Definition of Collective bargaining

The phrase ‘Collective Bargaining' is coined by famous authors Sydney and Beatrice Webb in their
celebrated treatise on ‘History of Trade Unions’. Collective Bargaining is a method of determining the
terms and conditions of employment and settling disputes arising from those terms by negotiating
between the employer and the employees or their trade union.

Meaning of collective bargaining

The term collective bargaining is made up of two words, ‘collective’ – which means a ‘group action’
through representation and ‘bargaining’, means ‘negotiating’, which involves proposals and counter-
proposals, offers and counter-offers. Thus, it means collective negotiations between the employer and
the employee, relating to their work situations. The success of these negotiations depends upon
mutual understanding and give and take principles between the employers and employees.

Collective bargaining is a source of solving the problems of employees in the work situation
collectively. It provides a good climate for discussing the problems of workers with their employers.
The employees put their demands before the employers and the employers also give certain
concession to them.

The process of collective bargaining is bipartite in nature, i.e. the negotiations are between the
employers and employees without a third party’s intervention. Thus collective bargaining serves to
bridge the emotional and physiological gulf between the workers and employers though direct
discussions.

The ILO has defined collective bargaining as "negotiations about working conditions and terms of
employment between an employer and a group of employees or one or more employees' organizations
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 derivatives validity, none of the matters it deals which can in
normal circumstances be given as a ground for a dispute concerning an industrial worker".

Collective Bargaining in India:

The collective bargaining as a policy has been in vogue in the United Kingdom, the United States of
America, Australia, New Zealand and other countries. However in India the trade unions have more to
learn from these countries to tackle the industrial problems. The Govt, of India, through its Five Year
Plans has endeavoured to encourage the practice of collective bargaining.

The Second Five Year Plan, 1956 stated, “For the development of an understanding or an industry,
industrial peace is indispensable. Obviously this can best be achieved by the parties themselves... The
best solution to common problems, however, can be found by mutual agreement”.
The Fourth Five Year Plan recognised that “greater emphasis should be placed on collective
bargaining and on strengthening the trade union movement for securing better labour management
relations supported by recourse in large measure to voluntary arbitration”.

A collective bargaining process generally consists of four

types of activities

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.

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.

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.

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.

Characteristics Of Collective Bargaining


  It is a group process, wherein one group, representing the employers, and the
other, representing the employees, sit together to negotiate terms of
employment.
 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.
 Collective bargaining is a formalized process by which employers and
independent trade unions negotiate terms and conditions of employment and
the ways in which certain employment-related issues are to be regulated at
national, organizational and workplace levels.
 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.
 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.
 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.
 Collective bargaining tends to improve the relations between workers and the
union on the one hand and the employer on the other.
 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.
 Collective bargaining takes into account day to day changes, policies,
potentialities, capacities and interests.
 It is a political activity frequently undertaken by professional negotiators.

Collective bargaining process comprises of five core steps:

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.

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.

Functions of Collective bargaining

Prof. Butler has viewed the functions as:

1. a process of social change
2. a peace treaty between two parties
3. a system of industrial jurisprudence

1. Collective bargaining as a process of social change


 Collective bargaining enhances the status of the working class in the society.
Wage earners have enhanced their social and economic position in relation to
other groups.
 Employers have also retained high power and dignity through collective
bargaining.

2. Collective bargaining as a peace treaty

Collective bargaining serves as a peace treat between the employers and employees. However the
settlement between the two parties is a compromise.

3. Collective bargaining as an industrial jurisprudence

Collective bargaining creates a system of “Industrial Jurisprudence”. It is a method of introducing
civil rights into industry. It establishes rules which define and restrict the traditional authority
exercised by employers over their employees placing part of the authority under joint control of union
and management.

In addition to the above, its functions include:

 Increasing the economic strength to employers and employers.
 Improving working conditions and fair wages.
 Maintaining peace in industry
 Prompt and fair redressal of grievances.
 Promoting stability and prosperity of the industry.

