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ROLE OF COLLECTIVE BARGAINING IN
SETTLEMENT OF INDUSTRIAL DISPUTES *
ABSTRACT
Our country the principal techniques for dispute settlement provided under the I.D.Act
are collective bargaining, mediation, conciliation, investigation, adjudication and voluntary
arbitration. Out of these various methods of settlement of Industrial Disputes Collective
Bargaining plays an important role. It is a method by which problems of wages, conditions of
employment are resolved amicably, peaceably and voluntarily between labour and
management.
Collective Bargaining process demands the parties to deal with problem with open
heart and fair mind and thus stabilize employment relations and prevent obstructions to free
exchange of terms. It demands certain standard of good faith.
Employer is obliged to initiate collective bargaining. But he must respond to such
negotiation when requested by the proper agent of his employees. Failure to do so amounts to
unfair labour practice. The union having a majority of workers as its members of the union
with a stipulated minimum of workers alone should be recognized.
Collective Bargaining Agreement once recognized shall remain for a period of three
years and continue to be recognized until it is successfully challenged.
Now it is a welcome sign that the Govt. is to consider the introduction of a law to
ensure smooth collective bargaining and active participation of trade unions for promoting
harmonious industrial relations. The extension of collective Bargaining in India is the first
and foremost requirement. This requires immediate modification of central Labour Legislation
to provide its prerequisites. The recognition of trade union should be made compulsory.
Key words
Recognition of Trade Union, collective Agreement, Bargaining Process, Tripartism.
∗ Mr. Santosh Ku. Behera, Guest Lecturer,Lingaraj Law College,Berhampur, Odisha & Mr. Snehansu Bhusan
Pattnaik, Guest Lecturer,Lingaraj Law College,Berhampur, Odisha.
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INTRODUCTION
An individual is free to bargain for himself and safeguard his own interest. If an
individual workman seeks employment he stands in a weak position before his master, who
having command over wealth stands in better position to dictate his own terms and the
individual has to accept the offer without any reserves for he has to earn something to feed his
family. However the position becomes different if a bargain is made by a body or association
of workmen. They can negotiate to settle their terms with their employer in a better way and
secure better wages, better terms of employment and greater security. The object of collective
bargaining is to harmonise labour relations, promote industrial peace by creating equality of
bargaining power between the labour and the capital. Collective bargaining can exist only in
an atmosphere of political freedom. Any condition of service like, wages, hours of work,
leave, gratuity, bonus, allowances and other privileges can all be settled by negotiation between
the body of workmen and employer. Thus “Collective Bargaining” is that arrangement
whereby the wages and conditions of employment of workmen are settled through a bargain
between the employer and the workmen collectively whether represented through their union
or by some of them on behalf of all of them.1
The two parties employers/ management and workers and their trade unions rely on
themselves for the resolution of their differences for the settlement of their disputes. They do
not approach a third party, i.e., the Government and seek its intervention. This method is quite
sound, for it lays stress on bipartite dialogue. It can result in a stable and mature relationship
between the two parties if both are well-organised recognize each other and accommodate each
others point of views. These agreements reached voluntarily between the two parties are
backed by moral sanction.
Collective Bargaining:
The role of collective bargaining in the modern industrial set up is assuming importance
as a peaceful method to resolve industrial disputes.
What is?
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Collective bargaining is that arrangement where by the wages and conditions of
employment of workman are settled through a bargain between the employer and the workman
collectively whether represented through their union or by some of them on behalf of all of
them.2 Though collective bargaining has not been defined in the I.D. Act or any other
enactments it is to be understood in the sense according to Ludwig Teller, “as an agreement
between a single employer or an association of employers on the one hand and a Labour union
on the other, which regulates the terms and conditions of employment”. According to the
Encyclopedia Britanica, “Collective Bargaining is a negotiation between an employer or group
of employers and a group of work people to reach agreement on working condition.3 The
encyclopedia a Social Science defines collective bargaining as a “process of discussion and
negotiation between the two parties, one or both of whom is a group of persons acting in
concert, more specially it is the procedure by which an employer or employers or a group of
employers agree upon the conditions of work”.4
Collective bargaining is recognized as a right of social importance and greater emphasis
is given on it by India’s five year plans. It is accepted as a best method of solving industrial
disputes in Western Countries. Even it is recognized in our system in Principle.
Origin
The concept of collective bargaining is the off shoot of Trade Union activity. It is a
historical fact that before the advent of collective bargaining era in the labour market, the
labour was at a great disadvantage in obtaining reasonable terms of contract of service from his
employer. With the growth of Unionism and consciousness of the working class the trade
agreement on collective basis have become a rule rather than exception.
