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Labour relation and collective bargaining


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  • 1. LABOUR RELATIONS & COLLECTIVE BARGAINA trade union (British English), labour union (Canadian English) or labor union(American English is an organization of workers who have banded together to achievecommon goals such as protecting the integrity of its trade, achieving higher pay, increasingthe number of employees an employer hires, and better working conditions. The trade union,through its leadership, bargains with the employer on behalf of union members (rank and filemembers) and negotiates labour contracts (collective bargaining) with employers. The mostcommon purpose of these associations or unions is "maintaining or improving the conditionsof their employment".This may include the negotiation of wages, work rules, complaint procedures, rulesgoverning hiring, firing and promotion of workers, benefits, workplace safety and policies.The agreements negotiated by an union are binding on the rank and file members and theemployer and in some cases on other non-member workers. Trade unions traditionally have aconstitution which details the governance of their bargaining unit and also have governanceat various levels of government depending on the industry that binds them legally to theirnegotiations and functioning.Originating in Europe, trades unions became popular in many countries during the IndustrialRevolution, when the lack of skill necessary to perform most jobs shifted employmentbargaining power almost completely to the employers side, causing many workers to bemistreated and underpaid. Trade unions may be composed of individual workers,professionals, past workers, students, apprentices and/or the unemployed.Aside from collective bargaining, activities vary, but may include: • Provision of benefits to members: Early trades unions, often provided a range of benefits to insure members against unemployment, ill health, old age and funeral expenses. In many developed countries, these functions have been assumed by the state; however, the provision of professional training, legal advice and representation for members is still an important benefit of trade union membership. • Protection of workers: Unions prevent exploitation of workers, increase their wages thereby reducing inequality. • Industrial actio: Trades unions may enforce strike or resistance to lockout in furtherance of particular goals. • Political activity: Trades unions may promote legislation favourable to the interests of their members or workers as a whole. To this end they may pursue campaigns, undertake lobbying, or financially support individual candidates or parties (such as the labour party in Britain) for public office. In some countries, trades unions may be invited to participate in government hearings about educational or other labour market reforms.LABOUR LEGISLATIONS
  • 2. The term `labour legislation’ is used to cover all the laws which have been enacted to dealwith “employment and non-employment” wages, working conditions, industrial relations,social security and welfare of persons employed in industries.Organized industry in a planned economy calls for the spirit of co-operation and mutualdependence for attaining the common purpose of greater, better and cheaper production.¬ Since this has not been happening voluntarily, the need for State intervention.¬ In India, labour legislation is treated as an arm of the State for the regulation of workingand living conditions of workers.¬ The need for labour legislation may be summarized as under:o Necessary for the health, safety, and welfare of workers;o Necessary to protect workers against oppressive terms as individual worker is economicallyweak and has little bargaining power;o To encourage and facilitate the workers in the organization;o To deal with industrial disputes;o To enforce social insurance and labour welfare schemes.Objectives:¬ The objectives of labour legislations are two-fold:o Preservation of the health, safety and welfare of workers; ando Maintenance of good relations between employers and employees.Principles of labour legislation:¬ Social Justice:o The essence of democracy is ensuring social justice to all sections of the community.o This demands the protection of those who cannot protect themselves.o In modern industrial set-up, workers, left to themselves, are unable to protect their interest.o Therefore, the State has to intervene to help them by granting them freedom of association,the power of collective bargaining and by providing for mediation or arbitration in the case ofindustrial conflict.Labour Legislation in India:¬ In India, we have many labour laws that affect the labour conditions. The main laws are:o The Factories Act, 1948.o The Trade Union Act, 1926.o The Industrial Disputes Act, 1947.o The Payment of Wages Act, 1936.o The Minimum Wages Act, 1948.o The Equal Remuneration Act, 1976.STRUCTURE OF TRADE UNIONTrade unions may, for the purpose of analysis, be divided into a number of categories, asfollows:
