Study Notes on Collective Bargaining

By BYJU'S Exam Prep

Updated on: September 14th, 2023

Collective Bargaining

Collective Bargaining refers to a process of negotiation through which employers, their organizations as well as trade unions can establish fair wages and working conditions. The Fourth Five Year Plan emphasised on collective bargaining and on strengthening the trade union movement for securing better labour-management relations supported by recourse in large measure to voluntary arbitration.

Functions of Collective Bargaining

Prof. Butler views the functions of collective bargaining as:-

  • A process of social change – Collective bargaining improves and enhances the status of the working class in the society
  • A peace treaty – Collective bargaining serves as a peace treaty between the employers and the employees.
  • A system of Industrial Jurisprudence – Collective bargaining creates a system of Industrial Jurisprudence. It serves as a method of introducing civil rights into the industry.

Types of Collective Bargaining

1- Distributive Bargaining:

  • This is a type of competitive bargaining strategy wherein one party wins over the other., one party gains only when the other party loses something. Both the parties try their best to get the maximum share from the asset or the resource that needs to be distributed.
  • Distributive Bargaining is also known as Conjunctive Bargaining or Zero-sum Bargaining and is used as a negotiation strategy to distribute fixed resources like assets, resources, money etc between both the parties.

2- Integrative Bargaining:

  • Under this type of bargaining, both the parties sit and try to resolve the problems of their common interest.
  • It involves the negotiation of a certain issue on which both the parties may gain or at least none of the parties lose.
  • Integrative Bargaining is also known as cooperative bargaining as it tends to be more cooperative than distributive bargaining.

3- Productivity Bargaining:

  • In this type of Collective Bargaining, both the employer as well as the employee enjoy the benefits in the form of increased production and increased pay respectively.
  • The workers are given the incentives as a result of increased productivity and through this, the workers get encouraged and work hard to reach beyond the specified level of productivity so as to gain additional benefits.

4- Composite Bargaining:

  • Under this type of bargaining, along with bargaining for wages, the workers go a step ahead and also express concern over the working conditions, environmental issues, recruitment and training policies etc. so as to safeguard their interest.

Process of Collective Bargaining

1- Preparation

2- Discuss

3- Propose

4- Bargain

5- Settlement

  • The first step is about the preparation of both parties. It is important for the negotiation team to have the knowledge of the organization as well as the skills to be an effective negotiator and establish objectives for the negotiation. An understanding of the working conditions, as well as dissatisfaction with working conditions, is an important part of preparation. The team should also prepare and anticipate union demands.
  • The second step involves a discussion between both the parties that consists of setting ground rules for how the negotiation will occur.
  • In the third step, each party presents proposals that involve initial opening statements and options to resolve the situations that exist. A discussion is conducted wherein opinions of both the parties are sought.
  • In the fourth step i.e., Bargaining, negotiations take place until a final agreement is reached. The key is to negotiate with a problem-solving attitude.
  • The fifth step i.e., Settlement is the final stage of the collective bargaining process wherein both the parties come to terms on a common solution the problem already discussed. Therefore, a mutual agreement is formed which is to be signed by each party to get the dispute settled.

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