Mba 536


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Mba 536

  1. 1. 1. Define Collective Bargaining.Collective bargaining is a process of negotiations between employers and a group of employees aimed atreaching agreements that regulate working conditions. The interests of the employees are commonlypresented by representatives of a trade union to which the employees belong. The collectiveagreements reached by these negotiations usually set out wage scales, working hours, training, health andsafety, overtime, grievance mechanisms, and rights to participate in workplace or company affairs.[1]The union may negotiate with a single employer (who is typically representing a companys shareholders) ormay negotiate with a group of businesses, depending on the country, to reach an industry wide agreement. Acollective agreement functions as a labor contract between an employer and one or more unions. Collectivebargaining consists of the process of negotiation between representatives of a union and employers (generallyrepresented by management, in some countries[which?] by anemployers organization) in respect of the termsand conditions of employment of employees, such as wages, hours of work, working conditions, grievance-procedures, and about the rights and responsibilities of trade unions. The parties often refer to the result of thenegotiation as a collective bargaining agreement (CBA) or as a collective employment agreement (CEA). 2. Define Bargaining Unit.A bargaining unit in labor relations is a group of employees with a clear and identifiable community ofinterests who are (under U.S. law) represented by a single labor union in collective bargaining and otherdealings with management. Examples would be "non-management professors"; "law enforcementprofessionals"; "blue-collar workers"; "clerical and administrative employees"; etc. Geographic location as wellas the number of facilities included in bargaining units can be at issue during representation cases.The size of a company does not relate to the size of a bargaining unit. Bargaining units must consist of at least3 employees, and must have the support of a majority of employees in the bargaining unit. However, thebargaining unit could be a small portion of a large company, where no other employees are members of aunion. 3. Differentiate between Fair Wage and living Wage.Fair wages:‘Wage levels and wage-fixing mechanisms that provide a living wage floor for workers, while complyingwith national wage regulations (such as the minimum wage, payment of wages, overtime payments,provision of paid holidays and social insurance payments), ensure proper wage adjustments and lead tobalanced wage developments in the company (with regard to wage disparity, skills, individual andcollective performance and adequate internal communication and collective bargaining on wage issues).’Minimum WageMinimum wages are set both nationally and statewide. The minimum wage gives employers a guidelineas to the legal minimum amount paid to employees. In 1968 the minimum wage served to keep 86% ofworkers and their families above the poverty line for a family of four. Today that percentage has droppedto 64%, in effect leaving 36% of wage earners living at or below the poverty line. The current minimumwage amounts are roughly half of what the projected living wage is in any given area. Living wage isdefined as the estimated amount of income necessary to live comfortably and put a family into the bracketof middle class.
  2. 2. Living WageAccording to the living wage calculator from the Poverty in America website, the typical twoparent, two child family forced to live on a minimum wage income puts them closer to the povertyline than middle class. Living wage for this family in an urban area such as Los Angeles is $34.07.The minimum wage is $8.00 and the poverty wage is $9.83. In a more rural area of California thenumbers change to $25.01 for a living wage, $8.00 for the minimum wage and $9.83 for the povertywage. It certainly proves that a single income family is a thing of the past. According totheUniversal Living Wage Website, 10.1 million people are working at minimum wage jobs andthey are staying at these jobs for up to ten years and attempting to raise their families on thesewages. Minimum Wage is Less Than Half the Living Wage. 4. How collective bargaining is beneficial to employers and employees. Collective bargaining includes not only negotiations between the employers and unions but also includes the process of resolving labor-management conflicts. Thus, collective bargaining is, essentially, a recognized way of creating a system of industrial jurisprudence. It acts as a method of introducing civil rights in the industry, that is, the management should be conducted by rules rather than arbitrary decision making. It establishes rules which define and restrict the traditional authority exercised by the management. Importance to employees Collective bargaining develops a sense of self respect and responsibility among the employees. It increases the strength of the workforce, thereby, increasing their bargaining capacity as a group. Collective bargaining increases the morale and productivity of employees. It restricts management’s freedom for arbitrary action against the employees. Moreover, unilateral actions by the employer are also discouraged. Effective collective bargaining machinery strengthens the trade unions movement. The workers feel motivated as they can approach the management on various matters and bargain for higher benefits. It helps in securing a prompt and fair settlement of grievances. It provides a flexible means for the adjustment of wages and employment conditions to economic and technological changes in the industry, as a result of which the chances for conflicts are reduced. Importance to employers 1. It becomes easier for the management to resolve issues at the bargaining level rather than taking up complaints of individual workers. 2. Collective bargaining tends to promote a sense of job security among employees and thereby tends to reduce the cost of labor turnover to management. 3. Collective bargaining opens up the channel of communication between the workers and the management and increases worker participation in decision making. 4. Collective bargaining plays a vital role in settling and preventing industrial disputes. Importance to society 1. Collective bargaining leads to industrial peace in the country 2. It results in establishment of a harmonious industrial climate which supports which helps the pace of a nation’s efforts towards economic and social development since the obstacles to such a development can be reduced considerably. 3. The discrimination and exploitation of workers is constantly being checked. 4. It provides a method or the regulation of the conditions of employment of those who are directly concerned about them. 5. Define Bargaining Agent. Union or individual certified through a secret ballot process to be the exclusive representative of all the employees in a bargaining unit or group; also called bargaining representative. In order for a
