Collective bargaining is an important instrument provided in labour law that provides a framework for workers and employers to negotiate the terms and conditions of employment. These laws, governed by the Industrial Disputes Act, 1947 and the Trade Unions Act, 1926, outline the process for resolving disputes, including the rights and obligations of employers and workers in the event of a strike or lockout.
Collective bargaining is the process in which representatives of a labor union negotiate with the management of a company or organization to establish the terms and conditions of employment for unionized workers. The goal of collective bargaining is to reach an agreement on issues such as wages, benefits, working hours, and other conditions of employment that are fair to both the workers and the employer.
During the collective bargaining process, both the union and management will typically present their respective positions and make offers and counter-offers until a mutually acceptable agreement is reached. The process can also include negotiation over issues related to workplace safety, health benefits, and job security.
Once an agreement is reached, it is typically put into the form of a written contract, called a collective bargaining agreement (CBA), which lays out the terms and conditions of employment for a specific period of time, often 3 years. Both the union and management are bound to the terms of the agreement until it expires, and the process of collective bargaining begins again when the contract is up for renewal.
Laws governing collective bargaining
Collective bargaining is governed by both international and Indian national laws.
At the international level, the most important framework for collective bargaining is the International Labour Organization (ILO) conventions. The most relevant conventions for collective bargaining are Convention No. 98, which deals with the right to organize and collective bargaining, and Convention No. 154, which sets out guidelines for the protection and promotion of the right to organize and bargain collectively. These conventions have been ratified by many countries around the world and are considered international labor standards.
According to Article 2 of the Collective Bargaining Convention, 1981 (No. 154) of the International Labour Organisation, “collective bargaining extends to all negotiations which take place between an employer, a group of employers or one or more employers’ organisations, on the one hand, and one or more workers’ organisations, on the other, for
(a) determining working conditions and terms of employment; and/or
(b) regulating relations between employers and workers; and/or
(c) regulating relations between employers or their organisations and workers or workers’ organisations”.
In India, collective bargaining is governed by several laws and regulations at the national and state level. Some of the most important laws include:
- The Industrial Disputes Act, 1947: This law sets out the procedure for resolving industrial disputes, including disputes over wages, working hours, and other conditions of employment. It also provides for the establishment of conciliation and arbitration boards to resolve disputes and lays out the rights and obligations of employers and workers in the event of a strike or lockout.
- The Trade Unions Act, 1926: This law regulates the registration and functioning of trade unions, which are the organizations that represent workers in collective bargaining.
- The Labor Laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishments) Act, 1988: This law allows certain types of small businesses to be exempt from certain labor laws and regulations, including those related to collective bargaining.
In addition to these laws, the Indian government also has several policies in place to promote collective bargaining, including the National Policy on Industrial Relations, which emphasizes the importance of collective bargaining as a means of resolving industrial disputes, and the Industrial Relations Code Bill 2020, which have been presented in parliament for the amendment of current laws.
It is worth mentioning that, collective bargaining is not mandatory in India and it is an option which companies can choose to adopt. Many of the companies in India follow a voluntary system of collective bargaining.
What is the procedure of collective bargaining?
The procedure for collective bargaining can vary depending on the specific circumstances, such as the industry and country in which the negotiation is taking place. However, in general, the process typically includes the following steps:
- Preparation: Both the union and management will typically prepare for the negotiation process by gathering information and data related to the issues to be negotiated. This can include information on wages, benefits, working conditions, and other issues of concern to the union and management.
- Initiation: The union will typically initiate the collective bargaining process by providing a notice to the management outlining the issues to be negotiated and the proposed start date for negotiations.
- Negotiations: The union and management will then begin negotiations, which can be formal or informal. The union will typically present its position on the various issues to be negotiated, and the management will present its counter position. Both sides will then engage in a process of offer and counter-offer until a mutually acceptable agreement is reached.
- Mediation or arbitration: If the union and management are unable to reach an agreement, the negotiations may be referred to a mediator or an arbitrator. A mediator is a neutral third party who helps the parties to reach an agreement, while an arbitrator is a neutral third party who makes a binding decision on the disputed issues.
- Ratification: Once an agreement is reached, it is typically submitted to the union membership for ratification. If the agreement is ratified, it will be put into the form of a written contract, called a collective bargaining agreement (CBA), which lays out the terms and conditions of employment for a specific period of time.
- Implementation: Once the CBA is signed, both the union and management are bound to the terms of the agreement, which will be implemented in the workplace. The CBA will remain in effect for a specified period of time, usually around 3 years, after which the process of collective bargaining begins again when the contract is up for renewal.
