Pre-Requisites & Process of Collective Bargaining
The term “collective bargaining” simply means negotiation. It provides an opportunity to the workers to achieve industrial democracy. It is applied in different levels starting from craft-level to national level. In Indian industry, the process of collective bargaining started in the second half of the 19th century and got legislative recognition in the first half of the 20th century. This project dwells upon the concept of collective bargaining in general which includes the discussion of its scope, objectives, types, conditions, environment, theories and different levels. Besides, the relevant provisions of Industrial Disputes Act, Trade Union Act, Standing Order and the Constitution, along with some cases of the Apex Court have been dealt with for justifying the legality of collective bargaining.
Peace is sine qua non for development and disputes dissipate valuable time, effort and money of the society. But, in a realistic sense, conflict is inevitable. Commerce, business, development work, administration, etc., all suffer because of long time taken in resolving disputes through traditional court of law. To get out of this maze of litigation, there is an alternative methods of industrial dispute resolution namely; collective bargaining, conciliation, mediation, arbitration, worker’s participation in management, wage boards etc. Of all these, collective bargaining is considered as the best possible method because in this the disputants themselves sit together and resolve their differences in an amicable and respectable manner. A number of theories – from the fields of industrial relations, economics, political science, history and sociology as well as the writings of activists, workers and labour organizations have attempted to define and explain collective bargaining. One theory suggests that collective bargaining is a human right and thus deserving of legal protection. In June 2007 the Supreme Court of Canada in Facilities Subsector Bargaining Assn. v. British Columbia extensively reviewed the rationale for considering collective bargaining to be a human right. The Court made the following observations in this case:
The right to bargain collectively with an employer enhances the human dignity, liberty and autonomy of workers by giving them the opportunity to influence the establishment of workplace rules and thereby gain some control over a major aspect of their lives, namely their work.
Collective bargaining is not simply an instrument for pursuing external ends…rather [it] is intrinsically valuable as an experience in self-government.
Collective bargaining permits workers to achieve a form of workplace democracy and to ensure the rule of law in the workplace. Workers gain a voice to influence the establishment of rules that control a major aspect of their lives.
According to Dale Yoder, “Collective bargaining is the term used to describe a situation in which the essential conditions of employment are determined by bargaining process undertaken by representatives of a group of workers on the one hand and of one or more employers on the other.”
In the words of Flippo, “Collective bargaining is a process in which the representatives of a labour organisation and the representatives of business organisation meet and attempt to negotiate a contract or agreement, which specifies the nature of employee-employer-union relationship.”
Collective bargaining is a voluntary process under which the representatives of both employers and labour enter into an agreement. We also note that the process does not stop as soon as a bargain is reached at between the employer and the trade union. It is a continuous process because the contract is only the beginning of collective bargaining. Bargaining requires an efficient and permanent arrangement for negotiations. No temporary or one-time arrangements can make the bargaining process successful.
The I.L.O. defines collective bargaining as “the negotiations about working conditions and terms of employment between an employer, or a group of employers, or one or more employers' organisations, on the one hand, and one or more representative workers' organisation on the other with a view to reaching agreement." Similarly, according to Ludwing and Teller, collective bargaining is “an agreement between a single employer or an association of employers on the one hand and labour union on the other hand which regulates terms and conditions of employment”. The Webbs describe collective bargaining as an economic institution, with trade unionism acting as a labour cartel by controlling entry into the trade. Prof. Allan Flanders has argued on the other hand, that collective bargaining is primarily a political rather than an economic process.
This definition confines the term collective bargaining as a means of improving conditions of employment. But in fact, collective bargaining serves something more. Perlman aptly stated, "Collective bargaining is not just a means of raising wages and improving conditions of employment. Nor is it merely democratic government in industry. It is above all technique, collective bargaining as a technique of the rise of a new class is quite different ...... from the desire to displace or abolish" the "old ruling class"... ... to gain equal rights as a class ... ... to acquire an excessive jurisdiction in that sphere where the most immediate interests, both material and spiritual, are determined, and a shared jurisdiction with the older class or classes in all other spheres."
Collective Bargaining in India has been the subject matter of industrial adjudication since long and has been defined by our Law Courts. In Karol Leather Karamchari Sangathan v. Liberty Footwear Company the Supreme Court observed that, "Collective bargaining is a technique by which dispute as to conditions of employment is resolved amicably by agreement rather than coercion." According to the Court, the Industrial Disputes Act, 1947 seeks to achieve social justice on the basis of collective bargaining. In an earlier judgment in Titagarh Jute Co. Ltd. v. Sriram Tiwari , the Calcutta High Court clarified that this policy of the legislature is also implicit in the definition of ‘industrial dispute'.