  3. 3. bargaining agent to be certified, it must receive a majority of the ballots cast in the bargaining unit. 6. What do you mean by dilemma of Dearness Allowance? 7. When does the company issue bonus issues? If a company is sitting on huge cash reserves and wants to reward its shareholders for their faith and their support, it can do so through bonus shares. Bonus share are issued in a certain proportion to the existing holding. A 3:1 bonus would mean you get three additional shares at no cost for the one share you hold in the company. Bonus shares are shares allotted to the existing shareholders (as on a certain date) at no cost to them. Since there is a nil purchase cost attached to bonus shares, you are able to reduce the cost of investment to that extent. Suppose you are holding 100 shares of Company ABC. The company issues a bonus of 1:2. This means that for every two shares that you hold, you are allotted one bonus share. This means that post bonus, your holding will rise to 150 shares (100 original shares + 50 bonus shares). Now, assume that your purchase cost was Rs 10,000 for the original 100 shares. Post the bonus your holding has risen to 150 shares. However, your purchase cost remains the same i.e. Rs 10,000. Therefore, your cost of purchase per share from the earlier Rs 100 (Rs 10,000 / 100 shares) stands reduced to Rs 67 (Rs 10,000 / 150 shares). 8. Give the origin of the term Collective bargaining.The term collective bargaining was coined in 1891 by Beatrice Webb in her work cooperative move in industries.The employment term according to her can be determined either unilaterally by the state, unilaterally by employees,unilaterally by workers and by the combined efforts of the employers and their organs, workers and their organs and thestate representatives.C.I.B study text (1982:258) observed that since the 1960s there have been certain developments in the system ofcollective bargaining. It explains that negotiating arrangements have been introduced in many organizations at local orplant level, i.e. in "domestic" bargaining. For example, a union might negotiate minimum wage rates at a national orcompany level and then separate negotiations at plant level might be concerned with extra payments for specialarrangements, such as a productivity agreement in the plant.Before the advent of collective bargaining, employees bargain individually, through the interview i.e. individual contract. 9. Discuss the Basket approach to collective Bargaining. 10. Define Caucus Bargaining. 11. Give various Theatrics used in Collective Bargaining. 12. Define Wages. 13. What do you mean by productivity linked wages? 14. What is conciliation machinery? 15. What do you mean by duty to bargain in good faith? 16. Industrial dispute. 17. What are bargaining weapons? 18. Breakdown of collective bargaining. 19. Strategies of collective bargaining. 20. Tactics of collective Bargaining. 21. Contract Administration. 22. Elements of collective bargaining. 23. Concept of Wage. 24. Fair Wage. 25. Dearness Allowance. 26. Differentiate between salary and wages. 27. What is piecemeal approach to CB?
  4. 4. 28. Explain, ìBargaining the impasseî. 29. What is Pressure bargaining? 30. Discuss ìTrade offsî. 31. What is collective agreement? 32. What is conjunctive bargaining? 33. What do you mean by Paternalistic attitudes of employees? 34. How can bargaining unit be determined? 35. Give the purpose of CB. 36. Define national wage policy. 37. What is living wage? 38. What is meant by minimum wages? 39. What are the advantages of using negotiation? 40. What is the meaning of dearness allowance? 41. What is bonus? 42. What is meaning of wage differentials? 43. What are the functions of a wage board? 44. Outline the meaning of contract administration 45. Outline the “Principle of Equal Pay for Equal Work”. 46. What do you mean by the statement “Collective bargaining is a continuous process”. 47. Explain the advantages of offering monetary incentives to the employees. 48. What do you mean by relative wages? 49. How technological change affects collective bargaining? 50. What is charter of demands? 51. What is wholistic approach to collective bargaining? 52. Give the features of collective bargaining? 53. How CB is helpful for the workers? 54. Give the limitation of CB. 55. Give benefits of CB for employers. 56. What is productive link wages? 57. How collective bargaining is beneficial to employees? 58. How can bargaining unit be determined? 59. What preparation is required before bargaining?J-8087[S-9700024] P.T.O.Section - B(9 × 5 = 45) 60. Discuss the techniques of Collective bargaining.Bargaining TechniquesThere is no formula for effective negotiations, but there are many broad issues about which the unionbargaining committee should be in agreement with respect to meetings with the management committee.Control of the agendaControl of the agenda is an exercise of power. In bargaining sessions with the employers representatives, theunion must not concede control of the agenda to the employer. Control of bargaining sessions may be eitherexplicit or implicit, and the union committee should take care not to lose such control either way. One concretemethod for maintaining control of the agenda is to make sure that the union speaks through a single, primaryspokesperson. Focusing union power through a single point transmits the appearance of control and power.Ground rules
  5. 5. One method for assuring some level of control over the agenda of bargaining is to make sure that the parties arein agreement over procedural matters that can affect the substance of bargaining. It is common for bargainingground rules to be negotiated prior to the substance of the collective bargaining agreement, either in preliminarymeetings with the employer or at the earliest bargaining sessions. Some of the matters that should be addressedas part of the procedural ground rules include: Time, place and frequency of bargaining sessions. Methods of communications between sessions, particularly when the next session is not scheduled. Release time and payment of wages for members of the union bargaining committee. Methods for maintaining an official record of the sessions, if a joint record is to be kept. An agreement that all agreements are contingent upon acceptance of the entire package. Clarification of the authority of the bargaining committee. Procedures for the exchange of proposals. Restrictions on or procedures concerning external communication about the progress of negotiations. Order of negotiations, including the negotiation of non-economic and economic provisions.DocumentationNo matter what procedures exist for maintaining an official record of the negotiations with the employer, theunion must have its own mechanisms for the recording of all substantive discussions occurring in bargainingsessions. All committee members, with the possible exception of the chief spokesperson, should take notesduring bargaining sessions. One member should be given the primary responsibility for maintaining the unionrecord. One of the values of a caucus is to gain the benefit from multiple records. No matter how effective theofficial recorder is, there will be confusion in the process of negotiations. If other members have taken notes,those members will be in a position to help assure that the official record for the union is complete and accurate.The committee should periodically review the notes to assure that no significant errors or omissions have creptinto the record.ArgumentationNot everything that takes place in discussions with the employers committee is necessarily rational, but theunion should have solid arguments prepared to explain and justify its position on every issue introduced innegotiations. Techniques of argumentation and logic are useful in negotiations for three distinct purposes. Oneis the ability to explain the proposals to the management committee. The second is to justify the need for theproposed language. The third is to persuade the employers representatives of the merits of the unions position.Explanation, justification and persuasion are different concepts. The explanation of any proposal should be arational and objective discussion of the problems giving rise to the unions proposals. Any proposal put on thetable by the union was placed there for a reason. The union committee should be prepared to define the problemthat gave rise to the proposal and the solution for that problem put forward by the union. The justification ofthat proposal goes one step further. Even if the company understands the issue and the solution addressed by theunions proposal, it is important for the union to justify the need for its proposed change in the status quo.Finally, the union must be prepared to persuade the company that the solution put forward by the union is asuperior solution to the identified problem than any other proposed change put forward.CaucusAn important tactic in the collective bargaining process is the effective use of a caucus, or opportunity for theunion to withdraw temporarily from direct negotiations with the employer. A caucus can and should be used ina number of different situations to make sure that negotiations are progressing in an appropriate manner. Someof the major reasons for the union to call a caucus during negotiations are discussed in this section.
