Collective Bargaining

COLLECTIVE BARGAINING

CONCEPT  Collective Bargaining is the technique that has been

adopted by unions & managements to reconcile their conflicting interests. It is called collective because the employees, as a group, select representatives to meet & discuss differences with the employer.  Collective bargaining is that arrangement where the wages components of remuneration & conditions of employment of workman are settled through a bargain between the employer & the workmen collectively whether represented through their union or by some of them on behalf of all them.

Origin  Collective bargaining has emerged throughout

the world, particularly in democratic countries, as a major institutional mechanism for the resolution of conflict of interests between labour & management.  Sidney & Beatrice Webb were the first to use the term’ collective bargaining’ in 1891. Subsequently , Samuel Gompers, the president of American Federation of Labour in USA considered, collective bargaining

DEFINITION  Michael Jucius – “ Collective Bargaining refers

to a process by which employers on the one hand & representatives of employees on the other, attempt to arrive at agreements concerning the conditions under which employees will contribute & be compensated for their services.”  Richardson – “ Collective bargaining takes place when a number of work-people enter into negotiation as bargaining unit with an employer or group of employers with the object of reaching an agreement on the conditions of employment of work-people.

 Encyclopedia of Social Sciences – “ Collective

Bargaining is a process of discussion & negotiation between two parties, one or both of whom is a group of persons acting in concert. The resulting bargain is an understanding as to the terms & conditions under which a continuing service is to be performed…More specifically , collective bargaining is a procedure by which employers & a group of employees agree upon the conditions of work.

Nature of Collective bargaining   

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It is carried out on a collective as distinct from an individual basis. That is, collective bargaining is bargaining by groups of people. In the bargaining process, the main actors are employees, employers & their associations. The object of collective bargaining is rule making. i.e reaching an agreement by specifying the rules pertaining to employment relationship. The main focus of these rules is on the terms & conditions of employment. It is both device & a procedure used by wage earners to safeguard their interests; it is an institution or instrument of an industrial organization for discussion & negotiation between the two parties. It is moreover a technique by which an attempt is made to reconcile the needs & objectives of workers & employers & is therefore, an integral part of an industrial society. The essence of collective bargaining lies in the readiness of the two parties to a dispute to reach an agreement or mutually satisfying settlement. It is concerned about the emotions of the people involved in it as well as with the logic of their interest.

Features of Collective Bargaining. 1. 2. 3. 4. 5. 6. 7. 8.

It is group action as opposed to individual action & is initiated through representatives of workers. It is flexible & mobile, & not fixed or static. It is a two-party process. It is a continuous process. It is dynamic & not static. It is industrial democracy at work. Collective bargaining is not a competitive process but is essentially a complementary process. It is an art, an advanced form of human relations

Importance of Collective Bargaining  Improvement in the Conditions of Workers – Collective

bargaining has considerably helped in securing a wide variety of economic benefits for the workers in the form of higher wages, liberal allowances, fringe benefits, economic security, shorter hours of work, better terms & conditions of employment & physical working conditions. Collective Bargaining has helped workers in getting economic benefits & facilities,  Check on Autocracy in Industry – During early years of industrialization, the employers unilaterally determined the terms & conditions of employment of their workers. Hiring & firing of workmen was considered their prerogative. Collective bargaining has put an effective check on employers autocracy in regard to the laying down of terms & conditions of employment.

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Promotion of lasting industrial peace.- It has been seen that a lasting solution to the problems in an industry can be possible only when the parties have a say in reaching decisions. Collective bargaining provides this opportunity. The employer and workers are in the better position to understand and appreciate the problems and difficulties of each other. Collective bargaining enables the parties to settle their differences or disputes based on facts and realities of the situation. Favorable to managerial efficiency – Collective bargaining has also contributed towards improving managerial efficiency and solution of specific problems facing the management. Development of industrial Rules. – Successful conclusion of collective bargaining and incorporation of the terms in collective agreement lead to establishment of rules or standards to be observed by both the parties. Significant for society and economy.

NEED FOR COLLECTIVE BARGAINING 1.

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Collective Bargaining provides platform for mgmt & employees which places them at par so far as negotiations are concerned. Therefore, any outcome of the negotiation is perceived as mutually beneficial to each other & has better acceptability among them. It is a pragmatic & democrative process for regulating the terms & conditions of employment in which employees feel a part of decision making process. This feeling develops better understanding among them, increases trust & mutuality of interests with the organization.

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Because of development of better understanding between employees & mgmt, collective bargaining may be used to adopt a more flexible approach towards employment conditions in dynamic environment. Collective bargaining provides opportunity for speedy implementation of decisions regarding terms of employment as both parties are involved in decision making process. A participative decision making , particularly on issues of continuous nature, provides in-built mechanism for implementation of decisions.