Workers’ participation in Management

Workers’ participation in management is a process by which subordinate employees, either

individually or collectively, become involved in one or more aspects of organizational decision
making within the enterprises in which they work.

Workers’ participation in management is an essential ingredient of Industrial democracy. The concept

of workers’ participation in management is based on Human Relations approach to Management
which brought about a new set of values to labour and management. Traditionally the concept of
Workers’ Participation in Management (WPM) refers to participation of non-managerial employees in
the decision-making process of the organization.

Workers’ participation is also known as ‘labour participation’ or ‘employee participation’ in

management. In Germany it is known as co-determination while in Yugoslavia it is known as self-
management. The International Labour Organization has been encouraging member nations to
promote the scheme of Workers’ Participation in Management.

Workers’ participation in management implies mental and emotional involvement of workers in the
management of Enterprise.

Article 43A of the Constitution of India deals with 'Participation of workers in management of
industries' and falls under Part IV - Directive Principles of State Policy. The State shall take steps, by
suitable legislation or in any other way, to secure the participation of workers in the management of
undertakings, establishments or other organisations engaged in any industry.

ILO:

Workers’ participation, may broadly be taken to cover all terms of association of workers and their
representatives with the decision-making process, ranging from exchange of information,
consultations, decisions and negotiations, to more institutionalized forms such as the presence of
workers’ member on management or supervisory boards or even management by workers themselves
(as practiced in Yugoslavia).

The objectives of workers’ participation in management are as follows:

  To raise level of motivation of workers by closer involvement.

 To provide opportunity for expression and to provide a sense of importance to

workers.

 To develop ties of understanding leading to better effort and harmony.

 To act on a device to counter-balance powers of managers.

 To act on a panacea for solving industrial relation problems.

Specific of Purpose of Workers' Participation

1. It helps in managing resistance to change which is inevitable. For the growth and development of
industry, changes have to be welcomed, otherwise the organization will stagnate and be left behind. If
the need for change is jointly felt by all partners of production its acceptance can be high. Workers'
participation in change strategy can facilitate acceptable solutions with a view to secure effective and
smooth implementations of decisions.

2. Workers' participation can encourage communication at all levels. Since both partners of
production are involved in the decision-making there will be fewer changes of distortion and/ or
failure in communicating the decision.

3. Joint decision- making ensures the there will be minimum industrial conflict an economic growth
can be free form distracting strife.

4. Workers' participation at the plant level can be seen as the first step to establishing democratic
values in society at large.

Forms/ Types of Participation

Different forms of participation are discussed below:

Collective Bargaining:

Collective bargaining results in collective agreements which lay down certain rules and conditions of
service in an establishment. Such agreements are normally binding on the parties. Theoretically,
collective bargaining is based on the principle of balance of power, but, in actual practice, each party
tries to outbid the other and get maximum advantage by using, if necessary, threats and counterthreats
like; strikes, lockouts and other direct actions. Joint consultation, on the other hand, is a particular
technique which is intended to achieve a greater degree of harmony and cooperation by emphasising
matters of common interest. Workers prefer to use the instrument of collective bargaining rather than
ask for a share in management. Workers’ participation in the U.S.A has been ensured almost
exclusively by means of collective agreements and their application and interpretation rather than by
way of labour representation in management.

Works Councils:

These are exclusive bodies of employees, assigned with different functions in the management of an
enterprise. In West Germany, the works councils have various decision-making functions. In some
countries, their role is limited only to receiving information about the enterprise. In Yugoslavia, these
councils have wider decision-making powers in an enterprise like; appointment, promotion, salary
fixation and also major investment decisions.

Joint Management Councils and Committees:

Mainly these bodies are consultative and advisory, with decision-making being left to the top
management. This system of participation is prevalent in many countries, including Britain and India.
As they are consultative and advisory, neither the managements nor the workers take them seriously.

Board Representation:

The role of a worker representative in the board of directors is essentially one of negotiating the
worker’s interest with the other members of the board. At times, this may result in tension and friction
inside the board room. The effectiveness of workers’ representative at the board depend upon his
ability to participate in decision-making, his knowledge of the company affairs, his educational
background, his level of understanding and also on the number of worker representatives in the Board.