  6. 6. One of the most important reasons to call a caucus is to resolve real or apparent conflict within the unionbargaining committee. If there are disagreements about issues or tactics within the committee, thosedisagreements should be resolved away from the bargaining table. Whenever it appears that committeemembers are advocating conflicting positions, the union committee should call for a caucus. Internal conflictshould be resolved away from the bargaining table, not in the presence of management.A caucus can also be used as a means of regaining control of the bargaining agenda and controlling the pace ofnegotiations. If emotions get out of hand, a break in the tension may be necessary. If sessions become toochaotic it may be wise to interrupt the flow. A caucus may also be used to increase the pace of negotiations. If asession moves off course into discussions unrelated to the substance of negotiations, a break in the process maybe a useful mechanism for refocusing attention.61. Discuss various Wages Differentials.Types of Wage DifferentialsEven a cursory glance at any aspect of the wage structure as mentioned earlier with bring to notice abewildering diversity in wage rates, not in the wages for different jobs but also in the wages for thesame job. These differentials can be grouped to facilitate comprehension under the following heads :(i) occuptional/skill wage differentials(ii) industrial wage differentials,(iii) area or geographical wage differentials,(iv) interplant/intra-plant wage differentials,(v) sex wage differentials,(vi) Race/caste/religion wage differentials,(vii) Union/non-union wage differentials,(viii) Age/seniority wage differentials.These are some the types of wage differentials and one could expand the list by adding many more.However, one should be cautious enough in any discussion on wage differentials to take note of theoverlapping nature of some of these differentials. 62. Give the issues in Collective Bargaining.COLLECTIVE BARGAINING ISSUESLabor unions were formed to help workers achieve common goals in the areas of wages, hours, workingconditions, and job security. These issues still are the focus of the collective bargaining process, though somenew concepts have become the subjects of negotiations. Table 1 lists the issues most often negotiated inunion contracts.THE SETTLEMENT PROCESSUnion contracts are usually bargained to remain in effect for two to three years but may cover longer or shorterperiods of time. The process of negotiating a union contract, however, may take an extended period of time.Once the management and union members of the negotiating team come to agreement on the terms of thecontract, the union members must accept or reject the agreement by a majority vote. If the agreement isaccepted, the contract is ratified and becomes a legally binding agreement remaining in effect for the specifiedperiod of time.If the union membership rejects the terms of the agreement, the negotiating teams from labor andmanagement return to the bargaining table and continue to negotiate. This cycle can be repeated severaltimes. If no agreement can be reached between the two teams, negotiations are said to have "broken down,"and several options become available.Mediation is usually the first alternative when negotiations are at a stalemate. The two parties agree voluntarilyto have an impartial third party listen to the proposals of both sides. It is the mediators job to get the two sidesto agree to a settlement. Once the mediator understands where each side stands, he or she makesrecommendations for settling their differences. The mediator merely makes suggestions, gives advice, andtries to get labor and management to compromise on a solution. Agreement is still voluntary at this point. The
  7. 7. mediator has no power to force either of the parties to settle the contract, though often labor and managementdo come to agreement by using mediation.If mediation fails to bring about a settlement, the next step can be arbitration, which can be either compulsoryor voluntary. Compulsory arbitration is not often used in labor-management negotiations in the United States.Occasionally, however, the federal government requires union and management to submit to compulsoryarbitration. In voluntary arbitration, both sides agree to use the arbitration process and agree that it will bebinding. As in mediation, an impartial third party serves in the arbitration process. The arbitrator acts as ajudge, listening to both sides and then making a decision on the terms of the settlement, which becomeslegally binding on labor and management. Ninety percent of all union contracts use arbitration if the union andmanagement cant come to agreement (Boone and Kurtz, 1999).SOURCES OF POWERIf the collective bargaining process is not working as a way to settle the differences between labor andmanagement, both sides have weapons they can use to bolster their positions. One of the most effective uniontactics is the strike or walkout. While on strike, employees do not report to work and, of course, are not paid.Strikes usually shut down operations, thus pressuring management to give in to the unions demands. Someemployees, even though allowed to belong to unions, are not allowed to strike. Federal employees fall into thiscategory. The law also prohibits some state and municipal employees from striking.During a strike, workers often picket at the entrance to their place of employment. This involves marching,carrying signs, and talking to the media about their demands. The right to picket is protected by the U.S.Constitution as long as it does not involve violence or intimidation. Problems sometimes arise during strikesand picketing when management hires replacement workers, called scabs or strikebreakers, whoCollective Bargaining IssuesWages Hours Working Conditions Job SecurityRegular Compensation Regular Work Hours Rest Periods SeniorityOvertime Compensation Overtime Work Hours Grievance Procedures EvaluationIncentives Vacations Union Membership PromotionInsurance Holidays Dues Collection LayoffsPensions Recallsneed to cross the picket line in order to do the jobs of the striking workers.The boycott is another union strategy to put pressure on management to give in to the unions demands.During a primary boycott, not only union members but also members of the general public are encouraged torefuse to conduct business with the firm in dispute with the union.Though it is rarely done, management may use the lockout as a tactic to obtain its bargaining objectives. In thissituation, management closes down the business, thus keeping union members from working. This putspressure on the union to settle the contract so employees can get back to their jobs and receive their wages.Management sometimes uses the injunction as a strategy to put pressure on the union to give in to itsdemands. An injunction is a court order prohibiting something from being done, such as picketing, or requiringsomething to be done, such as workers being ordered to return to work.GRIEVANCE PROCEDURESOnce a collective bargaining agreement is settled and a union contract is signed, it is binding on both the unionand management. However, disagreements with contract implementation can arise and violations of thecontract terms can occur. In these cases, a grievance, or complaint, can be filed. The differences that must beresolved are usually handled through a step-by-step process that is outlined in the collective bargainingagreement. The grievance procedure begins with a complaint to the workers immediate supervisor and, ifunresolved at that level, moves upward, step by step, to higher levels of management. If no resolution is found
