Collective Bargaining

 The term “collective bargaining” simply means negotiation which provides an opportunity for the workers to achieve industrial democracy. It is applied at different levels starting from the state level to the national level. In India, the process of collective bargaining started in the second half of the 19th century and got legislative recognition in the first half of the 20th century. This paper deals with the concept of collective bargaining in general which includes the discussion of its meaning, types, objectives, features, and importance at different levels. Further, it discusses the relevant provisions of the Industrial Disputes Act, Trade Union Act, Factories Act, and the Constitution, along with some cases of the Apex Court that dealt with for justifying the legality of collective bargaining.


The term “collective bargaining”, was first coined by Sydney and Beatrice in 1891. They described collective bargaining as “a process through which workers come together and send representatives to negotiate over their terms and conditions of employment.” This concept was widely accepted and used in the USA for settling industrial disputes. In India, Collective bargaining as a method of settling industrial disputes is comparatively of recent origin. Collective bargaining is considered the best possible method because in this the disputants themselves sit together and resolve their differences amicably and respectably.

Collective Bargaining in India has been the subject matter of industrial adjudication for a long and has been defined by our court of law. In Karol Leather Karamchari Sangathan v. Liberty Footwear Company,[1] 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 based on collective bargaining. In an earlier judgment in Titagarh Jute Co. Ltd. v. Sriram Tiwari[2] , the Calcutta High Court clarified that this policy of the legislature is also implicit in the definition of ‘industrial dispute’[3]

Meaning of Collective Bargaining

The expression “collective bargaining” simply means negotiation or bargaining that happens between employers and employees. It takes place when several work people enter into a negotiation as a bargaining unit with an employer or group of employees with the object of reaching an agreement on the condition of the employment of the workplace.

Collective bargaining is specifically an industrial relations mechanism or tool, as an aspect of negotiation, applicable to the employment relationship.

In collective bargaining certain essential conditions need to be satisfied such as the need existence of the freedom of association and a labor law system.

The I.L.O. defines collective bargaining as “the negotiations about working conditions and terms of employment between an employer, or a group of employers, or one or more employers’ organizations, on the one hand, and one or more representative workers’ organization on the other to reach an agreement.”[4]

Aims and Objective

  1. To increase confidence between the employer and employees.
  2. To raise the socio-economic attributes of the employees.
  3. Provides an opportunity for the workers to voice their problem on issues related to employment.
  4. Facilitates reaching a solution that is acceptable to all the parties involved
  5. Resolves all conflict and disputes in a mutually agreeable manner.
  6. Prevents any conflict in the future through mutually signed contracts.
  7. Develop a cordial environment to foster good industrial relations.
  8. Provides peaceful and stable relations in organizations.
  9. Enhances the productivity of the organization by preventing strikes, lockout, etc.

Types of Collective Bargaining – There are two types of collective bargaining exercises :

  1. Conjuritive or distributive bargaining – It deals with issues in which parties have conflicting interests and each party uses its coercive power to a maximum extent possible. This is a win-lose situation where one party’s gain is the other’s loss. Wages bargaining is an obvious example of distributive bargaining
  2. Integrative or Cooperative bargaining- integrative bargaining is concerned with the solution of problems confronting both parties. It is a win-win situation where neither party can gain unless the other gains as well.

Process of Collective Bargaining

  1. Composition of negotiations teams
  2. The negotiation team should consist of employer and employees  with adequate qualities, job knowledge, and skills for negotiation
  3. They must have the authority to speak and take a decision
  4. They should have a correct understanding of the main issues like knowledge of operations, working condition, and production norms
  5. Preparation of demands
  6. Generally, the charter of demands presented to management by the unions is prepared by the member of negotiation teams in consultation with other employees.
  7. Negotiation  process
  8. After all the stages, the process of negotiation is started
  9. Generally, two types are adopted  – 1) piecemeal negotiation: in this process, the issue is taken one by one.

2) Total approach – in this process, all the issues are negotiated considering total effect.

  • Bargaining strategy
  • There is no specific strategy for negotiation use here.

It depends upon   –

  • Situation
  • Nature of demand
  • Time Strength and
  • market conditions.
  • Preparation of  agreement
  • The outcome of the collective bargaining process is the preparation of an agreement
  • The agreement should be signed by both parties and communicate to all concerned.
  • In our country, it is called “settlement” within the meaning of section 2 (p) of the industrial dispute act 1947.
  • Administration of agreement

Once the agreement is accepted and signed; the agreement will be administered as per the terms and conditions of the agreement.

In the future , the work would be performed according to the ratified agreement.

If all the process completes the above-mentioned step in can be said the collective bargaining has been completed.

Features of Collective Bargaining

  1. Group activity – Collective bargaining is a group action as opposed to individual action. Both parties of the settlement are represented by their groups. The employer is represented by its delegates and, on the other side; employees are represented by their trade union.
  2. Flexibility – The process of collective bargaining is flexible and there is ample scope for compromise for a mutual ‘give and take until the final agreement is reached.
  3. Continuous process – it is a continuous process which means it does not end with one agreement. It provides a mechanism for continuous and organized relationships between the management and trade unions.
  4. Bipartite process- it is a collective process where workers and employees representatives negotiate directly, face to face. It includes two ways collectively.
  5. All the employees collectively bargain for their common interests and benefits.
  6. The workers and management jointly arrive at an amicable solution, through solutions.
  7. Dynamic Process: The process of collective bargaining has undergone drastic changes. It  is growing, expanding, and changing but it used to be emotional, turbulent, and sentimental. At present, it is scientific, factual, and systematic.