In Ram Prasad Viswakarma v. Industrial Tribunal the Court observed that, "It is well known how before the days of ‘collective bargaining', labour was at a great disadvantage in obtaining reasonable terms for contracts of service from its employer. As trade unions developed in the country and Collective bargaining became the rule, the employers found it necessary and convenient to deal with the representatives of workmen, instead of individual workmen, not only for the making or modification of contracts but in the matter of taking disciplinary action against one or more workmen and as regards of other disputes."
In Bharat Iron Works v. Bhagubhai Balubhai Patel, it was held that "Collective bargaining, being the order of the day in the democratic, social welfare State, legitimate trade union activities, which must shun all kinds of physical threats, coercion or violence, must march with a spirit of tolerance, understanding and grace in dealings on the part of the employer. Such activities can flow in healthy channel only on mutual cooperation between the employer and the employees and cannot be considered as irksome by the management in the best interests of its business. Dialogue with representatives of a union help striking a delicate balance in adjustments and settlement of various contentious claims and issues." These definitions only bring out the basic element in the concept i.e., civilized confrontation between employers and employees and the whole process is regulated by statutory provisions.
Aims and Objectives
1. Balances the Legitimate Expectations – Management can legitimately expect that most qualified labour will be available at a price which permits a reasonable margin for investment. On the other hand, labours can claim job for each worker and steady increment in the wages. In other words, management’s interest in planning production and in being protected against its interruption is the exact equivalent to the worker’s interest in planning his and his family’s life and in being protected against an interruption in his mode of existence, either through a fall of his real income or through the loss of his job. Collective Bargaining balances this conflicting interest through the process of negotiation.
2. Maintain Equality – Collective Bargaining is a means to maintain equality between the worker and the workmen as the latter is at least advantageous position from the outset. The bargaining power of an individual worker is, more often than not, quite weak because of factors like illiteracy, indebtedness and socio-economic backwardness. Therefore, there is no match for the economically and consequently, political, superior employer. These expose the worker to exploitation, discrimination and indignities. As Lord Wedderburn rightly argues, “the Common Law assumes that it is dealing with a contract made between equals, but in reality, save in exceptional circumstances, the individual worker brings no equality of bargaining power to the labour market”.
3. Promote Industrial Democracy – Trade Union seeks to promote industrial democracy. They have now come to symbolize: workers’ right to organize, to put forth their demands collectively16 and to resort to industrial action, i.e; strike, when their demands are not conceded by their employers. They seek to impress upon their employers that their collective voice be heard when decisions affecting their working lives are made. Thus, union assures that individual interest should be subordinated to the collective well being of its members. Given that joint regulation takes place of authoritarian decision making, collective bargaining can be a vehicle for the democratization of industrial life. The International Confederation of Free Trade Union stated that the objects of the collective bargaining is to express in practical terms the workers’ desire to be treated with due respect and to achieve democratic participation in decision affecting their working conditions.
4. Rule-making Function – Collective bargaining performs rule-making function. Collective Agreements govern employment relationships in the bargaining unit and thereby create generally applied standards. This indicates the power of groups to provide for their own internal regulation (e.g; by custom and practice) and that there are limits to the sovereign power of an employer. Collective bargaining can thus be regarded as an expression of pluralism. Thus, collective bargaining is not just a means for raising wages and improving conditions of employment. Nor is it merely democratic government in industry. It is above all a technique whereby an inferior social class or group exerts a never- slackening pressure for a bigger share in social sovereignty, as well as for more welfare and greater security and liberty. In short, collective bargaining helps in establishment and maintenance of the mutual relations of the workers and the management. Consequently, it strengthens the union as an organization. Further, it makes enterprise more responsive to human needs.