  8. 8. at any of these levels, the two parties can agree to have the grievance submitted to an impartial outsidearbitrator for a decision binding to the union and management.Collective bargaining is a successful way for workers to reach their goals concerning accept able wages,hours, and working conditions. It al lows workers to bargain as a team to satisfy their needs. Collectivebargaining also allows management to negotiate efficiently with workers by bar gaining with them as a groupinstead of with each one individually. Though traditional bargaining can be negative and adversarial, it doesproduce collective bargaining agreements between labor and management. Partnership bargaining can lead toincreased understanding and trust between labor and management. It is a positive, cooperative approach tocollective bargaining that also culminates in contracts between labor and management. 63. Discuss the role of Collective Bargaining in India.COLLECTIVE BARGANING IN INDIACollective Bargaining in India has been the subject-matter of industrial adjudication since long and has beendefined by our Law Courts. In Kamal Leather Karamchari Sangathan v. LibertyFootwear Company1 the Supreme Court observed that, "Collective bargaining is a technique by which disputeas 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 ofcolIective bargaining. In an earlier judgment in Titagarh Jute Co. Ltd. v. Sriram Tiwari2 the Calcutta HighCourt clarified that this policy of the legislature is also implicit in the definition of industrial dispute.In Ram Prasad Viswakarma v. Industrial Tribunal3 the Court observed that, "it is well known how before thedays of collective bargaining, labour was at a great disadvantage in obtaining reasonable terms for contracts ofservice 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 ofindividual workmen, not only for the making or modification of contracts but in the matter of takingdisciplinary action against one or more workmen and as regards all other disputes.”In Bharat Iron Works v. Bhagubhai Balubbai Patel4 it was held that Collective bargaining, being the order ofthe day in the democratic social welfare State, legitimate trade union activities, which must shun all kinds ofphysical threats, coercion or violence, must march with a spirit of tolerance, understanding and grace indealings on the part of the employer. Such activities can flow in healthy channel only on mutual cooperationbetween the employer and the employees and cannot be considered as irksome by the management in the bestinterests of its business.Dialogue with representatives of a union help striking a delicate balance in adjustments and settlement ofvarious contentious claims and issues."These definitions only bring out the basic element in the concept i.e., civilized confrontation between employersand employees and the whole process is regulated by statutory provisions. 64. Discuss the national wage policy.Main objectives of national wage policy in India are discussed below:One of the objectives of economic planning is the raising of the standard of living of the people. This meansthat the benefits of planned economic development should be distributed among the different sections of thesociety.Therefore, in achieving a socialistic pattern of society, the needs for proper rewards to the working class of thecountryman never is over emphasised.
  9. 9. A national wage policy, thus aims at establishing wages at the highest possible level, which the economicconditions of the country permit and ensuring that the wage earner gets a fair share of the increased prosperityof the country as a whole resulting from the economic development.The term ―wage policy‖ here refers to legislation or government action calculated to affect the level or structureof wages or both, for the purpose of attaining specific objectives of social and economic policy.1. To eliminate malpractices in the payment of wages.2. To set minimum wages for workers, whose bargaining position is weak due to the fact that they are eitherun-organised or inefficiently organised. In other words, to reduce wage differential between the organised andunorganised sectors.3. To rationalise inter-occupational, inter-industrial and inter-regional wage differentials in such a way thatdisparities are reduced in a phased manner.4. To ensure reduction of disparities of wages and salaries between the private sector and public sector in aphased manner.5. To compensate workers for the raise in the cost of living in such a manner that in the process, the ratio ofdisparity between the highest paid and the lowest paid worker is reduced.6. To provide for the promotion and growth of trade unions and collective bargaining.7. To obtain for the workers a just share in the fruits of economic development.8. To avoid following a policy of high wages to such an extent that it results in substitution of capital for labourthereby reducing employment.9. To prevent high profitability units with better capacity to pay a level of wages far in excess of the prevailinglevel of wages in other sectors.10.To permit bilateral collective bargaining within national framework so that high wage islands are not created.11.To encourage the development of incentive systems of payment with a view to raising productivity and thereal wages of workers.12.To bring about a more efficient allocation and utilisation of man-power through wage differentials andappropriate systems of payments. In order to achieve the above objectives under the national wage policy, thefollowing regulations have been adopted by the state:1. Prescribing minimum rates of wages.2. Compulsory conciliation and arbitration.3. Wage boards.1. Minimum Wages:In order to prescribe the minimum rate of wages, the Minimum Wages Act, 1948 was passed. The Actempowers the government to fix minimum rates of wages in respect of certain sweated and unorganisedemployments. It also provides for the review of these wages at intervals not exceeding 5 years.2. Compulsory Conciliation and Arbitration:With the object of providing for conciliation and arbitration, the Industrial Disputes Act 1947 was passed. Itprovides for the appointment of Industrial Tribunals and National Industrial Tribunals for settlement of industrialdisputes including those relating to wages.3. Wage Boards:A wage board is a tripartite body with representatives of management and workers, presided over by agovernment nominated chairman who can act as an umpire in the event of disagreement among the parties.Technically, a wage board can make only recommendations, since there is no legal sanction for it, but for allpractical purposes, they are awards which if made unanimously, are considered binding upon employers. 65. Give various Collective Bargaining Exercises. 66. Discuss Contract Administration.Contract management or contract administration is the management of contracts made with customers,vendors, partners, or employees. Contract management includes negotiating the terms and conditions incontracts and ensuring compliance with the terms and conditions, as well as documenting and agreeing on anychanges or amendments that may arise during its implementation or execution. It can be summarized as theprocess of systematically and efficiently managing contract creation, execution, and analysis for the purpose ofmaximizing financial and operational performance and minimizing risk.[1]
