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ll Project


I would like to express my special thanks of gratitude to my Prof. H.N. Tiwari who gave us the
golden opportunity to do this wonderful project on the topic Future of collective bargaining in
the 21st century in the light of changing dimensions of labour force which also helped me in
doing a lot of Research and I came to know about so many new things I am really thankful to
Secondly I would also like to thank my parents and friends who helped me a lot in finalizing this
project within the limited time frame.

Shubham Agarwal
Semester Xth
Roll no. 93

The conflict between the management and the employee is inherent in an industrial society. One
argues for more investment and profits while the other argues for better standard of living. These
two conflicting interests can be adjusted temporarily through the principle of "give and take" 1,
The principle of give and take has been infused in the principle of collective bargaining.
The phrase "collective bargaining" was coined by British labor reformers Sidney and Beatrice
Webb of Great Britain which was the home of collective bargaining in the 1890s 2. The idea of
collective bargaining emerged as a result of industrial conflict and growth of trade union
movement and was first given currency in the United States by Samuel Crompers. In India the
first collective bargaining agreement was conducted in 1920 at the instance of Mahatma Gandhi
to regulate labour management relation between a group of employers and their workers in the
textile industry in Ahmadabad3.
Advocates of collective bargaining in the early decades of the twentieth century thought it
essential for three reasons. First and foremost, a system of peaceful and routine bargaining would
eliminate industrial strife and violence. Second, collective bargaining stood for "industrial
democracy," and finally, collective bargaining promised to make capitalism work.
In any industrial establishment the friction between employer and the workmen is inevitable.
There are demands by the workmen and if those demands are resisted by the employer, industrial
dispute arises resulting in industrial tension and disturbing the peace and harmony in the
industry. Collective Bargaining is one of the methods wherein the employer and the employees
can settle their disputes.
There was always a need of a legislation which could ensure industrial justice pre-empt the
industrial tensions and provide the mechanics of dispute resolution. When Industrial Disputes
Act, 1947 was passed in India, it was passed to provide machinery and form for the investigation
1 Otto Kahn-Freund, Laboar aad the Law, L mdon, Stevens & Sons, (1977\ .). 49
2 Webb, Sydney and Beatrice, Industrial Democracy,1902,p.185
3 Report of Royal Commission on Labour in India, 1931; p. 336-337

of industrial disputes and for the settlement thereof and for the purposes analogous and incidental
thereto. As is evident from the Act itself that it is piece of legislation which mainly provides for
investigation and settlement of Industrial disputes.
In the words of Justice Desai the emergence of the concept of welfare state implies an end to
exploitation of workmen and as a corollary to that collective bargaining came into its own and
lest the conflicting interests of the workmen and the employer disturb the industrial peace and
harmony, a machinery for adjustment of such conflicting interests became the need of the time.
The Act therefore was enacted to provide machinery and Forum for adjustment of such
conflicting and seemingly irreconcilable interests without disturbing the peace and harmony in
the industry assuring the industrial growth which was the prerequisite of for a welfare state.
Collective bargaining is one of the methods wherein the employer and the employees can settle
their disputes. This method of settling disputes was adopted with the emergence and stabilization
of the trade union Government. Before the adoption of the collective bargaining the labour was
at a great disadvantage in obtaining reasonable terms for contract of service from its employer.
With the development of the trade unions in the country and the collective bargaining becoming
the rule it was equally found by the employers that instead of dealing with individual workmen it
is convenient and necessary to deal with the representatives of the workmen not only for the
making or modification contracts but also in the matter of taking disciplinary action against the
workmen and regarding other disputes. So, collective bargaining has come to stay having regard
to modern conditions of the society where capital and labour have organized themselves into
groups for the purpose of fighting and settling their disputes.

There is no precise definition of Collective bargaining. In fact keeping in view the change in
the society with its fast changing social norms the scope and content of collective also varies
from country to country. Nevertheless, Collective bargaining has been defined by different
experts in different ways. It is treated as a method by which problem of wages and conditions of
employment are resolved peacefully and voluntarily between labour and management.4
This chapter deals with the various definitions of collective bargaining which will be helpful in
understanding the concept of collective bargaining, its ambit and scope as has been coined by
various writers.
According to K. Alexander
Collective bargaining is a process of bargaining between the employers and their workers by
which they settle their disputes among themselves relating to employment or non-employment or
terms of employment or conditions of labour of the workmen, on the strength of the sanctions
available to each side. Occasionally such bargaining results in amicable settlement arrived at
voluntarily and peaceful between the parties. But quite often the workers and the employers have
to apply sanctions by resorting to the weapons of strikes and lock-outs to pressurize one another
which makes both the sides aware of the strength of one another and that finally forces each to
arrive at a settlement in the mutual interests. It is thus the strength of the parties which
determines the issues rather than the wordy duals which are largely put on for show as any
element of strength in one party is by the same token an element of weakness in another.
Convention 154 of International Labour Organization (ILO) under Article 2 says: For the
purpose of this Convention the term collective bargaining extends to all negotiations which take
place between an employer, a group of employers or one or more employers' organizations, on
the one hand, and one or more workers' organizations, on the other, for