Collective Bargaining in India
Origin & Development - Since Collective Bargaining is the off-shoot of Trade Union activity, it is worthwhile to trace the origin of Trade Union first. The credit for organised labour movement in India goes to N.M. Lokhande, who was a factory worker himself. In 1884, he organised an agitation in Bombay and prepared a memorandum demanding limitation of working hours, a weekly rest day, compensation for injuries etc. and in response of these demands a weekly holidays was actually granted by the mill owners of Bombay. In fact, in 1890, the Bombay Mill hands’ Association was organised with Lokhande as chairman and workers newspaper “Deenabandhu” was started. The trade union movement got its momentum at the close of the World War I and the period of 1918-21 was an epoch-making period in the history of Indian labour movement. The Madras Labour Union (1918) founded by P.P. Wadia was the first India’s Trade Union. By the year 1920 the Trade Union had emerged on the Indian Scene in almost all the sector to protect the legitimate interests of the working classes. Collective Bargaining formally started in 1920s in the textile industry in Ahmedabad at the time when Mahatma Gandhi was introducing the concept of arbitration. Collective Bargaining started because of failure of arbitration.
Thereafter, lots of collective bargaining agreements were executed especially after Independence. But there was little support for the growth of this practice, since neither British India nor Independent India made legal provisions for collective bargaining. Nevertheless, like many other countries, collective bargaining in India got some impetus from various statutory provisions. The Trade Union Act, 1929, the Bombay Industrial Relations Act, 1946, the Industrial Disputes Act, 1947, and the Madhya Pradesh Industrial Relations Act, 1960 provided a machinery for consultation and paved the way for Collective bargaining.
Validity & Recognition – The analysis of the following documents along with the decisions of the Court justifies the legality and recognition of collective bargaining in India.
1. Industrial Disputes Act, 1947 – The Act is basically enacted for providing the mechanism for the settlement of disputes41. According to Section 18 of the Act, “A settlement arrived at by agreement between the employer and workman otherwise than in the course of conciliation proceeding shall be binding on the parties to the agreement ….” Thus, settlement other than conciliation which may take place by a binding agreement between the employer and the employee is nothing but an implication of the collective bargaining agreement. In other words, Section 18 recognises collective bargaining. In fact, the definition of settlement under the Act itself contains the element of collective bargaining.
In the case of Workmen of Dimakuchi Tea Estate vs. The Management of Dimakuchi Tea Estate, the examination of the salient provisions of the Act shows that the principal objects of the Act are –
“(1) the promotion of measures for securing and preserving amity and good relations between the employer and workmen; (2) an investigation and settlement of industrial disputes, between employers and employers, employers and workmen, or workmen and workmen, with a right of representation by a registered trade union or federation of trade unions or association of employers or a federation of associations of employers;….and (5) collective bargaining”.
Further, in Karnal Leather Karamchari Sanghatan (Regd.) vs. Respondent:Liberty Footwear Company (Regd.) and Ors, the Court laid down that the Act (Industrial Disputes Act, 1947) seeks to achieve social justice on the basis of collective bargaining. The voluntary arbitration is a part of infrastructure of dispensation of justice in the industrial adjudication. The arbitrator thus falls within the rainbow of statutory tribunals. When a dispute is referred to arbitration, it is therefore, necessary that the workers must be made aware of the dispute as well as the arbitrator whose award ultimately would bind them. They must know what is referred to arbitration, who is their arbitrator and what is in store for them. They must have an opportunity to share their views with each other and if necessary to place the same before the arbitrator. This is the need for collective bargaining and there cannot be collective bargaining without involving the workers. The Union only helps the workers in resolving their disputes with management but ultimately it would be for the workers to take decision and suggest remedies. It seems to us therefore, that the arbitration agreement must be published before the arbitrator considers the merits of the dispute. Non-compliance of this requirement would be fatal to the arbitral award.
In the case of Amalgamated Coffee Estates Ltd. vs. Workmen, the Apex Court held that the process of negotiated settlements is at the heart of the solution of the collective disputes. Unlike a settlement in the course of conciliation proceedings, a bipartite settlement with a majority union is equally binding if it is held to be fair and reasonable. Likewise, Central Provinces Transport Services vs. Patwardhan, the Court held that the Industrial Disputes Act essentially deals with collective disputes.
2. Trade Union Act, 1926 – The Act provides for the registration of trade union and determines the rights, liabilities and immunities of the union. The primary purpose for the formation of the trade union is to regulate the relations between the employer and employee or among themselves48 and it is well established that collective bargaining is one of the means of regulating such a relation. In the case of D.N. Banerjee vs. P.R. Mukherjee, the court recognises collective bargaining. Justice Chandra Shekhar Aiyer observed that “having regard to the modern condition of society where capital and labour have organised themselves into groups for the purpose of fighting their disputes and settling them on the basis of the theory that Union is Strength, collective bargaining has come to stay”.
