Collective Bargaining

International Journal of Research in Management, Economics and Commerce
(ISSN 2250057X)
IMPACT FACTOR: 4.604
website: www.indusedu.org, Volume 4, Issue 5, May)
COLLECTIVE BARGAINING TRENDSIN INDIA

Col. R.D. Sharma
Research Scholar , Singhania University, Jhunjhnu Rajasthan
Dr Kailash Kumar
Ph.D (law), Associate Professor, ULIMS, Gurgaon
INTRODUCTION
The system of collective bargaining as a method of settlement of industrial dispute has been
adopted in industrially advanced countries like the United States of America in some Asian
and African Countries. India which has adopted compulsory adjudication system has also
accepted is the principle the system of collective bargaining as a method if settlement of
disputes in India.
HISTORY OF COLLECTIVE BARGAINING

Collective bargaining has developed in Indian industries since independence and mainly in
the last decade.
The textile industry in Ahmedabad has the longest history of settlement of disputes by mutual
negotiations and voluntary arbitration and can claim to have pointed the way towards modern
collective bargaining. In 1918 Gandhiji was leading the textile workers of Ahmedabad in
their demand for better working conditions, but even while he supported the strike, he
advocated negotiations and mutual discussions between employers and Labour, where
negotiations failed he suggested arbitration. This was hardly collective bargaining
Just before the Second World War the system of arbitration at Ahmedabad seemed to break
down and in 1940 under wartime conditions a reference was made to compulsory
adjudication under the Bombay Industrial Disputes Act. In 1952, the Ahmedabad Mill
Owners Association and the Textile Labour signed two agreements initially for two years by
which the machinery of voluntary arbitration was reviewed. This was proper collective
bargaining between the two representative organsations, who agreed that in future all disputes
between the mills and their employees should be settled out of Court.
In 1955, a general agreement on the subject of annual bonus was reached for the years 195357 covering all the mills. In 1957 a joint productivity council was set up for Ahmedabad
Textiles.
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One other early instance of an employers organisation and industrial union coming together
to solve their problem was in the Coir industry in Travencore State (Kerala) during the
Second world war. In 1938, the Travencore Coir Factory Workers Union, the largest in the
industry in common with coir workers unions in other areas organised a 26-day strike and
won a special allowance at 6% of basic wages from the employers. In 1943 the major
union and the employers association set up a joint body known as the Industrial Relations
Committee.
One of the duties of the committee was to fix rate of wages for all new types of work and
dearness allowances in each coir factory committee, which was recognised by the
management, and these local committees took up the day-to-day problems of the workers and
usually achieved a solution on the spot. Only questions of industry wide importance went to
the Industrial Relations Committee.
One of the very earliest instances of collective bargaining within the individual concerns as
distinct from groups of employers as in Ahmedabad and Kerala was that of the joint steamers
companies in Calcutta. The Bata Shoe Company in West Bengal made its first agreement in
1948. This agreement was for the union set up in a factory for two years. In 1951, the Indian
Aluminum Co., signed the first of its 5 years agreement with its Employees union at its
factory in Belur near Calcutta. The year 1955-56 saw a considerable extension of the field of
collective bargaining.
One of the most ardent supporters of collective bargaining in India was V.V. Giri, the then
Labour Minister at the Centre. He always pleaded for substitution of collective bargaining for
compulsory adjudication. This has come to be known as the Giri Approach. It is however a
pity that his approach did not receive enough support both from the employers and the central
unions. The government also showed little interest in collective bargaining due to the reasons
of lack of confidence in the bargaining strength of our trade union, fear of strikes and lock
outs and apprehension of inflation. Inspite of these infirmities collective bargaining
developed to a certain extent in India. Not only some of the above stated industries continue
to settle disputes through collective bargaining, industries all over India had started collective
bargaining though the Government has hardly taken any step legislative or otherwise to
effectively apply it in practice.
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FIVE YEAR PLANS AND COLLECTIVE BARGAINING

In India, the planners paid considerable attention to the adoption of the system of collective
bargaining to solve Labour disputes.
The First Five Year Plan recognised the workers right of association, organisation and
collective bargaining as a fundamental basis of peaceful industrial relations. It stated that
collective bargaining could derive reality only from the organised strength of workers and a
genuine desire on the part of the employer to co-operate with the representatives. It added
that the endeavor of the state had been to encourage collective bargaining and mutual
settlement of industrial dispute in order to encourage collective bargaining in order to
minimise the governmental intervention in Labour management relations.
The Second Five Year Plan recognised the need for mutual settlement for resolution of
industrial disputes. It pointed out that for the development of an undertaking or an industry,
industrial peace is indispensable. Obviously this can best be achieved by the parties
themselves. Labour legislation can only provide a suitable frame work in which employers
and workers can function. The best solution to the common problems, however, can be found
by mutual agreement.
The Third Five Year Plan encouraged voluntary arbitration and pleaded in place compulsory
adjudication. It stated that employers should show much greater readiness to submit disputes
to arbitration than they have done hitherto. This has to be the normal practice in preference to
recourse to adjudication as an important obligation adopted by the parties under the code.
The Fourth Five Year Plan stress that greater emphasis should be placed on collective
bargaining and on strengthening the trade union movement for securing better Labour
management relations, supported by recourse in large measures to voluntary arbitration.
LEGAL FRAME WORK

