Banaras Hindu University

Subject: - Labour law - I

Topic: - Collective Bargaining in India

Submitted To:

Dr. R. K. Murli

SUBMITTED BY: Himanshu Chaudhary

ENROLLMENT NO: 372209

EXAM ROLL NO: 14137LA050

FACULTY OF LAW, BHU, VARANASI

Date:-
1 |Collective Bargaining in India

Acknowledgement

It was a great pleasure for me to prepare a project in one of the most important topic of
the Labour Law while dealing with the topic “Collective Bargaining in India.”

I came across many points related to it and tried my best to express it in this project. This
project is mainly focus on Meaning, definition, concept of Collective Bargaining, Advantage
and disadvantage of collective bargaining and its application in India. I have made special
endeavors to present the subject matter in the simple, systematic and lucid manner.

I am grateful to all those who helped me in writing the project, without their help, it was
not possible to complete this project. I am also grateful to Dr. R. K. Murli for giving me to
prepare and present this topic.

Thank you

Himanshu Chaudhary
2 |Collective Bargaining in India

Contents
1. Introduction…………………………………………………………………………………………… 3 – 4
2. Concept and Meaning of Collective Bargaining………………………………………. 5 – 7
3. Scope and Objective of Collective Bargaining…………………………………………. 8 – 10
4. Pre-requisites for collective bargaining…………………………………………………… 11 – 12
5. Advantages & Disadvantages of Collective Bargaining……………………………. 13
6. Collective Bargaining agreement…………………………………………………………….. 14 – 18
7. Collective Bargaining in India………………………………………………………………….. 19 – 21
8. Position of collective bargaining in India…………………………………………………. 22 – 27
9. Conclusion and Suggestion……………………………………………………………………… 28 – 30
10. Bibliography…………………………………………………………………………………………… 31
3 |Collective Bargaining in India

1. Introduction
The conflict between the management and the employee is inherent in an industrial
society. One argues for more investment and profits while the other argues for better
standard of living. These two conflicting interests can be adjusted temporarily through the
principle of "give and take"1; the principle of give and take has been infused in the principle
of collective bargaining.

The phrase "collective bargaining" was coined by British labor reformers Sidney and
Beatrice Webb of Great Britain which was the “home of collective bargaining” in the
1890’s2. The idea of collective bargaining emerged as a result of industrial conflict and
growth of trade union movement and was first given currency in the United States by
Samuel Crompers. In India the first collective bargaining agreement was conducted in 1920
at the instance of Mahatma Gandhi to regulate labour management relation between a
group of employers and their workers in the textile industry in Ahmadabad3.
Advocates of collective bargaining in the early
decades of the twentieth century thought it essential for three reasons. First and foremost,
a system of peaceful and routine bargaining would eliminate industrial strife and violence.
Second, collective bargaining stood for "industrial democracy," and finally, collective
bargaining promised to make capitalism work.
In any industrial establishment the friction between employer and the workmen is
inevitable. There are demands by the workmen and if those demands are resisted by the
employer, industrial dispute arises resulting in industrial tension and disturbing the peace
and harmony in the industry. Collective Bargaining is one of the methods wherein the
employer and the employees can settle their disputes. There was always a need of a
legislation which could ensure industrial justice pre-empt the industrial tensions and
provide the mechanics of dispute resolution. When Industrial Disputes Act, 1947 was
passed in India, it was passed to provide machinery and form for the investigation of

1 Otto Kahn-Freund, Laboar aad the Law, L mdon, Stevens & Sons, (1977\ .). 49
2
Webb, Sydney and Beatrice, Industrial Democracy,1902,p.185
3
Report of Royal Commission on Labour in India, 1931; p. 336-337
4 |Collective Bargaining in India

industrial disputes and for the settlement thereof and for the purposes analogous and
incidental thereto. As is evident from the Act itself that it is piece of legislation which
mainly provides for investigation and settlement of Industrial disputes.
The system of Collective Bargaining as a method of settlement of industrial disputes has
been adopted in the industrially advanced countries like the United States of America and
United Kingdom and has also recently been adopted in some Asian and African countries.
India, which has compulsory adjudication system, has also accepted in principle the system
of collective bargaining but has hardly taken any steps, legislative or otherwise, to apply it
in practice.

In the words of Justice Desai the emergence of the concept of welfare state implies an end
to exploitation of workmen and as a corollary to that collective bargaining came into its
own and lest the conflicting interests of the workmen and the employer disturb the
industrial peace and harmony, a machinery for adjustment of such conflicting interests
became the need of the time. The Act therefore was enacted to provide machinery and
Forum for adjustment of such conflicting and seemingly irreconcilable interests without
disturbing the peace and harmony in the industry assuring the industrial growth which was
the prerequisite of for a welfare state. Collective bargaining is one of the methods wherein
the employer and the employees can settle their disputes. This method of settling disputes
was adopted with the emergence and stabilization of the trade union Government. Before
the adoption of the collective bargaining the labour was at a great disadvantage in
obtaining reasonable terms for contract of service from its employer. With the
development of the trade unions in the country and the collective bargaining becoming the
rule it was equally found by the employers that instead of dealing with individual workmen
it is convenient and necessary to deal with the representatives of the workmen not only for
the making or modification contracts but also in the matter of taking disciplinary action
against the workmen and regarding other disputes. So, collective bargaining has come to
stay having regard to modern conditions of the society where capital and labour have
organized themselves into groups for the purpose of fighting and settling their disputes.
5 |Collective Bargaining in India