  • 3. Craft union : The earliest form of trade union , one whose membership is restricted to aparticular category of skilled or craft workers , for instance, printers, carpenters and so on.Membership of craft unions is usually restricted to those who have completed the recognisedqualification for the craft or skill in question, frequently an apprenticeship. Being closedunions (see below), craft unions may be quite small: for example, the National Union ofSheet Metal Workers of Ireland has 720 members as of January 1992, and the Cork OperativeButchers Society 149 members at the same date.General union : A trade union which has no form of restriction on categories of worker whomay join. There are no limits on the industrial or occupational area of recruitment. As such,general unions are open unions (see below), and tend to be fairly large. The largest generalunion in Ireland, the Services, Industrial, Professional and Technical Union (SIPTU), has190,500 members in the Republic of Ireland as of December 1992 and amounts to 43 percent. of the Republics total ICTUaffiliated trade union membership. As some trade unionsmove away from their original areas of recruitment, so they may become more like generalunions; for example, the British-based union EETPU (now amalgamated with the engineeringunion AEU to become AEEU) which was originally a craft union, has now moved into anumber of other sectors and recruited many semiskilled workers, thus having become closerto a general union than a craft union. Similarly, the retail and distributive union IDATU haswidened its areas of recruitment.Industry union : A union which confines its recruitment to one particular industry orindustrial sector, and aims to recruit all workers at all grades in that area. There are very few"pure" industrial unions in Ireland, but the Communications Workers Union is the mostprominent union in the postal and telecommunications sector, and the non-ICTU NationalBusworkers Union competes with SIPTU in recruiting workers in the two CIE buscompanies. In attempting to recruit all grades of workers in the industry, industry unions aretherefore vertical unions; however, the existence of the Communication Managers Unionblocks the CWUs attempts to recruit managerial staff.Occupational union : A union which confines its recruitment to particular occupationalareas, many of which may require the holding of certain qualifications in the same way ascraft unions. Occupational unions mainly exist in the white-collar area: for teachers, civilservants, police, bank employees and so on. Many Irish occupational unions are structuredalong the lines of grade or type of staff: for example, membership of civil service unions ishighly structured according to grade, and the four teaching unions respectively representprimary, secondary, vocational and university teachers. Occupational unions also exist forworkers in the health services, but these are more commonly referred to as professionalunions.Professional unions : Unions whose membership is restricted to members of the same orsimilar professional areas. Professional unions are thus another form of craft union, butmembers of these unions would regard themselves as being of a higher status. Examples ofprofessional unions are the National Union of Journalists and unions representing healthprofessionals, such as those for doctors or nurses, and teaching unions. Most health unionsare not affiliated to the ICTU, with the exception of the Irish Nurses Organisation whichaffiliated in 1990.Vertical union : A union which recruits vertically through grades; in other words, workersfrom the lowest "shop-floor" grade up to management are recruited. Many professional
  • 4. unions are vertical: for example, those representing nurses and teachers, among others. Thedifficulty with vertical unions is the potential they contain for conflict between the grades,which may be manifested in different views on what union policy should be in a particulararea, or even in cases where the management structure means that the workers in dispute andthe managers against whom the dispute is taken are in the same union.White-collar union : A union which recruits primarily whitecollar workers, in other words,non-manual workers. Whitecollar unions represent general clerical workers and workers fromthe services sector, including financial services. The main expansion in trade unionmembership since the 1960s has been in this area. The largest white-collar union is the MSF,although the general unions have a large proportion of white-collar workers in membership,and trade unions representing clerical grades in the civil service and local government mayalso be classed as whitecollar.COLLECTIVE BARGAININGCollective BargainingUnder a collective bargaining system, union and management negotiate with each other todevelop the work rules.The performance of the mutual obligation of the employer and the representative of theemployees to meet at reasonable times and confer in good faith with respect to wages, hours,and other terms and conditions of employment, or the negotiation of an agreement, or anyquestion arising there under, and the execution of a written contract incorporating anyagreement reached if requested by either party; such obligation does not compel either partyto agree to a proposal or require the making of a concession.Labor Management Relations and Collective BargainingForms of Bargaining Structures AND Union/ Management Relationships--Thebargainingstructure can affect the conduct of collective bargaining. The four major structures are onecompany dealing with a single union, several companies dealing with a single union, severalunionsdealing with a single company, and several companies dealing with several unions. Types ofunion/management relations that may exist in an organization are conflict, armed truce,powerbargaining, accommodation, cooperation, and collusion.The Collective Bargaining Process--Both external and internal environmental factors caninfluence the process. The first step in the collective bargaining process is preparing fornegotiations. This step is often extensive and ongoing for both union and management. Aftertheissues to be negotiated have been determined, the two sides confer to reach a mutuallyacceptablecontract. Although breakdowns in negotiations can occur, both labor and management have attheir disposal tools and arguments that can be used to convince the other side to accept theirviews.
