………..…………………… 17

 Case Study with respect to the topic.…………………………….......... 20

 Conclusion.……………………………………………………………………………. 24

 Recommendations………………………………………………………………… 25

TOPIC: - COLLECTIVE BARGANING PROCESS

INTRODUCTION

Collective bargaining generally includes negotiations between the two parties

(employees’ representatives and employer’s representatives). Collective bargaining

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consists of negotiations between an employer and a group of employees that

determine the conditions of employment. Often employees are represented in the

bargaining by a union or other labor organization. The result of collective

bargaining procedure is called the collective bargaining agreement (CBA).

Collective agreements may be in the form of procedural agreements or substantive

agreements. Procedural agreements deal with the relationship between workers and

management and the procedures to be adopted for resolving individual or group

disputes.

This will normally include procedures in respect of individual grievances, disputes

and discipline. Frequently, procedural agreements are put into the company rule

book which provides information on the overall terms and conditions of

employment and codes of behavior. A substantive agreement deals with specific

issues, such as basic pay, overtime premiums, bonus arrangements, holiday

entitlements, hours of work, etc. In many companies, agreements have a fixed time

scale and a collective bargaining process will review the procedural agreement

when negotiations take place on pay and conditions of employment.

The collective bargaining process comprises of five core steps:

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1. Prepare: This phase involves composition of a negotiation team. The

negotiation team should consist of representatives of both the parties with adequate

knowledge and skills for negotiation. In this phase both the employer’s

representatives and the union examine their own situation in order to develop the

issues that they believe will be most important. The first thing to be done is to

determine whether there is actually any reason to negotiate at all. A correct

understanding of the main issues to be covered and intimate knowledge of

operations, working conditions, production norms and other relevant conditions is

required.

2. Discuss: Here, the parties decide the ground rules that will guide the

negotiations. A process well begun is half done and this is no less true in case of

collective bargaining. An environment of mutual trust and understanding is also

created so that the collective bargaining agreement would be reached.

3. Propose: This phase involves the initial opening statements and the possible

options that exist to resolve them. In a word, this phase could be described as

‘brainstorming’. The exchange of messages takes place and opinion of both the

parties is sought.

4. Bargain: negotiations are easy if a problem solving attitude is adopted. This

stage comprises the time when ‘what ifs’ and ‘supposals’ are set forth and the

drafting of agreements take place.

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5. Settlement: Once the parties are through with the bargaining process, a

consensual agreement is reached upon wherein both the parties agree to a common

decision regarding the problem or the issue. This stage is described as consisting of

effective joint implementation of the agreement through shared visions, strategic

planning and negotiated change.

Bargaining Form And Tactics

 Distributive bargaining

 Integrative bargaining

 Attitudinal restructuring

 Intra-organizational bargaining

Distributive bargaining

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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.

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 programmed 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.

Attitudinal restructuring

This involves shaping and reshaping some attitudes like trust or distrust,
friendliness or hostility between labor and management. When there is a backlog

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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.

Intra-organizational bargaining

It generally aims at resolving internal conflicts. This is a type of maneuvering 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

maneuver to achieve consensus among the conflicting groups.

Characteristics of Collective Bargaining

1. It is a group process, wherein one group, representing the employers, and the

other, representing the employees, sit together to negotiate terms of

employment.

2. Negotiations form an important aspect of the process of collective

bargaining i.e., there is considerable scope for discussion, compromise or

mutual give and take in collective bargaining.

3. Collective bargaining is a formalized process by which employers and

independent trade unions negotiate terms and conditions of employment and

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 the ways in which certain employment-related issues are to be regulated at

national, organizational and workplace levels.

4. Collective bargaining is a process in the sense that it consists of a number of

steps. It begins with the presentation of the charter of demands and ends

with reaching an agreement, which would serve as the basic law governing

labor management relations over a period of time in an enterprise. Moreover,

it is flexible process and not fixed or static. Mutual trust and understanding

serve as the by products of harmonious relations between the two parties.

5. It a bipartite process. This means there are always two parties involved in

the process of collective bargaining. The negotiations generally take place

between the employees and the management. It is a form of participation.

6. Collective bargaining is a complementary process i.e. each party needs

something that the other party has; labor can increase productivity and

management can pay better for their efforts.

7. Collective bargaining tends to improve the relations between workers and

the union on the one hand and the employer on the other.

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 8. Collective Bargaining is continuous process. It enables industrial democracy

to be effective. It uses cooperation and consensus for settling disputes rather

than conflict and confrontation.

9. Collective bargaining takes into account day to day changes, policies,

potentialities, capacities and interests.