2. Concept and Meaning of Collective Bargaining

There is no precise definition of “Collective bargaining”. In fact keeping in view the change
in the society with its fast changing social norms the scope and content of collective also
varies from country to country. Nevertheless, Collective bargaining has been defined by
different experts in different ways. It is treated as a method by which problem of wages and
conditions of employment are resolved peacefully and voluntarily between labour and
management.4

According to K. Alexander
“Collective bargaining is a process of bargaining between the employers and their workers
by which they settle their disputes among themselves relating to employment or non-
employment or terms of employment or conditions of labour of the workmen, on the
strength of the sanctions available to each side. Occasionally such bargaining results in
amicable settlement arrived at voluntarily and peaceful between the parties. But quite
often the workers and the employers have to apply sanctions by resorting to the weapons
of strikes and lock-outs to pressurize one another which makes both the sides aware of the
strength of one another and that finally forces each to arrive at a settlement in the mutual
interests. It is thus the strength of the parties which determines the issues rather than the
wordy duals which are largely put on for show as any element of strength in one party is by
the same token an element of weakness in another”.
Convention 154 of International Labour Organization (ILO) under Article 2 says: For the

purpose of this Convention the term collective bargaining extends to all negotiations which
take place between an employer, a group of employers or one or more employers'
organizations, on the one hand, and one or more workers' organizations, on the other, for –

(a) determining 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 a workers'
organization

4 I.L., Labour Law and Labour Relations, N.M. Tripathi (Pvt) Ltd., Bombay, (1968), P.29:
6 |Collective Bargaining in India

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 employees’ organizations 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”.

This definition however 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 exclusive 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."5
The best justification for collective bargaining is that it is a system based on bipartite
agreements, as such superior to any agreement involving third party intervention in
matters which essentially concern employers and workers.6

In Encyclopedia of Social Sciences, collective Bargaining has been defined a process of

discussion and negotiations between two parties, one or both of whom is a group of
persons acting in concert. The resulting bargain is an understanding as to terms and
conditions under which a continuing service is to be performed. More especially, collective

5 See Eugene V. Schneider, Industrial Sociology, London, Mc GrawHill, (1971), P. 344.

6
[Report of National Commission on Labour, p.325]
7 |Collective Bargaining in India

bargaining is the procedure by which an employer or employers and a group of employees

agree upon the conditions of work.

In the words of John T Dunlop, “Collective Bargaining is:

(1) a system which establishes, revises and administers many of the rules which govern
the worker’s place of work;
(2) a procedure which determines the quantum of compensation which employees
should receive and which influences the distribution of economic ills;
(3) a method of settling disputes during the pendency of agreement and of determining,
after its expiry, whether a dispute should be re-opened or whether a strike or a lock-
out should be resorted or not.

In sum collective bargaining, is labor relations, procedure whereby an employer or

employers agree to discuss the conditions of work by bargaining with representatives of the
employees, usually a labor union. Its purpose may be either a discussion of the terms and
conditions of employment (wages, work hours, job safety, or job security) or a
consideration of the collective relations between both sides (the right to organize workers,
recognition of a union, or a guarantee of no reprisals against the workers if a strike has
occurred). The merits of collective bargaining have been argued by both opponents and
proponents of the process; the former maintain that it deprives the worker of his individual
liberty to dispose of his service, while the latter point out that without the union's
protection the worker is subject to the dictation of the employer.
8 |Collective Bargaining in India

3. Scope and Objective of Collective Bargaining

Scope of Collective Bargaining

The growth of collective bargaining is associated with the recognition of trade unionism.
With the growth of trade unions and industrialization the scope of collective bargaining is
expanding. Initially collective bargaining was used for determining hours of work, wages
and terms of employment, but now within its purview are included the issues like leave
with pay, regulation of forced leave, pension, seniority promotions, sickness and maternity
benefits, etc. Since in the field of bargaining collective action is now common, collective
bargaining has assumed an institutional form. In the words of C.W. Randle:

“The subject matter of collective bargaining had broadened until it has virtually eliminated
the field of the management prerogatives. The area pattern of bargaining has moved from
simple style plant bargaining to region-wise and finally to dynamic nature of the scope of
collective bargaining. At the same time, they show how important negotiation has become
as an institution. And the future holds promise of an even greater role for collective”.

