Collective Bargaining : Meaning, Working, Objectives, Types and Examples

What is Collective Bargaining?

The negotiation regarding the employment terms between an employer and its workers is termed ‘Collective Bargaining’. The employer and the representatives of the employees agree to certain terms and conditions regarding the various terms of employment. The representatives of the employees belong to certain trade unions. The terms of employment under negotiation in collective bargaining include employee working conditions, salaries, wages, incentives, compensations, benefits, working hours, etc. The main objective is to agree with both parties via a written contract in collective bargaining. According to the International Labour Organization (ILO), collective bargaining is essential for all employees.

Geeky Takeaways:

• Collective bargaining is an approach through which employers and employees sign a contract regarding the terms of employment.
• This voluntary process takes place between the management of the company (employer) and the trade union (representatives of the employees).
• The main objective is to agree with both parties via a written contract or agreement in collective bargaining.
• Different forms of collective bargaining comprise composite concessionary, integrative, distributive, and productivity.

How does Collective Bargaining Work?

1. A Fundamental Right: As per the International Labour Organization (ILO), collective bargaining is an important right given to all employees to put up their grievances in front of their employer and come up with plausible solutions that both parties agree to. Collective bargaining brings equality and harmony in the workplace and protects the employees.

2. Negotiation Process: In collective bargaining, the management of the organization and trade union leaders negotiate certain agreements related to the terms of employment such as salaries and wages, benefits and incentives, working conditions, and hours worked. Both parties bring their offers to the negotiating table, and through discussions and concessions, they hope to arrive at a solution that will satisfy both of them.

3. Who Presents in the Negotiation: Usually, employees choose leaders, generally from trade unions, to negotiate on their behalf. During discussions, these representatives serve as a united voice for the workforce’s interests and concerns. Employers, on the other hand, designate delegates, such as human resources or management staff, to participate in talks and decide on behalf of their organization.

4. Collective Agreement: A collective bargaining agreement (CBA), which is a legally binding contract that specifies the terms and conditions of employment for the covered workers, is the result of successful talks. Establishing the rights and obligations of employers and employees is essential to promoting a stable and harmonious labor-management relationship within the corporation.

Objectives of Collective Bargaining

1. Remuneration Negotiation: One of the prime objectives of collective bargaining is to negotiate and determine fair wages and benefits for employees.

2. Working Conditions: Collective bargaining aims to improve and establish favorable working conditions, including issues such as working hours, safety standards, and other workplace policies.

3. Employment Terms: It seeks to negotiate and determine employment terms, such as contracts, job security, and grievance procedures, to ensure fairness and stability for workers. or employees.

4. Resolution of Disagreements: Collective bargaining helps in resolving conflicts between employers and employees through negotiations, reducing the likelihood of strikes or other disruptive actions.

5. Rights of the Employees: It focuses on securing and protecting the rights of workers, for example, the right to organize, collectively bargain, and engage in other concerted activities.

6. Productivity and Efficiency: By addressing issues like training, technology adoption, and efficiency improvements, collective bargaining aims to enhance overall productivity within the workplace.

Scope of Collective Bargaining

The following lists out the scope of collective bargaining applicable in any negotiation between the employer and employee.

1. Negotiation Power: Collective bargaining provides workers with a unified front, increasing their bargaining power when negotiating with employers.

2. Payments and Benefits: The negotiations are based on wages or salaries, benefits, and working conditions, to secure favorable terms for the employees.

3. Working Conditions: It addresses issues about the working hours, safety standards, and other conditions to ensure a fair and conducive work environment. The workers need to feel safe and secure while working for the organization.

4. Conflict Resolution: Collective bargaining serves as a procedure for resolving disputes between management and the workers of an organization, fostering a collaborative approach to conflict resolution.

5. Job Security: The negotiations also comprise discussions on job security and layoffs with the motive to protect workers from unfair terminations.

6. Rights of the Employees: In the discussions certain issues such as job role and responsibilities, promotions, and disciplinary actions might be addressed to safeguard the rights of employees.