Pre-requisites of Collective Bargaining
The Pre-requisites of Collective Bargaining are:
a) Strong Independent and well organized Unions.5
b) Recognition of the Union as the bargaining agent.6
c) Willingness to “Give and Take”.7
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d) Mutual Trust and good faith.8
e) Absence of unfair labour practice.9
Importance of Collective Bargaining
Collective Bargaining is the means by which a “normative system” is created for
regulating industrial conflict. However, it does not prevent industrial conflict but it provides a
forum for discussion and a means for systematic social change in the working code governing
management – men relations. By providing a forum for meeting between management and
union, collective bargaining can help to facilitate improved relations and gradual change of
industry and productivity.10 It is a forum of self government11 and as such promotes the
democratic virtue of independence and responsibilities. Moreover, it has the great merit of
flexibility. Industrial processes are constantly changing so at the conditions of employment.
These problems can be settled satisfactorily only if the workers are intimately connected with
the management.12
Bargaining Process
Collective bargaining process is a complicated one like business deal yielding less and
gaining more; it is a diplomatic endeavor continuously probing into the strength and weakness
of the opposite party and thus skillfully and tactfully handling the issues. It demands the
parties to deal with the problem with open heart and fair mind and thus stabilize employment
relations and prevent obstructions to free exchange of terms. It demands certain standards of
good faith.
Long before the collective bargaining conference, the parties hold separate meetings
and discuss elaborately the stand to be taken before the conference table. These meetings are
important and often they are lively because it is there that the representatives get the necessary
mandate to their commitment and demands at the collective bargaining time. The problems are
to be discussed horizontally and vertically and the maximum and minimum demands are to be
evolved in such meetings after mature deliberations. The union leaders at this stage are
expected to play a constructive role. They should adopt a rational approach to the problem
bearing considerations of the capacity of the employer and the socio-economic effects and the
consequences of their extreme demands. They are to feel the modes and feelings of the rank
and file, but should not be fully carried away by that. The emotions are to be standardized into
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proper channel and that they have to look at the problem with rational approach. Similarly, the
employers are also expected to adopt a flexible stand with a give and take spirit. After such
private meetings the representatives come before the conference table. It involves face to face
conference. In the bargaining sessions the issues and problems are discussed and debated. The
representatives express their stand. Proposals and counter proposals are made. Sometimes
adjournments take place to enable the representatives to have further discussions with the
workers or employers, as the case may be. By this complicated process the parties may come
to some settlement in which case contract will be drafted which is known as the collective
bargaining contract.
Function
Prof. Butler has viewed the functions of collective bargaining under these heads.13
1. Collective Bargaining as a Process of Social Change.
2. Collective Bargaining as a peace treaty between two parties in continual conflict.
3. Collective Bargaining as a system of industrial jurisprudence.
Collective Bargaining is quick and efficient and the parties do not waste their time in
unnecessary litigation. It is more democratic where the parties themselves resolve their
disputes. Hence it results harmonious relationship between employers and workers, benefitting
both, in a democratic manner.
Recognition of Unions as Bargaining Agent.
Recognition of Union is the most important step for collective bargaining.
In India, so far no serious effort has been made at the national level to lay down a
proper procedure for recognition of the bargaining agent. Neither the Indian Trade Union Act,
1926, nor the Industrial Disputes Act, 1947 provided for compulsory recognition of a Trade
Union. The Standing Labour Committee as the 18th Session and the NCL favoured a statutory
provision for recognition of Unions as bargaining agent. The NCL has attached considerable
importance to the matter of recognition of unions.
It said;
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“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.”
The NCL suggested the following steps for granting recognition to trade Unions.
a) Statutory Recognition:
It would be desirable to make Union recognition compulsory under Central law. In all
undertaking where 100 or more workers are employed or where the capital invested is more
than stipulated size. A Trade Union seeking recognition from an individual employer
should have a membership of at least 30% of the workers in the establishment and where
more than one Union seek for recognition.
The Union having a large number of members should be recognized.
b) Method of determining Representative Character:
Serious differences exist, however on the manner in which the Union is to be
recognized. Two methods advocated are (a) verification of the fee paying membership of
the Unions, or (b) election by secret ballot. The NCL left it to the discretion of an
independent body, i.e. the proposed industrial relations commission to choose one of the
above methods.
It was unanimously agreed in the National Labour Conference held in September 17th,
18th of 1982 at Vigyan Bhavan that there should be a collective bargaining agent at the unit/
industry level.14 Collective bargaining agent once recognized shall remain for a period of
three years and continue to be recognized until it is successfully challenged.15
It is said that the Government’s attitude was politically motivated. It is also said that
the Government fear monopolization by the communist backed labour organisations, if
recognition and procedure thereof were formalized. The absence of a comprehensive
recognition procedure is one of the reasons for the ineffectiveness of the collective
bargaining process in India.