10.It is a political activity frequently undertaken by professional negotiators.

Importance of Collective Bargaining

Collective bargaining includes not only negotiations between the employers and
unions but also includes the process of resolving labor-management conflicts.
Thus, collective bargaining is, essentially, a recognized way of creating a system of
industrial jurisprudence. It acts as a method of introducing civil rights in the
industry, that is, the management should be conducted by rules rather than arbitrary
decision making. It establishes rules which define and restrict the traditional
authority exercised by the management.

Importance to employees

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 1. Collective bargaining develops a sense of self respect and responsibility

among the employees.

2. It increases the strength of the workforce, thereby, increasing their

bargaining capacity as a group.

3. Collective bargaining increases the morale and productivity of employees.

4. It restricts management’s freedom for arbitrary action against the employees.

Moreover, unilateral actions by the employer are also discouraged.

5. Effective collective bargaining machinery strengthens the trade unions

movement.

6. The workers feel motivated as they can approach the management on

various matters and bargain for higher benefits.

7. It helps in securing a prompt and fair settlement of grievances. 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.

Importance to employers

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 1. It becomes easier for the management to resolve issues at the bargaining

level rather than taking up complaints of individual workers.

2. Collective bargaining tends to promote a sense of job security among

employees and thereby tends to reduce the cost of labor turnover to

management.

3. Collective bargaining opens up the channel of communication between the

workers and the management and increases worker participation in decision

making.

4. Collective bargaining plays a vital role in settling and preventing industrial

Importance to society

1. Collective bargaining leads to industrial peace in the country

2. It results in establishment of a harmonious industrial climate which supports

which helps the pace of a nation’s efforts towards economic and social

development since the obstacles to such a development can be reduced

considerably.

3. The discrimination and exploitation of workers is constantly being checked.

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 4. It provides a method or the regulation of the conditions of employment of

those who are directly concerned about them.

Levels of Collective Bargaining:-

Collective bargaining operates at three levels:

1. National level

2. Sector or industry level

3. Company/enterprise level

1. National level:-Economy-wide (national) bargaining is a bipartite or tripartite

2. Sector or industry level:- Sector oral bargaining, which aims at the

standardization of the terms of employment in one industry, includes a range of

bargaining patterns. Bargaining may be either broadly or narrowly defined in terms

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of the industrial activities covered and may be either split up according to

territorial subunits or conducted nationally.

3. Company/enterprise level:-The third bargaining level involves the company

and/or establishment. As a supplementary type of bargaining, it emphasizes the

point that bargaining levels need not be mutually exclusive.

Bargaining Dead Locks:-

Strikes:

1. There is a chance of strike after labour negotiation if bargaining demands of

employee are not met by the management.

2. The right of employees to strike in support of their bargaining demands is

protected by the Landrum-Griffin Act.

3. A lawful labour dispute may result work stoppage by employees, which

may not violation of an existing agreement between management and

the union.

Lockouts:

1. After expiry of collective bargaining agreement, when employers desires to

hold economic pressure on union to settle a contract on terms

favorable to the employers, by law, employer can lock out its employees.

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 2. It also is a legal for a company to replace the locked outworkers with

temporary replacement in order to continue operations during the lock out.

However, the use of permanent replacement is not permissible.

3. Third party involvement: A bargaining dead locks produce when the

parties fail to reach at the stage of settlement. Litigation/third party involved

to resolve the issue

PRACTICAL STUDY OF THE ORGANIZATION

Now I would like to compare theoretical aspects with practical aspects, which I
have studied about OGDCL Pakistan.

INTRODUCTION TO OGDCL PAKISTAN

Office Venue:-

OGDCL House, Plot No.3, Sector F-6/ G-6, Jinnah Avenue, Blue Area, Islamabad.

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Voice: 051-9209811-18, Fax:-051-9209792

Regional Offices:-

OGDCL Regional Offices are located in Karachi and Multan. Besides this OGDCL

has its Liaison Offices in Hyderabad, Sukkur, and Quetta for operational activities.

The company head office is located in Islamabad but carrying out exploration in all

the four provinces of Pakistan.

Historical Perspective :-

The Oil & Gas Development Company Limited (OGDCL) was created under an

Ordinance in 1961, to undertake comprehensive exploratory program and promote

Pakistan’s oil and gas prospects. In July 1989, OGDCL was off-loaded from

Government Budget, making it a self-financing entity. And In 1997, it was

converted into Public Limited Company and is now governed by the Companies

Ordinance 1984. In Nov 2003, the GOP divested 5% of its shares in the company

through an initial Public Offering (IPO). The company is now listed on all the

major stock exchanges of the country.