Objective of Collective Bargaining

The International Confederation of Free Trade Union called Collective Bargaining ‘A
Worker’s Bills of Rights’. It enumerated the following objects of the union in the collective
bargaining:

1. to establish and build union recognition as an authority in the place;

2. to raise workers’ standard of living and win a better share in company’s profits;
3. to express in the practical terms the workers’ desire to be treated with the due
respect and to achieve democratic participation in the decisions affecting their
workers condition;
4. to establish orderly practices for sharing in these decisions and to settle disputes
which may arises in day-to-day life of the company;
9 |Collective Bargaining in India

5. to achieve broad general objectives such as the defending and promoting the
workers’ interests throughout the country.7

The ILO also states that:

In Collective Bargaining, the object is to reach agreement on wages and other

condition of the employment about which the parties begin with divergent viewpoints but
try to reach a compromise. When a bargain is reached, the term of the agreement are put
into effect.8

Thus, it is evident that the prime object of the collective bargaining is to resolve the
difference between the parties in the respect of employment, non-employment, terms of
employment and the conditions of service of the members of union.

Features of Collective Bargaining

The features of collective bargaining are as under:

 It is a group process, wherein one group, representing the employers, and the other,
representing the employees, sit together to negotiate terms of employment;
 Negotiations form an important aspect of the process of collective bargaining i.e.,
there is considerable scope for discussion, compromise or mutual give and take in
collective bargaining;
 Collective bargaining is a formalized process by which employers and independent
trade unions negotiate terms and conditions of employment and the ways in which
certain employment-related issues are to be regulated at national, organizational and
workplace levels;
 Collective bargaining is a process in the sense that it consists of a number of steps. It
begins with the presentation of the charter of demands and ends with reaching an
agreement, which would serve as the basic law governing labor management
relations over a period of time in an enterprise. Moreover, it is flexible process and

7
Referred in Mary Sur, Collective Bargaining (1965), 4.
8
International Labour Office, Collective Bargaining (A Workers’ Education Manual), Geneva (1960), 5.
10 |Collective Bargaining in India

not fixed or static. Mutual trust and understanding serve as the by products of
harmonious relations between the two parties;
 It a bipartite process. This means there are always two parties involved in the process
of collective bargaining. The negotiations generally take place between the
employees and the management. It is a form of participation;
 Collective bargaining is a complementary process i.e. each party needs something
that the other party has; labor can increase productivity and management can pay
better for their efforts;
 Collective bargaining tends to improve the relations between workers and the union
on the one hand and the employer on the other;
 Collective Bargaining is continuous process. It enables industrial democracy to be
effective. It uses cooperation and consensus for settling disputes rather than conflict
and confrontation;
 Collective bargaining takes into account day to day changes, policies, potentialities,
capacities and interests;
 It is a political activity frequently undertaken by professional negotiators.

Subject-matter of Collective Bargaining

Collective bargaining has two pronged concerns:

(1) Chalking out a broad contract of employment relationship between employers and
workers, and
(2) The administration of the contract.

In fact, it has been recognised as a method of determining the wage rates and other terms
and conditions of employment and of regulating the relations between the management
and organized labour. Collective bargaining includes provisions with respect to hiring, lay-
offs, promotions, transfers, work scheduling, work assignment, wages, welfare
programmes, retirement benefits, discipline, etc.
11 |Collective Bargaining in India

4. Pre-requisites for collective bargaining

1) Freedom of Association:
In order to achieve collective bargaining, it is essential to ensure that the denial of such
freedom negates collective bargaining. In this respect, it is significance to note that the
International Labour Organization adopted the ‘Convention No. 87 concerning freedom of
association and protection of the right to organize’ which seeks to provide for freedom of
association. India has, however, not formally ratified this convention perhaps due to
administrative and constitutional problems. However, Article 19(1) (c) of the constitution of
India guarantees ‘the right to form association or unions.’ Earlier the Trade Unions Act,
1926 impliedly concedes the freedom of association by conferring certain rights, duties and
immunities upon members of registered trade unions. However, there is need to ratify ILO
Convention.

2) Strong and Stable Trade:

For the success of collective bargaining, it is also essential that there should be strong,
independent, democratic and well organized trade unions. Unorganized labour is the hurdle
in its success. In India, however, the unions are generally weak. Rivalry on the basis of caste,
creed, and religion is another characteristics of Indian trade unions which come in the way
of successful collective bargaining. Further, division on the basis of political ideologies
further retards the growth unions. Moreover, most of the workers are illiterate. Lastly, the
financial position of trade unions is weak and some of them are even unable to maintain a
proper office.

