COLLECTIVE BARGAINING IN INDUSTRY

COLLECTIVE BARGAINING IN
INDUSTRY

FINAL DRAFT
SUBMITTED TOWARDS THE FULFILMENT OF PROJECT
ALLOTTED FOR THE SUBJECT

HUMAN RESOURCE MANAGEMENT AND

ORGANISATIONAL BEHAVIOUR

SUBMITTED TO: SUBMITTED BY:

Dr. S.C.ROY VIDUSHI VERMA

(FACULTY) ROLL NO.—1662

B.B.A. L.L.B. (Hons.)

Session: 2016-2021

CHANAKYA NATIONAL LAW UNIVERSITY, PATNA

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TABLE OF CONTENTS

1. ACKNOWLEDGEMENT…………………………………………………………3
2. RESEARCH METHODOLOGY…………………………………………………..4
3. HYPOTHESIS………………………………………………………………………5
4. INTRODUCTION…………………………………………………………………..6
5. CHAPTER 1: COLLETIVE BARGAINING………………………………………7
6. CHAPTER 2: HISTORY OF COLLECTIVE BARGAINING…………………….9
7. CHAPTER 3: TYPES OF COLLECTIVE BARGAINING……………………….12
 DISTRIBUTIVE
 INTEGRATIVE
 ATTITUDINAL
 INTRA ORGANIZATIONAL
8. CHAPTER 4: PROCESS OF COLLECTIVE BARGAINING……………………13
 PREPARATION
 DISCUSSION
 BARGAINING
 SETTLEMENT
9. CHAPTER 5: CHARACTERISTICS……………………………………………..14
10. CHAPTER 6: IMPORTANCE OF COLLECTIVE BARGAINING……………...15
11. CHAPTER 7: FEATURES OF COLLECTIVE BARGAINING………………....17
12. CHAPTER 8: FUNCTIONS OF COLLECTIVE BARGAINING………………...18
13. CHAPTER 9: AIMS AND OBJECTIVES OF COLLECTIVE BARGAINING….19
14. CHAPTER 10: CONCLUSION…………………………………………………….21
15. CHAPTER 11: BIBLIGRAPHY……………………………………………………22

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ACKNOWLEDGEMENT

I would like to thank my faculty Dr. S.C. ROY, whose assignment of such a relevant and
interesting topic made me work towards knowing the subject with a greater interest and
enthusiasm and moreover he guided me throughout the project.

I owe the present accomplishment of my project to my friends, who helped me immensely

with sources of research materials throughout the project and without whom I couldn’t have
completed it in the present way.

. I would also like to thank the library staff for working long hours to facilitate us with
required material going a long way in quenching our thirst for education.

I would also like to extend my gratitude to my parents and all those unseen hands that helped
me out at every stage of my project.

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RESEARCH METHODOLOGY

This project is based upon doctrinal method of research. This project has been done after a
thorough research based upon intrinsic and extrinsic aspects of the project.

Sources of Data:

The following secondary sources of data have been used in the project-

1. Articles.

2. Books

3. Journals

4. Websites

Method of Writing:

The method of writing followed in the course of this research project is primarily analytical.

Mode of Citation:

The researchers have followed a uniform mode of citation throughout the course of this
project.

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HYPOTHESIS

The hypothesis adopted for the given project topic- “COLLECTIVE BARGAINING IN
INDUSTRY” are-

 Collective bargaining is important to maintain good interpersonal relationship

between employer and employee
 Collective bargaining is necessary for employee satisfaction and employee
empowerment.
 It helps in increasing productivity of an employee.

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INTRODUCTION

In the work situation, an individual worker has to face many problems such as, low wages,
long hours of work, loss incentive etc. These problems of an individual or few individuals
cannot attract the attention of the employer because of their less bargaining power. The
growth of trade union increased the bargaining strength of workers and enables them to
bargain for their better conditions collectively.

Collective bargaining is a source of solving the problems of employees in the work situation
collectively. It provides a good climate for discussing the problems of workers with their
employers. The employees put their demands before the employers and the employers also
give certain concession to them. Thus it ensures that the management cannot take unilateral
decision concerning the work ignoring the workers. It also helps the workers to achieve
responsible wages, working conditions, working hours, fringe benefits etc. It provides them a
collective strength to bargain with employer. It also provides the employers some control
over the employees.

