Collective bargaining

The phrase ‘Collective Bargaining' is coined by famous authors Sydney and Beatrice Webb in their celebrated treatise on ‘History of Trade Unions’. Collective Bargaining is a method of determining the terms and conditions of employment and settling disputes arising from those terms by negotiating between the employer and the employees or their trade union. The very fact that the parties reserve the ultimate right to use economic weapons of strike and lock out helps in stimulating the parties to arrive at an agreement.

Meaning of collective bargaining

The term collective bargaining is made up of two words, ‘collective’ – which means a ‘group action’ through representation 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. The success of these negotiations depends upon mutual understanding and give and take principles between the employers and employees.

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.

The HR Labor Relations Manager directs the organization's labor relations agreement in accordance with executive level instruction and endorsement. They supervise labor relations support staff and serve as the management representative in labor negotiation, bargaining, or interpretive meetings.


The phrase collective bargaining is made up of two words collective which implies group action through its representatives; and bargaining which suggests haggling and / or negotiating. The phrase, therefore, implies collective negotiation of a contract between the management’s representatives on one side and those of the workers on the other. Thus collective bargaining is defined as a process of negotiation between the employer and the organized workers represented by their union in order to determine the terms and conditions of employment.

Stevens: Collective Bargaining as a ‘social control technique for reflecting and transmitting the basic power relationships which underlie the conflict of interest in an industrial relations system.’

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” Dubin

Richardson says, “Collective bargaining takes place when a number of work people enter into negotiation as a bargaining unit with an employer or a group of employers with the object of reaching agreement on conditions of the employment of the work people”.

Encyclopedia Britannica defined collective bargaining as a process of discussion and negotiation between an employer or group of employees and a group of work-people to reach agreement on working conditions. If negotiations are between an employer and a group of his work-people, the dependence of the work-people on the employer for their job weakens their bargaining power, and therefore, collective bargaining is more usually understood to be negotiation between one or more trade unions and the employer or group or association of employers".

Ludwig Teller states the “Definition and General Nature of Collective Bargaining” in these terms.

“The collective bargaining agreement has been variously interpreted, but its essential nature is the subject of general understanding. It may be broadly defined as an agreement between a single employer or an association of employers at the one hand and a labour union on the other, which regulates the terms and conditions of employment.”

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".

Indian Constitution Guaranteed:

Article 19(1) (c) of the Constitution of India guaranteed to all citizens the right to form association or unions.

In All India Bank Employers Association vs. National Industrial Tribunal, it was argued that Article 19(1) (c) guarantees, as a concomitant to its right to form associations or unions, a right to effective collective bargaining and a right to strike. But the Supreme Court rejected the argument and said that even a very liberal interpretation of sub-clause (c) of clause (1) of Art. 19 cannot lead the conclusion that the trade unions have a guaranteed right to an effective bargaining...”

Collective Bargaining in India:

The collective bargaining as a policy has been in vogue in the United Kingdom, the United States of America, Australia, New Zealand and other countries. However in India the trade unions have more to learn from these countries to tackle the industrial problems. The Govt, of India, through its Five Year Plans has endeavoured to encourage the practice of collective bargaining.

The Second Five Year Plan, 1956 stated, “For the development of an understanding or an industry, industrial peace is indispensable. Obviously this can best be achieved by the parties themselves... The best solution to common problems, however, can be found by mutual agreement”.

The Fourth Five Year Plan recognised 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 measure to voluntary arbitration”.

A collective bargaining process generally consists of four types of activities

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 labour 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 manoeuvre to achieve consensus among the conflicting groups.

Characteristics Of Collective Bargaining

    • 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 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.

Collective bargaining process comprises of 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.


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.

Functions of Collective bargaining

Prof. Butler has viewed the functions as:

    1. a process of social change

    2. a peace treaty between two parties

    3. a system of industrial jurisprudence

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 treat 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.

In addition to the above, its functions include:

    • Increasing the economic strength to employers and employers.

    • Improving working conditions and fair wages.

    • Maintaining peace in industry

    • Prompt and fair redressal of grievances.

    • Promoting stability and prosperity of the industry.