3) Recognition of the Bargaining Agent:

The management should give recognition to the trade union for participating in the
collective bargaining process. In case there is more than one union, selection could be done
through verification of membership by a government agency giving representation to all
the major unions through joint consultations. Thus, the bargaining agent of the workers
should be properly identified before initiating any action.
4) Deciding the Level of Bargaining:
Whether the dealings are confined to enterprise level, industry level, regional or national
level should be decided as the contents, scope and enforcement agencies differ in each
case.
12 |Collective Bargaining in India

5) Determining the Scope and Coverage of Bargaining:

It would be better to have a clear understanding of what are the issues to be covered
under bargaining. Many a time, bargaining is restricted to wage and working conditions
related issues but it would be advantageous for both the management and union to cover
as many issues as possible to prevent further friction and disputes. Therefore, all the
important and interrelated issues are to be taken for consideration.
6) Spirit of Give and Take:
When there is a spirit of give and take between the management and union, collective
bargaining can be an effective technique of settling industrial disputes.
7) Good Faith and Mutual Agreement:
The parties to collective bargaining should act in good faith and do the things on the basis
of mutual agreement as there is no legal sanction behind the terms and conditions agreed
upon by the parties.
13 |Collective Bargaining in India

5. Advantages & Disadvantages of Collective Bargaining

Advantages of Collective Bargaining

According to National Commission Report on labour collective bargaining has been
preferred over compulsory adjudication system for several reasons:

a.) It is a system based on bipartite agreements, and as such, superior to any

arrangement involving third party intervention in matters which essentially concern
employees and workers;
b.) It is quick and efficient method of settlement of industrial disputes; and
c.) It is democratic method of settlement of industrial disputes;

Disadvantages of Collective Bargaining

Two vital defects in collective bargaining have been pointed out by Wilcox. These defects
are:

a.) There are situations in which a serious strike and prolonged strike simply cannot be
tolerated.
b.) The second great flaw in collective bargaining as a solvent for labour disputes is the
lack of representation of the public interest at the bargaining table. Whether prices
can be raised without strangling and ability to sell goods or services, unions and
companies are in a position to agree on wage increase that will cause higher prices,
then the consumer must shoulder the full burden of their agreement9.

9
[ALJ, (1965) p.39]
14 |Collective Bargaining in India

6. Collective Bargaining agreement

The agreement arrived at between the representatives of a trade union and the employer is
called as collective bargaining agreement. Ludwig Teller has broadly defined collective
bargaining agreement as “an agreement between a single employer or an association of
employers on the one hand and a labour union upon the other, which regulates the terms
and conditions of employment.” The term ‘collective’ as applied to collective bargaining
agreement will be seen to reflect the plurality not of the employers who may be parties
thereto, but of the employees therein involved. Again the term collective bargaining is
reserved to mean bargaining between an employer or group of employers and a bona fide
labour union. Bargaining which involves a company dominated union is assumed to be
merely a disguised form of individual bargaining. As per Teller the Collective Bargaining
agreement bears in its many provisions the imprints of decades of activity contending for
labour equality through recognition of the notions underlying collective negotiation.
Indeed, in the collective bargaining agreement is to be found a culminating purpose of
labour activity10.

Collective agreements may be written or unwritten. Whatever be the form of agreements

these may be looked upon as legislative acts setting forth the rules governing employment
relationship for a specified period of time. However, these laws are private in nature.
Despite many of the laws passed by the legislature, these agreements are of greater
importance to the workers in majority of cases. The economic strength of the parties is
supposed to be the main sanction behind a collective agreement. If a party under the
agreement does not agree to abide by and fulfill the commitments, the other party in order
to meet its obligations can force him by resorting to economic pressures to do so.

Validity of Collective Bargaining Agreements

The collective bargaining agreements may have been made subjects of litigation regarding
their validity, enforceability and interpretation. The usual case involves where an employee

10
Teller, 476
15 |Collective Bargaining in India

files a suit in pursuant to the agreement to recover damages or assets his seniority rights
guaranteed to him in the agreement. But there are other ways also whereby the problem is
raised. For example, a suit may be filed by the labour organization, an employer or
employer’s association for specific performance or to claim damages or to seek the
enforcement of an arbitration clause stipulated in the agreement. If there is an alleged
violation of the agreement it is sometimes sought to enjoin a strike or lock-out called for
the purpose or sometimes the labour organization is the plaintiff seeking to enjoin a lock-
out in breach of the agreement or failure to hire union employees etc. Where the legality of
the agreement is designed to be destroyed, the validity of collective bargaining agreement
is also tested in these proceedings. As for example, to secure a closed shop or to regulate
an entire industry by prescribing rules governing competition etc.

Duration of Collective Bargaining Agreements

The durations of collective bargaining agreements vary widely. Unions generally favour
shorter contracts, while managements favour longer ones. In the United States many of the
contracts are for a period of one to three or more years, with options to renew. In the
United Kingdom, “open end” contracts, which can be negotiated on notice at any time, are
the rule. In the Scandinavian countries, one year contracts with renewal clauses are usual.