  10. 10. Common commercial contracts include employment letters, sales invoices, purchase orders, and utilitycontracts. Complex contracts are often necessary for construction projects, goods or services that are highlyregulated, goods or services with detailed technical specifications, intellectual property (IP) agreements, andinternational trade.A study has found that for "42% of enterprises...the top driver for improvements in the management of contractsis the pressure to better assess and mitigate risks" and additionally,"nearly 65% of enterprises report thatcontract lifecycle management (CLM) has improved exposure to financial and legal risk."[2]ContractsA contract is a written or oral legally-binding agreement between the parties identified in the agreement tofulfill the terms and conditions outlined in the agreement. A prerequisite requirement for the enforcement of acontract, amongst other things, is the condition that the parties to the contract accept the terms of the claimedcontract. Historically, this was most commonly achieved through signature or performance, but in manyjurisdictions - especially with the advance of electronic commerce - the forms of acceptance have expanded toinclude various forms of electronic signature.Contracts can be of many types, e.g. sales contracts (including leases), purchasing contracts, partnershipagreements, trade agreements, and intellectual property agreements. A sales contract is a contract between a company (the seller) and a customer that where the company agrees to sell products and/or services. The customer in return is obligated to pay for the product/services bought. A purchasing contract is a contract between a company (the buyer) and a supplier who is promising to sell products and/or services within agreed terms and conditions. The company (buyer) in return is obligated to acknowledge the goods / or service and pay for liability created. A partnership agreement may be a contract which formally establishes the terms of a partnership between two legal entities such that they regard each other as partners in a commercial arrangement. However, such expressions may also be merely a means to reflect the desire of the contracting parties to act as if both are in a partnership with common goals. Therefore, it might not be the common law arrangement of a partnership which by definition creates fiduciary duties and which also has joint and several liabilities 67. What is breakdown of Collective Bargaining.ImpasseCollective bargaining situation that occurs when the parties are not able to move further toward settlementusually because one party is demanding more than the other will offer.MediationIntervention in which a neutral third party tries to assist the principals in reaching agreementFact finderA neutral party who studies the issues in a dispute and makes a public recommendation for reasonablesettlementArbitrationThe most definitive type of third party intervention in which the power to determine and dictate the settlementterms:In collective bargaining an impasse occurs when the parities are not able to move further toward settlement.An impasse usually occurs because one party is demanding more than the other will offer. Sometimes animpasse can be resolved through a third party is a disinterested person such as a mediator or arbitrator. If the
  11. 11. impasse is not resolved in this way the union may call a work stoppage or strike to put pressure inmanagement.Third party involvementNegotiators use three types of third party interventions to overcome an impasse mediation fact finding andarbitration with mediation a neutral third party tries to assist the principals in reaching agreement. The mediatorusually holds meetings with each party to determine where each stands regarding its position, and then usesthis information to find common ground for further bargaining. The mediator is always a go between and doesnot have the authority to dictate terms or make concessions. He or she communicates assessments of thelikelihood of a strike, the possible settlement packages available and the like.In certain situations as in a national emergency dispute a fact finder may be appointed. A fact finder is aneutral party who studies the issues in a dispute and makes a public recommendation for reasonablesettlement. Presidential emergency fact finding boards have successfully resolved impasse in certain criticaltransportation disputes.Arbitration is the most definitive type of third party intervention, because the arbitrator often has the power todetermine and dictate the settlement terms. Unlike mediation and fact finding arbitration can guarantees to animpasse. With binding arbitration both the parties are committed to accepting the arbitrator‘s award. Withnonbinding arbitration they are not. Arbitration may also be voluntary or compulsory (In other words, imposedby a government agency) In the United States voluntary binding arbitration is the most prevalent.There are two main topics of arbitration. Interest arbitration always centers on working out a labor agreement;the parties use it when such agreements do not yet exist or when one or both parties are seeking to changethe agreement. Rights arbitration really means contract interpretation arbitration. It usually involves interpretingexisting contract terms for instance when an employee‘s questions the employer‘s right to have taken somedisciplinary action.Sources of Third Party assistanceVarious public and professional agencies make arbitrators and mediators available. For example, the AmericanArbitration association (AAA) represents and provides the services of thousand of arbitrators and mediators toemployers and union requesting their services. The US government‘s Federal mediation and ConciliationService provides both arbitrators and mediators. For example, its office of arbitration Services maintains aroster of arbitrators qualified to hear and decide disputes over the interpretation or application of collectivebargaining agreements and provides the parties involved with lists and panels of arbitrators In fiscal year 2006,its arbitration panels decided about 2,400 cases. In addition most states provide arbitrators and mediationservices, For example New York State‘s Employment Relations Board provides mediation services to assist insettling grievance disputes and in the collective bargaining process.StrikesA strike is a withdrawal of labor, and there are four main types of strikes. An economic strike results for afailure to agree on the terms of a contract. Unions call unfair labor practice strikes to protest illegal conduct bythe employer. A wild cat strike is an unauthorized strike occurring during the term of a contract. A sympathystrike occurs when one union strikes in support of the strike of another union. For example in sympathy withemployees of the Detroit News, Detroit Free press and USA Today The United auto workers enforced a nearlysix year boycott that prevented the papers from being sold at Detroit area auto plants cutting sales by about20,000 to 30,000 copies a day.The number of major work stoppages (those involving 1,000 workers or more) peaked at about 400 per yearbetween 1965 and 1975 ad today average around 20. 68. Discuss the theories of wages.There are mainly three types of theories of wage: Economic Theories: These theories can be broadly classified into two categories: The theories that explain wages predominantly in terms of factors that influence the supply price of labour. The theories that consider wages as being determined primarily by factors which influence the demandprice of labour.Though the wage theories important policy implications some relevance for certain occupations or in certainregions , none of them are adequate as general theory having universal applicability. Subsistence Theory This theory is based on assumption that labour, like any other commodity is purchased & sold in the market,& in the long run, the value of labour trends to be equal to the cost of production.