OGDCL holds the largest share of oil and gas reserves in the country, i.e. 48% of

total oil and 34% of total gas reserves. Its percentage share of the total oil and gas

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production in Pakistan is 52% and 23% respectively. On the basis of its activities

since inception, the company has made 60 discoveries.

MISSION STATEMENT

“Our mission is to become a competitive, dynamic and growing E & P Company,

rapidly enhancing our reserves through world class work force.

MAIN PRODUCTLINE

 Crude Oil

 Gas

 Sulphur

MAJOR ACTIVITIES

 Exploration & Development of Oil & Gas Resources.

REVIEW OF THEORETICAL & PRACTICAL SITUATION

“If Corporation prospers, workers prosper and if corporation fails, workers

fail”. Trade Union”

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Oil and gas Development Corporation was established in 1961 for the exploration

of oil and gas deposits / reservoir in Pakistan.

How Situation Occurs

The working pattern of OGDC is a different from other organizations. The oil and

gas fields are located in remote areas. Most of the unskilled labour is hired from

the nearby areas, while skilled staff is hired from all over the country. The

workings conditions are tough and frustrations of worker during stay in fields

create problems for the management.

Labour Demand

At this situation, labour can demand the incentives and other reasonable facilities

because the labour is far away from their families and home. There are following

demands of labour:

 Living facility.

 Life insurance facility.

 Safety measures.

 Medical facility.

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Charter of Demand Submitted to the Management

The above mentioned demands of labour working in the remote areas of all over

the country have been summarized and then presented to the OGDCL higher

management for their early consideration. In this charter of demand it has also

emphasized that the fulfillment of these demands will help in smooth functioning

of the company and for the betterment and progress of the organization.

Management’s Action

In response to the above charter of demand which was submitted by the Labour

Union Representatives the management of OGDCL decided to have an internal

meeting for fulfillment of these demands and for this purpose management told the

Union Representatives in writing that they required two weeks time for taking any

decision in this regard. But unfortunately after the lapse of these two weeks,

management did not decided any thing in favour or against OGDCL labour /

workers of remote areas.

Strikes are to be takenDue to this situation labour union serve a three days strike

notice to the management. They said that during the strike no work will be done in

field as well as in offices.

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Union and Management Meeting

After receiving the above mentioned strike notice, OGDCL management arranged

an emergency meeting with the union representatives in OGDCL Headquarters at

Sector F-6, Islamabad. In this meeting both the stake holders (union and

management) resolved these problems.

OGDCL Labour Union President Chaudhry Mohammad Akram represent the

OGDCL union and bargain very comprehensively and forced the management to

accept the labour demands.

Steps That Are Taken By the Management

There are following steps which are taken by the management:

 Considering the field hardships and homesickness of the non – resident

workers OGDC adopted a policy through which field workers spend 45 days

in filed and is allowed 15 days off to live with their families. This helps them

to regain their energies and remove their frustration.

 Management has taken the steps such as higher compensation and extended

facilities of life insurance, free medical for workers and their families, good

residence and mess facilities at work place.

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  The Corporation also provides all safety measures and use of helmet and

needed instruments are obligatory for the worker in the field.

SWOT ANALYSIS OF THE ORGANIZATION (OGDC):-

STRENGTHS WEAKNESSES
 Highly Skilled People  Political Influences
 Vast Experience  Target Customer is limited
 Partner are the biggest Players  Market model is not scalable

in the market
 First mover advantage  Third party dependence
 High market cap and revenue  Inadequate Financing
OPPRTUNITIES THREATS
 Great positioning in the  Technology

market
 Expanding into vertical  Fear of unproductive wells

market
 Few substitutes  Vast Market
 New Entrants  Customers have more

 High international Market opportunities in global market

CONCLUSION

From the above example we can see that how collective bargaining is formed and

done. It is legal tool for the labour to fight their rights. Management realizes that

the positive role of trade union has helped in implementation of their policies. It

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considers the workers as valuable assets of the corporation and union activities as

their genuine right. The labour union feels that good industrial relations are key to

the success of any organization. Workers have the responsibility to put their best

efforts and management has to reward them by giving them fair share in the profits

and meeting their legitimate and law full demands.

RECOMMENDATIONS

Whereas in the past negotiations tended to be focused around a union claim,

companies adopting a human resources management approach, tend to want to set

the agenda, which in an unionized environment places unions in the position of

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responding to management's demands. Congress, in its policy document 'Managing

Change' sets down a strategy for a more participative and non-adversarial style of

collective bargaining within the context of the global competitive environment for

business.

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