4 I.L., Labour Law and Labour Relations, N.M. Tripathi (Pvt) Ltd., Bombay, (1968), P.29:


determining working conditions and terms of employment; and/or


regulating relations between employers and workers; and/or


regulating relations between employers or their organizations and a workers' organization

ILO has defined collective bargaining as,
negotiation 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/industrial relations with one another.
This definition however 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
exclusive 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
The best justification for collective bargaining is that it is a system based on bipartite
agreements, as such superior to any agreement involving third party intervention in matters
which essentially concern employers and workers.6

5 See Eugene V. Schneider, Industrial Sociology, London, Mc GrawHill, (1971), P. 344.

6 [Report of National Commission on Labour, p.325]

Collective bargaining is concerned with the relations between employers acting through
management and organised labour. It is concerned not only with the negotiation of a formal
labour agreement but also with the day-to-day dealings between management and the union.
Collective bargaining is a voluntary process under which the representatives of both employers
and labour enter into an agreement. 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.
Features of Collective Bargaining
The features of collective bargaining are as under:

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 employmentrelated 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.

Significance of Collective Bargaining
In an Industrial Establishment to solve the problems arising at the plant or industry level the need
of the collective bargaining is eagerly felt. Through negotiations the solution to the common
problems can be directly found out between the management and workers and here the collective
bargaining plays significant role and its scope is very great. In so far the determination of terms
and conditions of employment are concerned, one important consequence of collective
bargaining has been that it has enabled trade unions to participate in the decision making process
regarding hours of work, wages, working conditions etc. Earlier the employer used to decide
these issues unilaterally, but now they have become subjects of bilateral negotiations with the
advent of collective bargaining. Thus an element of industrial democracy has been introduced by
collective bargaining in the field of industrial and labour management.
Collective bargaining is really useful from the stand point of management, trade unions and
workers. Among workers it develops a sense of responsibility and self respect if it works well
and thus contributes to a great extent to employees morale and productivity. It opens up
channels of communication between top and bottom of an undertaking which is difficult
otherwise. Further the managements freedom of action is restricted because the establishment
loses its unilateral discretion regarding bargainable issues even when managements security is
intact and thereby learns a new code of behavior by conceiving of the union as a method of
dealing with the employees not an obstacle to such dealing.


The significance of collective bargaining from the national stand point is that it helps in creating
peaceful industrial climate if properly conducted, thereby increases the pace of the countrys
efforts towards social and economic development. Collective bargaining as an instrument of
industrial peace has no parallel. It extends the democratic principle from the political to the
industrial field and is an important aspect so far as the labour and management relations are
Scope of Collective Bargaining
The growth of collective bargaining is associated with the recognition of trade unionism. With
the growth of trade unions and industrialization the scope of collective bargaining is expanding.
Initially collective bargaining was used for determining hours of work, wages and terms of
employment, but now within its purview are included the issues like leave with pay, regulation of
forced leave, pension, seniority promotions, sickness and maternity benefits, etc. Since in the
field of bargaining collective action is now common, collective bargaining has assumed an
institutional form. In the words of C.W. Randle:
The subject matter of collective bargaining had broadened until it has virtually eliminated the
field of the management prerogatives. The area pattern of bargaining has moved from simple
style plant bargaining to region-wise and finally to dynamic nature of the scope of collective
bargaining. At the same time, they show how important negotiation has become as an institution.
And the future holds promise of an even greater role for collective.

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The collective bargaining process begins when the majority of workers of an organization vote to
be represented by a specific union. The National Labor Relations Board (see Labor Unions) then
certifies the union. At this point, the management of the organization must recognize the union as
the collective bargaining agent for all the employees of that organization. Once this part of the
process is completed, collective bargaining can begin.
Bargaining always takes place between labor and management, but negotiations can include
more than one group of workers and more than one employer. Single-plant, single-employer
agreements are the most common. However, if an employer has more than one plant or work site,
multiplant, single-employer agreements can be bargained. Several different union groups
representing the workers of the same employer can use coalition bargaining. Industry wide
bargaining involves one national union bargaining with several employers of a specific industry.
Many different negotiation styles can be used when union and labor representatives sit down at
the bargaining table. The two basic modes of bargaining are traditional bargaining and
partnership bargaining, though there are many variations of each style.
The traditional style of bargaining has been used since collective bargaining began between
management and the early labor unions. It is an adversarial style of negotiating, putting one side
against the other with little or no understanding of, or education about, the other on the part of
either party. Each side places its demands and proposals on the table, and the other side responds
to them with counterproposals. The process is negative and involves a struggle of give-and-take
on most issues. Even with its negative connotations, however, the traditional style of negotiating
is still used effectively in bargaining many union contracts.
The partnership style of bargaining is the more modern approach to negotiations. It strives for
mutual understanding and common education on the part of both labor and management, and it
focuses on goals and concerns common to both parties. Because of its emphasis on each side's
being aware of the issues concerning the other side, partnership-style bargaining is also known as
interest-based bargaining. In this process, labor and management each list and explain their