  12. 12. The labour cost is equal to the amount which is necessary for the maintenance of the worker & his family atthe subsistence level. Conversely, if the wages fall below the subsistence level, children will die or some workers might decide tohave fewer children, would eventually bring down the birth rate. This would result in decreased labour supply,which would ultimately be equal to the demand for it. Therefore, in the long run, the wage rate gets adjusted atthe subsistence level. This theory is also known as Iron Law of Wages. The Surplus Value Theory This theory is associated with Karl Marx. According to his view, the supply of labour always tended to be kept in excess of the demand for it by a special feature ofthe capitalist wage system. Also, the worker did not get full compensation for the time spent on the job. The rateof surplus value , which is the ratio of surplus labour to necessary labour, is also referred as “rate ofexploitation” under the capitalist for of production. The Wages-Fund Theory John Stuart Mill tried to explain the movement of wages in a changing world. He observed that there waschanging “natural rate” defined by the changing ratio of capital to population. Thus, according to this theory,wages are determined by: 1. The wage fund which has been expended for obtaining the services of labour. 2. The number of workers seeking employment. It was assumed that a wage-fund is fixed & does not change. Any change in the wage rate, therefore,would be due to a change in the number of workers seeking employment. This theory was rigid in its own way. It demonstrated that bargaining power or trade union cannot raise thewage level & that efforts to discourage the accumulation of capital the wages were bound to lower wages byreducing them the wages-fund. This theory showed that productivity of labour was determined by the level of wages. If the rise in wagescould augment the efficiency of labour as well, stimulating to set out more funds in the purchase of labour.The Marginal Productivity TheoryJ.B Clark was the first to develop this theory. Later on, Marshall had made some amendments in the shape ofrefinements added to this theory. According to this theory, both demand & supply together determine the factorprice, which in a perfectly competitive market, is equal to the marginal revenue productivity of the factor. This theory assumed that there was a certain quantity of labour seeking employment & the wage rate at whichthis labour could secure employment in a competitive labour market was equal to the addition to totalproduction that resulted from employing the marginal unit of the labour force. It was also assumed thatproduction was carried out under the conditions of diminishing returns to labour.The Bargaining TheoryJohn Davidson, an American economist, was the first exponent of the Bargaining Theory of Wages. He arguedthat the wages & hours of work were ultimately determined by the relative bargaining strength of the employers& the workers. According to this theory, there is an upper limit & a lower limit on wage rates & the actual rates betweenthese limits are determined by the bargaining power of the employers & the workers. The upper limit marks thehighest wages the employers would be willing to pay, whereas, the lower limit indicates the minimum wagesprescribed under the strength of resistance of the workers at the subsistence wages below which they will notavailable for workDemand & Supply TheoryAlfred Marshall, the chief exponent to this theory, explained the complexity of the economic world tried toprovide a less rigid & deterministic theory. According to him, the determination of wages is affected by thewhole set of actors which govern demand for & supply of labour. The demand price of labour, however,determined by the marginal productivity of the individual worker. The term “supply & labour” can be expressed in a number of senses. First, it refers to the number of workersseeking employment; these are the workers who have no alternative livelihood & join the labour market seeking
  13. 13. employment for wages. Secondly, “supply & labour” may refer to the number of hours each worker is availablefor work. The supply of labour in this sense increases with any increase in the number of working hours.The Purchasing Power TheoryKeynes applied a new theory to the economy as a whole & not to an individual firm or industry. According tohim, wages are not only the cost of production for an employer but also incomes for the wage earners whoconstitute a majority in the total working population. A major part of the products of an industry is consumed bythe same workers & their families. Hence, if the wage rates are high they will have more purchasing power,which would increase the aggregate demand for goods & the level of output. Conversely, if the wage rates arelow, their purchasing power would be less, which would bring about a fail in the aggregate demand. Therefore,according to him, a cut in the wage rate instead of removing unemployment & depression will further add to theproblem.Behavioural Theories of MotivationEquity Theory Equity can be external or external. Internal equity refers to the pay differential between & among the variousskills & levels of responsibility. External equity refers to concerns regarding how wage levels for similar skilllevels in one firm compare with those in other firms in similar or the same industry & location. Expectancy theory It suggests that motivation depends on individuals‟ expectations about their ability to perform tasks & receivethe desired rewards. An employer‟s responsibility is to help employees meet their needs &, at the same time,attain organizational goals. Employers must try to find out match between employees‟ skills & abilities & thejob demands. 69. Discuss the feature of Collective Bargaining.Features of Collective BargainingThe 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 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.
