CONTENTS

STUDY ON COLLECTIVE BARGAINING AS AN EFFECTIVE TOOL FOR CONFLICT RESOLUTION

AASHNA GROVER

1. Introduction

2. Definitions

3. Purpose of Collective Bargaining

4. Importance of Collective Bargaining

5. Bargaining Process

6. Types of Collective Bargaining

7. The Bargaining Zone

8. Procedures in Collective Bargaining

9. The Case Study of Collective Bargaining

10. Summary & Conclusion

INTRODUCTION – WHAT IS COLLECTIVE BARGAINING?

Collective bargaining is a process of negotiations between employers and the representatives of a unit of employees aimed at reaching agreements that regulate working conditions. The results of collective bargaining, known as the Collective Bargaining Agreement (CBA), may include changes in wages, hiring practices, working conditions and hours, layoffs and termination procedures, and benefit programs. The agreements reached by this process vary in the extent of their influence. Contract negotiations may occur on the national level, or be confined to regional or local levels, depending on the structure of the industry involved. Collective Bargaining Agreements have been known as Enterprise Bargaining Agreements (EBA), consisting of an agreement between employers and groups of employees or unions. In either case, successful negotiations depend on the ability of representatives of both management and workers to work together harmoniously for the benefit of

all involved. Collective bargaining has the potential of reducing conflict through the resolution of labor disputes, and can promote workplace democracy and ensure the recognition and protection of the worker’s rights. It also helps promote a sense of freedom among workers and is essential to make them aware about their rights.

Collective bargaining is process of joint decision making and basically represents a democratic way of life in industry. It is the process of negotiation between firm’s and workers’ representatives for the purpose of establishing mutually agreeable conditions of employment. It is a technique adopted by two parties to reach an understanding acceptable to both through the process of discussion and negotiation.

ILO has defined collective bargaining as, negotiation about working conditions and terms of employment between an employer and a group of employees or one or more employee, organization with a view to reaching an agreement wherein the terms serve as a code of defining the rights and obligations of each party in their employment/industrial relations with one another.

Collective bargaining involves discussions and negotiations between two groups as to the terms and conditions of employment. It is called ‘collective’ because both the employer and the employee act as a group rather than as individuals. It is known as ‘bargaining’ because the method of reaching an agreement involves proposals and counter proposals, offers and counter offers and other negotiations.

Thus collective bargaining:

1.Is a collective process in which representatives of both the management and employees participate.

2.Is a continuous process which aims at establishing stable relationships between the parties involved.

3.Not only involves the bargaining agreement, but also involves the implementation of such an agreement.

4.Attempts in achieving discipline in the industry

5.Is a flexible approach, as the parties involved have to adopt a flexible attitude towards negotiations.

Typically, the employees are represented by a union. Collective bargaining actually begins with joining a union, agreeing to abide by the rules of the union, and electing union representatives. In general, experienced people from the union will assist the employees with putting together a draft of a contract, and will help them present their desires to the company. Numerous meetings between representatives of employer and employees will be held until the two can agree on a contract.

The term "collective bargaining" was first used in 1891 by economic theorist Sidney Webb. However, collective negotiations and agreements had existed since the rise of trade unions during the nineteenth century. However, it is only in the highly modernized and industrial world of today that this word has gained the kind of importance that it has. In short, collective Bargaining is :-

• Process of resolving labor- management conflicts

• Recognized way of creating a system of industrial jurisprudence

• Conducted by rules rather than arbitrary decision making

• Rules defines and restricts traditional authority exercised by employers

• The end result of collective bargaining – win-win situation

• Unionized workers well organized and represented

• Limitation for non unionized worker - fear of being labeled a trouble maker

HISTORY

Collective bargaining is a type of negotiation used by employees to work with their employers. During a collective bargaining period, workers' representatives approach the employer and attempt to negotiate a contract which both sides can agree with. Typical issues covered in a labor contract are hours, wages, benefits, working conditions, and the rules of the workplace. Once both sides have reached a contract that they find agreeable, it is signed and kept in place for a set period of time, most commonly three years. The final contract is called a collective bargaining

agreement, to reflect the fact that it is the result of a collective bargaining effort.

The roots of collective bargaining lie in the late nineteenth century, when workers began to agitate for more rights in their places of employment. Many skilled trades started using their skills as bargaining tools to force their employers to meet their workplace needs. Other workers relied on sheer numbers, creating general strikes to protest poor working conditions. Several labor pioneers started to establish a collective bargaining system so that labor negotiations could run more smoothly.

As the contract is being negotiated, general employees also have input on it, through their union officers. Thus, the agreement reflects the combined desires of all the employees, along with limitations that the employer wishes to see put in place. The result is a powerful document which usually reflects cooperative effort. In some cases, however, the union or the employer may resort to antagonistic tactics such as striking or creating a lockout, in order to push the agreement through.