Further, in Tamil Nadu Electricity Workers Federation vs. Madras State Electricity Board, the Madras High Court observed that the whole theory of organised labour and its statutory recognition in industrial legislation is based upon the unequal bargaining power that prevails as between the capital employer and in individual workman, or disunited workman. Collective bargaining is the foundation of this movement, and it is in the interest of labour that statutory recognition has been accorded to Trade Unions and their capacity to represent workmen, who are members of such bodies.
3. The Industrial Employment (Standing Orders) Act, 1946 – Standing Order is drafted by the employer which contains the conditions of employment. As per Section 3 of the Act, initially, the employer needs to submit the draft standing order to the Certifying Officer which should be in conformity to the model standing order as far as possible. Thereafter, the said Officer forward the copy of the draft to the trade union or to the workmen, if there is no trade union for seeking objections (if any) and after giving both the parties an opportunity of being heard, the Officer shall certify the standing order with necessary modifications (if required) and shall send it copies to both the parties.
Thus, the process of framing of standing order clearly suggest that both the employer and the employee takes part in it rather than it being in the hands and whims of either of them, though with the help of the Certifying Officer who acts as a negotiator. In other words, framing of standing order is a kind of negotiation with the help of the third person (Certifying Officer) which implies the process of collective bargaining. In the case of Glaxo Laboratories vs. Labour Court, Justice Desai assesses the imminent need for the Act in his inimitable style: “In the days of Laissez-faire when industrial relation was governed by the harsh and weighted law of hire and fire the management was the supreme master, the relationship being referable to contract between unequal’s and the action of the management treated almost sacrosanct. The Act, as its long title shows, required the employers in industrial establishments to define with sufficient precision the conditions of employment under them and to make the said conditions known to the workmen employed by them. The contract was not left to be negotiated by two unequal persons but statutorily imposed”
4. The Constitution of India, 1950 – The Constitution of India in the Chapters on Fundamental Rights and Directive Principles of State Policy justify the legality of collective bargaining. In this context, Article 19 permits to form association which implicates the validity of trade union and as mentioned above that one of the main purposes of trade union is collective bargaining. Further, several Directives Principles also justifies the provisions for improving the conditions of the labour in general and Article 43-A in particular provides that State shall ensure the participation of workers in the management. Although the said Directives are not directly enforceable in the court of law, still its binding nature can by established with the help of some decisions of the Apex Court of India. In Re Kerala Education Bill case, the Supreme Court observed that though the directives principles cannot override the fundamental rights, nevertheless, in determining the scope and ambit of fundamental rights the court may not entirely ignore the directive principles but should adopt “the principles of harmonious construction and should attempt to give effect to both as much as possible”.
Recognition – The willingness of an employer or of an employers’ association to bargain with a particular union is known as the “recognition” of the union. Thus, recognition is the process through which management acknowledge and accept a trade union as representative of some or all of the workers in an establishment or industry and with which it is willing to conduct discussions on all issues concerning those workers. When this acceptance also includes the willingness of the management to bargain with that union or unions, they may be termed as bargaining agent or agents. The National Commission on Labour attached considerable importance to the matter of recognition of unions. The Commission stated that the provision for union recognition has been realised is evident from the…Bombay Industrial Relations Act, 1946 and certain other state Acts (Madhya Pradesh and Rajasthan), the amendments incorporated (but not enforced) in the Trade Union Act and the Code of Discipline, as also the fact that it was included in the Second Plan.
The Commission suggested a compulsory recognition of the union under a Central Law in all undertaking employing 100 or more workers or where the capital invested is above a stipulated size. The Commission also recommended the rights of the recognised unions. Nevertheless, there is no law at the national level for recognition of trade unions. However, some States such as Maharashtra, Andhra Pradesh, Madhya Pradesh, West Bengal and Orissa have enacted the legal provisions for the recognition. Thus, it is evident that in spite of absence of expressly centrally enacted provisions on collective bargaining in India, there are enough protections for the relevance of collective bargaining in India.
Features of Collective Bargaining
The features of collective bargaining are as under:
# It is a collective process. The representatives of both workers and management participate in bargaining;
# It is a continuous process. It establishes regular and stable relationship between the parties involved. It involves not only the negotiation of the contract, but also the administration of the contract;
# It is a flexible and dynamic process. The parties have to adopt a flexible attitude through the process of bargaining;
# It is a method of partnership of workers in management.
Subject-matter of Collective Bargaining
Collective bargaining has two pronged concerns:
(1) Chalking out a broad contract of employment relationship between employers and workers, and
(2) The administration of the contract. In fact, it has been recognised as a method of determining the wage rates and other terms and conditions of employment and of regulating the relations between the management and organised labour.