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needs, and the ensuing discussion revolves around ways to meet those needs that will be not only
acceptable but also beneficial to both parties. This style of bargaining is very positive and
imparts a much more congenial atmosphere to the negotiating process. Many modern unionmanagement contracts are bargained very successfully using the partnership style.
A blending of the traditional and partnership styles is widely used in labor-management
negotiations. The combination approach is used for many reasons, including the fact that many
union and management leaders are more familiar with the traditional style. However, with
today's more participatory relationship between labor and management in the workplace, the
partnership style is becoming more accepted and is being used more frequently. The negotiating
process may also include both styles of bargaining because of the variety of issues being
negotiated. The partnership style may be used to negotiate certain issues, while the traditional
style may be invoked when bargaining other terms.

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India is a founder member of the International Labour Organization, which came into existence
in 1919. A unique feature of the ILO is its tripartite character. The membership of the ILO
ensures the growth of tripartite system in the Member countries. At every level in the
Organization, Governments are associated with the two other social partners, namely the workers
and employers. All the three groups are represented on almost all the deliberative organs of the
ILO and share responsibility in conducting its work.
The principal means of action in the ILO is the setting up the International Labour Standards in
the form of Conventions and Recommendations. Conventions are international treaties and are
instruments, which create legally binding obligations on the countries that ratify them.
Recommendations are non-binding and set out guidelines orienting national policies and actions.
Specific features of Conventions
Conventions have a number of specific features, which can be grouped under four main ideas:

Conventions are adopted within an institutional framework. Thus, the adoption of Conventions
does not follow the type of diplomatic negotiation which is usual in the case of treaties. They are
rather prepared in discussions in an assembly that has many points in common with
parliamentary assemblies. This also partly explains the fact that unanimity is not necessary for
the adoption of Conventions. For the same reason, only the International Court of Justice can
interpret the Conventions. The revision of Conventions is made only by the General Conference,
which is the legislative body of the Organization.


The International Labour Conference, which adopts Conventions, is constituted by

representatives of governments, employers and workers, each delegate being entitled to vote

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A two-thirds majority is sufficient for the adoption of a Convention, and governments should
submit the Convention to their competent authorities for ratification, i.e. as a rule to their
parliaments. Also, the governments have the obligation, when requested, to supply reports on
various issues related to Conventions.


Some Conventions include flexibility clauses, because they are generally directed towards
countries with very different economic, social and political conditions, as well as different
constitutional and legal systems. The flexibility clauses comprise options regarding the

Obligations: possibility of choosing, at the time of ratification, by means of formal declaration,

the extent of the obligations undertaken. (for .e.g. Social Security Convention, No. 102)


Scope: Governments may decide for themselves, subject to certain consultations, what the scope
of the Convention shall be (for. e.g. Conventions of minimum wage fixing machinery, Nos. 26
and 29), or they may be permitted to exclude certain categories of persons or undertakings (for
e.g. Conventions on night work, Nos.41 and 89), or the definitions of persons covered may be
based on a specified percentage of the wage earners or population of the country concerned (for
e.g. many social security Conventions), or exceptions are allowed for a certain part of the
country (Various types of Conventions, for e.g. Nos. 24, 25, 62, 63, 77, 78, 81, 88, 94, 95, 96
etc.), or governments may themselves define a certain branch, industry or sector (for e.g. Weekly
rest Convention, No. 106);


Methods: State which ratifies a Convention shall take such action as may be necessary to make
effective the provisions of such Convention, custom, administrative measures or, in certain
circumstances, collective agreements.

Core Conventions of the ILO

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The eight Core Conventions of the ILO (also called fundamental/human rights conventions) are:

Forced Labour Convention (No. 29)


Abolition of Forced Labour Convention (No.105)


Equal Remuneration Convention (No.100)


Discrimination (Employment Occupation) Convention (No.111)

(The above four have been ratified by India).


Freedom of Association and Protection of Right to Organised Convention (No.87)


Right to Organise and Collective Bargaining Convention (No.98)


Minimum Age Convention (No.138)


Worst forms of Child Labour Convention (No.182)

(These four are yet to be ratified by India)
ILO Conventions on Collective Bargaining
There are several other ILO Conventions and Recommendations that relate to collective
bargaining. These are:


the Right to Organise and Collective Bargaining Convention, 1949 (No. 98);


the Collective Agreements Recommendation, 1951 (No. 91);


the Voluntary Conciliation and Arbitration Recommendation, 1951 (No. 92);


the Labour Administration Convention, 1978 (No. 150);


the Labour Administration Recommendation, 1978 (No. 158);


the Labour Relations (Public Service) Convention, 1978 (No. 151);


the Labour Relations (Public Service) Recommendation, 1978 (No. 159); and


the Collective Bargaining Recommendation, 1981 (No. 163).