For workers, collective bargaining is an excellent tool. Many workplaces benefit from unionization, which allows workers to speak together as a body to assert their rights. Employers also benefit from collective bargaining agreements, which set out clear expectations for both sides. The experience of collective bargaining can also be a learning experience for both sides of the discussion, as it encourages employers and employees alike to consider each other's positions.

DEFINITIONS

• Collective Bargaining is a process whereby employers and employees negotiate the conditions of employment’

• Collective Bargaining is a concept related to the relative abilities of parties in a situation to exert influence over each other’

• ‘Collective bargaining is an agreement under which two or more competitors in an industry come together to negotiate terms and conditions…….’

• ‘Collective bargaining is the type of negotiation in which the buyer and seller of a good or services dispute the price which will be paid and the exact nature of the transaction that will take place, will eventually come to an agreement’

• The procedure opted by employers and workers to reach a collective agreement regarding employment terms and rights and the duties of workers is known as collective bargaining. Collective bargaining aims to resolve issues pertaining to wages, working conditions, health and safety, and working hours of workers.

• The I.L.O. defines collective bargaining as “negotiations about working conditions and terms of employment between an employer, or a group of employers, or one or more employers' organizations, on the one hand, and one or more representative workers'

organisation on the other with a view to reaching agreement."

This definition confines the term collective bargaining as a means of improving conditions of employment. But in fact, collective bargaining serves something more.

Perlman aptly stated, “Collective bargaining is not just a means of raising wages and improving conditions of employment. Nor is it merely democratic government in industry. It is above all technique, collective bargaining as a technique of the rise of a new class is quite different ...... from the desire to displace or abolish" the "old ruling class"... ... to gain equal rights as a class ... ... to acquire an excessive jurisdiction in that sphere where the most immediate interests, both material and spiritual, are determined, and a shared jurisdiction with the older class or classes in all other spheres.

COLLECTIVE BARGAINING: PROS AND CONS OF COLLECTIVE

BARGAINING

The collective bargain concept has its own merits and demerits. Here are its key advantages:

It avoids unnecessary legal proceedings and the issue is sorted out of the Court. As we all are well aware legal proceedings are usually lengthy, tedious, and cumbersome and are sometimes not economically viable. It is at times like this that the notion of Collective Bargaining comes in handy.

It promotes worker’s democracy and worker’s participation in management. It also promotes their feeling of being a part of the Democratic process.

It helps in establishing harmonious relationship between employee and the employer. Strained Relations between Employer and Employee are not conducive to a good working atmosphere

It emphasizes on the interests and benefits of both parties while taking due care of both their welfare, claims and the economic interests of the company as well.

It eliminates unnecessary expenditure and avoids bitterness among involved parties.

Here are the few disadvantages of collective bargaining:

Increased wages and improved facilities for workers will indirectly result in high prices for goods and services.

Consumers are affected badly due to price rise; a process which they do not actively participate in. It is unfair to the consumers to have to pay for the strained ties between the employer and employee.

The collective bargaining process may not be fair at all times; the decision is often influenced by power and politics. As is seen is many cases today, actual problems are mostly overshadowed by the play of power and the onset of politics in the most mundane of matters. Economic Issues should be kept separate from Political ones.

In case of failure of the collective bargaining agreement, the immediate consequence is strike or lock-out which is not in the best economic interests of the company to which both parties belong.

PURPOSE OF COLLECTIVE BARGAINING

Two Key Purposes.

1.A discussion of the term and conditions of employment (for example, wages, working hours, leave, safety issues, job security, etc)

2.A consideration of the collective relation between both parties (for example, the right to organize workers, recognition of a Union, or a guarantee of no reprisals against the workforce, if a strike has occurred

IMPORTANCE OF COLLECTIVE BARGAINING

IMPORTANCE TO EMPLOYEES/WORKERS

1. Develops a sense of self respect and responsibility amongst the workers

2. Increases strength of the workforce, therefore increasing the bargaining capacity as a group

3. Increases morale and productivity of workers

4. Restricts management’s freedom from arbitrary actions against workers – unilateral actions by employers are discouraged