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

Collective bargaining in industry is a process of negotiation between employee and employer

or a group of employees aimed at agreements to regulate working salaries and other aspects
of working conditions. The interests of the employees are commonly presented by
representatives of a trade union to which the employee belong. The collective agreements
reached by these negotiations usually set out wage scales, working hours, training, health and
safety, overtime, grievance mechanism, and rights to participate in workplace or company
affairs. It strives to create good interpersonal relationship between employer and employee
thereby working towards the betterment of the organization in general.

Collective bargaining is therefore an important aspect for a person’s performance in an

organization. There are different processes involved in this type of bargaining and it is of
great importance.

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CHAPTER 1: COLLECTIVE BARGAINING

The term collective bargaining is made up of two words, ‘collective’ – which means a ‘group
action’ and ‘bargaining’, means ‘negotiating’, which involves proposals and counter-
proposals, offers and counter-offers. Thus it means collective negotiations between the
employer and the employee, relating to their work situations.1 The success of these
negotiations depends upon mutual understanding and give and take principles between the
employers and employees.

The ILO has defined collective bargaining as "negotiations about working conditions and
terms of employment between an employer and a group of employees or one or more
employees' organizations with a view to reaching an agreement wherein the terms serve as a
code of defining the rights and obligations of each party in their employment relations with
one another; fix a large number of detailed conditions of employment, and derivatives
validity, none of the matters it deals which can in normal circumstances be given as a ground
for a dispute concerning an industrial worker".2 Collective bargaining is a fundamental right.3

According to Prof. Allan Flanders, Collective Bargaining is primarily a political rather than
an economic process. He describes collective bargaining as a power relationship between a
trade union organization and the management organization. The agreement arrived at is a
compromise settlement of power conflicts. Collective Bargaining has also been described as
“the great social invention that has institutionalized industrial conflict”

Collective agreements usually set out wage scales, working hours, training, health and safety,
overtime, grievance mechanisms and rights to participate in workplace or company affairs.
The union may negotiate with a single employer (who is typically representing a company's
shareholders) or may negotiate with a federation of businesses, depending on the country, to
reach an industry wide agreement. A collective agreement functions as a labour contract
between an employer and one or more unions. Collective bargaining consists of the process
of negotiation b0etween representatives of a union and employers (generally represented by
management, in some countries and by appeals in others.

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 Company4 the Supreme Court observed that, "Collective bargaining is a
technique by which dispute as to conditions of employment is resolved amicably by

1
https://www.law.cornell.edu/wex/collective_bargaining

2
http://www.ilo.org/global/topics/collective-bargaining-labour-relations/lang--en/index.htm

3
1998, ILO Declaration on Fundamental Principles and Rights at Work
4
1990 AIR 247

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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 Tiwari5, 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 Tribunal6 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 Patel7, 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 helps 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.

Collective bargaining in India is therefore an old practice and cannot be said to be a newer
technique. It was practised in India since a long time and is now a part of Indian management
sphere.

5
(1979) ILLJ 495 Cal

6
1961 AIR 857
7
1976 AIR 98, 1976 SCR (2) 280

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CHAPTER 2: HISTORY OF COLLECTIVE BARGAINING

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.8 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.

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 disputes. 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 ….”9 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.

8
COLLECTIVE BARGAINING—AN INSIGHT, DR M. SHARMA

9
Section 18 of Industrial Disputes Act, 1947

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In Karnal Leather Karamchari Sangathan (Regd.) vs. Respondent: Liberty Footwear

Company (Regd.) and Ors,10 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. Workmen11, 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

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 themselves 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. Mukherjee12, 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”.

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.13

10
1990 AIR 247
11
1965 SC
12
1953 AIR 58, 1953 SCR 302
13
Section 3, Industrial Employment (Standing Orders) Act,1946

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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 Court14, 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

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.

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.