In this chapter, we will discuss three main conventions on collective bargaining. Which are as
Freedom of Association and Protection of the Right to Organize Convention, 1948 (No. 87)

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This Convention establishes the right of all workers and employers to form and join
organizations of their own choosing without prior authorization, and lays down a series of
guarantees for the free functioning of organizations without interference by the public
Right to Organize and Collective Bargaining Convention, 1949 (No. 98)
One of the most well-known and widely ratified Conventions that relate to collective bargaining
is No. 98 the Right to Organise and Collective Bargaining Convention, 1949. This fundamental
Convention says that member States should encourage systems of voluntary negotiations in order
to regulate terms and conditions of employment through collective agreements. All the other
Conventions and Recommendations listed above complement Convention No. 98 through
clarifying concepts and supporting the principles that it defines.
Right to Organize and Collective Bargaining Convention, 1949 provides for protection against
anti-union discrimination, for protection of workers and employers organizations against acts of
interference by each other, and for measures to promote collective bargaining.
Collective Bargaining Convention, 1981 (No. 154)
The Collective Bargaining Convention (No. 154) was adopted by the International Labour
Conference in 1981. It promotes free and voluntary collective bargaining. This Convention
encourages collective bargaining in both the private sector and the public sector (with the
exception of armed forces and the police), with the only reservation that national laws or
Regulations or national practice may fix special modalities of application of the convention as
regards the public service. Member States which ratify the convention may no longer confine
themselves to consultations. They are bound to promote collective bargaining for determining
working conditions and terms of employment, among other objectives. The extension of the
scope of the Convention No. 154 to the public service was facilitated by the fact that, in contrast
with convention No. 98, this instrument does not refer to the determination of terms and

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conditions of employment by means of collective agreements. Other indications of flexibility
are also to be found in Convention 154 in its provision that collective bargaining should be
progressively extended to all matters covered by the convention or that its provisions shall, in so
far as they are not otherwise made effective by means of collective agreements, arbitration
awards or in such other manner as may be consistent with the national practice, be given effect
by national laws or regulations.
The definition of collective bargaining and scope are contained in Article 1 and 2 of the
convention, Article 4 contains method of application and reads as follows;
the provisions of this convention shall, in so far as they are not otherwise made effective by
means of collective agreements, arbitration awards or in such other manner as may be consistent
with national practice, be given effect by national laws or regulations.
Promotion of Collective Bargaining
Article 5

Measures adapted to national conditions shall be taken to promote collective bargaining.


The aims of the measures referred to in paragraph 1 of this Article shall be the following:
(a) Collective Bargaining should be made possible for all employers and all groups of
workers in the branches of activity covered by this convention;
(b) Collective bargaining should be progressively extended to all matters covered by
subparagraphs (b) and (c) of Article 2 of is Convention;
(c) Establishment of rules of procedure agreed between employers and workers
organizations should be encouraged;
(d) Collective bargaining should not e hampered by the absence of rules governing
the procedure to be used or b the inadequacy or inappropriateness of such rules;
(e) Bodies and procedures for the settlement labour disputes should be so conceived
as to contribute to promotion of collective bargaining.

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Article 6: The provisions of this convention do not preclude the operation of industrial relations
systems in which collective bargaining takes place within the framework of conciliation and or
arbitration machinery or institutions, in which machinery or institutions, the parties to the
collective bargaining process voluntarily participate.
Article 7: Measures taken by public authorities to encourage and promote the development of
collective bargaining shall be the subject of prior consultation and whenever possible, agreement
between public authorities and employers and workers organizations.
Article 8: The measures taken with a view to promoting collective bargaining shall not be so
conceived or applied as to hamper the freedom of collective bargaining.
Article 9: This convention does not revise any existing convention or recommendation.
Collective Bargaining Recommendation, 1981 (No. 163) - concerning the promotion of
Collective Bargaining
Recommendation No. 163 outlines in more detail measures the Government and the parties
might take to promote collective bargaining. The general conference of International Labour
Organization, having been convened at Geneva by the Governing Body of the International
Labour Office, and having met in its sixty-seventh session on 3 June 1981, and having decided
upon the adoption of certain proposals with regard to the promotion of collective bargaining,
which is the fourth item on agenda of the session, and having determined that these proposals
shall take the form of recommendation supplementing the collective bargaining convention,
1981, adopts the following recommendation, which may be cited as Collective Bargaining
Recommendation, 1981:
1. The provisions of this recommendation may be applied by national laws or regulations,
collective agreements, arbitration awards or in any other manner consistent with national