Workers Ownership of Enterprise:

Social self-management in Yugoslavia is an example of complete control of management by workers

through an elected board and workers council. Even in such a system, there exist two distinct
managerial and operative functions with different sets of persons to perform them. Though workers
have the option to influence all the decisions taken at the top level, in actual practice, the board and
the top management team assume a fairly independent role in taking major policy decisions for the
enterprises, especially in economic matters.

Levels of Participation

Workers’ participation is possible at all levels of management; the only difference is that of degree
and nature of application. For instance, it may be vigorous at lower level and faint at top level.
Broadly speaking there is following five levels of participation:

1. Information participation: It ensures that employees are able to receive information and express
their views pertaining to the matters of general economic importance.

2. Consultative participation: Here works are consulted on the matters of employee welfare such as
work, safety and health. However, final decision always rests at the option of management and
employees’ views are only of advisory nature.

3. Associative participation: It is extension of consultative participation as management here is under

moral obligation to accept and implement the unanimous decisions of employees.

4. Administrative participation: It ensure greater share of works in discharge of managerial functions.

Here, decision already taken by the management come to employees, preferably with alternatives for
administration and employees have to select the best from those for implementation.
5. Decisive participation: Highest level of participation where decisions are jointly taken on the
matters relation to production, welfare etc. is called decisive participation.

Pre-requisites for Effective Participation

The pre-requisites for the success of any scheme of participative management are the following:

 Firstly, there should be a strong, democratic and representative unionism for the
success of participative management.

 Secondly, there should be mutually-agreed and clearly-formulated objectives for

participation to succeed.

 Thirdly, there should be a feeling of participation at all levels.

 Fourthly, there should be effective consultation of the workers by the management.

 Fifthly, both the management and the workers must have full faith in the soundness of
the philosophy underlying the concept of labour participation.

 Sixthly, till the participative structure is fully accepted by the parties, legislative
support is necessary to ensure that rights of each other are recognised and protected.

 Seventhly, education and training make a significant contribution to the purposeful

working of participative management.

 Lastly, forums of participation, areas of participation and guidelines for

implementation of decisions should be specific and there should be prompt follow-up
action and feedback.

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Bipartite & Tripartite Consultative Bodies:

Bipartite:

Bipartite committees consisting of the representatives of workers and their employer at the plant or
industrial level. Bipartite committees are given the power to settle differences between the workers
and the employers as soon as they appear, and thereby they prevent them from growing into big
conflagrations.

Bipartism is a system of industrial relations where social and labour issues are discussed between
trade unions and management, usually at the enterprise level. The bipartite consultative machinery
comprises of groups like Works Committee and Joint Management Council. These are purely
consultative and not negotiating bodies, with equal representations of the employers and the workers.
They were set up for dealing with disputes affecting the plant or industry. With the beginning of
industrialization of India, labor relations in Indian industries have also been largely influenced by
Indian democracy. The bipartite consultation machinery was established around 1920, to democratize
Indian industrial relations. These joint committees were introduced in TISCO at Jamshedpur.

Tripartite:

Tripartite means composed of or split into three parts, or refers to three parties. The Whitley
Commission, in 1931, recommended a body be set up to look into the needs for consultation on labour
matters. It envisaged a statutory organisation which should ensure adequate representation of the
various interests involved: employers, labour and government. The ILO is based on the principle of
tripartism - dialogue and cooperation between governments, employers, and workers - in the
formulation of standards and policies dealing with labour matters. Tripartite forums evolve norms or
standards in the form of guidelines. The tripartite body was established to make peace and improve
relations between management and unions, and maintain smooth functioning of union management
relations. The aim of the consultative machinery is “to bring the parties together for mutual settlement
of differences in a spirit of cooperation a goodwill”. The principals and policies of the tripartite body
have been a machinery of consultancy at the industrial and national levels and have shaped Industrial
relations in Indian Industrial relations in India have been shaped largely by principles and policies
evolved through tripartite consultative machinery at the industry and national levels.

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