Collective bargaining includes provisions with respect to hiring, lay-offs, promotions, transfers, work scheduling, work assignment, wages, welfare programmes, retirement benefits, discipline, etc. The Indian Institute of Personnel Management suggested the following subject matter of collective bargaining:
# Purpose of agreement, its scope, and the definition of important terms;
# Rights and responsibilities of the management and of the trade union;
# Wages, bonus, production norms, leave, retirement benefits, and terms and conditions of service;
# Grievance redressal procedure;
# Methods and machinery for the settlement of possible future disputes;
# Termination clause.
Importance of Collective Bargaining
Collective bargaining is an important method of regulating relations between employers and employees. It involves negotiation, administration and enforcement of the written contracts between the employees and the employers. It also includes the process of resolving labour-management conflicts. There is a strong view that parties should be left to themselves to settle their disputes and the State should not intervene in these matters.
Pre-requisites for Collective Bargaining
Please understand that effective negotiations and enforcement requires a systematic preparation of the base or ground for bargaining which involves the following three steps:
1. Recognition of the Bargaining Agent. The management should give recognition to the trade union for participating in the collective bargaining process. In case there is more than one union, selection could be done through verification of membership by a government agency giving representation to all the major unions through joint consultations. Thus, the bargaining agent of the workers should be properly identified before initiating any action.
2. Deciding the Level of Bargaining. Whether the dealings are confined to enterprise level, industry level, regional or national level should be decided as the contents, scope and enforcement agencies differ in each case.
3. Determining the Scope and Coverage of Bargaining. It would be better to have a clear understanding of what are the issues to be covered under bargaining. Many a time, bargaining is restricted to wage and working conditions related issues but it would be advantageous for both the management and union to cover as many issues as possible to prevent further friction and disputes. Therefore, all the important and interrelated issues are to be taken for consideration.
Problems of Collective Bargaining
The major emphasis of both union and employers is to settle the disputes through adjudication rather than sorting out the issues among themselves. Whatever bargaining takes place, it is limited to large plants only. Smaller organisations generally do not prefer this form of handling the issues. Several factors are responsible for this state of affairs. These are listed below:
Due to the dominance of outsiders in trade unionism in the country, there is multiplicity of unions which are weak and unstable, and do not represent majority of the employees. Moreover, there are inter-union rivalries, which further hinder the process of collective bargaining between the labour and the management.
Since most of the trade unions are having political affiliations, they continue to be dominated by politicians, who use the unions and their members to meet their political ends.
There is a lack of definite procedure to determine which union is to be recognised to serve as a bargaining agent on behalf of the workers
In India, the law provides an easy access to adjudication. Under the Industrial Disputes Act, the parties to the dispute may request the Government to refer the matter to adjudication and the Government will constitute the adjudication machinery, i.e., labour court or industrial tribunal. Thus, the faith in the collective bargaining process is discouraged.
There has been very close association between the trade unions and political parties. As a result, trade union movement has leaned towards political orientations rather than collective bargaining.
Collective bargaining can help bring industrial peace in our country by promoting mutual understanding and cooperation between workers and managements. It provides a framework for deciding the terms and conditions of employment without resorting to strikes and lockouts and without the intervention of outsiders. The management and the union can develop a matured relationship. Instead of fighting amongst themselves, they should work towards the betterment of the organisation.
The following steps should be taken for the success of collective bargaining.
Strong Trade Union: A strong and stable representative trade union is essential for effective collective bargaining. For having such a trade union, workers should have freedom to unionise so that they can exercise their right of unionisation and form a trade union for the purpose of electing their representatives for collective bargaining. A weak union not enjoying the support of majority of workers is not likely to be effective. The management will not negotiate with such a union; because mutual agreements are not likely to be honoured by a large section of the labour-force. Moreover, there is always a danger that non-union members may sabotage it.
Compulsory Recognition of Trade Unions: There must be an acceptable and recognised bargaining agent. That means that there must be recognised union or unions to negotiate the terms and conditions of the agreement with the management. Please understand that the process of collective bargaining cannot begin until unions are recognised by the employers. Employers will give such recognition only if they believe it to be in their interest or if it is a legal requirement. A strong, stable and the most representative union should be recognised by the employers for the purpose because any agreement with that union will be acceptable to majority of workers and it will help in establishing sound industrial relations in the organization.