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2. In so far as necessary, measures adapted to national conditions should be taken to
facilitate the establishment and growth, on a voluntary basis, of free, independent and
representative employers and workers organizations.
3. In so far as necessary, measures adapted to national conditions should be taken so that (a) representative employers and workers organizations are recognized for the purposes
of collective bargaining; (b) in countries in which the competent authorities apply
procedures for recognition with a view to determining the organizations to be granted the
right to bargain collectively, such determination is based on pre-established and objective
criteria with regard to the organizations representatives character, established in
consultation with representative employers and workers organizations.
4. (1) Measures adapted to national conditions should be taken, if necessary, so that
collective bargaining is possible at any level whatsoever, including that of the
establishment, the undertaking, the branch of activity, the industry, or the regional or
national levels. (2) In countries where collective bargaining takes place at several levels,
the parties to negotiations should seek to ensure that there is co-ordination among these
5. (1) Measures should be taken by the parties to collective bargaining so that their
negotiators, at all levels, have the opportunity to obtain appropriate training. (2) Public
authorities may provide assistance to workers and employers organizations, at their
request, for such training. (3) The content and supervision of the programmes of such
training should be determined by the appropriate workers or employers organization
concerned. (4) Such training should be without prejudice to the right of workers and
employers organizations to choose their own representatives for the purpose of collective
6. Parties to collective bargaining should provide their respective negotiators, so that the
necessary mandate to conduct and conclude negotiations, subject to any provisions for
consultations within their respective organizations.

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7. (1) Measures adapted to national conditions should be taken, if necessary, so that the
parties have access to the information required for meaningful negotiations. (2) ZFor this
purpose (a) public and private employees should, at the request of workers
organizations, make available such information on the economic and social situation of
the negotiating unit and the undertaking as a whole, as is necessary for meaningful
negotiations; where the disclosure of some of this information could be prejudicial to the
undertaking, its communication may be made conditional upon a commitment that it
would be regarded as confidential to the extent required; the information to be made
available may be agreed upon between the parties to collective bargaining; (b) the public
authorities should make available such information as is necessary on the over-all
economic and social situation of the country and the branch of activity concerned, to the
extent to which the disclosure of this information is not prejudicial to the national
8. Measures adapted to national conditions should be taken, if necessary, so that the
procedures for the settlement of labour disputes assist the parties to find a solution to the
dispute themselves, whether the dispute is one which arose during the negotiation of
agreements, one which arose in connection with the interpretation and application of
agreements or one covered by the examination of grievances recommendation, 1967.
9. This recommendation does not revise any existing recommendation.

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Collective Bargaining in India has been the subject-matter of industrial adjudication since long
and has been defined by our Law Courts. In Kamal Leather Karamchari Sangathan v. Liberty
Footwear Company7 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
According to the Court, the Industrial Disputes Act, 1947, seeks to achieve social justice on the
basis of colIective bargaining. In an earlier judgment in Titagarh Jute Co. Ltd. v. Sriram Tiwari8
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 9 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 all other disputes.
In Bharat Iron Works v. Bhagubhai Balubbai Patel 10 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.

7 AIR 1990 SC 247

8 (1979) Lab I.C. 523 (Cal)]
9 (1961) I LL.J 504
10 (1976) Lab. I.C. 4 [S.C]

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Collective Bargaining machinery essentially is a reflection of a particular social and political
climate. The history of the trade union movement shows that union are affiliated to one or the
other political parties. As a result most of the trade unions are controlled by outsiders. Critic says
that the presence of outsiders is one of the important reasons for the failure of collective
bargaining in India.11
Outsiders in the Process of Collective Bargaining
The Trade Unions Act, 1926, permits outsiders to be the office bearers of a union to the extent of
half the total number of office bearers.12 So, it permits one to be the leader of the union who does
not actually work in the industry. Sometimes a dismissed employee working as a union leader
may create difficulties in the relationship between the union and the employer.13 Nevertheless,
experience shows that outsiders who have little knowledge of the background of labour
problems, history of labour movement, fundamentals of trade unionism and the technique of the
industry and with even little general education assume the charge of labour union and become
the self-appointed custodian of the welfare of workers. The employers, therefore, have been
reluctant to discuss and negotiate industrial matters with outsiders, who have no personal or
direct knowledge of day to day affairs of the industry.
Accordingly employers refuse recognition to the unions which are either controlled by the
politicians or affiliated to a particular political party or controlled by a particular individual.
Government cannot morally compel employers to accord recognition to unions without driving
out the politicians from them. The State must outright ban "outsiders" from the trade union body.
Further, provision for political fund 14 by trade unions should be eliminated, since it invariably
encourages the politicians to prey upon them. The National Commission on Labour has
overlooked this aspect. The Commission does not favour a legal ban on non-employees for
11 S.N. Dhyani, Trade Union and the right to strike, S. Chand & Co. (Pvt.) Ltd, New Delhi, PP.
12 See Section 22 of the Trade Unions Act, 1926,
13 See Report of the National Commission on Labour, (1969), P. 288
14 See Section-16 of the Trade Unions Act. 1926.

