Indian Laws

Collective Bargaining: Concept, Importance And Pre-Requisites.

The phrase, collective bargaining was first coined and used by Sydney and Beatrice Webb in their celebrated treatise on ‘History of Trade Unions’ and later, Great Britain came to be known as the ‘Home of Collective Bargaining’.

Even though the term was coined in the year 1891, traces of its use were found back in the year 1874 among coal miners in Great Britain. Coming to India, the concept of Collective Bargaining gained its ground post-independence but like Britain, the traces of its use in India were found around the 1920s in the textile mills of Ahmadabad with the initiatives of the father of the nation, Mahatma Gandhi. The word bargaining means nothing but negotiation.

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What is the meaning of Collective Bargaining?

The layman definition for the term collective bargaining can be “a process of discussion and negotiation between two parties, one or both of whom is acting in consent.” Understanding the concept known as collective bargaining one must keep in mind that, it is a bipartite process, i.e., only the employer and the employees are the parties and there is no third-party intervention.

What is the key role of Collective Bargaining?

The key role of Collective Bargaining is to settle and prevent industrial disputes fairly and peacefully. It acts as a tool in maintaining peace at the industrial level and implies a responsibility on both the employers and the employees. The significance of Collective bargaining is that it creates a ground for both the employers and the employees to put forth their problems such as the employers can explain their problems to the leaders of the union whereas the employees can explain and reason out their demands and desires.

It is the sole responsibility of the representatives of the management as well as the labour to make honest attempts in solving the problems of both the parties and give likewise solutions that do not taint the faith, trust, respect and confidence of the parties in each other. Peace is the sine qua non however, conflicts are inevitable.

Why is Collective Bargaining best method out there?

Collective bargaining is an opportunity for the labours and workers to achieve industrial democracy. It is an alternative method for industrial dispute resolution just like arbitration, mediation and reconciliation to get out of the maze of litigation. It is likely to mention that the process of Collective Bargaining is the most preferred out of all the above-mentioned methods since it provides an opportunity for both the parties in conflict to sit down together, discuss their problems with each other and find solutions for the same in an amicable, respectable and responsible manner. It creates an open ground for the parties to establish mutually agreeable conditions for each other to maintain peace.

The concept of Collective Bargaining is present at both the craft level and the national level. The standing of the same concept at the state level has been discussed by the end of this paper. The broader meaning of the term ‘bargaining’ is that there is the involvement of negotiation, proposals, offers and counteroffers, by both parties to reach a final and mutual agreement.

What are the theories pertaining to Collective Bargaining?

There are 3 theories in particular that relate to collective bargaining and discuss its very concept. The theories, in no particular order of preference, run as follows-

The governmental concept and the agreement as a law – In this concept, collective bargaining is considered as a political relationship and has been out looked as a constitutional system being followed by the whole commerce. In this, the union shares sovereignty with the management on the topic of workers as well as whom they are represented by, on matters concerning employers and employees, and to protect their rights from any external involvement. The central government and management get together for a contract that is considered as a constitution and is negotiated as a compromise trade deal.The union and the management form a contract and whenever the management does not adhere with the agreement, a provision of judicial machinery is made available to the union for redressal.
The marketing concept and the agreement as a contract – This kind of concept sees collective bargaining as a contract which is for the sale of the labourers. This theory says that individual employees will sell their labours only based on terms which are defined collectively based on the contract, as well as those that are created through the collective bargaining process. Bargain is necessary because of competition of the jobs, the uncertainty of trade cycles, and the spirit of mass production.
By instructions, the industrial relations have been decided collectively – Industrial organisations view collective bargaining to be a system of industrial governance. It is viewed as a functional partnership, with group government taking the place of the state government.

The theories about collective bargaining elevate the reader to know about the importance of collective bargaining in respect of both the union and the employers/management. The importance of collective bargaining has been discussed briefly below –

There is a certain “positive” possibility that the working class can combine as a whole and protect itself from the interests of the management and thus, exploit the labourers by the process of collective bargaining. However, the process of collective bargaining impose restriction upon the employers by preventing the possibility of unilateral action and protects the class of labourers from unfair treatment and discrimination in terms of wage. Moreover, only trade unions can make collective bargaining as their primary function is to protect the interest of the workers, it be economical or non- economical.
Collective bargaining is a bilateral process and it protects the interest of the employers as well. It is fairly understandable that the primary function of organizations is to ensure that employees or laborers do the work at a minimum cost, and maximum output can be brought out of them. Considering the possibility that to achieve this goal, cooperation is required at maximum level. Collective bargaining is the best remedy to maintain the relationship between the employers/organization and the trade union. It is the only way to maintain cooperation between the two and eliminate the possibility of misconception.
Collective Bargaining has emerged out so well in these years that it has created significant affect on the government as well. The Government has amended the legislation for the laborers and have made sure that the implementation of the legislation should be in real sense. Because a mutually agreed arrangement may be achieved between the employees and the employer to execute the provisions specified in the legislation, collective bargaining is the sole mechanism that stops the government from utilising its authority.

