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Collective bargaining generally includes negotiations between the two parties







bargaining consists of negotiations between an employer and a group of

employees that determine the conditions of employment. Often employees are
represented in the bargaining by a union or other labor organization.
The result of collective bargaining procedure is called the collective bargaining
agreement (CBA).
Collective agreements are written documents regarding working conditions and
terms of employment concluded between an employer and the union.
The CBA maybe described in a number of ways. It is a compromise between the
self-interest of the two parties that they have agreed upon as a guide to their
relationships on certain matters for a specified period of time.
The contents of the agreement would depend on what is agreed upon and on
the subject matter. The following examples are of some general application:

The date of commencement of the agreement

Its duration - when it will terminate or may be terminated, and how it can
be terminated

A definition of terms which may otherwise be ambiguous

The procedure for settling disputes regarding interpretation, as well as

other disputes. This may also include the issue of trade union action and
lock-out, i.e. in what circumstances such action may or may not be

The consequences in the event of breaches of the agreement

As regards wages, exactly how conversion of employees' wages to the

new scales is to be effected.

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The contents of CBA vary considerably from plant to plant and from industry to
industry. Usually, they cover items relating to wages, working conditions, working
hours, fringe benefits and job security.
Legally, a CBA binds only the parties to it and the persons on behalf of whom
they were acting. It often happens that all workers in a given undertaking may
not belong to the union which signed the agreement or they are non unionized.
Therefore, in a number of countries the law provides for compulsory coverage of
agreements or settlements on employers and all the employees in an
establishment. The implementation and supervision of collective agreements, in
some countries, depends on the good faith of the parties. They are gentlemens
agreements without any legal sanction, for instance, in the United Kingdom.
In India, there are three types of agreements, namely
1. voluntary agreements,
2. settlements, and

Consent awards.

Collective agreements are voluntary when they are a result of direct

negotiations between the parties on themselves for their implementation.
Settlements are collective agreements that are backed by the interventions of
government agencies. Consent awards are agreements reached between the
parties when the matters in dispute are under reference to industrial tribunals/
CBA may be in the form of procedural agreements or substantive
Procedural agreements deal with the relationship between workers and
management and the procedures to be adopted for resolving individual or group
disputes. This will normally include procedures in respect of individual
grievances, disputes and discipline. Frequently, procedural agreements are put

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into the company rule book which provides information on the overall terms and
conditions of employment and codes of behavior.
Substantive agreement deals with specific issues, such as basic pay, overtime
premiums, bonus arrangements, holiday entitlements, hours of work, etc. In
many companies, agreements have a fixed time scale and a collective
bargaining process will review the procedural agreement when negotiations take
place on pay and conditions of employment.
When agreement is reached one of the following two courses may be adopted:
- Set out the agreement reached in a letter to the union and, on confirmation,
prepare a draft agreement.
- Alternatively provide the union with a draft agreement. This would be the better
course of action as the actual agreement reached will be clearer. It also leaves
less room for further negotiations between the time agreement is reached and
the draft agreement is approved.
The signing of an agreement does not ensure its successful implementation.
Managers and supervisors should be acquainted with the agreement through the
most appropriate means. A combination of written and oral communication is
often useful.
Trade Union Recognition
The existence of the freedom of association does not necessarily mean that
there would automatically be recognition of unions for bargaining purposes.
Especially in systems where there is a multiplicity of trade unions, there should
be some pre-determined objective criteria operative within the industrial relations
system to decide when and how a union should be recognised for collective
bargaining purposes. The accepted principle is to recognise the most
representative union, but what criteria is used to decide it and by whom may

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differ from system to system. In some systems the issue would be determined by
requiring the union to have not less than a stipulated percentage of the workers
in the enterprise or category in its membership. The representativeness may be
decided by a referendum in the workplace or by an outside certifying authority
(such as a labour department or an indepenedent statutory body). There could
be a condition that once certified as the bargaining agent, there cannot be a
change of agent for a prescribed period (e.g. one or two years) in order to
ensure the stability of the process.
Observance of Agreements
Especially in developing countries where there is a multiplicity of unions, unions
are sometimes unable to secure observance of agreements by their members.
Where a labour law system provides for sanctions for breaches of agreements,
the labour administration authorities may be reluctant to impose sanctions on









understandings reached through the collective bargaining process, the party not
in default would lose faith in the process.
Support of Labour Administration Authorities
Support by the labour administration authorities is necessary for successful
collective bargaining. This implies that they will:
Provide the necessary climate for it. For instance, they should provide effective
conciliation services in the event of a breakdown in the process, and even
provide the necessary legal framework for it to operate in where necessary, e.g.
provision for the registration of agreements, will not support a party in breach of
agreements concluded consequent to collective bargaining.
As far as is practicable, secure observance of collective bargaining agreements.
Provide methods for the settlement of disputes arising out of collective
bargaining if the parties themselves have not so provided.