14
1984 AIR 505,
1984 SCR 230

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CHAPTER 3: TYPES OF COLLECTIVE BARGAINING

Collective bargaining is the negotiation between an employee and an employer regarding

several work issues. There are four basic kinds of collective bargaining: distributive,
integrative, attitudinal and intra organizational,

These types can be understood in detail when categorised as—

 Distributive bargaining:

It involves haggling over the distribution of surplus. Under it, the economic issues like
wages, salaries and bonus are discussed. In distributive bargaining, one party’s gain is
another party’s loss. This is most commonly explained in terms of a pie. Disputants can work
together to make the pie bigger, so there is enough for both of them to have as much as they
want, or they can focus on cutting the pie up, trying to get as much as they can for
themselves. In general, distributive bargaining tends to be more competitive. This type of
bargaining is also known as conjunctive bargaining.

 Integrative bargaining:

This involves negotiation of an issue on which both the parties may gain, or at least neither
party loses. For example, representatives of employer and employee sides may bargain over
the better training programme or a better job evaluation method. Here, both the parties are
trying to make more of something. In general, it tends to be more cooperative than
distributive bargaining. This type of bargaining is also known as cooperative bargaining.

 Attitudinal restructuring:

This involves shaping and reshaping some attitudes like trust or distrust, friendliness or
hostility between labor and management. When there is a backlog of bitterness between both
the parties, attitudinal restructuring is required to maintain smooth and harmonious industrial
relations. It develops a bargaining environment and creates trust and cooperation among the
parties.

 Intra-organizational bargaining:

It generally aims at resolving internal conflicts. This is a type of manoeuvring to achieve

consensus with the workers and management. Even within the union, there may be
differences between groups. For example, skilled workers may feel that they are neglected or
women workers may feel that their interests are not looked after properly. Within the
management also, there may be differences. Trade unions maneuver to achieve consensus
among the conflicting groups.

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CHAPTER 4: PROCESS OF COLLECTIVE BARGAINING

Collective bargaining can be achieved by management or by trade practices. The process of

collective bargaining is bipartite in nature, i.e. the negotiations are between the employers
and employees without a third party’s intervention. Thus collective bargaining serves to
bridge the emotional and physiological gulf between the workers and employers though
direct discussions. The HR Labour Relations Manager directs the organization's labour
relations agreement in accordance with executive level instruction and endorsement.15 They
supervise labor relations support staff and serve as the management representative in labour
negotiation, bargaining, or interpretive meetings

The process of collective bargaining can be summarised in five core steps—

1. Prepare: This phase involves composition of a negotiation team. The negotiation team
should consist of representatives of both the parties with adequate knowledge and skills for
negotiation. In this phase both the employer’s representatives and the union examine their
own situation in order to develop the issues that they believe will be most important. The first
thing to be done is to determine whether there is actually any reason to negotiate at all. A
correct understanding of the main issues to be covered and intimate knowledge of operations,
working conditions, production norms and other relevant conditions is required.

2. Discuss: Here, the parties decide the ground rules that will guide the negotiations. A
process well begun is half done and this is no less true in case of collective bargaining. An
environment of mutual trust and understanding is also created so that the collective
bargaining agreement would be reached.

3. Propose: This phase involves the initial opening statements and the possible options that
exist to resolve them. In a word, this phase could be described as ‘brainstorming’. The
exchange of messages takes place and opinion of both the parties is sought.

4. Bargain: negotiations are easy if a problem solving attitude is adopted. This stage
comprises the time when ‘what ifs’ and ‘supposals’ are set forth and the drafting of
agreements take place.

5.Settlement: Once the parties are through with the bargaining process, a consensual
agreement is reached upon wherein both the parties agree to a common decision regarding the
problem or the issue. This stage is described as consisting of effective joint implementation
of the agreement through shared visions, strategic planning and negotiated change.

15
http://www.whatishumanresource.com/collective-bargaining

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CHAPTER 5: CHARACTERISTICS

The characteristics of collective bargaining can be summarised as follows—

• It is a group process, wherein one group, representing the employers, and the other, representing the
employees, sit together to negotiate terms of employment.

•Negotiations form an important aspect of the process of collective bargaining i.e., there is
considerable scope for discussion, compromise or mutual give and take in collective bargaining.

•Collective bargaining is a formalized process by which employers and independent trade unions
negotiate terms and conditions of employment and the ways in which certain employment-related
issues are to be regulated at national, organizational and workplace levels.