What are the pre-requisites for Collective Bargaining?

It is important to establish successful collective bargaining to establish a smoothly working industry and smooth working atmosphere for the organization, the employers and the trade unions. Collective bargaining being the only remedy to both the parties requires the establishment of some pre-requisites before it can practically come into play. The pre-requisites can be –

Both the parties in the industry, i.e., the employers and the employees should realize the need and importance of collective bargaining.
Both the parties should be honest, cooperative, sincere and responsible with and to each other and should try to solve their problems through sensible negotiation.
There is no standard rule that the bargaining can be only a one time possibility. The employers and employees can bargain multiple times to eliminate and avoid any kind of problem which exist or may be a possibility in the near future.
The employer and employees can have a written agreement once they reach a conclusion.
The approach of the parties should be constructive and their primary motive should be to maintain peace among themselves at industrial level.
Both the parties should approach the table of discussion with true facts and figures. The management should pay reasonable wage and any sort of unfair labor practice should be strictly restricted.

What is the Supreme Court’s take on Collective Bargaining?

For the initials, it is important to mention that Mahatma Gandhi came up with the concept of collective bargaining after the idea of arbitration was found to be failing. Later post-independence, a lot of collective bargaining agreements were executed but there were no legal provisions made for the same, neither by British India nor by Independent India. But collective bargaining came into serious play after The Trade Union Act, 1929, the Bombay Industrial Relations Act, 1946, the Industrial Disputes Act, 1947, paved the way and established a working mechanism for the same.

Taking the landmark case of Karnal Leather Karamchari Sanghatan (Regd.) vs. Respondent Liberty Footwear Company (Regd.) and Ors, the Court laid down that the Act (Industrial Disputes Act, 1947) On the basis of collective bargaining, strives to promote social justice. The architecture of justice dispensation in industrial adjudication includes voluntary arbitration. As a result, the arbitrator is included in the spectrum of statutory tribunals. When a dispute is brought to arbitration, it is vital to inform the workers about the conflict as well as the arbitrator whose decision will eventually bind them.

They must understand why a case has been brought to arbitration, who their arbitrator is, and what awaits them. They must be given the chance to discuss their opinions with one another and, if required, to present them to the arbitrator. This is the need for collective bargaining and there cannot be collective bargaining without involving the workers. The Union only helps the workers in resolving their disputes with management but ultimately it would be for the workers to make decisions and suggest remedies. As a result, we believe the arbitration agreement should be made public before the arbitrator evaluates the merits of the case. The arbitral award would be nullified if these criteria were not met.

In Tamil Nadu Electricity Workers Federation vs. Madras State Electricity Board, the Madras High Court observed that the whole philosophy of organized labour, as well as its formal recognition in industrial legislation, is founded on the uneven bargaining power that exists between the capital employed and individual workers, or disunited workers, according to the Madras High Court. The core of this movement is collective bargaining, and it is in the interest of labour that Trade Unions and their ability to represent workers who are members of such groups have been given statutory status.

Conclusion

Collective bargaining has emerged out to be a democratic way of life in industry. It is a process of joint decision making and for the success of collective bargaining, the process must begin with proposals and not demands and it should be the motive of both the parties should be willing to compromise and reach a conclusion without much of a hassle. The problem with the concept of collective bargaining in India is that there is no provision to strictly implement the same at the Central level.

The fact that hinders the successful and smooth functioning of collective bargaining is that the labours are unrecognized and thus, the union party is comparatively weaker. In addition to this, the division of unions on the basis of political ideologies and weak financial position retards the growth of trade unions. Therefore, the need of the hour is that the Indian government should look into this problem and try to implement a statute that recognizes the trade unions at the central level. Doing so will maintain peace and harmony among the parties and then both will be able to provide the best output and further improve the economy of the country.