  • 5. Eventually, however, management and the union usually reach an agreement that defines therulesof the game for the duration of the contract. The next step is for the union membership toratifythe agreement. There is a feedback loop from "Administration of the Agreement" to"Preparingfor Negotiation." Collective bargaining is a continuous and dynamic process, and preparingfor thenext round of negotiations often begins the moment a contract is ratifiedThe Psychological Aspects Of Collective Bargaining a. Preparing For NegotiationsBargaining issues can be divided into three categories: mandatory, permissive, andprohibited.Mandatory Bargaining Issues--Fall within the definition of wages, hours, and other termsand conditions of employment.Permissive Bargaining Issues--May be raised, but neither side may insist that they bebargained over.Prohibited Bargaining Issues--Are statutorily outlawed.b. Bargaining IssuesThe document that results from the collective bargaining process is known as a laboragreement or contract. Certain topics are included in virtually all labor agreements.Recognition--Its purpose is to identify the union that is recognized as the bargainingrepresentative and to describe the bargaining unit.Management Rights--A section that is often, but not always, written into the laboragreementand that spells out the rights of management. If no such section is included, management mayreason that it retains control of all topics not described as bargainable in the contract.Union Security-- The objective of union security provisions is to ensure that the unioncontinuesto exist and to perform its functionCompensation and Benefits--This section typically constitutes a large portion of most laboragreements. Virtually any item that can affect compensation and benefits may be included. 1. Wage Rate Schedule: The base rates to be paid each year of the contract for each job are included in this section. At times, unions are able to obtain a cost-of-living allowance (COLA) or escalator clause in the contract in order to protect the purchasing power of employees earnings.
  • 6. 2. Overtime and Premium Pay: Provisions covering hours of work, overtime pay, and premium pay, such as shift differentials, are included in this section. 3. Jury Pay: Some firms pay an employees entire salary when he or she is serving jury duty. Others pay the difference between jury pay and the compensation that would have been earned. The procedure covering jury pay is typically stated in the contract. 4. Layoff or Severance Pay: The amount that employees in various jobs and/or seniority levels will be paid if they are laid off or terminated is presented in this section. 5. Holidays: The holidays to be recognized and the amount of pay that a worker will receive if he or she has to work on a holiday are specified. In addition, the pay procedure for times when a holiday falls on a workers nominal day off is provided. 6. Vacation: This section spells out the amount of vacation that a person may take, based on seniority. Any restrictions as to when the vacation may be taken are also stated. 7. Family Care: This is a benefit that has been included in recent collective bargaining agreements, with child care expected to be a hot bargaining issue in the near future.CONSEQUENCES OF NON AGREEMENT BETWEEN MNGT & TRADE UNIONSThere are times when a unionbelieves that it must exert extreme pressure on management to agree to its bargainingdemands.Strikes and boycotts are the primary means that the union may use to overcome breakdownsinnegotiations. 1. Strikes: When union members refuse to work in order to exert pressure on managementin negotiations. 2. Boycotts: An agreement by union members to refuse to use or buy the firms products.The practice of a union attempting to encourage third parties (suppliers and customers) tostop doing business with the firm is a secondary boycott.Managements Strategies For Overcoming Negotiation Breakdowns--One form of actionthat is somewhat analogous to a strike is called a lockout. Management keeps employees outof theworkplace and may run the operation with management personnel and/or temporaryreplacements.The employees are unable to work and do not get paid.a. Ratifying The Agreement
  • 7. In the vast majority of collective bargaining encounters, the parties reach agreement withoutexperiencing severe breakdowns in negotiations or resorting to disruptive actions. Typically,this is accomplished before the current agreement expires. After the negotiators have reacheda tentative agreement on all topics negotiated, they will prepare a written agreement completewith the effective and termination dates. However, the approval process can be more difficultfor the union. Until it has received approval by a majority of members voting in a ratificationelection, the proposed agreement is not final. Union members may reject the proposedagreement, and new negotiations must begin.b. Administration Of The AgreementThe larger and perhaps more important part of collective bargaining is the