  14. 14. 70. What preparations are to be made for CB.Pre-requisites for collective bargainingEffective negotiations and enforcement requires a systematic preparation of the base or ground for bargainingwhich involves the following steps:1. 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.2. 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.3. 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.4. 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.5. 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. 71. Discuss Relative Wages. 72. Explain various approaches of collective bargaining/negotiation.An Eight (8) Step Approach to Collective Bargaining or NegotiatingWith the proposals submitted, and the team selected, the chief negotiator/ leader may recognize the importance of the followingphases of negotiations:1. PREPARATIONPreparation for any serious negotiations would be incomplete without a thorough examination of factors external and internal to theworkplace which has a bearing on the negotiations.Examining external factors - the macro-economic environmentPreparation for negotiations will include an examination of macro-economic factors such as employment levels, the rate of inflation, theforeign reserves, investment, interest rates, and growth in the economy, among other things. Where the macro-economic situationappears stable and there are signs of prosperity, employers are more likely to make reasonable settlements. A major difficulty in theCaribbean is that there is a great divergence in macro-economic performance. Some countries have also performed in such a way thateven in years of solid growth, the benefits have not accrued to the mass of workers.Examining internal factors - enterprise performanceAn examination of the internal performance of the business enterprise is even more important than information on the macro-economic
  15. 15. environment. The sharing of business information is critically important for effective negotiations. In too many instances managementrefuses to provide vital information to trade unions. This is especially so where there are single owner proprietorships, partnership, andprivate limited liability companies. Branch plant operations of foreign-owned companies also often refuse to share information.2. ARGUINGNegotiators are expected to argue effectively in support of their submissions. Negotiations are not discussions, and they are notconsultations. They are about persuasive arguments that can win over a case. Negotiators are expected to argue rationally, reasonably,and to use reliable information in support of a claim. Negotiators use a blend of logic, emotional appeals, persuasion, humour,analogies and pleadings in furtherance of their claims. Argument can become heated, and may even become acrimonious and hostile.This is usually a clear sign of the need for a break or for conciliation.3. SIGNALLINGNegotiating is interactive and dynamic. Active listening is a skill which has to be developed. Also, negotiators have to be able to askquestions to elicit useful responses. Negotiators send signals through words, some plain and easily apprehended, others are moreobtuse. Negotiators also send signals through body language. For those who are adept at receiving signals, the process of movingnegotiations onward becomes less onerous. It is through signals that a negotiator begins to perceive: proposals that will meet with little resistance; those that can be accepted with some modification; and those that have low chances of success in the current round of negotiations.4. PROPOSINGArmed with the reading of signals, a negotiator will then know which proposals can be prioritized with almost certain chances ofsuccess.5. PACKAGINGThe negotiator may then decide to package proposals, making concessions and linking strong winners with others with less chances ofsuccess. A total package proposal is placed on the table with an agreement of all elements crucial for settlement.6. BARGAININGAt this stage, it is likely that both sides will be proposing packages, each with a core that signifies „the irreducible‟ that is required byeach for settlement. At this stage, negotiators might be suggesting that their proposals are the „last, last‟ that they will be making.At this stage, each negotiator is searching for an advantage, while helping the opponent to feel a winner. It is often wise to break outof formal negotiations and engage in creative scenario building on a menu of options that may provide a settlement. Negotiators talkabout taking “pens off the table”, instructing the takers of minutes not be record the creative exercise in problem-solving. In case thecreative efforts fail, the negotiators can return to formal discussions at the level of their last formal submissions. Bargaining in earnestcan be a painstaking and lengthy exercise with all of the features of an Olympic exercise between formidable contestants.7. CLOSINGExpert negotiators develop a sense of when it is best to close negotiations. Closing too early or too late can lead to the loss of thestrategic moment when greatest success can be reached. In assessing the best time to close, consideration must be given to issuessuch as the mood of the workers and the prevailing economic climate.At the end of the bargaining session, negotiators should be able to walk back over the negotiations and summarize all of the positions.They should note the agreements reached, issues that are withdrawn and others that are deferred.Ambiguities should be cleared up and joint language discussed.8. AGREEINGThe final stage in the formal negotiation process is reached when the draft agreement has been vetted, and has been produced in aformal form by the negotiators.Discussions are then held about issues such as the starting date for the payment of new salaries/wages; issues related to retroactivepay, where relevant; the timing of the introduction of new benefits; and indeed, areas of housekeeping and tidying up the business ofthe table. The discussions are then closed with appropriate addresses, bringing a civilized end to a round of negotiations.