Process of Collective Bargaining

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In Collective bargaining process following steps are involvedPreparation for Negotiation. Issues for Bargaining. Negotiation. Negotiated Agreement. Rectification of agreement. Implementation of agreement.

1. Preparation for Negotiation 

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Preparation for Negotiation in a collective bargaining is as important as the negotiation process itself. Up to 83% of the outcomes of the negotiations are influenced by pre-negotiation process. Such preparation is required both by mgmt as well as union. From mgmt side, pre-negotiation preparation is required as followsMgmt should decide when to open the negotiation; sometimes, it is advisable to open negotiation long before the expiry of previous settlement while, other times, fre3ash negotiation may start after the expiry of previous settlement. The mgmt must interpret the situation appropriately & make the decision. Mgmt must decide the representatives to negotiate at the negotiation table. These representatives should posses negotiating skills like, emotional balance, communicative & listening, flexible attitudes, empathy & knowledge of the issues involved in the bargaining. There should be analysis of the impact of various decisions which may emerge out of negotiations. 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.

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From the employees side, the preparation is required on the followingThe union should collect the facts about the financial position of the co. & its ability to pay. It must also be aware of the various practices followed by other co’.s in the same region or industry so that it takes a more realistic approach on various issues of bargaining. The union must assess the attitudes & expectations of the employees over various issues so that negotiation outcomes do not face resistance from them. It must also assess the likely stand that the mgmt may take over various issues so that the union can adopt suitable steps for more acceptable outcomes.

2. Issues for Bargaining 

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The 2nd step in bargaining process is the determination of issues which will be taken up for negotiation. Various issues which can be sorted out through collective Bargaining fall into 4 categoriesWage related issues- wage related issues include wage/salary revision, allowances for meeting increased cost of living like dearness allowances, overtime rates, financial incentives schemes, bonus etc. Supplementary Economic Benefits- These include such issues as pension plans, gratuity plans, paid vacations, paid holidays, lay-off pay, retrenchment compensation, health insurance plan etc. Institutional issues- These issues include the determination of rights & duties of employers, employees & trade union with a view that each group respects & protects the rights of others & performs its duties accordingly. Administrative Issues- These issues include determination of seniority, basis of promotion, employee discipline & discharge procedure, grievances procedure, employee health & safety measures, work rules, job security & job changes, training, technological changes etc.

3. Negotiation 

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When the first 2 steps are completed both parties engage in actual negotiation process at a time & place fixed for the purpose. There are 3 types of negotiation processHaggling bargaining- This is the oldest procedure of negotiation between labour & mgmt. in this method 2 approaches can be adopted; piecemeal approach & total approach. In piecemeal approach an issue can be taken, deliberated 7 decided without linking it to another. In this way, all issues are decided. In total approach all the issues are discussed but the item-wise decision is not arrived at, as no issues is settled independently. Every issue is kept open until the whole negotiating process is ready to crystallize into a total agreement.

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Boulwarism- In this method the co. itself takes an initiative to find out through comprehensive research & survey the needs of the employees. Based on the analysis of findings, the co designs its own package based on the issues of bargaining. Thereafter, a change is incorporated only when new facts are presented by the employees or their unions. Continuous bargaining -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.

4. Negotiated Agreement  When 2 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 formalized after its rectification by the respective organizations.

5. Rectification of Agreement  Rectification 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 rectification of agreement may be done by the appropriate managers authorized for the purpose in the case of mgmt, trade union executive or all the employees in the case of employees.  The agreement is in written form indicating the various issues settled . It usually consists of a preamble, a series of clauses & appendices giving details of items wherever required. It also includes the date from which it comes into operation & the period for which it will remain in operation, the mechanism of sorting out the differences over the interpretation of clauses & signatories to the agreement.

6. Implementation of Agreement  When the agreement is finalized, it

becomes operational from the date indicated in the agreement. The agreement must be implemented in terms of its letters & sprit by both the parties.

CAUSES FOR FAILURE OF COLLECTIVE BARGAINING 1. Attitude of management 2. Legal Problems. 3. Political Interference 4. Problem with Unions. 5. Problems from Governments

Employee Stock Option Plans (ESOP)  A plan established by a company whereby a certain

number of shares is reserved for purchase & issuance to key employees. Such shares usually vest over a certain period of time to serve as an incentive for employees to build long term value for the company.  Many companies use employee stock option plans to compensate , retain, & attract employees. These plans are contracts between a company & its employees that give employees the right to buu a specific number of the co’s shares at a fixed price within a certain period of time.  Employees who are granted stock options hope to profit by exercising their options at a higher price than when they were granted.