Collective Bargaining | Commerce & Accountancy Optional Notes for UPSC PDF Download

Introduction 

Collective bargaining is the negotiation process occurring between workers or laborers and their employers concerning the terms outlined in their contracts. Often, laborers are represented by a trade or labor union during these negotiations. The primary objective is to address the demands and rights of the laborers, including aspects like working hours, salaries, and working conditions. This method of resolving industrial disputes has brought about a significant transformation in labor relations across Indian industries, encompassing both private and public sectors. Given the inevitability of conflicts in the realm of commerce and business, relying solely on courts for dispute resolution is impractical. Consequently, collective bargaining has emerged as a viable and effective alternative for adjudicating industrial disputes.

What is collective bargaining 

Definition

• As per Article 2 of the Collective Bargaining Convention, 1981 (No. 154) of the International Labour Organisation, collective bargaining encompasses all negotiations involving an employer, a group of employers, or one or more employers' organizations on one side and one or more workers' organizations on the other.
  These negotiations aim at:
  (a) Establishing working conditions and terms of employment; and/or
  (b) Regulating relations between employers and workers; and/or
  (c) Regulating relations between employers or their organizations and workers or workers' organizations.
• The introduction of collective bargaining was a transformative development for laborers, as highlighted in the Ram Prasad Viswakarma v. Industrial Tribunal (1961) case. Before its advent, negotiating contract terms and conditions was challenging for laborers. Trade unions played a crucial role in making collective bargaining a standard practice, offering a more convenient avenue for employers to negotiate with labor representatives rather than individual workers.
• In the Bharat Iron Works v. Bhagubhai Balubhai Patel (1976) case, it was emphasized that collective bargaining is integral to the modern concept of the welfare State. Practicing it in a healthy manner fosters mutual cooperation between employers and employees. Negotiations between management and trade unions play a pivotal role in reaching settlements on various issues.

Aims of collective bargaining 

The objectives of collective bargaining encompass:

• Upholding Industrial Democracy: Collective bargaining aims to promote and sustain industrial democracy by facilitating negotiations between employers and workers or their representatives. This process ensures that decisions affecting the workforce are made collaboratively.
• Ensuring Equality and Justice for Socially and Economically Backwards Groups: Collective bargaining seeks to address social and economic disparities by advocating for equality and justice within the workplace. It aims to create a fair and inclusive environment, especially for groups that may be socially or economically disadvantaged.
• Protecting the Working Class from Exploitation: One of the key goals of collective bargaining is to shield the working class from exploitation. It achieves this by establishing fair and reasonable terms of employment, preventing unfair labor practices, and ensuring that workers are treated justly.
• Meeting the Legitimate Expectations of Labourers Regarding the Work They Have Undertaken: Collective bargaining aims to fulfill the legitimate expectations of laborers concerning the work they perform. This involves negotiating terms and conditions of employment that meet the reasonable expectations and needs of the workforce.

Advantages of collective bargaining 

The advantages of collective bargaining include:

• Enhanced Negotiating Power Through Group Representation: Employees, when united as a group or through a trade union, can effectively articulate their demands and negotiate with employers. The collective voice of a unified large group or union makes it more challenging for employers to disregard their requests compared to individual employees.
• Improvement in Workplace Conditions: Collective bargaining contributes to the enhancement of workplace conditions for employees. Through negotiations, workers can secure improvements in various aspects such as wages, working hours, and safety measures.
• Clarity in Rights and Obligations: The process of collective bargaining brings about clarity in the rights and obligations of both employers and employees. Through negotiations, agreements are reached, outlining the terms and conditions of employment, which helps in fostering a transparent working relationship.

Disadvantages of collective bargaining 

The drawbacks of collective bargaining include:

• Lengthy and Complicated Process: The negotiation process between employee unions and employers is often prolonged and intricate. Both parties engage in back-and-forth discussions, leading to a time-consuming procedure that requires them to take breaks from their regular work.
• Interunion Rivalry: The presence of multiple trade unions in India poses a challenge to the effectiveness of collective bargaining. Interunion rivalry can hinder negotiations for improved working conditions as unions may prioritize their interests over the collective welfare.
• Political Influence on Trade Unions: Many trade unions have affiliations with or are influenced by political parties. In such cases, the political agenda may impact the demands made by trade unions, potentially diverting the focus from the workers' needs.
• Uncertainty in Union Representation: Determining which union accurately represents the employees can be challenging, leading to ambiguity in negotiations and potential conflicts.

Indian statutes and case laws recognizing collective bargaining

Industrial Disputes Act, 1947

The Industrial Disputes Act of 1947 was enacted to regulate the resolution of industrial disputes, and Section 18 emphasizes that settlements through agreements between employers and employees, other than conciliation, are binding. This highlights the acknowledgment of dispute resolution through collective bargaining. The Supreme Court in the Karnal Leather Karamchari Sanghatan v. Liberty Footwear Company (Regd.) and Ors. (1990) case emphasized the Act's aim to achieve social justice through collective bargaining. The court asserted that arbitration falls under statutory tribunals, emphasizing the importance of workers actively participating in the process.

Trade Union Act, 1926 

The Trade Union Act of 1926 focuses on the registration, rights, liabilities, and immunities of trade unions, serving to regulate relationships between employers and employees. The D.N. Banerjee v. P.R. Mukherjee (1952) case highlighted the role of trade unions in settling disputes, emphasizing the strength of unity and the resultant collective bargaining.

The Industrial Employment (Standing Orders) Act, 1946

The Industrial Employment (Standing Orders) Act of 1946 defines "standing order" as rules related to various employment matters. The Act mandates employers to submit the draft of standing orders to the Certifying Officer, who acts as a negotiator, involving both employers and employees in the process. This underscores the application of collective bargaining in framing standing orders.