The position in India is not clear. A study of 114 contracts in 1961 by the Employers
Federation of India showed that a majority of them were for one to five years, with a strong
trend in favour of longer terms. (This may perhaps be evidence of control by employer or of
employer’s superior bargaining power or both). The long-term contract has two advantages
for management over the short-term one:

(1) It imparts stability to labour-management relations, and

(2) It helps in planning production and expansion programmes based on fixed labour
costs (one of the highest items in the budgets of many industries).
16 |Collective Bargaining in India

Contents or Subject Matter of Collective Bargaining Agreements

The subjects for collective bargaining are determined by the parties in some countries and
by law in others. In Denmark, Germany, Italy, Norway, Sweden, Switzerland, the United
Kingdom and the United States, the parties determine their subjects freely (of course within
legal limits). In Brazil, Columbia, Equador and some other Latin American Countries the law
specifies that every contract must include clauses regulating wages, hours, rest periods,
holidays, the duration of the agreement, the procedure for its extension. In France, every
national collective contract must contain provisions on freedom of employees (with
particular reference to the prohibition of discrimination on grounds of membership in any
particular union), length of notice, and organization of apprenticeship and training. In
Canada, every contract must contain a grievance procedure.11

In India the selection of subjects, while it is for the parties to decide, is nevertheless rather
narrowly circumstanced by law. For example, the negotiators of a contact must always keep
in mind the provisions of the Factories Act, 1948, the Industrial Employment (Standing
Orders) Act, 1946, the Minimum Wages Act, 1948 and the Payment of Wages Act, 1936.
These deals with many subjects such as safety precautions, health measures, amenities,
conditions of employment, retrenchment must be carried out, rationalization must be
undertaken, and disciplinary proceedings must be handled.

Some contracts are short and deal with a few matters, while others are elaborate and deal
with many. Usually all contracts in India contain most or all of the following clauses:

(1) A preamble stating the positions of the parties;

(2) Recognition by the employer of the union as sole bargaining agent and of its right to
organize the workers;
(3) Recognition of the right of management to carry on its normal activities and meet its
responsibilities;
(4) Wages, bonus and dearness allowance;

11
ILO, Collective Bargaining 46-47
17 |Collective Bargaining in India

(5) Grades, job classification and job evaluation;

(6) Hours of work, holidays, leave and overtime;
(7) Dismissal, discharge, termination and retirement from service in so far it is not
covered by the company’s standing orders;
(8) Medical benefits, provident fund, pension and gratuity;
(9) Joint machinery for the efficient and smooth functioning of the industry, such as a
joint production committee, a joint labour relations committee, a job evaluation
committee, or a discipline, safety and welfare committee;
(10) Grievance procedure;
(11) No-strike clause, and an undertaking that disputes will be settled through mutual
consultation; and
(12) The duration and termination of the contract.

The signing of the contract makes a great impression on the rank and file of the union. “ Its
formal language is the mark of its significance and…a guarantee that the management will
carry out its pledged word. It strengthens the position of the union in the eyes of the
members, and it provides basis for a continuing and dignified relationship between the
management and the employers”.12

Enforcement of Collective Bargaining Agreements

The enforcement of bargaining contracts depends in some countries on the good faith of
the parties and in others, on that, plus the law. In the United Kingdom, such contracts are
called “gentlemen’s agreements”. To enforce them in a court of law, workers must rely on
their individual contracts with their employer, which may in some cases incorporate the
larger agreement. In a great many countries of Europe, Latin America and Asia, the effects
of the contract are regulated by special legislation. They can then be enforced in a court of
law, either by the union or by the individual worker, through an action for damages for
breach of contract. Scandinavian countries, Germany, Ireland and some Latin American
12
Mary Sur, Supra Note 1 at 107
18 |Collective Bargaining in India

countries have established special courts to enforce the contracts on the grounds that
procedure in ordinary courts is long and costly, that delay may result in a strike and to
secure a quick remedy. The actions here must usually be brought by the unions; but in
some cases individuals may be allowed to start proceedings.13

In India, the collective bargaining agreements can be enforced under section 18 of the
Industrial Disputes Act, 1947, as a settlement arrived at between the workers and the
employers. The appropriate government may refer the dispute over a breach of contract to
a labour court or to an industrial tribunal.

13
ILO, Collective Bargaining 71-72
19 |Collective Bargaining in India

7. Collective Bargaining in India

Collective Bargaining as a method of industrial disputes is comparatively a recent
development. However, it has been debated ever since the days of the Royal Commission
of Labour. The planners paid considerable attention to the adoption of the system of
collective bargaining to solve labour disputes in India.

Collective Bargaining in India has been the subject-matter of industrial adjudication since
long and has been defined by our Law Courts. In Kamal Leather Karamchari Sangathan v.
Liberty Footwear Company14 the Supreme Court observed that, "Collective bargaining is a
technique by which dispute as to conditions of employment is resolved amicably by
agreement rather than coercion".

According to the Court, the Industrial Disputes Act, 1947, seeks to achieve social justice on
the basis of colIective bargaining. In an earlier judgment in Titagarh Jute Co. Ltd. v. Sriram
Tiwari15 the Calcutta High Court clarified that this policy of the legislature is also implicit in
the definition of 'industrial dispute'.

In Ram Prasad Viswakarma v. Industrial Tribunal16 the Court observed that, "it is well
known how before the days of 'collective bargaining', labour was at a great disadvantage in
obtaining reasonable terms for contracts of service from its employer. As trade unions
developed in the country and collective bargaining became the rule, the employers found it
necessary and convenient to deal with the representatives of workmen, instead of
individual workmen, not only for the making or modification of contracts but in the matter
of taking disciplinary action against one or more workmen and as regards all other
disputes.”