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holding the union office. It says that without creating conditions for building up the internal
leadership, a complete banning of outsiders would only make unions weaker. The Commission
hopes that internal leadership would develop through their education and training. Accordingly
the Commission suggests proportion of the outsiders and the workers in a union executive. 15 On
realizing the problems of outsiders in the union, the Industrial Relations Bill, 1988 proposes to
reduce the number of outsiders to two only. Another hurdle in the success of collective
bargaining in India, is the absence of a compulsory recognition provision in the Act.
Impact of Recognition as Bargaining Agent in Collective Bargaining
In view of the prevailing multi-trade-unionism in the country, recognition of a bargaining agent
has assumed importance. Unfortunately, no attempt has been made at the national level to either
lay down a procedure for recognition of a trade-union as bargaining agent or work out a
procedure. There is no provision either in the Indian Trade Union Act 1926 or in the Industrial
Disputes Act 1947 for the purpose. The Government of India proposed an amendment in the
Trade Union Act in 1950 making recognition of a union compulsory. The measure however,
faced serious opposition and remained unimplemented. The Standing Labour Committee (l8th
Session) and National Commission on Labour favoured a statutory -provision for the purpose but
their recommendations have yet to be accepted. The National Commission on Labour attached
considerable importance to the matter of recognition of unions and observed as under:
"Industrial Democracy implies that the majority union should have the right to sole
representation, i.e., the right to speak and act for all workers and enter into agreements with the
In the absence of statutory provision, the matter is regulated by the Code of Discipline which
was evolved at Nainital session of Indian Labour Conference in 1952. The Code of Discipline
15 id. at P. 291, The Commission has recommended as follows :Where the membership of union is;
( i) below 1,000 the number of outsiders should not be more than 10%
{ii) between 1,000-10,000 . . .. .. .. .. .. 20%
(iii) above l,000 . . .. .. .. .. .. . 30%
(iv) 'the permissible limit for industry -wise unions should be 30%

16 Report of the National Commission on Labour, (1969)p. 329

23 | P a g e
provides for verification of trade-union membership by Central Industrial Relations Machinery
of the Government. Its voluntary character has however, made it ineffective and it has been
found difficult to implement it in view of statutory provisions in the Industrial Disputes Act.
At the present not even public sector undertakings are following the Code of Discipline and are
bargaining with more than one union.
States like Bombay and Madhya Pradesh have, however, given statutory recognition to the
procedure for determination of bargaining agent. Both, Bombay Industrial Relations Act 1946
and Madhya Pradesh Industrial Relations Act, 1960, provide for the determination of representtative union by the Registrar of Representative Unions. Special provisions have been made for
agreements signed by representative unions. In spite of it, the experience shows that there had
been serious opposition to statutory recognition of a union as sole bargaining agent of the
workers of the establishment. Indeed the experience is that wherever there is a union recognition,
representative of rival unions have come together to force the employer to bargain with them."
The fear of retaliation by unrecognized unions has proved to be the biggest stumbling block in
the success of statutory recognition system.
Multi -Unionism
Political orientation of trade unions is the primary reason for multi-unionism. Communal
sentiments, provincial feelings and caste are other major causes for multi-unionism.17 Presence of
too many unions in an industry destroys the bargaining strength of workers. Our labour
legislation also permits multi-unionism.18
Multi-unionism adversely affects collective bargaining process. Where there are too many
unions, with whom should management negotiate? Each union may claim recognition. Each
union may present separate charter of demands in a spirit of rivalry. When conflicting demands
are made, it may be impossible to accept any of them. Moreover, if one union is ready to accept
17 Mrs. P. Chakravarthy, Strike and Morale in Industry, Calcutta. Navana Printing Works, Pvt.
Ltd. (1969) PP. 37-38.
18 See Section-4 of the Trade Unions Act, 1926, permits any seven members to form a union and
get registered.