Mutual Accommodation: There has to be a greater emphasis on mutual accommodation rather than conflict or uncompromising attitude. Conflicting attitude does not lead to amicable labour relations; it may foster union militancy as the union reacts by engaging in pressure tactics. The approach must be of mutual give and take rather than take or leave. The take or leave philosophy is followed in America where there is contractual labour. As of now this is not the case in India. So if the union and the management have to look for a long-term relationship they have to respect each other’s rights.
Mutual Trust and Confidence: Trade unions and management must accept each other as responsible parties in the collective bargaining process. There should be mutual trust and confidence. In fact in any relationship trust is the most important factor. Management must accept the union as the official representative. The union must accept the management as the primary planners and controllers of the company’s operations. The union must not feel that management is working and seeking the opportunity to undermine and eliminate the labour organisation. The company management must not feel that the union is seeking to control every facet of the company’s operations.
Efficient Bargaining Mechanism: No ad-hoc arrangements are satisfactory for the reason that bargaining is a continuing process. An agreement is merely a framework for every day working relationships, the main bargain is carried on daily and for this there is a need to have permanent machinery. As for machinery being efficient, it has three aspects:
(a) Availability of full information
(b) Selection of proper representatives
(c) Recognition of natural temperament of each other.
Emphasis on Problem-solving Attitude: I am sure you will agree that there should be an emphasis upon problem-solving approach with a de-emphasis upon excessive legalism. Litigation leads to loss of time and energy and it does not benefit anyone. Therefore the emphasis is to look for mutually acceptable solutions rather than creating problems for each other. Lastly, the overall political environment should be congenial. The political environment should support collective bargaining.
Political Climate: For effective collective bargaining in a country, it is important to have sound political climate. The Government must be convinced that the method of arriving at the agreements through mutual voluntary negotiations is the best for regulating certain conditions of employment. Therefore, positive attitude of the political parties is a must for the promotion of collective bargaining. Such an approach would help and encourage the development of strong, stable and representative trade unions, growth of mechanism for the resolution of industrial conflict, recognition of unions, etc.
Types of Collective Bargaining
Types of Collective Agreements in India Collective bargaining as it is practiced in India can be divided into three classes.
1. Bipartite Agreements: These are most important types of collective agreements because they represent a dynamic relationship that is evolving in establishment concerned without any pressure from outside. The bipartite agreements are drawn up in voluntary negotiation between management and union. Usually the agreement reached by the bipartite voluntarily has the same binding force as settlement reached in conciliation proceedings. The implementations of these types of agreements are also not a problem because both the parties feel confident of their ability to reach the agreement.
2. Settlements: It is tripartite in nature because usually it is reached by conciliation, i.e. it arises out of dispute referred to the appropriate labour department and the conciliation officer plays an important role in bringing about conciliation of the differing viewpoints of the parties. And if during the process of conciliation, the conciliation officer feels that there is possibility of reaching a settlement, he withdraws himself from the scene. Then the parties are to finalise the terms of the agreement and should report back to conciliation officer within a specified time. But the forms of settlement are more limited in nature than bipartite voluntary agreements, because they strictly relate to the issues referred to the conciliation officer.
3. Consent Award: Here the negotiation takes place between the parties when the dispute is actually pending before one of the compulsory ad judicatory authorities and the agreement is incorporated to the authorities, award. Thus though the agreement is reached voluntarily between the parties, it becomes part of the binding award pronounced by an authority constituted for the purpose. The idea of national or industry-wide agreements and that to on a particular pattern may appear to be a more ideal system to active industrial relation through collective bargaining, but the experience of various countries shows that it is not possible to be dogmatic about the ideal type of collective bargaining, because it largely depends upon the background, traditions and local factors of a particular region or country.
Good faith bargaining a term that means both parties are communicating and negotiating and those proposals are being matched with counterproposals with both parties making every reasonable effort to arrive at agreements. It does not mean that either party is compelled to agree to proposal. Bargaining in good faith is the cornerstone of effective labour management relations. It means that both parties communicate and negotiate. It means that proposals are matched with counterproposals and that both parties make every reasonable effort to arrive at agreement. It does not mean that either party is compelled to agree to a proposal. Nor does it require that either party make any specific concessions. As interpreted by the courts, a violation of the requirement for good faith bargaining may include the following:
1. Surface bargaining. This involves merely going through the motions of bargaining without any real intention of completing a formal agreement.