In Bharat Iron Works v. Bhagubhai Balubbai Patel17 it was held that 'Collective bargaining,
being the order of the day in the democratic social welfare State, legitimate trade union
activities, which must shun all kinds of physical threats, coercion or violence, must march
with a spirit of tolerance, understanding and grace in dealings on the part of the employer.
Such activities can flow in healthy channel only on mutual cooperation between the
employer and the employees and cannot be considered as irksome by the management in
the best interests of its business.

Dialogue with representatives of a union help striking a delicate balance in adjustments and
settlement of various contentious claims and issues."

14
AIR 1990 SC 247
15
(1979) Lab I.C. 523 (Cal)]
16
(1961) I LL.J 504
17
(1976) Lab. I.C. 4 [S.C]
20 |Collective Bargaining in India

These definitions only bring out the basic element in the concept i.e., civilized confrontation
between employers and employees and the whole process is regulated by statutory
provisions.

Types of Collective Bargaining Agreements in India

Collective bargaining as it is practiced in India can be divided into three classes. First is, the
bipartite agreement drawn up in voluntary negotiation between management and union.
The second type is known as a settlement, while the third type of collective agreement is
consent award. These are discussed below:

1. Bipartite Agreements:

These are most important types of collective agreements because they represent a
dynamic relationship that is evolving in establishment concerned without any pressure
from outside. The bipartite agreements are drawn up in voluntary negotiation between
management and union. Usually the agreement reached by the bipartite voluntarily has the
same binding force as settlement reached in conciliation proceedings. The implementations
of these types of agreements are also not a problem because both the parties feel
confident of their ability to reach the agreement.

2. Settlements:

It is tripartite in nature because usually it is reached by conciliation, i.e. it arises out of

dispute referred to the appropriate labour department and the conciliation officer plays an
important role in bringing about conciliation of the differing viewpoints of the parties. And
if during the process of conciliation, the conciliation officer feels that there is possibility of
reaching a settlement, he withdraws himself from the scene. Then the parties are to finalise
the terms of the agreement and should report back to conciliation officer within a specified
time. But the forms of settlement are more limited in nature than bipartite voluntary
agreements, because they strictly relate to the issues referred to the conciliation officer.

3. Consent Award:

Here the negotiation takes place between the parties when the dispute is actually pending
before one of the compulsory ad judicatory authorities and the agreement is incorporated
to the authorities, award. Thus though the agreement is reached voluntarily between the
parties, it becomes part of the binding award pronounced by an authority constituted for
the purpose.

The idea of national or industry-wide agreements and that too on a particular pattern may
appear to be a more ideal system to active industrial relation through collective bargaining,
21 |Collective Bargaining in India

but the experience of various countries shows that it is not possible to be dogmatic about
the ideal type of collective bargaining, because it largely depends upon the background,
traditions and local factors of a particular region or country.
22 |Collective Bargaining in India

8. 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.18

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.19 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.20 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 employers 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 fund21 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

18
S.N. Dhyani, Trade Union and the right to strike, S. Chand & Co. (Pvt.) Ltd, New Delhi, PP. 374-380.
19
See Section 22 of the Trade Unions Act, 1926,
20
See Report of the National Commission on Labour, (1969), P. 288
21
See Section-16 of the Trade Unions Act. 1926.
23 |Collective Bargaining in India

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.22 On realizing the problems of outsiders in
the union, the Industrial Relations Bill, 1988 proposes to reduce the number of outsiders to
two only. Another hurdle in the success of collective bargaining in India, is the absence of a
compulsory ‘recognition’ provision in the Act.

Impact of Recognition as Bargaining Agent in Collective Bargaining

In view of the prevailing multi-trade-unionism in the country, recognition of a bargaining
agent has assumed importance. Unfortunately, no attempt has been made at the national
level to either lay down a procedure for recognition of a trade-union as bargaining agent or
work out a procedure. There is no provision either in the Indian Trade Union Act 1926 or in
the Industrial Disputes Act 1947 for the purpose. The Government of India proposed an
amendment in the
Trade Union Act in 1950 making recognition of a union compulsory. The measure however,
faced serious opposition and remained unimplemented. The Standing Labour Committee
(l8th Session) and National Commission on Labour favoured a statutory -provision for the
purpose but their recommendations have yet to be accepted. The National Commission on
Labour attached considerable importance to the matter of recognition of unions and
observed as under:
"Industrial Democracy implies that the majority union should have the right to sole
representation, i.e., the right to speak and act for all workers and enter into agreements
with the employer."23

22
id. at P. 291, The Commission has recommended as follows :
Where the membership of union is;
( i) below 1,000 the number of outsiders should not be more than 10%
{ii) between 1,000-10,000 … …. …. ….. ….. ….. ….. ….. 20%
(iii) above l,000 … …. …. ….. ….. ….. ….. ….. …. … …30%
(iv) 'the permissible limit for industry -wise unions should be 30%
23
Report of the National Commission on Labour, (1969)p. 329
24 |Collective Bargaining in India