24 | P a g e
some of the demands, other union may object to them. In this context, it is difficult to think of
any effective collective bargaining process in India.
Politicization of Trade-Union Movement in India
It is well known that the trade-union movement in India is divided on political lines and exists on
patronage of various political parties. Most of the trade-union organizations have aligned
themselves with a political party with whom they find themselves philosophically close. It is
because of this that the Indian National Trade Union Congress is considered to be the labour
wing of congress (I) whereas H.M.S. is considered to be the labour wing of Socialist party.
Bhartiya Majdoor Sangh pledges its allegiance to B.J.P. and C.I.T.U has the support of C.P.I.
(M). It is also the case with the . AITUC which had started as a national organization of workers
but subsequently came to be controlled by the Communist Party of India and is now it's official
labour wing. Political patronage of trade-unions has given a new direction to the movement
whose centre of gravity is no longer the employees or workmen. The centre has shifted towards it
leadership whose effectiveness is determined by the extent of political patronage and the
consequent capacity to obtain the benefit. This shifting centre of power is the necessary
consequence of political parties search for workers votes, which they seek by conferring benefits
on them. Since the public sector which is really the instrumentality of the State, has emerged as
the biggest employer in this country, the collective bargaining -between the union patronized by
the party-in-power and the employer has become an important methodology. It is because of this
process that agreements conferring benefits are signed even in those units where financial losses
are mounting. It is also our experience that inspite of wage increase and improved conditions of
service, there has been no corresponding improvement in production or the productivity and
most of the losses are being passed on to the consumers by increasing prices of the products. It is
in this context that Justice Gupta has, in his, "Our Industrial Jurisprudence" made the following
"If our experience is any guide, it reveals that level of increase in wages etc., (in public sector
undertaking ) is now decided by the Bureau of Public Enterprises which takes into consideration
only the 'Political impact' and 'Consumer resistance' as two dominant factors. This is the reason

25 | P a g e
why the prices of almost all products of necessity like coal, iron and steel, cement, sugar etc.
have been constantly increasing. A survey of pending and decided industrial disputes of the last
10 years reveals that there was virtually no industrial dispute regarding wage structure or bonus
in any industry of some significance. There are also not many collective bargaining agreements
which have tried to link wages with productivity. Clearly, therefore, the basic idea of 'sharing the
prosperity' which developed because of our commitment to the cause of 'social justice' is no
longer current and the expected end-product of the process of 'social justice" is no longer
Critical Evaluation
In Indian labour arena we see, multiplicity of unions and inter-union rivalry. Statutory provisions
for recognising unions as bargaining agents are absent. It is believed that the institution of
collective bargaining is still in its preliminary and organizational stage. 20 State, therefore, must
play a progressive and positive role in removing the pitfalls which have stood in the way of
mutual, amicable and voluntary settlement of labour disputes. The labour' policy must reflect a
new approach.
Hitherto the State has been playing a dominant role in controlling and guiding labourmanagement relation through its lopsided adjudication machinery. The role of the industrial
adjudicator virtually differs from that of a judge of ordinary civil court. The judge of a civil court
has to apply the law to the case before him and decide rights and liabilities according to its
established laws. Whereas industrial adjudicator has to adjust and reconcile the conflicting
claims of disputants and evolve "socially desirable" rights and obligations of the disputants. 21 In
deciding industrial disputes the adjudicator is free to apply the principle of equity and good

19 Justice Gulab Gupta, Our Industrial Jurisprudence, 1987, p.133

20 Dr, B.R. Patil, "Collective Bargaining and Conciliation in India," 12, I.J.I.R. 41 (1976).
21 Anirudh Prasad Singh, "New Dimension of Employer-Employee Relations in Progressive
Industrial Society," 9, Lawyer, 164 (1977).

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However, it is said that the impact of the attitude of the judiciary towards workers has not proved
conducive to the peaceful industrial relations. 22 It is accepted that the end of judicial proceeding
is pain and penalties. It cannot solve the problems of industries. Accordingly it is said that:
"While statutes, rules, regulations, pains and penalties have their place in the ordering of
industry, they do not touch the core of the problems of industrial relations."23
Moreover, advocates of adjudication contend that as the collective bargaining procedure might
end in a strike or lockout, which implies a great loss to the parties concerned and the country, if
for the sake of industrial peace, the adjudication becomes necessary. But has there been industrial
peace and satisfactory progress since adjudication was adopted after world-war-II? We do agree
that industrial peace can be established by the adjudication for the time being. But the conflicts
are driven deeper and it will retard industrial production. In the absence of effective collective
bargaining the anti productivity tendencies are bound to appear.

22 See Dr. Ahmedullah Khan, "Judicial Regulation of Industrial Relations" 9, Awards Digest,
177 (Where the author emphatically discussed the defects of judiciary as far as labourmanagement relation is concerned.)
23 Kir Kaldy, The spirit of Industrial Relations (1974) P. 58, cited in S.N. Dhyani's op. cit.,

27 | P a g e
As discussed earlier, collective bargaining is a technique by which disputes of employment are
resolved amicably, peacefully and voluntarily by settlement between labour unions and
managements. The method of collective bargaining in resolving the Industrial dispute, while
maintaining industrial peace has been recognized as the bed rock of the Industrial Disputes Act,
1947. Under the provision of the Act, the settlement arrived at by process of collective
bargaining with the employer has been given a statutory recognition under Section 18 of the Act.
Under the Act two types of settlement have been recognised:

Settlement arrived in the course of conciliation proceeding before the authority. Such settlements
not only bind the member of the signatory union but also non-members as well as all the present
and future employees of the management.