2. Concession. Although no one is required to make a concession, the courts’ definitions of good faith suggest that willingness to compromise is an essential ingredient in good faith bargaining.
3. Proposals and demands. This is considered as a positive factor in determining overall good faith.
4. Dilatory tactics. The law requires that the parties meet and ‘confer at reasonable times and intervals.’ Obviously, refusal to meet at tall with the union does not satisfy the positive duty imposed on the employer.
5. Imposing conditions. Attempts to impose conditions that are as onerous or unreasonable as to indicate bad faith will be scrutinized by the board.
6. Unilateral changes in conditions. This is viewed as a strong indication that the employer is not bargaining with the required intent of reaching an agreement.
7. By passing the representative. An employer violates its duty to bargain when it refuses to negotiate with the union representative. The duty of management to bargain in good faith involves, at a minimum, recognition that this statutory representative is the one with whom the employer must deal in conducting bargaining negotiations.
8. Commission of unfair labour practices during negotiations. Such practices may reflect poorly upon the good faith of the guilty party.
9. Providing information. Information must be supplied to the union, upon request, to enable it to understand and intelligently discuss the issues raised in bargaining.
10. Bargaining items. Refusal to bargain on a mandatory item (one must bargain over these) or insistence on a permissive item (one may bargain over these) is usually viewed as bad faith bargaining.
Process of Collective Bargaining
However there are certain fundamental procedures and stages that are followed in the organisations. That standardisation is as follows: Process of collective bargaining and negotiation the process can be divided into four main phases:
I. Organising and Recognition. The first thing to be done by the employees is to form a group of seven persons or more (as per Trade Unions Act, 1926) and get the trade union registered under the Act. The registration of the union is advisable, because there are certain advantages of getting the union registered. It can use its general funds for certain specified purposes; it can create a separate fund for political purposes; it gets immunity from civil suit in certain cases; it can have representation of its members to the works committee; etc. After getting the union registered, efforts should be made to increase its membership; it should enjoy the support of the majority of workers in the plant. In case, it is not the only union in the plant, efforts should be made to make it the most representative union so that it s is recognised as the exclusive bargaining representative for all the employees within the specified bargaining unit by the employers. Once the union is recognised as the bargaining agent, each worker is covered by the negotiated contract as must abide by the governance.
II. Preparation for Negotiation. After a union has been recognised as the exclusive bargaining agent, both the union and management begin preparation for negotiations. The preparation for negotiation is basically composed of three activities:
a. Fact gathering
b. Goal setting
c. Strategy development.
Facts are gathered from both internal sources and the external sources. The internal data would include things like:
• Grievance and accident record
• Employee performance report
• Overtime figures
• Reports on transfers
• Absenteeism etc.
External information should include:
• Statistics on the current economy
• Economic forecasts for short and intermediate terms
• Data on communities in which the company operates
• Industry labour statistics this information helps management in knowing its position and the position of similar other organisations under the existing circumstances, and in anticipating the same in the near future.
On the basis of these data, the management sets tentative goals for achieving in the negotiations. Please understand that when the management has the above data in hand the management is in a better position to develop a strategy for dealing with the union’s demands. This includes assessing the union’s power and specific tactics. The degree of union influence is affected by factors like the labour market, economic conditions, rates of inflation, and recent contract settlements. Also understand in the process of negotiations, management’s ability to tolerate a strike will also be crucial. If the company’s products are highly demanded, the management will be against a strike, even for a short period. On the other hand, if the sales have been low, management may be prepared even for a lengthy strike, and, therefore, will be unwilling to concede to union’s demand.
There are four outcomes that can be achieved in negotiations. They are:
The first situation is where both the parties lose. In the second and the third situation, only one party wins and the other one loses. The fourth situation is in which both the parties win.
III. Negotiation. For negotiating a contract, the first meeting between labour and management negotiation teams usually establishes rules, policies, and schedules for future meetings. Sometimes, at the first meeting, the representatives of labour formally present their specific proposals for changes in the existing labour agreements. At succeeding meetings, management submits counter-proposals. Both groups seek opportunities to suggest compromise solutions in their favour until an agreement is reached. If labour and management find it impossible to come to an agreement, a third-party (a fact finder, a mediator, or an arbitrator) may be brought in from outside. If, even with the assistance of the outsider, no viable solution can be found to resolve the parties’ differences, there may be a strike or lockout. It should be clearly understood that strikes and lockouts should not be resorted to! We have already seen the ill effects of these weapons. Weapons! , Now don’t give that lost look! We have read this in Industrial disputes. This brings us to the last phase in negotiations and that is contract administrational.