In the absence of statutory provision, the matter is regulated by the Code of Discipline
which was evolved at Nainital session of Indian Labour Conference in 1952. The Code of
Discipline provides for verification of trade-union membership by Central Industrial
Relations Machinery of the Government. Its voluntary character has however, made it
ineffective and it has been found difficult to implement it in view of statutory provisions in
the Industrial Disputes Act.
At the present not even public sector undertakings are following the Code of Discipline and
are bargaining with more than one union. States like Bombay and Madhya Pradesh have,
however, given statutory recognition to the procedure for determination of bargaining
agent. Both, Bombay Industrial Relations Act 1946 and Madhya Pradesh Industrial Relations
Act, 1960, provide for the determination of representative union by the Registrar of
Representative Unions. Special provisions have been made for agreements signed by
representative unions. In spite of it, the experience shows that there had been serious
opposition to statutory recognition of a union as sole bargaining agent of the workers of the
establishment. Indeed the experience is that wherever there is a union recognition,
representative of rival unions have come together to force the employer to bargain with
them." The fear of retaliation by unrecognized unions has proved to be the biggest
stumbling block in the success of statutory recognition system.

Multi-Unionism
Political orientation of trade unions is the primary reason for multi-unionism. Communal
sentiments, provincial feelings and caste are other major causes for multi-unionism.24
Presence of too many unions in an industry destroys the bargaining strength of workers.
Our labour legislation also permits multi-unionism.25
Multi-unionism adversely affects collective bargaining process. Where there are too many
unions, with whom should management negotiate? Each union may claim recognition. Each
union may present separate charter of demands in a spirit of rivalry. When conflicting

24
Mrs. P. Chakravarthy, Strike and Morale in Industry, Calcutta. Navana Printing Works, Pvt. Ltd. (1969) PP. 37-38.
25
See Section-4 of the Trade Unions Act, 1926, permits any seven members to form a union and get registered.
25 |Collective Bargaining in India

demands are made, it may be impossible to accept any of them. Moreover, if one union is
ready to accept some of the demands, other union may object to them. In this context, it is
difficult to think of any effective collective bargaining process in India.

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 (I) 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 inspite of wage increase and improved conditions of
service, there has been no corresponding improvement in production or the productivity
and 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:
26 |Collective Bargaining in India

"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."26

Critical Evaluation
In Indian labour arena we see, multiplicity of unions and inter-union rivalry. Statutory
provisions for recognizing unions as bargaining agents are absent. It is believed that the
institution of collective bargaining is still in its preliminary and organizational stage.27 State,
therefore, must play a progressive and positive role in removing the pitfalls which have
stood in the way of mutual, amicable and voluntary settlement of labour disputes. The
labour' policy must reflect a new approach.
Hitherto the State has been playing a dominant role in controlling and guiding labour-
management relation through its lopsided adjudication machinery. The role of the
industrial adjudicator virtually differs from that of a judge of ordinary civil court. The judge
of a civil court has to apply the law to the case before him and decide rights and liabilities
according to its established laws. Whereas industrial adjudicator has to adjust and reconcile
the conflicting claims of disputants and evolve "socially desirable" rights and obligations of

26
Justice Gulab Gupta, Our Industrial Jurisprudence, 1987, p.133
27
Dr, B.R. Patil, "Collective Bargaining and Conciliation in India," 12, I.J.I.R. 41 (1976).
27 |Collective Bargaining in India

the disputants.28 In deciding industrial disputes the adjudicator is free to apply the principle
of equity and good conscience.
However, it is said that the impact of the attitude of the judiciary towards workers has not
proved conducive to the peaceful industrial relations.29 It is accepted that the end of judicial
proceeding is pain and penalties. It cannot solve the problems of industries. Accordingly it is
said that:
"While statutes, rules, regulations, pains and penalties have their place in the ordering of
industry, they do not touch the core of the problems of industrial relations."30
Moreover, advocates of adjudication contend that as the collective bargaining procedure
might end in a strike or lockout, which implies a great loss to the parties concerned and the
country, if for the sake of industrial peace, the adjudication becomes necessary. But has
there been industrial peace and satisfactory progress since adjudication was adopted after
world-war-II? We do agree that industrial peace can be established by the adjudication for
the time being. But the conflicts are driven deeper and it will retard industrial production.
In the absence of effective collective bargaining the anti – productivity tendencies are
bound to appear.

28
Anirudh Prasad Singh, "New Dimension of Employer-Employee Relations in Progressive Industrial Society," 9, Lawyer, 164
(1977).
29
See Dr. Ahmedullah Khan, "Judicial Regulation of Industrial Relations" 9, Awards Digest, 177 (Where the author emphatically
discussed the defects of judiciary as far as labour-management relation is concerned.)
30
Kir Kaldy, The spirit of Industrial Relations (1974) P. 58, cited in S.N. Dhyani's op. cit., P.396.
28 |Collective Bargaining in India

9. Conclusion and Suggestion

So, at last I conclude that a lot has been said about the development of collective
bargaining in India. But in fact, collective bargaining which is a two way affair, has been
used at present only as a one-way exercise in which the union, as the aggressive partner,
makes the demands, and the management, as the passive partner, derives satisfaction
merely by countering the extent to which it is able to minimize the additional burdens while
meeting the union’s demands. There are not many examples even now where unions as
well as the management, as equal partners, have approached the process of collective
bargaining with the objective and spirit that collective bargaining must bring concrete
benefit to both the parties.