Settlement not arrived in the course of conciliation proceedings but signed independently by the
parties to the settlement, binds only such members who are signatory or party to the settlement.
Section 19 of the Act prescribes the period of operation inter alia of such a settlement and
envisage the continuation of the validity of such a settlement unless the same is not replaced by
another set of settlement, while Section 29 prescribes the penalty for the breach of such a
The Industrial Disputes Act, 1947 provides for the appointment of Conciliation Officers, charged
with the duty of mediation in promoting the settlement of industrial disputes. On a reference to
the Conciliation Officer, a Conciliation Board is constituted consisting of representatives of
employees and employer with the conciliation officer as the chairman. The memorandum of
settlement duly signed by the conciliation officer is to go from one camp to the other and find out
greatest common measure of agreement, to investigate the dispute and to do all such things as he
thinks fit to arrive at a fair and amicable settlement of the dispute.24

24 Royal Calcutta Golf Club Mazadoor Union v. State of west Bengal, AIR 1956 Cal 550.

28 | P a g e
A settlement arrived at by agreement between the employer and the workmen otherwise than in
the course of conciliation proceedings shall be binding on the parties to the agreement. A
settlement comes into operation on such date as is binding on the parties to the agreement, and
for such period as has been agreed upon. Dealing with the binding nature of settlement Chagla, J
has observed that; Industrial Law takes no notice of any private settlement or agreement arrived
at between parties in the course of industrial dispute. Such a private agreement belongs to the
realm of contract, it may give rise to contractual rights; it has no sanctions in industrial law and
industrial dispute does not end until a settlement is arrived at which has been given a binding
effect under the provision of S.19 (2) and such settlement can be only arrived at when
conciliation proceedings are held under S.12 of the Industrial Disputes Act, 1947. 25 From this
observation, it would be wrong to infer that a private settlement in respect of an industrial
dispute does not end an industrial dispute. In this respect the following observation of chief
Justice Chagala are relevant, But when parties do arrive at a settlement, the law gives to it a
greater sanctity than it gives to an award and therefore , the industrial law does not contemplate
any interference with the finality of a settlement and it compels the settlement to run on for the
period mentioned in the settlement itself and neither party is permitted to challenge that
settlement during its duration.26

25 Poona Mazdoor Sabha v. G.K.Dhuta, AIR b1956. Bom. 743.

26 Ibid

29 | P a g e
The collective bargaining scene in India is not very encouraging. 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.
As discussed in the previous chapter, 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


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.

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A lot has been said about the development of collective bargaining in India. But in fact,
collective bargaining which is a two way affair, has been used at present only as a one-way
exercise in which the union, as the aggressive partner, makes the demands, and the management ,
as the passive partner, derives satisfaction merely by countering the extent to which it is able to
minimize the additional burdens while meeting the unions demands. There are not many
examples even now where union as well as the management, as equal partners, have approached
the process of collective bargaining with the objective and spirit that collective bargaining must
bring concrete benefit to both the parties.
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 unionize
so that they can exercise their right of unionization 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.
Recognition of trade union has to be determined through verification of fee membership
method. The union having more membership should be recognised as the effective
bargaining agent. 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

31 | P a g e
acceptable to majority of workers and it will help in establishing sound industrial
relations in the organisation.

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 others rights.


Enactment of Legislation: The State should enact suitable legislation providing for compulsory
recognition of trade union by employers. State has to play a progressive role in removing the
pitfalls which stand in the way of mutual, amicable and voluntary settlement of labour disputes.
The new labour policy must reflect the new approach and new objectives.


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 companys 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 companys 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

32 | P a g e

As for machinery being efficient, it has three aspects:



Availability of full information


Selection of proper representatives


Recognition of natural temperament of each other.

Emphasis on Problem-solving Attitude: 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. The provision for political fund by trade unions has to be
done away with-since it unvariably encourages the politicians to prey upon the union.
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.

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Books referred..

Bhagoliwal, T.N., Economics of Labour& Industrial Relations, 1989, Sahitya

Bhawan, Agra.

Goswami, V.G., Labour and Industrial Law, 2004 Central Law Agency, Allahabad.

Teller Ludwig, Labour Disputes and Collective Bargaining, Vol I, 1940 Barker Voorhis& co.
INC New York.

Coutinho,V.B, Strike in Industrial Conflict: A Critical and Comparitive Study,

1993, 5th edn.

Fred Witney et al; Labour Relations Law, 7th edn 1990.

Articles referred.

Right to Strike : An Analysis, B.P.Rath and B.B.Das, IJIR 1999,pg 248-259.

Perspectives On Collective Bargaining In India, LLJ, Vol 1, 2005 p.21-34

Strikes and Lock outs, Pankaj and Dharamveer Singh, Lab&IC, Vol 1,2005