7. Efficiency and Productivity: From collective bargaining, employers and employees can agree to certain conditions that would boost productivity and efficiency, benefiting both the employer and the employees.

8. Legally Binding: This agreement ensures that the contracts adhere to legal regulations and compliance, building a framework for fair and lawful employment practices.

Collective Bargaining Steps

Collective bargaining is a deep-level discussion between the employer and employee where offers and counteroffers continuously flow from both sides. However, the ultimate goal of this negotiation is to reach a mutual agreement. There are certain steps that the collective bargaining follows:

1. Recognizing the Problems and Organizing the Demands: This involves compiling a list of complaints, such as inadequate pay or harsh management techniques.

2. Negotiating: Professional negotiators can be hired by the trade unions to try to agree with the employer. The employer will also send negotiators, and the meetings between the two parties won’t end until a mutually agreeable solution is reached.

3. Reaching a Temporary Agreement: Upon reaching a consensus, the negotiating parties will present the agreement to their respective constituencies. In the meantime, any last-minute concerns would be brought up while the details are worked upon.

4. Approving and Endorsing the Agreement: The detailed contract would be presented to the union members, who have the power to either vote for or against the new agreement.

5. Monitoring the Agreement: After the contract is finalized and signed by both parties, representatives would monitor whether the agreed parties are abiding by the obligations or not.

There are certain instances where the parties are not able to reach a consensus. If the negotiation time doesn’t come to an agreed terms and conditions, the union leaders ask the employees to go on strike until the demands are fulfilled. On the other hand, if the employers can accept the terms and conditions, they can temporarily shut their employees until a mutual agreement is reached. In this case, the employees can put up a protest.

However, most employers and employees do not go to such levels as those are extreme cases. Both the parties mutually agree upon the laid-out contract.

Collective Bargaining Laws

Laws governing collective bargaining govern the negotiations that take place between labor unions and employers. These rules usually spell out the rights and responsibilities of each party throughout the negotiation process, including the need to bargain in good faith. They might also cover topics including unfair labor practices, union formation and recognition, and the processes involved in negotiating and carrying out collective bargaining agreements. Collective bargaining rules are intended to ensure fair working conditions and compensation for employees while taking into account the legitimate interests of employers. They are implemented in many nations to promote a peaceful and equitable resolution of labor disputes. Jurisdiction-specific requirements differ, however adherence to these legal requirements is necessary to preserve a steady and fruitful labor-management partnership.

Types of Collective Bargaining

Collective bargaining can take different forms depending on the parties involved and the issues negotiated. The below list of the types of collective bargaining:

1. Distributive Bargaining: This type involves a fixed amount of resources that parties need to divide among themselves. It’s often a zero-sum game, where one party’s gain is the other’s loss. Wage negotiations are a common example, where employees seek higher pay, and employers aim to control labor costs.

2. Integrative Bargaining: Unlike distributive bargaining, integrative bargaining creates a “win-win” situation. The objective is to expand the resources available so that both parties can benefit. Collaborative problem-solving and creative solutions are encouraged to address the interests and needs of both parties involved.

3. Composite Bargaining: Composite bargaining is also known as pattern bargaining. This occurs when negotiations cover multiple issues, and agreements on one issue set a pattern for the others. It allows for a comprehensive approach to bargaining, where resolution on one aspect may influence or guide the resolution of other related issues.

4. Concessionary Bargaining: Concessionary bargaining means coming to a concession in the negotiation process. It is centered on union leaders agreeing to give up something in return for job security. This is typical during a recession or other downturn in the economy. Union leaders may consent to forgo some perks to ensure the longevity of the workforce and, eventually, the company.

5. Productivity Bargaining: The primary issues of discussion in this kind of negotiation are employee productivity and compensation. Trade union leaders frequently use increased pay and benefits to encourage worker productivity, which increases the company’s value and profits. To maximize output, both sides must come to an understanding of financial terms for this type of negotiation to be successful.

Advantages of Collective Bargaining

1. Improved Working Conditions: Collective bargaining often leads to agreements that enhance working conditions, and also include better remuneration, overtime pay, benefits, working hours, and vacation time.