In India, the right of collective bargaining in the trade unions was recognised without any
prolonged struggle. The first legislation on this subject viz. the Trade Unions Act of 1926
was intended to remove legal impediments to collective bargaining, because of common Law
Doctrines of restraint of trade, tortious liability, civil conspiracy and the rest.
The Industrial Disputes Act of 1947 imposed on the state for a greater responsibility that it
had previously undertaken. It was intended that machinery created under the Act was meant
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to strengthen collective bargaining, and to intervene in trade disputes only where collective
bargaining was unable to deliver the necessary results. Lot of trust was put on Works
Committees, which was rather misplaced because, Works Committees in the scheme of the
Act have only a limited role to pay.
The provision of the Industrial Dispute Act, 1947 and the judicial interpretation on the
provision, however, have not encouraged collective bargaining under the Act, as originally
passed, a settlement arrived at otherwise than in the course of conciliation proceedings was
not given any legal status at all. The Amendment Act of 1956 provided that a settlement
arrived at by agreement between the employer and the workmen otherwise than in the course
conciliation proceedings shall be binding only on the parties to it. This provision in Sec.18
(1) in the Industrial Disputes Act, 1947 is in sharp contrast with the provisions relating to
settlement through conciliation proceedings, as the said settlement would bind not only the
members of the union which have signed the settlement, but all workmen employed in the
establishment to which the dispute related and all workmen who subsequently become
employed in the establishment.
Thus under the law, there are only two recognised ways of settling an industrial dispute;
Through bilateral negotiations in which case the settlement binds only the members of the
union which has signed the settlement and through conciliation proceedings in which case the
dispute in so far as establishment is concerned itself stands settled. No reopening of the
matter covered by such a settlement is allowed during the period of operation of the
settlement.
The consequence of the above legal position is that where an employer settles an industrial
dispute bilaterally through a union. He can still be dragged into litigation at the instance of
the union or unions, which are not parties to the settlement.
It is noted that neither the Act nor the rules made there under contains any provision laying
down the circumstances in which the conciliation officer shall intervene and bring about a
settlement during conciliation proceedings. Under the scheme of the Act, the discretion
vested in the conciliation officer appears to be wide. There are no guidelines in the Act or in
the Rules to say which matter he will take up and settle through conciliation and in what
circumstances he will not intervene. He is not duty bound to invite all the unions, which are
in existence in the establishment to participate in the conciliation proceedings. Even if a
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settlement is arrived at which one of the unions in the establishment among many, it binds all
the unions and no further dispute can be raised while the settlement is in force.
Thus it could be seen that the law on the subject is in a highly unsatisfactory state. There have
been attempts made from time to time to remove this lacuna in the Industrial Disputes Act,
and provide for machinery by which the sole bargaining agent on behalf of the workman may
be chosen. Attempts made to remove this lacuna through the Industrial Relations Bill of 1950
and the Trade Unions Bill of 1950 did not materialize due to stiff resistance. An attempt was
made through the code of Discipline in Industry and the code provided the criteria for
recognition of trade unions as bargaining agent. But the code had no legal sanctity
whatsoever and has not been able to render much help in delaying with the problems raised
due to multiplicity of trade unions. The Industrial Relations Bill introduced by the Janata
Government incorporating many of the suggestion made by the National Commission on
Labour 1969 could not be passed by the Legislature. The Trade unions and the Industrial
Disputes Amendment Bill 1988 which contained many provisions for the promotion of
collective bargaining including establishment of bargaining councils and Industrial Relations
Commission. But this Bill also lapsed due to the dissolution of parliament.
PROCESS OF BARGAINING
The collective agreements in India are generally arrived at after a tortuous haggling and
bargaining procedure. Unions prefer this procedure to other procedures because they fear that
if they do not haggle with the management, workers would accuse them of having sold
themselves out to the management can never be a full and final offer. Hence they should not
accept the every first offer but should bargain for better terms.
Most of the agreements are at the plant level though some industry level agreements have
also been concluded. Plant level agreements are common in manufacturing and commercial
establishments. Whereas industry-level agreements are found in plantation and textile
industry. National-level agreements are still uncommon except in the case of departmental
undertakings in the public sector viz. Railways, Post and Telegraphs and Ordinance
Factories.
The parties normally decide the selection of subjects in collective bargaining. However it is
circumscribed by law. For example, the negotiators of a contract must always keep in mind
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the provisions of the Factories Act, 1948, the Payment, of Wages Act, 1936, the Minimum
Wages Act, 1948 and the Industrial Employment (Standing Orders) Act, 1946. These Act
deals with many subjects such as safety precautions, health measures, amenities, conditions
of employment, minimum wages and payment of wages. Any contract must naturally be
consistent with these acts. The decisions of courts sometimes interpreting other acts, have
also laid down principles on such matters as how bonus must be calculated, retrenchment
must be carried out, rationalisation must be taken, and disciplinary proceedings must be
handled. Some contracts are short and deal with a few matters while others are elaborate and
deal with many.
FACTORS AFFECTING SUCCESSFUL COLLECTIVE BARGAINING