•Collective bargaining is a process in the sense that it consists of a number of steps. It begins with the
presentation of the charter of demands and ends with reaching an agreement, which would serve as
the basic law governing labour 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 is 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; labour 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.

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CHAPTER 6: IMPORTANCE OF COLLECTIVE BARGAINING IN

CURRENT SCENARIO

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 employee’s morale
and productivity. It opens up channels of communication between top and bottom of an
undertaking which is difficult otherwise. 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.16 Further the management’s freedom of action is restricted because the
establishment loses its unilateral discretion regarding bargain able issues even when
management’s security is intact and thereby learns a new code of behaviour 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
country’s 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 concerned.

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.

Adjustment and balance of power between the management and union when they are in
conflict with each other. This method brings in social change. When two parties are in a state
of continuous conflict, it helps in bringing about compromise, truce or agreement for

16
I.L., Labour Law and Labour Relations, N.M. Tripathi (Pvt) Ltd., Bombay, (1968)

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establishing peace between the parties both the parties are morally bound to implement the
agreement once it is signed

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.17

17
Report of National Commission on Labour, p.325

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CHAPTER 7: 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;

1. 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;
2. Collective bargaining is a formalized process by which employers and independent
trade unions negotiate terms and conditions of employment and the ways in which
certain employment-related issues are to be regulated at national, organizational and
workplace levels;
3. 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;
4. 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;
5. Collective bargaining is a complementary process i.e. each party needs something that
the other party has; labour can increase productivity and management can pay better
for their efforts;
6. Collective bargaining tends to improve the relations between workers and the union
on the one hand and the employer on the other;
7. 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;
8. Collective bargaining takes into account day to day changes, policies, potentialities,
capacities and interests;
9. It is a political activity frequently undertaken by professional negotiators

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CHAPTER 8: FUNCTIONS OF COLLECTIVE BARGAINING

Various functions of collective bargaining can be studies under following headings-

1. a process of social change

2. a peace treaty between two parties

3. a system of industrial jurisprudence

4. Miscellaneous

1. Collective bargaining as a process of social change

• Collective bargaining enhances the status of the working class in the society. Wage earners
have enhanced their social and economic position in relation to other groups.

•Employers have also retained high power and dignity through collective bargaining.

2. Collective bargaining as a peace treaty

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

3. Collective bargaining as an industrial jurisprudence

Collective bargaining creates a system of “Industrial Jurisprudence”. It is a method of

introducing civil rights into industry. It establishes rules which define and restrict the
traditional authority exercised by employers over their employees placing part of the
authority under joint control of union and management.

4. Miscellaneous

• Increasing the economic strength to employers and employers.

• Improving working conditions and fair wages.

• Maintaining peace in industry

• Prompt and fair redressel of grievances.

• Promoting stability and prosperity of the industry.

• SWOT Analysis

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CHAPTER 9: AIMS AND OBJECTIVE BEHIND COLLECTIVE

BARGAINING

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

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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

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CHAPTER 10: CONCLUSION

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 bargaining18. 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.

Thus in this way we see that the hypothesis adopted for the topic that Collective
bargaining is important to maintain good interpersonal relationship between employer and
employee,Collective bargaining is necessary for employee satisfaction and employee
empowerment and it helps in increasing productivity of an employee is true and stands all the
tests.

18
www.ilo.org

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CHAPTER 11: BIBLIOGRAPHY

Books

# Human resource management and Organisational behaviour, Biswajeet Pattanayak

# Collective Bargaining – an insight, Dr M. Sharma

# I.L., Labour Law and Labour Relations, N.M. Tripathi

Statutes

# Industrial Disputes Act, 1947

# Trade Union Act, 1926

# The Industrial Employment (Standing Orders) Act, 1946

# The Constitution of India, 1950

Websites

 http://www.yourarticlelibrary.com/hrm/collective-bargaining-in-india-an-
overview/35470
 http://www.legalservicesindia.com/article/article/pre-requisites-and-process-of-
collective-bargaining-1441-1.html
 http://www.whatishumanresource.com/collective-bargaining
 https://www.law.cornell.edu/wex/collective_bargaining
 www.indiankanoon.com
 www.legalcases.com

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