Impact of the presence of outsiders in the process of collective bargaining:
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Collective bargaining machinery essentially is a reflection of a particular social and
political climate. The history of the trade union movement shows that the union is affiliated to
any one of the political parties. As a result, most of the trade unions are controlled by
outsiders. Critics say that the presence of outsiders, is one of the most important reasons for
the failure of collective bargaining in India.
In controversy about ‘outsiders’ in a union is as old as the Trade Union Act itself,
perhaps even earlier. Under the Trade Unions Act, 1926, any person not actually engaged or
employed in the industry concerned is deemed to be an outsider. But the argument of the
labour union is that any one who has devoted his life for union work and has been a full time
union workers, whether he had ever worked as an employee in an industry or not, should not
be treated as outsider. However, the Trade Union Act, 1926, permit outsiders to be the office
bearers of an Union to the extent of half the total number of office bearers.
The National Commission on Labour 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. NCL hopes
internal leadership would develop through their education and training.
It is observed that outsiders can bargain with the management without fear of
victimization and they can be treated as equal to that of management. This argument is
however confined to the under developed trade Unionism.16
But this view does not seem to be correct even in the early stage of trade unionism. It
shows that outsiders having little knowledge of the background of labour problem and the
technique of the industry and with little general education assumes the charge of labour union
by which the employers have been reluctant to discuss and negotiate industrial matters with
outsiders, who have no personal or direct knowledge with day to day affairs of the industry.
Therefore, the state must outright ban ‘outsiders’ from the trade union body. Further
provision for political fund by trade union should be eliminated, since it invariably encourages
the politicians to prey upon the trade union.
Structure of Collective Bargaining:
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Since the collective bargaining is in its initial stage in India it is not yet time to say
which is appropriate. It depends upon many factors, like pace of industrialization, means of
communication, scope of the industry, development of the trade union movement, etc.17
If the scope of the industry is limited to small unit for local consumption, plant level
bargaining would be appropriate and the most fruitful method. If there are many enterprises in
the same industry and all are situated in one area then industrywide bargaining would be useful
and economical. For example, collective bargaining contracts in the textile industry in
Bombay, Ahmedabad etc. If the industries are spread over a region, and the union is strong,
then collective bargaining may be conducted for the whole of the region. For example, United
Planters Association of South India, The Workers Unions. When the activities of the industry
are spread throughout the country a nation-wide bargaining is good, Examples Railway, Post
and Telegraph, petroleum companies, banking etc.
Subject-matter of collective bargaining contract:
In United States and England the parties determine their subjects freely within the legal
limit. In Latin American countries, the law specifies that such collective bargaining contracts
must include clauses regulating wages, working hours, rest period, holidays, etc. In India, the
parties decide the subject. But this is circumscribed by the laws. For example, such contracts
must be in conformity with the provision of Factories Act, 1948, Industrial Employment
(Standing Orders) Act, Minimum Wages Act, Payment of Wages Act etc. These Acts prescribe
safety precaution, health measures, amenities, conditions of employment, minimum wages,
payment of wages, etc.
Enforcement of collective bargaining:
In England, collective bargaining agreement is treated as gentlemen’s agreement.
However, the Industrial Relations Act, 1971 provides for enforcement of the agreement
through labour tribunals. But this provision is repealed by a 1974 Amendment Act. Hence, in
England collective bargaining contract remains as gentlemen’s agreement. This means, the
enforcement of the agreement depends on the good will of the parties. In some other countries,
such contracts are enforced by special legislation. The unions or the individual worker can
enforce such contracts through court of law. In Latin American countries, Germany, etc. such
Courts are set up for enforcement of this agreement.
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In India, collective bargaining contracts are enforceable under Section 18 of the
Industrial Disputes Act as a settlement arrived at between workers and employers.
Government may refer the dispute over the breach of contract to a labour Court or to an
Industrial Tribunal as the case may be.
Critical Evaluation:
The system of collective bargaining as an institution is yet to mature and become
stabilized in India. The blame for the slow progress of the system lies with the two parties and
with the Government. Employers/managements have not shown any enthusiasm or initiative
in developing stable relation with labour. They have been reluctant to settle issues with the
labour through the process of collective bargaining.
However, it has been customary to blame Trade Union for their multiplicity and
fragmented character, statutory provisions for recognizing unions as bargaining agents are
absent. Neither are there any provisions which require employer and workers to bargain in
‘good faith’.