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Good Faith
Collective bargaining is workable only if the parties bargain in good faith. If not,
there will be only the process of bargaining without a result viz. an agreement.
Good faith is more likely where certain attitudes are shared among employers,
workers and their organizations e.g. a belief and faith in the value of compromise
through dialogue, in the process of collective bargaining, and in the productive
nature of the relationship collective bargaining requires and develops. Strong
organizations of workers and employers contribute to bargaining in good faith,
because there would be some parity in the bargaining strength of the two
Proper Internal Communication
Both the management and union should keep their managers and members
respectively well informed, as a lack of proper communication and information
can lead to misunderstandings and even to strikes. Sometimes managers and
supervisors who are ill-informed may inadvertently mislead workers who work
under them about the current state of negotiations, the management's objectives
and so on. In fact, it is necessary to involve managers in deciding on objectives
and solutions, and such participation is likely to ensure greater acceptance - and
therefore better implementation - by them.
In recent years, in India as in almost elsewhere, collective bargaining has
faced the challenges stemming from falling trade union membership, increasing
individualization of labour relations and the difficult quest for greater
competitiveness and flexibility in a situation of economic globalization. In this
context, certain trends in India could be enumerated as follows:

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Coverage of collective bargaining is high in the formal sector and very low
portion of workers in the informal sector are covered by collective

Bargaining at the enterprise level is increasing

Other forms of bargaining and new issues

Bargaining in the public sector largely staying at the same level.

Other forms of bargaining like individual employer-employee bargaining,

work councils, bargaining on individual work contracts, bargaining directly
with workers representatives, work place consultations based on
performance targets etc. are on the increase.

The new issues in the bargaining are bankruptcy, equality, careerdevelopments, leisure time, evaluation systems etc. and overall the
issues covered in collective bargaining are broadening.


CB essentially means negotiations between the labour and management

CB should just not stop at the negotiations but also go on to be

implemented; otherwise the entire process of CB will be rendered futile.

It is mostly the formal sector that benefits out of the CB process.

Once both the parties know what they want, negotiations become easier
and better.

Obviously all the above mentioned conditions are required successful for
CB but the most essential among them is the good faith

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CB agreement is a written format and it is essential because that acts as

a legal framework and as a guide to their relationships on certain matters
for a specified period of time.

Today because of the weakening unions, collective bargaining is not

highly practiced, yet at the other end there are organisations which take
care of the workers well enough so that collective bargaining is not highly

Collective bargaining in India

In India, the workers working in the formal sector, who constitute only seven
percent of the total workforce are generally, in a position to gain from the
collective bargaining mechanism and the vast majority of the workers engaged in
the informal sector are largely untouched by this instrument in its standard form
for improvement of their terms of employment. Generally, all enterprises which
are either registered under the purview of any one of the acts like the Indian
Factories Act, 1948, Mines and Minerals (Regulations and Development) Act,
1957, Plantation Labour Act, 1951 the Companies Act, 1956 the Central/ State
Sales Tax Act, Shops and Establishments Acts of the State Governments are
defined as part of the organized sector. Also included are all government
companies, Departmental Enterprises and Public Sector Corporations. Also, all
workers in the agricultural sectors except those working in the plantations are
regarded as informal sector workers.
In India, Collective Bargaining and rise in Trade Unionism came into existence
mainly in the early 20 th century. The movement got impetus from Constitutional,
statutory and voluntary provisions. Article 19(c) of the Indian Constitution
guarantees freedom of association as a fundamental right. The Trade Unions
Act passed in 1926 provides for registration of Trade Unions of employers and
workers and in certain respects, it defines the law relating to registered Trade
Unions. It confers legal and corporate status on registered Trade Unions. The
Amendment to the Trade Unions (Amendments) Act, 1926 in 2001, enforced with

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effect from 9th January 2002 provides for reducing multiplicity of Trade Unions,
orderly growth of Trade Unions and promoting internal democracy.
In India, trade unions gained prominence much later only after 1900. In 1918,
Gandhiji - as the leader of the Ahmedabad textile workers advocated the
resolution of conflict through CB agreements.
But the idea gathered interest only after the Second World War.


Government of that time took steps like setting up of machinery for negotiations,
conciliation and arbitration. The trade union movement and also CB agreements
became popular after Indian independence.
Moving from agreements at the plant level, such agreements spread to
industries such as chemicals, petroleum, tea, coal, oil and aluminum. In ports
and docks, banking and insurance, collective agreements were arrived at, right
at the national level.
1. Use of contingency worker and employee leasing.
2. Technological changes
3. International forces- less expensive foreign worker.
4. Economic conditions
5.Heavily governed by its political forces and legal regulations

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