The Steel Authority of India Ltd. v. National Union Waterfront Workers (1994) dealt with the issue of whether an employer could change the terms and conditions of employment without the agreement of the workers. The Supreme Court of India held that an employer can change the terms and conditions of employment, but the consent of the workers must be taken before making any such changes, and that if the consent was not taken, the changes would be void.
The State of Bombay v. The Hospital Mazdoor Sabha (1960): This case dealt with the issue of whether an employer could terminate the services of employees for participating in a lawful strike. The Supreme Court of India held that an employer cannot terminate the services of employees for participating in a lawful strike, and that such termination would be an unfair labor practice.
It is worth noting that the steps may be changed or added according to the specific law and regulation in different countries or regions. And some cases may need the parties to take their disputes to the court if mediation or arbitration does not work.
What is Collective bargaining agreements and what are its essentials?
Collective bargaining agreements (CBAs) are legally binding agreements between an employer and a labor union that outlines the terms and conditions of employment for unionized employees. These agreements typically cover issues such as wages, benefits, working hours, and job security, among others.
The essential elements of a CBA typically include:
- Wages: The agreement will set out the wages that unionized employees will be paid, including base pay and any increases or decreases over the term of the agreement.
- Benefits: The agreement will outline the benefits that unionized employees will receive, such as health insurance, retirement plans, and paid time off.
- Working conditions: The agreement will set out the working conditions for unionized employees, including hours of work, overtime pay, and safety standards.
- Job security: The agreement will address job security for unionized employees, including provisions for layoffs, plant closings, and the use of temporary or replacement workers.
- Grievance procedures: The agreement will establish a process for resolving disputes between the employer and unionized employees, including the steps for filing and resolving grievances.
- Term of the Agreement: The agreement will specify the date on which the agreement goes into effect, and the date on which it will expire.
Advantages of collective bargaining
Collective bargaining has several advantages for both the workers and the employers:
- Improved working conditions: Collective bargaining allows workers to negotiate for better wages, benefits, working hours, and other conditions of employment. This can lead to improved living standards for the workers and their families.
- Job security: Collective bargaining can help to protect workers from layoffs, discrimination, and other forms of job insecurity.
- Improved productivity: When workers feel that their rights and interests are being protected, they are more likely to be satisfied with their jobs and more motivated to work. This can lead to improved productivity and a better overall work environment.
- Reduced labor-management conflicts: Collective bargaining can help to prevent or resolve labor disputes and strikes, which can be costly and disruptive for both the workers and the employer.
- Better communication: Collective bargaining can improve communication between workers and management, which can help to create a more harmonious and cooperative workplace.
- Legal framework: Collective bargaining is recognized and protected by national laws and regulations, this legal framework provide a stable environment for the company and employees.
- Increased competitiveness: A collective bargaining agreement can create a more stable workforce, and can improve company’s competitiveness by reducing labor turnover and absenteeism.
- Better relations with unions: Companies that engage in collective bargaining tend to have better relations with their unions, which can lead to more effective problem-solving and decision-making in the workplace.
It’s worth noting that, the advantages of collective bargaining can vary depending on the specific circumstances, such as the industry and country in which the negotiation is taking place and the strength of the union. Also, it’s not always easy to reach a collective bargaining agreement, negotiations can be long and complicated, and can sometimes lead to strikes, lockouts, and other labor disputes.
Disadvantages of collective bargaining
While collective bargaining can have many advantages, it also has some disadvantages, such as:
- Cost: The process of collective bargaining can be costly for both the union and management, as they may need to hire legal counsel, consultants, and other experts to assist with the negotiations.
- Time-consuming: The process of collective bargaining can be time-consuming, and can take many months or even years to reach an agreement.
- Inflexibility: Once a collective bargaining agreement is reached, both the union and management are bound to the terms of the agreement, which can be inflexible and make it difficult to respond to changes in the business environment.
- Reduced profitability: The demands of the union can raise labor costs and make it difficult for companies to remain profitable.
- Interference in business operations: Collective bargaining can give unions a say in the management of the company, which can interfere with the autonomy of management and the ability of the company to respond to market conditions.
- Reduced competitiveness: Collective bargaining agreements can create a less flexible workforce and can increase labor costs, which can make the company less competitive, especially in a global market.
- Legal burden: In some cases, companies may face legal problems if they breach the terms of collective bargaining agreement, or if they fail to respect the rights of the workers.
- Limited access for some companies: Collective bargaining may not be available for companies that are not unionized, or for companies that are in industries where unions do not have a strong presence.
It’s worth noting that, the disadvantages of collective bargaining can vary depending on the specific circumstances, such as the industry and country in which the negotiation is taking place, and the strength of the union. And also, it’s not always easy to reach a collective bargaining agreement, negotiations can be long and complicated, and can sometimes lead to strikes, lockouts, and other labor disputes.