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Collective Bargaining

Collective bargaining is a process in which

management and employee representatives meet
and negotiate the terms and conditions of
employment for mutual benefits.

Collective – both employer and employees act as a

group rather than individuals.

Bargaining – method of reaching an agreement

involves proposals and counter proposals, offers
and counter offers.

1. It is a group process
2. It involves negotiations
3. It is a bipartite exercise
4. Objective: to reach an agreement
5. Purpose of agreement: improve working conditions
of employees
6. It is a socio-economic process
7. Rules, regulations, conventions and customs which
are developed by trade unions, management,
corporations and the government are meticulously
Scope (Aspects covered)

1. Wages fixation, increments and bonus payment

2. Hours of work and overtime.
3. Terms and conditions of work, safety, welfare
and health care
4. Grievance procedure
5. Labour productivity, labour standard and
6. Union management relations including workers
Need for Collective Bargaining:

1. Provides a platform for management and employees which

places them at par so far as negotiations are concerned.

2. Pragmatic and democratic process for regulating the

terms and conditions of employment in which employees feel
a part of decision making process.

3. May be used to adopt a more flexible approach towards

employment conditions in dynamic environment.

4. Provides opportunity for speedy implementation of

decisions regarding terms of employment as both the parties
are involved in decision making process.
Preparation for negotiation
Collective Bargaining
Determination of bargaining issues

Negotiation Overcoming negotiation
breakdown breakdown

Negotiated agreement

Ratification of agreement

Implementation of agreement
1. Preparation for negotiation
From the management side:
1. Management should decide when to open
the negotiation.
2. Management must decide the representatives to
negotiate at the negotiation table.
3. There should be analysis of the impact of
various decisions which may emerge out of
4. Draft for likely decisions should be prepared in
advance so that final agreement draft can be
prepared as soon as the negotiation process is over.
From the employees’ side:
1. The union should collect the facts about the financial
position of the company and its ability to pay.

2. It must also be aware of the various practices followed

by other companies in the same region or industry.

3. The union must assess the attitudes and expectations of

the employees over various issues to avoid resistance later

4. It must also assess the likely stand that the management

may take over various issues (to adopt acceptable
2. Issues for bargaining

1. Wage related issues: wage and salary revision,

allowances for meeting increased cost of living like DA, OT
rates, financial incentive scheme, bonus, etc.

2. Supplementary Economic benefits: pension plans,

gratuity plans, paid vacation, paid holidays, lay-off pay,
retrenchment compensation, accident compensation,
health insurance plan, etc.
3. Institutional issues: determination of rights and
duties of employers, employees and trade union with
a view that each group respects and protects the
rights of others.

4. Administrative issues:
determination of seniority, basis of promotion,
employee discipline and discharge procedure,
grievance procedure, employee health and
safety measures, work rules, job security and
job changes, training, technological changes, etc.
3. Negotiation
Types of negotiating procedure:
1. Haggling Bargaining:
piecemeal approach, total approach
2. Boulwarism: company conducts comprehensive
research and survey the needs of the employees.
Based on the analysis of the findings, the company
designs its own package based on the issues of
3. Continuous bargaining: involves parties to
explore particular difficult bargaining problems
in joint meetings over the long period of time,
sometimes throughout the life of each agreement.
Activities (Strategies) in collective bargaining:
1. Distributive bargaining: straight out haggling over the
distribution of surplus (wages/salaries, bonus and other financial

2. Integrative Bargaining: co-operative search on the issues involved.


3. Attitudinal structuring:
for smooth bargaining and maintaining harmonious relations

4. Intraorganisational bargaining:
maneuvering to achieve consensus within the labour and
management organisations. Consensus is required for the smooth
acceptance of outcomes of bargaining process.
4. Initial negotiated Agreement:

When two parties arrive at some mutually acceptable

agreement either at the initial process or through
overcoming negotiation breakdown, the agreement is
entered into with a provision that the agreement will
be formalised after its ratification by the respective
5. Ratification of Agreement:
Ratification of negotiated agreement is required because
the representatives of both the parties may not have
ultimate authority to decide various issues referred to for
collective bargaining. The ratification of agreement may be
done by the appropriate manager(s) authorised for the
purpose in the case of management, trade union executive
or all the employees in the case of employees.

The agreement is in written form- preamble, a series of

clauses and appendices giving details of items wherever
required. It also includes the date from which it comes into
operation and the period for which it will remain in
6. Implementation of agreement:

When the agreement is finalised, it becomes

operational from the date indicated in the agreement.

The HR Department is crucial in ensuring that all the

provisions of the agreement are implemented
Pre-requisites for Effective Collective Bargaining:

1. Unanimity among workers

2. Strength of both the parties
3. Attitudes of the parties should be positive
4. The parties should be ready to give away something in
order to gain something
5. Both parties should observe and follow the terms and
conditions of previous agreements that are reached
6. The parties should have mutual trust, confidence and
respect for each other
7. Bargaining process should be free from unfair
practices and conflict
8. Each party should respect rights and responsibilities
of the other party.