The Constitution of India, 1950

The Constitution of India, adopted in 1950, supports the concept of collective bargaining. Article 19 allows citizens to form associations, including trade unions. Article 43A empowers the state to enact laws encouraging workers' participation in management. These constitutional provisions further justify and support the practice of collective bargaining in labor relations.

Stages of collective bargaining 

The following are the stages that the process of collective bargaining typically goes through: 

• Forming a Union:
  • According to Section 9A of the Trade Unions Act, 1926, a trade union can be formed with a minimum of seven employees.
  • Although registration is not compulsory, it offers advantages like adequate representation, specific fund utilization, and immunity from civil suits.
• Making a Charter of Demands:
  • Either the union or the employer can initiate collective bargaining.
  • The trade union engages in discussions among its members to draft a charter of demands.
• Negotiation:
  • The negotiations commence with the submission of the charter of demands.
  • The union typically presents proposals for changes, and the management responds with counter-proposals until an agreement is reached.
  • If an agreement seems impossible, a third party may be appointed as a mediator or arbitrator.
• Forming an Agreement:
  • When negotiation is successful, the management and the union create a written agreement known as a collective bargaining agreement.
• Strikes:
  • If negotiations fail, the union may declare a strike, following the regulations outlined in Section 22 of the Industrial Disputes Act.
  • Public utility sector employees, for example, must provide a six weeks' notice before striking.
• Conciliation:
  • The conciliation process starts when a notice of strike is received by the conciliation officer.
  • Two alternatives exist: the state government may appoint a conciliation officer for investigation, mediation, and settlement during a cooling-off period, or a Board of Conciliation may be appointed.
  • Strikes are not permitted during conciliation, as outlined in Sections 22 and 23 of the Industrial Disputes Act.
  • The process concludes with a settlement, a reference to an industrial tribunal or labor court, or with no resolution.
• Arbitration or Adjudication by Industrial Tribunals or Labour Courts:
  • In case conciliation fails, parties may opt for voluntary or compulsory arbitration, with the arbitrator's recommendations being binding.
  • Section 7A of the Act allows for labor courts or industrial tribunals within a state to adjudicate disputes.
  • Section 7B permits the constitution of national tribunals for disputes involving national interest, and parties may refer cases to these tribunals by a written agreement.

Collective bargaining agreements

A collective bargaining agreement is a crucial legal document, written and formalized between an employer and a trade or labor union representing employees. It marks the culmination of the negotiation process between the employer and the union or workers, representing a significant milestone in collective bargaining.

Types of collective bargaining agreements

In India, three main types of collective bargaining agreements exist:

• Bipartite or Voluntary Agreement:
  • Bipartite agreements arise from voluntary negotiations during the collective bargaining process.
  • As per Section 18 of the Industrial Disputes Act, these agreements are binding on the involved parties.
  • Such agreements are reached through mutual consent between the employer and the union.
• Settlement:
  • Settlements are agreements with a tripartite character, involving a third party in the negotiation process.
  • A conciliation officer assists in reaching the agreement between the employer and employees. If there is a potential for settlement during conciliation, the officer withdraws, allowing the parties to examine the terms and report back within a specified period.
  • This type of agreement is facilitated with the assistance of the conciliation officer and signifies the resolution of the dispute.
• Consent Award:
  • In cases where a dispute is pending before a compulsory adjudicatory authority, parties can engage in negotiations.
  • The resulting agreement from these negotiations is incorporated into the authority's award, giving it binding force.
  • This type of agreement is formed despite the ongoing adjudication process and adds a negotiated aspect to the authority's final decision.

Elements of a collective bargaining agreement

A collective bargaining agreement (CBA) typically encompasses various clauses that define the terms and conditions governing the relationship between employees represented by trade unions and employers.
The key elements or clauses found in a collective bargaining agreement include:

• Duration of the Settlement: Specifies the time frame during which the terms of the agreement are valid. CBAs often have a fixed duration, and parties may renegotiate or renew the agreement at the end of this period.
• Settlement Terms: Details the terms related to wages, benefits, leaves, working hours, rest hours, allowances, concessions, and any other relevant employment conditions. This section outlines the specifics of the agreement on these crucial matters.
• Conditions Regarding Strikes: Defines the conditions under which strikes or work stoppages are permitted or prohibited. It may include provisions for notice periods, dispute resolution mechanisms, and restrictions on certain types of strikes.
• Obligations of Employees: Outlines the responsibilities and expectations placed on the employees covered by the agreement. This may include adherence to work schedules, productivity expectations, and compliance with workplace policies.
• Obligations of Management: Describes the responsibilities and commitments of the employer or management. This may include providing a safe working environment, adherence to employment laws, and addressing concerns raised by employees.
• Penalties for Non-Compliance: Specifies the consequences or penalties for both employees and management in the event of non-compliance with the terms of the agreement. This could include disciplinary actions, fines, or other measures to enforce adherence.
• Dispute Resolution: Establishes procedures for resolving disputes that may arise during the term of the agreement. This could involve mechanisms such as negotiation, mediation, arbitration, or other agreed-upon methods to address conflicts without resorting to legal action.

Conclusion 

In Conclusion, the collective bargaining agreement represents a crucial outcome achieved through negotiations between employers and employees engaged in the collective bargaining process. It serves as the primary means for resolving disputes, being the initial recourse for both employers and unions. Formed through successful voluntary negotiations, this agreement facilitates the resolution of conflicts without resorting to legal interventions, simplifying and streamlining negotiations with employers.