IV. Contract Administration. The final phase in the process of collective bargaining is contract administration. Once a contract is agreed upon, it then must be administered. The way it will be administered is included in the contract itself.
For effective administration of the contract and to have harmonious industrial relations in the organisation, the contract must spell out a procedure for handling contractual disputes. Almost all collective bargaining agreements contain formal procedures to be used in resolving grievances over the interpretation and application of the terms of contract. I am sure you will agree that the grievance procedures should be designed in such a way that makes it possible to resolve grievances as quickly as possible and at the lowest level possible in the organisation. The grievances should be referred to higher levels, and, ultimately, to arbitration, only when they cannot be resolved at the initial level. This is essential for speedy resolution of grievances and for creating and efficient and effective working climate in the organisation.
Collective Bargaining is the process of joint decision making and basically represents a democratic way of life in industry. For the success of collective bargaining the process must begin with proposals rather than demands and the parties should be ready and willing to compromise otherwise the whole idea of collective bargaining would be frustrated. In Indian context, the problem lies in the fact that in the absence of any statutory provisions at Central Level for the recognition of a representative trade union by an employer affects the bargaining power of the trade union. In addition, besides, unorganised labour being a hurdle, the unions are generally weak. Rivalry on the basis of caste, creed, and religion is another characteristic of Indian Trade Unions which come in the way of successful collective bargaining. Further, division of union on the basis of political ideologies and weak financial position retards the growth of Trade Unions.
Therefore, it is recommended that India should provides for a recognition of the Trade Union at the central level, so that peace and harmony with the management and workers can be maintained, which in turn can provide better service to the community and hence lead to the growth and development of the economy. In fact, India is under international obligations to provide effective mechanism for collective bargaining. In this regard, it is also recommended that India can ratify ILO Conventions No. 87 of 1948 and No. 98 of 1949 – both of these conventions assure the right to effective collective bargaining. In short, we may say that the time has come for repeating the history.
As per Sir Henry Maine, the progressive society move from status to contract. However, given the necessity of collective bargaining as an effective tool for the settlement of industrial dispute, the progressive society has to move otherwise i.e; from contract to status rather than from status to contract.
# Industrial Disputes Act, 1947
# Trade Union Act, 1926
# The Industrial Employment (Standing Orders) Act, 1946
# The Constitution of India, 1950
# S.C. Srivastava, Industrial Relations and Labour Laws, 4th Ed., Reprint, 2002, Vikas Publishing House Pvt. Ltd., New Delhi.
# S.K. Puri, Labour & Industrial Law, 8th Ed. 2004 (Reprint), Allahabad Law Agency.
# O.P. Malhotra, The Law of Industrial Disputes, 6th Ed., 2004.
 In this method, a third party provides assistance with a view to help the parties to reach an agreement.
 In mediation, a third party provides assistance with a view to help the parties to reach an agreement by submitting his own proposals for settlement of their disputes.
 The resort to arbitration procedure may be compulsory or arbitrary.
 Article 23 of the Universal Declaration of Human Rights identifies the ability to organise trade unions as a fundamental human right.
 2007 SCC 27.
 International Labour Office, Collective Bargaining (A Worker’s Education Manual) (1960), p.3.
 (1989)4 SCC 448.
 (1979) I LLJ 495 Cal.
 (1961) I LLJ 504.
(1976) Lab. 1.C:.4[S.C.].
 S.K. Puri, Labour & Industrial Law, 8th Ed. 2004 (Reprint), Allahabad Law Agency.
 AIR 1958 SC 353.
 Supra Note 7.
 1965 II LLJ 110 SC.
 (1956) SCR 956.
 1 L.L.J. 1951 (SC).
 AIR, 1965 Mad. 111.
 1984 1 LLJ 16.
 See Articles 39, 41, 42 and 43 of the Constitution.
 AIR 1957 SC 956.
 See Ranjan Dwivedi vs. Union of India (AIR 1983, SC 624), Kesavananda Bharti vs. State of Kerala (AIR 1978 SC).1461), Unni Krishnan vs. State of A.P. (1993) 1 SCC 645.
 S.C. Srivastava, Industrial Relations and Labour Laws, 4th Ed., Reprint, 2002, Vikas Publishing House Pvt. Ltd., New Delhi.
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