2. Stability and Peaceful Labor Relations: By providing a structured and standard platform for negotiations, collective bargaining can contribute to stable and peaceful labor relations, reducing the likelihood of strikes or other disruptive actions.

3. Employee Empowerment: This negotiation strategy offers employees a collective voice and bargaining power, allowing them to actively participate in decisions that affect their workplace.

4. Increased Productivity: When agreements address employee concerns and needs, it can foster a more satisfied and motivated workforce, potentially increasing productivity.

Disadvantages of Collective Bargaining

1. Rigidity: Collective bargaining agreements may introduce inflexibility into the employment relationship, making it challenging for employers to adapt to changing business conditions.

2. Conflict and Strikes: Failed negotiations or disputes during the bargaining process can lead to strikes or halt in work, disrupting operations and causing financial losses for both parties.

3. Costs: Meeting the demands of collective bargaining agreements, such as higher wages and benefits, can increase labor costs for employers, impacting profitability.

4. Inequality: Not all employees may benefit equally from collective bargaining, as the negotiated terms may favor certain groups or seniority-based structures, potentially leading to inequality among workers.

5. Time-Consuming: Sometimes the negotiation discussion might take a longer period such as weeks or months. It is hence also known as a drawn-out process.

Criticisms of Collective Bargaining

Critics of collective bargaining often raise several concerns. The following are some of them:

1. Collective bargaining can lead to inefficiencies by rigidly fixing wages and working conditions, potentially hindering productivity and innovation.

2. It may create a disconnect between individual performance and compensation, as collective agreements often treat all workers within a group equally.

3. Sometimes, critics also contend that unions, which play a central role in collective bargaining, may sometimes prioritize the interests of their members over broader economic considerations.

4. Further, critics argue that collective bargaining can lead to labor market distortions, making it difficult for employers to respond flexibly to changing economic conditions.

Example of Collective Bargaining

In the year 2021, the workers of John Deere tried to negotiate a favorable agreement with the manufacturer of farming machinery. However, during the epidemic of Covid-19, when John Deere had higher profits, the workers believed that they had the right to higher pay and retirement benefits compared to the initial offer by the organization.

Finally, the employees rejected the initial tentative agreement and went on a strike against the organization. In 2021, on October 14th, the workers started protesting in the John Deere factories and headquarters, leading to a tense situation for the farm companies. A lot of pressure and tension was created among the organization by the workers, politicians, and also the public, after which John Deere agreed to bring up a new contract that met most of the workers’ demands. On November 21st, 2021, the month-long strike ended.

Frequently Asked Questions (FAQs)

1. What is the main goal of collective bargaining?

Answer:

The primary goal of collective bargaining is to come to a mutual agreement on terms of employment between both the parties (employer and representatives of the employees). This the collective bargaining agreement or contract which comprise employement working conditions and terms that are beneficial for both the involving parties.

2. Is collective bargaining illegal?

Answer:

No, collective bargaining is not illegal. As per the International Labour Organization (ILO), employees have the right to form trade union groups to represent them and work for their interest and demands. There are leaders of these groups who negotiate the employement terms with the employers and come to a mutually agreed upon contract.

3. What are the stages of collective bargaining in India?

Answer:

There are different stages namely: Charter of demands, Negotiation, Collective bargaining agreement, Strikes, Concillation and finally complusory arbitration or adjudication by Labour courts, Industrial tribunals and National tribunals.

4. Who can participate in collective bargaining?

Answer:

Except the managers, superintendents, and person who are employed in a position relating to labour relations or who exercise management functions, remaining all the employees has the right to participate in collective bargaining and other lawful activities conducted by the trade unions and be a member of the union.

5. Is it possible for wage rates and other working conditions to be changed during collective bargaining?

Answer:

During collective bargaining, until and unless a collective agreement has been signed or the parties are in a strike or lock-out position, the wages rates, benefits, working conditions and other rights must remain the same, with the condition that the parties should agree.