5. Effective collective bargaining machinery strengthens the Trade union movement

6. Increases worker’s motivation – approach management on various matters and bargain for higher benefits

7. Securing a prompt and a fair settlement of grievances

8. Provides a flexible feedback means for adjustment of wages, terms and conditions of employment, etc.

9. Chances for conflicts are reduced/minimized

IMPORTANCE TO EMPLOYERS

1. Easier for management to resolve issues at bargaining level – rather then dealing with individuals workers complaints

2. Tends to promote a sense of job security amongst workers – reduction in labor turnover

3. Opens channel of communication between workers and management – increases worker’s participation in decision making.

4. Plays a vital role in settling and preventing industrial relations.

IMPORTANCE TO SOCIETY

1. Leads to industrial peace in the industry/country

2. Results in establishment of a harmonious industrial climate

supports the nations effort toward economic and social development

3. Discrimination and exploitation of workers is constantly checked/monitored

4. Provides regulations - the terms/conditions of employment in the workplace

BARGAINING PROCESS

CORE STEPS

1. Preparation – gather facts/figures, research, is there a genuine reason for bargaining

2. Discuss – parties agree on ground rules

3. Propose – what are the possible options

4. Bargain – what if’s question, positioning strategy

5. Settlement – enter into an agreement

6. The Right to Strike- This right has been described ‘as an indispensable component of a democratic society’ and been ‘justified as a countervailing force to the power of capital’

THE BARGANING ZONE

• It is the range between one party’s minimum reservation point and the other party’s maximum reservation points

• Example : Case study -Wage negotiation for base salary for a BA graduate.

- Rs. 30,000 – employers initial offer

- Rs. 45,000 – graduates initial offer

- Rs. 40,000 – employer’s reservation point

- Rs. 35,000 – graduates reservation point

- The bargaining zone is between Rs.35,000 –Rs. 40,000

Case Study Findings

• It is a positive bargaining zone• The reservation points of both parties overlap• Bargaining has room to unfold

• Had the graduate’s minimum reservation point been greater than the employers reservation points (for example, Rs. 42,000)

• There is no room for bargaining, revisit BATNA

BARGAINING ALTERNATIVES

BATNA – or ‘best alternative to a negotiated agreement’

• Both parties must know what they will do if an agreement is not reached

• Requires both parties to understand their own interests in the situation

• Imperative that each party must achieve an understanding of what the other party values, even to the point of determining its BATNA

ZOPA – or ‘zone of possible agreement’

• Will only exists if there is potential agreement that could benefit the parties

DISTRIBUTIVE BARGAINING

1. DISTRIBUTIVE BARGAINING

- focus on ‘positions’ that the parties stake out or declare

- each party is trying to claim certain portion of the ‘pie’

- parties seeks to divide up the pie, aim is a win-loose situation

- meaning, one party may get more, another pay gets less because both parties have to draw from the same ‘pie’

- also called zero sum game because the pie over which the claims is made is constant

- a win-lose situation where one party’s gain is another party’s loss

The Hard Approach

- leads to competition, where each party seeks dominance

- parties will exert influence over each other

The Soft Approach

- may lead to accommodation – again one party takes the pie

- this approach may also result in the ‘pie’ being split equally between the parties

INTERGRATIVE BARGAINING

Integrative Bargaining – is negotiation that seeks one or more settlement that can create a win-win situation

- the parties tries to enlarge the available ‘pie’ rather than stake claims to certain portions of it

- also known as problem solving or interest-based negotiation

- the aim is to arrive at a mutual agreement that truly maximizes benefits to all parties

- approach seeks ways of satisfying the needs/interests of all parties

-compromise can also play a role in the integrative approach but it must have an enduring basis

- this is likely to occur when the compromise involves each party giving up something or something of perceived lesser personal value to gain something of greater value

- For example, one party may get the pie this time in return for the other party getting the one next time

Case Study – Collective Bargaining

I would like to mention the example of Pawan Hans Helicopters Ltd; as a case study; where my mother is working and she explained me the case of Collective Bargaining taken/followed up by the respective union. The Union had submitted its ----- Log of Claims & demands immediate negotiation.

The Union’s log of claims was as under:-

- 10% increase on basic salary, effective 1 st

April, 2010

- 10% increase on ALL allowances, effective 1 st

April, 2010

Discussions:- The factors or criteria which have been discussed are pay increases include enterprise profit, job evaluation, seniority, cost of living, manpower shortage or surplus,. Further, though wage rates negotiated through collective bargaining do reflect wage differentials based on skills, such differentials have not been geared to the encouragement of skills acquisition and application. Output An Agreement is signed.

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.Benefit of collective Bargaining:- In fact, public employees without collective bargaining rights frequently have more protection against arbitrary and unjust employer action than do private employees with such rights. The reality of collective bargaining is that it is essentially a bilateral process, whereas public policymaking is a multilateral process accessible to all taxpayers on equal terms.

