WELFARE AND PRODUCTIVITY - Industrial Relations Management

Collective Bargaining

Collective bargaining is process of joint decision making and basically represents a democratic way of life in industry. It is the process of negotiation between firm’s and workers’ representatives for the purpose of establishing mutually agreeable conditions of employment.It is a technique adopted by two parties to reach an understanding acceptable to both through the process of discussion and negotiation.

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 employee, organization 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 with one another.

Collective bargaining involves discussions and negotiations between two groups as to the terms and conditions of employment. It is called ‘collective’ because both the employer and the employee act as a group rather than as individuals. It is known as ‘bargaining’ because the method of reaching an agreement involves proposals and counter proposals,offers and counter offers and other negotiations.

Thus collective bargaining:

  • Is a collective process in which representatives of both the management and employees participate.
  • Is a continuous process which aims at establishing stable relationships between the parties involved.
  • Not only involves the bargaining agreement, but also involves the implementation of such an agreement.
  • Attempts in achieving discipline in the industry.

Features of Collective Bargaining

There are several essential features of collective bargaining, all of which cannot be reflected in a single definition or description of the process:

  1. It is not equivalent to collective agreements because collective bargaining refers to the process or means, and collective agreements to the possible result, of bargaining. Collective bargaining may not always lead to a collective agreement.
  2. It is a method used by trade unions to improve the terms and conditions of employment of their members.
  3. It seeks to restore the unequal bargaining position between employer and employee.
  4. Where it leads to an agreement, it modifies, rather than replaces, the individual contract of employment, because it does not create the employer-employee relationship.
  5. The process is bipartite, but in some developing countries the State plays a role in the form of a conciliator where disagreements occur, or where collective bargaining impinges on government policy.

Subjective matter of collective bargaining

The subject matter of collective bargaining covers a variety of issues affecting employment relationships between the workers and the management. According to Ghosh and Nath the issues covered in the collective bargaining are recognition of union or unions, wages and allowances, hours of work, leave and festival holidays, bonus and profit sharing schemes, seniority, rationalization and the issues relating to the fixation of workloads, and standard labour force, programmes of planning and development influencing workforce, issues relating to retrenchment and lay off, victimization for trade union activities, provident fund, gratuity and other retirement benefit schemes, incentive systems, housing and transport facilities, issues relating to discipline and shop rules, grievance procedure, working conditions and issues related to safety and accident prevention, occupational diseases and protective clothing, employee benefits such as canteens, rest rooms, medical and health services and crèches, administration of welfare funds, cooperative thrift and credit societies
and educational, recreational and training schemes. The Indian Institute of Personnel Management, Calcutta, gives the following as the subject matter of collective bargaining:

  1. Purpose of the agreement,its scope and the definition of important terms;
  2. Rights and responsibilities of the management and of the trade union;
  3. Wages, bonus, production norms, leave, retirement benefits and terms and
  4. conditions of service;
  5. Grievance redressal procedure;
  6. Methods and machinery for the settlement of possible future disputes; and
  7. Termination clause.

Importance of Collective Bargaining

Collective bargaining includes not only negotiations between the employers and unions but also includes the process of resolving labor-management conflicts. Thus, collective bargaining is, essentially, a recognized way of creating a system of industrial jurisprudence.It acts as a method of introducing civil rights in the industry, that is, the management should be conducted by rules rather than arbitrary decision making. It establishes rules which define and restrict the traditional authority exercised by the management.

Importance to employees:

  • Collective bargaining develops a sense of self respect and responsibility among the employees.
  • It increases the strength of the workforce, thereby, increasing their bargaining capacity as a group.
  • Collective bargaining increases the morale and productivity of employees.
  • It restricts management’s freedom for arbitrary action against the employees. Moreover, unilateral actions by the employer are also discouraged.
  • Effective collective bargaining machinery strengthens the trade unions movement.
  • The workers feel motivated as they can approach the management on various matters and bargain for higher benefits.
  • It helps in securing a prompt and fair settlement of grievances. It provides a flexible means for the adjustment of wages and employment conditions to economic and technological changes in the industry, as a result of which the chances for conflicts are reduced.

Importance to employers

  • It becomes easier for the management to resolve issues at the bargaining level rather than taking up complaints of individual workers.
  • Collective bargaining tends to promote a sense of job security among employees and thereby tends to reduce the cost of labor turnover to management.
  • Collective bargaining opens up the channel of communication between the workers and the management and increases worker participation in decision making.
  • Collective bargaining plays a vital role in settling and preventing industrial disputes.

Importance to society

  • Collective bargaining leads to industrial peace in the country.
  • It results in establishment of a harmonious industrial climate which supports which helps the pace of a nation’s efforts towards economic and social development since the obstacles to such a development can be reduced considerably.
  • The discrimination and exploitation of workers is constantly being checked.

It provides a method or the regulation of the conditions of employment of those who are directly concerned about them.

Industrial disputes

Our modern industrial system is threatened by the ravaging industrial disharmony characterized by the embittered relationships between the employers and the workers. A smooth industrial relations requi4res that all the participants are to be motivated to work whole heartedly for making the system to work. According to the new economic policy during 1991 a series of industrial fiscal and trade reforms were announced by the government to create industrial peace and prosperity. Generally, the reasons for industrial disputes in India were psychological, political and economic. To achieve industrial peace, changes in the attitude of workers, employers and trade unions are required along with political and economic changes. It is to be seen that whether such changes have taken place in India after the instruction of new economic policy.

In addition to main economic functions, some unions have now started undertaking and organizing welfare activities and also providing variety of services to services to their members and sometimes to the community of which they are a part, which may be grouped under the following heads:

Welfare Activities

They are provided to improve the quality of work life including organization of mutual fund cooperative societies for providing housing credit and socio cultural programmes, banking and medical facilities.


Education of members, creating awareness about the environment around them, enhancement of their knowledge particularly in regard to issue that concern them, their statutory and other rights and responsibilities, workers participation scheme, and procedure for redressing their grievances.

Publication of periodicals

News letters or magazines for establishing communication with their members, making the latter aware of union policy and stand on certain principal issues and personnel matters concerning members, such as births, deaths, marriages, promotion and achievements.


Of late this is gaining importance and is intended mainly to provide updated information to union negotiators systematically collected and analyzed at the bargaining table. Such research is to be more practical than academic concerning problems relating to day to affairs of the union and its activities and union and management relations. Some of the research activities like , collection and analysis of wage data including fringe benefits, and other benefits and services through surveys to comparative practices, data on working conditions and welfare activities.

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