Moreover, the advocates of adjudication contended that as the Collective bargaining
procedure might end in a strike or lock-out, which implies a great loss to the parties concerned
and the country, for the sake of industrial peace, the adjudication becomes necessary. It is
argued that ‘unions and employers alike have not been fully satisfied with the system of
compulsory arbitration by Courts and Tribunals. In the name of industrial harmony, difference
are settled by an iron clad system of adjudication. And it is agreed that industrial peace can be
established by the adjudication for the time being. In the absence of effective collective
bargaining the anti-productivity tendencies is bound to appear. In fact industrial adjudication is
a barbaric approach to the labour management relationship.
Till now Government has not realized the true significance of collective bargaining. in
spite of creating suitable norms towards progressive bargaining, the Government seems to
favour the worst method of adjudicatory process. Kirkaldy reminded the government that it
should not forget, that,
…… the relations between men and management are human relations ….. no
statute and no court decision ever made a marriage happy and successful. This
is just as true in industrial relations. It is just as hard and just as impracticable
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to prescribe iron-bound rules of behaviour in the dealings between labour and
management as it would be to prescribe than for husband and wives. The
solution lies on the hands of employers employees and their representatives…..
peace and harmony and efficiency can not be legislated can not come by decree
or command.18
However, it is a welcome sign that the government is considering the introduction of a
law to ensure smooth collective bargaining and active participation of trade unions for
promoting harmonious industrial relations.19
The importance of collective bargaining need not be under estimated. The extension of
collective bargaining in India is the first and foremost requirement. This requires immediate
modification of the central labour legislation to provide for its necessary prerequisites. The
recognition of Trade Union should be made compulsory as bargaining agent. To start with, one
union for one factory may be provided for to achieve the ultimate goal of one union for one
industry.
As the multiplicity of Trade Unions which results in inter union and intra-union rivalry,
is an impediment in the way of collective bargaining, it has to be done away with by restricting
mushroom growth of the Trade Unions. Section-4 of the Indian Trade Union Act, 1926 will
have to be amended to increase the minimum number of persons required to register a Trade
Union. Multiplicity of unionism can be minimized if recognition provision will be introduced.
When these above mentioned suggestions will be given effect then collective
bargaining will carry some meaningful importance.
Tripartism:20
Tripartism means a reliance upon the advice of three parties to industrial relations and
disputes. Trade unions, employers and Government are three parties. Under this the parties do
not decide anything, but they try to debate and advice about everything. Their representatives
sit together in one kind of meeting or another and strive to reach consensus and on that basis
make recommendations. The Government is the most active party, even though it decides
nothing as one participant, it does take the initiative in calling the management and labour
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together. This arrangement became popular in the Nanda period from 1957. This was against
the so called “Giri approach.” The late Sri V.V.Giri stressed, advocated and insisted that labour
should be self-reliant.
Even as back as 1947 the tripartism was embodied by the True resolution of 1947. That
resolution exhorted for the friendly co-operation between labour and management. However, it
became an accomplished fact only since 1957.
The chief instrument for tripartism is the Annual Labour Conference which advocated
proposals like workers participation in management, workers education, workers committees,
minimum wages legislation etc.
In 1958, “Code of Discipline in Industry” was adopted. This great document which is
considered to be the keystone of the tripartite arch highlighted the rights and responsibilities of
labour and management under all agreements. This also considers the need to educate
management personnel and workers about those rights and responsibilities. It pledged the
parties to avoid strikes and lock-outs without notice, to avoid unilateral actions to rely on
settlement by discussion, voluntary arbitration or by law’s machinery. It also pledged to avoid
coercion, victimization, partial strikes and lock-outs. It also provided for the establishing and
following grievance procedures.
The annual Conference and Standing Labour Committees promulgated a model
grievance machinery and procedure providing for negotiations on several stages. The Standing
Labour Committee also recommended to set up machineries at the Central and State level for
proper implementation of labour award, agreements and code of discipline. Many such
arrangements are set up at the Central and State level.
Tripartism is an approach which stresses the identity of interests between capital and
labour. This postulates a spirit of partnership. The ideal was focused from the Gandhian
approach to industrial disputes. Tripartism proceeds from two basic concepts:
(i) The relationship between workers and employers is one of partnership in the
maintenance of production and the building up of national economy; and
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(ii) The community as a whole and the individual employers are obliged to protect the
well-being of workers and to secure to them their due share in the gains of
economic development.
There are many tripartite commitees like the Workers Education, Works Committees,
Joint Management Councils, Bonus Commission, Wage Board, etc. Since 1977 tripartism
importance has gone down, as the Annual Labour Conference are not held. Anyhow, recently a
move to revive the national level tripartite labour conference is made. The Labour Minister at
the Centre recently conferred with the trade union leaders on this matter. There was no
tripartite national level labour conference since 1977. Now the necessity of such conference is
highlighted by all.
In January, 1990, after a long break, such a conference was held in which the ideal of
labour participation in management was highlighted. In 1997 also such a conference was held.
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