POSITION OF COLLECTIVE BARGAINING IN INDIA

Collective Bargaining machinery essentially is a reflection of a particular social and political climate. The history of the trade union movement shows that union are affiliated to one or the other political parties. As a result most of the trade unions are controlled by outsiders. Critic says that the presence of outsiders, is one of the important reasons for the failure of collective bargaining in India.

a. Outsiders in the Process of Collective bargaining:-

The Trade Unions Act, 1926, permits outsiders to be the office bearers of a union to the extent of half the total number of office bearers. So, it permits one to be the leader of the union who does not actually work in the industry. Sometimes a dismissed employee working as a union leader may create difficulties in the relationship between the union and the employer. Nevertheless, experience shows that outsiders who have little knowledge of the background of labour problems, history of labour movement, fundamentals of trade unionism and the technique of the industry and with even little general education assume the charge of labour union and become the self-appointed custodian of the welfare of workers. The employers, therefore, have been reluctant to discuss and negotiate industrial matters with outsiders, who have no personal or direct knowledge of day to day affairs of the industry.

Accordingly employees refuse recognition to the unions which are either controlled by the politicians or affiliated to a particular political party or controlled by a particular individual. Government cannot morally compel employers to accord recognition to unions without driving out the politicians from them. The State must outright

ban "outsiders" from the trade union body. Further, provision for political funds by trade unions should be eliminated, since it invariably encourages the politicians to prey upon them. The National Commission on Labour has overlooked this aspect. The Commission does not favour a legal ban on non-employees for holding the union office. It says that without creating conditions for building up the internal leadership, a complete banning of outsiders would only make unions weaker. The Commission hopes that Internal leadership would develop through their education and training. Accordingly the Commission suggests proportion of the outsiders and the workers in a union executive. On realising the problems of outsiders in the Union, the Industrial Relations Bill, 1988 proposes to reduce the number of outsiders to two only.

b. Politicization of Trade-Union Movement in India:-

It is well known that the trade-union movement in India is divided on political lines and exists on patronage of various political Parties. Most of the trade-union organizations have aligned themselves with a political party with whom they find

themselves philosophically close. It is because of this that the Indian National Trade Union Congress is considered to be the labour wing of congress, whereas H.M.S. is considered to be the labour wing of Socialist party. Bhartiya Majdoor Sangh pledges its allegiance to B.J.P. and C.I.T.U. has the support of C.P.I. (M). It is also the case with the AITUC which had started as a national organization of workers but subsequently came to be controlled by the Communist Party of India and is now its official labour wing. Political patronage of trade-unions has given a new direction to the movement whose centre of gravity is no longer the employees or workmen. The centre has shifted towards it leadership whose effectiveness is determined by the extent of political patronage and the consequent capacity to obtain the benefit. This shifting centre of power is the necessary consequence of political parties search for workers votes, which they seek by conferring benefits on them. Since the public sector which is really the instrumentality of the State, has emerged as the biggest employer in this country, the collective bargaining -between the union patronized by the party-in-power and the employer has become an important methodology. It is because of this process that agreements

conferring benefits are signed even in those units where financial losses are mounting. It is also our experience that in spite of wage increase end improved conditions of service; there has been no corresponding improvement in production or the productivity. Also, most of the losses are being passed on to the consumers by increasing prices of the products. It is in this context that Justice Gupta has, in his, 'Our Industrial Jurisprudence" made the following observations: “If our experience is any guide, it reveals that Level of increase in wages etc., (in public sector undertaking )is now decided by the Bureau of Public Enterprises which takes into consideration only the Political impact and 'Consumer resistance' as two dominant factors. This is the reason why the prices of almost all products of necessity like coal, iron and steel, cement, sugar etc. have been constantly increasing. A survey of pending and decided industrial disputes of the last 10 years reveals that there was virtually no industrial dispute regarding wage structure or bonus in any industry of some significance.

There are also not many collective bargaining agreements which have tried to link wages with productivity. Clearly, therefore, the basic idea of

‘sharing the prosperity' which developed because of our commitment to the cause of 'social justice' is no longer current and the expected end product of the process of ' social justice ' is no longer expected. "

The process of collective bargaining is not likely to succeed unless the threat of strike/lockout is there in the back-ground. Strike and lock-out are the weapons used by both the parties daring the collective bargaining process. Without having these weapons at hands, neither of the party to the dispute can defeat the claim of the other. The peculiar feature of our country while compared to the advanced nations of the world is that the economic conditions of the workers is very poor and as a result they cannot afford a long-standing strike.

SUMMARY & CONCLUSION

• CB is one of the important functions of both Employers and Unions

• CB is best described as a process of resolving labor- management conflicts

• The process allows the employees and the employers to negotiate the terms and conditions of work/relationship building

• Creates an opportunity for dialogue and resolve common issues of interests/concerns to both parties

• Explored purpose & importance of Collective Bargaining

• Aim is maintaining industrial peace at the workplace

• Building & sustaining long term relationship• Distinct features of Integrative & Distribute

Bargaining• Distinction between BATNA and ZOPA• A useful tool, should be encouraged at ALL

levels of the enterprise• Procedures in Collective Bargaining is

contained in the Code of Ethics for Bargaining .