Collective bargaining is a method to determine working conditions and terms of employment through negotiations. Negotiations take place between ’employers’ organizations and one or more workers’ organizations. Negotiations process helps to reach an agreement. Collective bargaining is considered as an economic institution and trade unionism by forming a labour cartel restricts the entry of business into the trade.
This theory of Industrial Democracy was advocated by Webbs or Sidney and Beatrice Webb in 1987. Alan Flanders (1975) discarding this concept advocated that collective bargaining is basically political as it aims to protect dignity rather than economic interest. Marxist school considers collective bargaining as a means of social control.
The marketing concept considers collective bargaining process as a constitutional system to determine relations between management and trade unions. Finally, the concept of industrial relations views collective bargaining as a system of ‘industrial governance’.
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In practice, however, we do not consider any theoretical distinction. All these theories converge on three basic issues, which define collective bargaining. It is (i) a means of contract for the sale of labour, (ii) a form of industrial government and finally (iii) a system of industrial relations.
International Labour Organization (ILO) defines the term ‘collective bargaining’ as ‘negotiations about working conditions and terms of employment between an employer, a group of employers or one or more employers’ organizations, on the one hand and/or more representatives of workers organization, on the other hand, with a view to reach an agreement.
In collective bargaining, the object is to arrive at an agreement on wages and other conditions of employment about which the parties start with divergent view points, but ultimately attempt to make a compromise. As soon as the bargain is made, the terms of agreement are put into operation. On the other hand, the major task of the latter relates to the sharing the information and suggestions with regard to issues of common interests including health, safety, welfare and productive efficiency.
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Mary Sur observes that collective bargaining starts with claims advanced by both sides—demands from the union and statements by the management on how far they can concede these demands and what they want in return. It is just the way the bazaar vendor and buyer start by quoting prices which are at variance, each knowing that he will have to make some accommodation in the end in order to reach a final agreed price.
According to Encyclopedia of Social Sciences, ‘Collective bargaining is a process of discussion and negotiation between two parties, one or both of whom is a group of persons acting in concert. The resulting bargain in an understanding as to the terms and conditions under which a continuing service is to be performed … More specifically, collective bargaining is a procedure by which employers and a group of employees agree upon the conditions of works’.
The most comprehensive definition of collective bargaining has been provided by Trade Unions and Labour Relations (Consolidation) Act 1992 (TULRCA 1992), Section 178 (1) and (2) of U.K. Employment Law Programme. It is a negotiation connected with one or more of the following:
(a) Terms and conditions of employment or the physical conditions in which any workers are required to work
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(b) Engagement or non-engagement, or termination or suspension of employment or the duties of employment of one or more workers
(c) Allocation of work or the duties of employment between workers or groups of workers
(d) Matters of discipline
(e) A worker’s membership or non-membership of a trade union
(f) Facilities for officials of trade unions,
(g) Machinery for negotiation or consultation and other procedures, relating to any of the above matters, including the recognition by employers or employers’ associations of the right of a trade union to represent workers in such negotiation or consultation or in the carrying out of such procedures
Important assumptions to achieve a stable collective bargaining:
(a) Though employers and employees have different interests, these differences are not irreconcilable. Instead, they are somewhat the same as the difference between buyers and sellers in general. Therefore, through bargaining, a deal can be cut, which sets the price and regulates the conditions under which employees sell their labour
(b) Each side accepts the legitimacy of the other and its right to survive
(c) The sides are roughly equal in strength; otherwise, one side will dominate rather than bargain with other
(d) The union legitimately represents the interests of all of those it claims to represent (a claim sometimes questioned by women and members of minority groups).
(e) Both parties are willing to negotiate seriously with the aim of reaching agreement
(f) If agreement cannot be reached, it is legitimate for either side to exert economic pressures (even as strike or lockouts) in order to induce the matter to make concessions. This type of pressure, which is usually regulated by law or the accepted rules of fair play, differs among countries
(g) The government plays only a limited direct role in bargaining.