administration ofthe agreement, which is seldom viewed by the public. The agreement establishes the union-management relationship for the duration of the contractTRADE UNION IN INDIA: HISTORY & CURRENT SCENERIOThe trade unionism in India developed quite slowly as compared to the western nations.Indian trade union movement can be divided into three phases.The first phase (1850 to1900)During this phase the inception of trade unions took place. During this period, the workingand living conditions of the labor were poor and their working hours were long. Capitalistswere only interested in their productivity and profitability. In addition, the wages were alsolow and general economic conditions were poor in industries. In order to regulate theworking hours and other service conditions of the Indian textile laborers, the Indian FactoriesAct was enacted in 1881. As a result, employment of child labor was prohibited.The growth of trade union movement was slow in this phase and later on the Indian FactoryAct of 1881 was amended in 1891. Many strikes took place in the two decades following1880 in all industrial cities. These strikes taught workers to understand the power of unitedaction even though there was no union in real terms. Small associations like Bombay Mill-Hands Association came up by this time.The second phase (1900 to 1946)This phase was characterized by the development of organized trade unions and politicalmovements of the working class. Between 1918 and 1923, many unions came into existencein the country. At Ahmedabad, under the guidance of Mahatma Gandhi, occupational unionslike spinners’ unions and weavers’ unions were formed. A strike was launched by theseunions under the leadership of Mahatma Gandhi who turned it into a satyagrah. These unionsfederated into industrial union known as Textile Labor Association in 1920.In 1920, the FirstNational Trade union organization (The All India Trade Union Congress (AITUC)) wasestablished. Many of the leaders of this organization were leaders of the national Movement.In 1926, Trade union law came up with the efforts of Mr. N N Joshi that became operativefrom 1927. During 1928, All India Trade Union Federation (AITUF) was formed.The third phase began with the emergence of independent India (in 1947). The partition ofcountry affected the trade union movement particularly Bengal and Punjab. By 1949, fourcentral trade union organizations were functioning in the country: 1. The All India Trade Union Congress,
  • 8. 2. The Indian National Trade Union Congress, 3. The Hindu Mazdoor Sangh, and 4. The United Trade Union CongressThe working class movement was also politicized along the lines of political parties. Forinstance Indian national trade Union Congress (INTUC) is the trade union arm of theCongress Party. The AITUC is the trade union arm of the Communist Party of India. Besidesworkers, white-collar employees, supervisors and managers are also organized by the tradeunions, as for example in the Banking, Insurance and Petroleum industries.Trade unions in IndiaThe Indian workforce consists of 430 million workers, growing 2% annually. The Indianlabor markets consist of three sectors: 1. The rural workers, who constitute about 60 per cent of the workforce. 2. Organized sector, which employs 8 per cent of workforce, and 3. The urban informal sector (which includes the growing software industry and other services, not included in the formal sector) which constitutes the rest 32 per cent of the workforce.At present there are twelve Central Trade Union Organizations in India: 1. All India Trade Union Congress (AITUC) 2. Bharatiya Mazdoor Sangh (BMS) 3. Centre of Indian Trade Unions (CITU) 4. Hind Mazdoor Kisan Panchayat (HMKP) 5. Hind Mazdoor Sabha (HMS) 6. Indian Federation of Free Trade Unions (IFFTU) 7. Indian National Trade Union Congress (INTUC) 8. National Front of Indian Trade Unions (NFITU) 9. National Labor Organization (NLO) 10. Trade Unions Co-ordination Centre (TUCC) 11. United Trade Union Congress (UTUC) and 12. United Trade Union Congress - Lenin Sarani (UTUC - LS)IMPORTANCE OF TRADE UNIONSReduction in Industrial Disputes – Good industrial relations reduce the industrial
  • 9. disputes. Disputes are reflections of the failure of basic human urges or motivations tosecureadequate satisfaction or expression which are fully cured by good industrialrelations. Strikes,lockouts, go-slow tactics, gherao and grievances are some of thereflections of industrialunrest which do not spring up in an atmosphere of industrial peace. It helps promoting co-operation and increasing production.High morale – Good industrial relations improve the morale of the employees. Employees work with great zeal with the feeling in mind that the interest of employerandemployees is one and the same, i.e. to increase production. Every worker feels that he isaco-owner of the gains of industry. The employer in his turn must realize that the gainsof industry are not for him along but they should be shared equally and generously withhisworkers. In