The following steps should be taken for the success of collective bargaining.

1. Strong Trade Union:

A strong and stable representative trade union is essential for effective collective
bargaining. For having such a trade union, workers should have freedom to unionize so that
they can exercise their right of unionization and form a trade union for the purpose of
electing their representatives for collective bargaining. A weak union not enjoying the
support of majority of workers is not likely to be effective. The management will not
negotiate with such a union; because mutual agreements are not likely to be honoured by a
large section of the labour-force. Moreover, there is always a danger that non-union
members may sabotage it.

2. Compulsory Recognition of Trade Unions:

There must be an acceptable and recognized bargaining agent. That means that there must
be recognized union or unions to negotiate the terms and conditions of the agreement with
the management. Recognition of trade union has to be determined through verification of
fee membership method. The union having more membership should be recognized as the
effective bargaining agent. A strong, stable and the most representative union should be
recognized by the employers for the purpose because any agreement with that union will
be acceptable to majority of workers and it will help in establishing sound industrial
relations in the organization.

3. Mutual Accommodation:

There has to be a greater emphasis on mutual accommodation rather than conflict or

uncompromising attitude. Conflicting attitude does not lead to amicable labour relations; it
may foster union militancy as the union reacts by engaging in pressure tactics.
29 |Collective Bargaining in India

The approach must be of mutual give and take rather than take or leave. The take or leave
philosophy is followed in America where there is contractual labour. As of now this is not
the case in India. So if the union and the management have to look for a long-term
relationship they have to respect each other’s rights.

4. Enactment of Legislation:

The State should enact suitable legislation providing for compulsory recognition of trade
union by employers. State has to play a progressive role in removing the pitfalls which
stand in the way of mutual, amicable and voluntary settlement of labour disputes. The new
labour policy must reflect the new approach and new objectives.

5. Mutual Trust and Confidence:

Trade unions and management must accept each other as responsible parties in the
collective bargaining process. There should be mutual trust and confidence. In fact in any
relationship trust is the most important factor.

Management must accept the union as the official representative. The union must accept
the management as the primary planners and controllers of the company’s operations. The
union must not feel that management is working and seeking the opportunity to undermine
and eliminate the labour organisation. The company management must not feel that the
union is seeking to control every facet of the company’s operations.

6. Efficient Bargaining Mechanism:

No ad-hoc arrangements are satisfactory for the reason that bargaining is a continuing
process. An agreement is merely a framework for every day working relationships, the main
bargain is carried on daily and for this there is a need to have permanent machinery.

As for machinery being efficient, it has three aspects:

(a) Availability of full information

(b) Selection of proper representatives

(c) Recognition of natural temperament of each other.

7. Emphasis on Problem-solving Attitude:

There should be an emphasis upon problem-solving approach with a de-emphasis upon

excessive legalism. Litigation leads to loss of time and energy and it does not benefit
anyone. Therefore the emphasis is to look for mutually acceptable solutions rather than
creating problems for each other.
30 |Collective Bargaining in India

Lastly, the overall political environment should be congenial. The political environment
should support collective bargaining.

8. Political Climate: For effective collective bargaining in a country, it is important to have

sound political climate. The Government must be convinced that the method of arriving at
the agreements through mutual voluntary negotiations is the best for regulating certain
conditions of employment. The provision for political fund by trade unions has to be done
away with-since it invariably encourages the politicians to prey upon the union.

Therefore, positive attitude of the political parties is a must for the promotion of collective
bargaining. Such an approach would help and encourage the development of strong, stable
and representative trade unions, growth of mechanism for the resolution of industrial
conflict, recognition of unions, etc.
31 |Collective Bargaining in India

10. Bibliography
Books
1. S.N. Mishra; Labour And Industrial Laws; 26th Ed; 2011, Central Law Publications,
Allahabad.

2. S. C. Srivastava; Industrial Relations and Labour Law; 6th Ed; 2015, Vikas Publishing House
Pvt. Ltd.

3. Goswami, V.G., Labour and Industrial Law, 2004 Central Law Agency, Allahabad.

Article
1. Perspectives On Collective Bargaining In India, LLJ, Vol. 1, 2005 p.21-34

Websites
1. http://www.tradeunionindia.org/miscellaneous/public_rights.htm.

2. http://www.unccr.ch/tbs/doc.nsf/(Symbol)/E.C.12.2002.12.En?Opendocument.(ILO )

3. http //www.google.co.in/

4. www.indialaw.com

5. www.lawsofindia.com