Theories of Collective Bargaining [5]

  1. The Marketing Concept as a contract  :

The marketing concept views collective bargaining as a contract for the sale of labor.

According to this theory, employees sell their labor only on terms collectively determined based on a contract that has been made through the process of collective bargaining.

  • The Governmental Concept as a law :

The Governmental Concept views collective bargaining as a constitutional system in the industry. It is a political relationship. The union shares sovereignty with management over the workers and, as their representative, uses that power in their interests.

  • The Industrial Relations Concept as Jointly Decided Directives:

The industrial relations view collective bargaining as a method for the representation of the union in the decision making and allowed workers to participate in determining policies, which guided and ruled their work lives.

Importance of Collective Bargaining at 3 different levels

  1. Employees
  2. Employers
  3. Society 

1 ) Importance to employees

  • It gives a sense of self-respect and belongingness among employees
  • Bargaining power increase as a group
  • Increase morale and productivity.
  • It strengthens the power of the trade union.
  • Management cannot take a unilateral decision.

2)Importance to employers :

  • Due to continuous discussion with the employees, employers get higher productivity.
  • It is easier for the management to resolve the issues at preventive levels.
  • It reduces the gap between top and bottom levels in the management hierarchy.

3) Importance to society :

  • It leads to industrial peace in society
  • It controls the exploitation of the workers from the management.
  • It contributes to the economic and social development of the country
  • It creates a sense of equality in society

Collective Bargaining in India[6]:

In India, collective bargaining has been growing along with the growth of trade unions and it is worthwhile to trace the origin of Trade Union first. The credit for the organized labor movement in India goes to N.M. Lokhande, who was a factory worker himself. The first collective bargaining agreement was made in the textile industry in Ahmedabad in 1920 when Mahatma Gandhi was introducing the concept of arbitration. Collective bargaining has been growing rapidly in the

post-independence scenario, happening mostly at the plant and organizational level and not at the industry level. The Trade Union Act, 1929, the Bombay Industrial Relations Act, 1946, the Industrial Disputes Act, 1947,  Factories Act, 1948, and the Madhya Pradesh Industrial Relations Act, 1960 provided machinery for consultation and paved the way for Collective bargaining.

The analysis of the following documents along with the decisions of the Court justifies the legality and recognition of collective bargaining in India.

1) Trade Union Act, 1929 – The Act provides for the registration of trade union and determines the rights, liabilities, and immunities of the union. The primary purpose for the formation of the trade union is to regulate the relations between the employer and employee or among themselves48 and it is well established that collective bargaining is one of the means of regulating such a relation.

In the case of D.N. Banerjee vs. P.R. Mukherjee[7], the court recognizes collective bargaining

2) Industrial Employment (Standing Orders) Act, 1946 – Standing Order is drafted by the employer which contains the conditions of employment. As per Section 3 of the Act, initially, the employer needs to submit the draft standing order to the Certifying Officer which should conform to the model standing order as far as possible

3) Industrial Disputes Act, 1947 – The Act is enacted for providing the mechanism for the settlement of disputes. According to Section 18 of the Act, “A settlement arrived at by agreement between the employer and workman otherwise than in the course of conciliation proceeding shall be binding on the parties to the agreement

In case In Karol Leather Karamchari Sangathan v. Liberty Footwear Company [supra] the Court laid down that the Act (Industrial Disputes Act, 1947) seeks to achieve social justice based on collective bargaining.

4) The Constitution of India – The Constitution of India in the Chapters on Fundamental Rights and Directive Principles of State Policy justify the legality of collective bargaining. In this context, Article 19 permits to form an association that implicates the validity of a trade union, and as mentioned above that one of the main purposes of a trade union is collective bargaining.[8]


Collective Bargaining is the process of joint negotiation making and represents a democratic way of industrial life. For the success of collective bargaining, the process must begin with the agreement, and the parties should be ready and willing to compromise otherwise the whole idea of collective bargaining would be wasted. In the context of India, the problem lies in the fact that in the absence of any statutory provisions at the Central Level for the recognition of a representative trade union by an employer affects the bargaining power of the trade union. Apart from that, unorganized labor being a hurdle, the unions are generally weak. Further, weak financial position and division of union based on political ideologies slow down the growth of Trade Unions. Therefore, it is recommended that India should provide for a recognition of the Trade Union at the central level to maintain the peace and harmony with the management and workers, which in turn can provide better service to the community and hence lead to the development and growth in the economy.


  1. What is collective bargaining?
  2. How are negotiations for a collective agreement begun?
  3. Why is the importance of parties in labor relationships to negotiate an agreement as a part of the process of collective bargaining?
  4. What is the scenario of collective bargaining post-independence?


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