other words, complete unity of thought and action is the main achievementof industrial peace. It increases the place of workers in the society and their ego is satisfiedMental Revolution – The main object of industrial relation is a complete mental revolution of workers and employees. The industrial peace lies ultimately in atransformedoutlook on the part of both. It is the business of leadership in the ranks of workers, employeesand Government to work out a new relationship in consonance witha spirit of truedemocracy. Both should think themselves as partners of the industry andthe role of workersin such a partnership should be recognized. On the other hand,workers must recognizeemployer’s authority. It will naturally have impact on production because they recognize theinterest of each other.Reduced Wastage – Good industrial relations are maintained on the basis of cooperationand recognition of each other. It will help increase production. Wastages of man, material andmachines are reduced to the minimum and thus national interest is protected.OBJECTIVES OF TRADE UNION• To establish and promote the growth of an industrial democracy based on labor partnershipin the sharing of profits and of managerial decisions, so that banindividuals personality maygrow its full stature for the benefit of the industry andof the country as well.• To eliminate or minimize the number of strikes, lockouts and gheraos by providingreasonable wages, improved living and working conditions, said fringe benefits.•To improve the economic conditions of workers in the existing state of ndustrial anagementsand political government.•Socialization of industries by making the state itself a major employer•Vesting of a proprietary interest of the workers in the industries in which they areemployed.WHY TO JOIN TRADE UNIONThe important forces that make the employees join a union are as follows:
  • 10. 1.Greater Bargaining PowerThe individual employee possesses very little bargaining power as compared to that of hisemployer. If he is not satisfied with the wage and other conditions of employment, hecanleave the job. It is not practicable to continually resign from one job after another when he isdissatisfied. This imposes a great financial and emotional burden upon theworker. The bettercourse for him is to join a union that can take concerted action againstthe employer. Thethreat or actuality of a strike by a union is a powerful tool that oftencauses the employer toaccept the demands of the workers for better conditions of employment.2.Minimize DiscriminationThe decisions regarding pay, work, transfer, promotion, etc. are highly subjective innature.The personal relationships existing between the supervisor and each of hissubordinates mayinfluence the management. Thus, there are chances of favoritisms anddiscriminations. A tradeunion can compel the management to formulate personnel policies that press for equality oftreatment to the workers. All the labor decisions of themanagement are under close scrutinyof the labor union. This has the effect of minimizing favoritism and discrimination.3.Sense of SecurityThe employees may join the unions because of their belief that it is an effective way tosecureadequate protection from various types of hazards and income insecurity such asaccident,injury, illness, unemployment, etc. The trade union secure retirement benefits of the workersand compel the management to invest in welfare services for the benefit of the workers.4.Sense of ParticipationThe employees can participate in management of matters affecting their interests only if theyjoin trade unions. They can influence the decisions that are taken as a result of collectivebargaining between the union and the management.5.Sense of BelongingnessMany employees join a union because their co-workers are the members of the union.Attimes, an employee joins a union under group pressure; if he does not, he often has averydifficult time at work. On the other hand, those who are members of a union feel thattheygain respect in the eyes of their fellow workers. They can also discuss their problemwith’the trade union leaders.6.Platform for self expressionThe desire for self-expression is a fundamental human drive for most people. All of us wishto share our feelings, ideas and opinions with others. Similarly the workers alsowant themanagement to listen to them. A trade union provides such a forum where thefeelings, ideasand opinions of the workers could be discussed. It can also transmit thefeelings, ideas,opinions and complaints of the workers to the management. Thecollective voice of theworkers is heard by the management and give due considerationwhile taking policy decisionsby the management.7.Betterment of relationships
  • 11. Another reason for employees joining unions is that employees feel that unions can fulfilltheimportant need for adequate machinery for proper maintenance of employer-employeerelations. Unions help in betterment of industrial relations among managementand workersby solving the problems peacefully.