IN INDIA
Labour Laws have affected the formation of trade unions in two ways. First, it has weakened
the protest movement. Second, it has failed to give adequate protection to the members of a
union for their trade union activities.
In India, the statutory provisions circumscribe the minimum standards of terms of
employment and conditions of Labour. This is for in advance of the level dictated by the
significant protest movement. Moreover, Institutions such as a works committee and
adjudication system, have in general, tended to minimize the value of trade unions. Further,
the institution of standing orders, the procedure for their certification and the provisions
regarding the adjudication, disputes relating to their interpretation and application instigate
against the necessity of forming trade unions.
Members of trade unions need as much protection from the common law doctrine of criminal
conspiracy and restraint of trade as from employers wrath. The protections granted by Sec.
17, 18 and 19 of the Trade Unions Act are hardly sufficient.
Law relating to Labour management relations and adjudication system prevalent in our
country reveals that the Labour law do not been to a great extent responsive to the bargaining
power of Indian Workers. Thus the Industrial Disputes Act, 1947, restricts the striking power
of Indian Workers it regulates the use of the instruments of economic coercion.
Section 7 of the Criminal Law (Amendment) Act, 193, render it impossible for the workers
to indulge in several kinds of Labour activities. It adversely affects the workmens right to
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picket. It prohibits obstruction of access and intimidation of persons or employees or loitering

at places or residence or business with the intent of deterring others from entering or
approaching or dealing at such place. It has severally affected the bargaining power of trade
unions.
The surplus Labour market affects the bargaining power of Indian Labour, further, the
absence of any statutory provisions of central level for the recognition of a representative
trade union by an employer also affects the bargaining power of trade union. The
Government's unfettered discretion in referring a dispute for adjudication and for issuing
prohibitory order under Sec. 10 of the Industrial Disputes Act had adversely affected the
Labour interest.
Provisions of the Industrial Disputes Act have not given any status to a trade union for
example Sec.36 of the Act, enables a worker, if he so desires to be represented by a union,
but it does not enable a union to represent its members. A union cannot bind by its decision,
its own members far less the non-union member in the establishment.
RECOMMENDATION OF THE NATIONAL COMMISSION ON

LABOUR
The National Commission on Labour made comprehensive investigation on the development
of collective bargaining as a method of disputes in India, and made a series of
recommendations to promote collective bargaining. Important among them are:
The requirements of national policy make it imperative that State regulation will have to coexist with collective bargaining. At the same time there are dangers in maintaining status quo.
There is a case for shift in emphasis and this shift will have to be in the direction of an
increasingly greater scope for, and reliance on, collective bargaining. But any sudden change
replacing adjudication by a system of collective bargaining would neither be called for nor
practicable. The process has to be gradual. A beginning has to be made in the move towards
collective bargaining by declaring that it will acquire primacy in the procedure for settling
industrial disputes (Report of the National Commission on Labour (1969) p, 327).
It follows that conditions have to be created for the success of this proposed changeover. An
important pre-requisite of it is the grant of union recognition by statute as also to create
conditions in which such arrangements have a chance to succeed.
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It would be desirable to make union recognition compulsory under a central law, in all
undertakings employing 100 or more Workers or where the capital invested in above a
stipulated size. A trade union seeking recognition as a bargaining agent from a individual
employer should be a membership of at least 30% of the workers in the establishment. If it is
for an industry in a local area, the minimum membership should be 25% where more unions
than one contend for recognition, the union having a larger following should be recognised.
Whether it is verification or secret ballot for the recognition of unions, best course, therefore
seems to leave the choice of method, in any particular case, to the discretion of an
independent authority. We suggest that the task should be entrusted to the Industrial Relations
Commission proposed by us. The Commission will have the power to decide the
representative character of unions either by examination of membership records, or of it
considers necessary, by holding an election through secret ballot open to all employees.
A union recognised as the representative union under any procedure, should be statutorily
given the right of sole representation of the workers in any collective bargaining.
Apart from this we have to indicate the place which strike and lock out will have in the
scheme we propose. Collective bargaining cannot exist without the right to strike and lockout. In our view, the right to strike is a democratic right, which cannot be taken away from
the working class in a constitutional set up like ours.
There are certain essential industries/services where in a cessation of work may cause harm to
the community, the economy or the security of the nation itself and as such even this right
may justifiably be abridged or restricted, provided, of course, a specific procedure is laid
down for remedies and redressal of grievances. Therefore in stich industries, the right to
strike may be curtailed but with the simultaneous provision of an effective alternative like
arbitration or adjudication to settle disputes.
BIBLIOGRAPHY
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Enterprises and Global Human Resource Strategies, WestPoint, CA, Quorum.
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3. Kochan A. T., (2003, April). Collective Actors in Industrial Relations: What future?
IIRA World Congress, Track 4, Rapporteur Report. MIT Institute for Work and
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International Journal of Research in Management, Economics and Commerce