  16. 16. 73. Explain process of collective bargaining/negotiation.All Caribbean countries have developed a legislative and institutional framework supportive of collective bargaining.Stages in Collective BargainingThe first step in the collective bargaining process is that of organizing a group of workers, gaining recognition and developing a body ofproposals to submit to the employer as the basis of a collective agreement. The development of proposals to be submitted on behalf ofworkers is a delicate process over which great care has to be taken.Trade union leaders are required to meet with the general membership and seek a clear understanding of the changes in theircontracts which they require. Such a meeting may demonstrate differences among the members on serious issues, such as levels ofremuneration. The submission of many issues, including levels of compensation and conditions, will have to be examined againstmarket considerations. The role of a research facility within a union is thus very important.Elements of submissionsNegotiators recognize that the submission must encompass various elements. Industrial relations existed at the workplace before theentry of the union. A pattern of benefits, conditions, rules and regulations is usually in place. The negotiator must make an assessmentof those provisions that are already adequate and those where improvements can be made.In terms of wages/salaries and other areas of remuneration, the first agreement is for setting a schedule in place, and must not beconfused with a revision. In a situation where wages/salaries are very far below the market value in circumstances that cannot bejustified, trade unions can sometimes achieve significant improvements for workers. In some cases, wages/salaries may already becompetitive in the market and the union may focus on conditions and other benefits.Traditionally, the trade union submits a list of changes which forms the agenda for negotiations. In recent times, the list may beenclosed in a draft collective agreement which helps to ensure that a collective agreement is signed early after the closure ofnegotiations.With recognition agreed, and proposals submitted, the union will usually inform the employer of the names of the shop stewards at theworkplace, and request the extension of courtesies in the performance of their functions.Composition of negotiating teamIn some instances, union negotiations are led by paid professional staff members and in others, by shop stewards from the workplace.In many instances, the manager, the human resources manager, and the financial officer or accountant may lead the management‟steam.Many trade union negotiating teams are led by generalists who have to develop expertise on a wide area of subjects such ascompensation practices, benefit schemes, pensions and safety and health conditions. They must also have some legal training fordrafting language in agreements.There is a growing tendency for specialists to sit on negotiating teams. Thus one person will deal with pension issues, another withhealth care and so on.In large companies with Human Resource Management Structures, there are officers who specialize in different areas of industrialrelations such as counselling, training, safety and health, negotiations, benefits, management and personnel matters.An Eight (8) Step Approach to Collective Bargaining or NegotiatingWith the proposals submitted, and the team selected, the chief negotiator/ leader may recognize the importance of the followingphases of negotiations: 1. Preparing 2. Arguing 3. Signalling 4. Proposing 5. Packaging 6. Bargaining 7. Closing 8. Agreeing.Negotiation has already been described as a process involving diplomacy. Some claim that the negotiations forum is a „contestedterrain‟, that the process is akin to an act of war, where words, wit and logic take the place of lethal weapons.
  17. 17. Communicating with the union membershipMention has already been made of the fact that negotiation leaders must always keep their principals informed and seek their supportin reaching acceptable settlements. To this end, they should hold a general meeting to get workers to vote for the settlement theypropose to close on.A negotiator can receive a shock if his tentative agreement at the table is met by a refusal from his principals, and this can happen ifthey have not been included throughout the various stages of the process.Meetings, circulation of minutes and the use of position summaries can all help to ensure the smooth process of collective bargaining.A skilled negotiator has little difficulty in having a vote at the end of the negotiation process and getting majority support for hisagreement. He should not however, be unduly concerned if support is not unanimous. He should be wary, nevertheless, if there isresistance from a substantial minority of his principals.Breakdown in Collective BargainingTrade unions have traditionally recognized the value and importance of industrial action when there is a failure to reach agreementthrough the established procedures. Industrial action can take many forms: 1. work-to-rule 2. go slow 3. strikeIn some countries the strike is highly regulated through statutory provisions.In most countries Essential Services are clearly defined and industrial action in these areas is circumscribed. 74. Discuss position of collective bargaining in India.POSITION OF COLLECTIVE BARGAINING IN INDIACollective Bargaining machinery essentially is a reflection of a particular social and political climate. Thehistory of the trade union movement shows that union are affiliated to one or theother political parties. As a result most of the trade unions are controlled by outsiders. Critic says that thepresence of outsiders is one of the important reasons for the failure of collective bargaining in India.iOutsiders in the Process of Collective BargainingThe Trade Unions Act, 1926, permits outsiders to be the office bearers of a union to the extent of half the totalnumber of office bearers.ii So, it permits one to be the leader of the union who does not actually work in theindustry. Sometimes a dismissed employee working as a union leader may create difficulties in the relationshipbetween the union and the employer.iii Nevertheless, experience shows that outsiders who have little knowledgeof the background of labour problems, history of labour movement, fundamentals of trade unionism and thetechnique of the industry and with even little general education assume the charge of labour union and becomethe self-appointed custodian of the welfare of workers. The employers, therefore, have been reluctant to discussand negotiate industrial matters with outsiders, who have no personal or direct knowledge of day to day affairsof the industry.Accordingly employers refuse recognition to the unions which are either controlled by the politicians oraffiliated to a particular political party or controlled by a particular individual. Government cannot morallycompel employers to accord recognition to unions without driving out the politicians from them. The State mustoutright ban "outsiders" from the trade union body. Further, provision for political fundiv by trade unions shouldbe eliminated, since it invariably encourages the politicians to prey upon them. The National Commission onLabour has overlooked this aspect. The Commission does not favour a legal ban on non-employees for holdingthe union office. It says that without creating conditions for building up the internal leadership, a completebanning of outsiders would only make unions weaker. The Commission hopes that internal leadership woulddevelop through their education and training. Accordingly
  18. 18. the Commission suggests proportion of the outsiders and the workers in a union executive.v On realizing theproblems of outsiders in the union, the Industrial Relations Bill, 1988 proposes to reduce the number ofoutsiders to two only. Another hurdle in the success of collective bargaining in India, is the absence of acompulsory „recognition‟ provision in the Act.Impact of Recognition as Bargaining Agent in Collective BargainingIn view of the prevailing multi-trade-unionism in the country, recognition of a bargaining agent has assumedimportance. Unfortunately, no attempt has been made at the national level to either lay down a procedure forrecognition of a trade-union as bargaining agent or work out a procedure. There is no provision either in theIndian Trade Union Act 1926 or in the Industrial Disputes Act 1947 for the purpose. The Government of Indiaproposed an amendment in theTrade Union Act in 1950 making recognition of a union compulsory. The measure however, faced seriousopposition and remained unimplemented. The Standing Labour Committee (l8th Session) and NationalCommission on Labour favoured a statutory -provision for the purpose but their recommendations have yet tobe accepted. The National Commission on Labour attached considerable importance to the matter of recognitionof unions and observed as under:"Industrial Democracy implies that the majority union should have the right to sole representation, i.e., the rightto speak and act for all workers and enter into agreements with the employer."viIn the absence of statutory provision, the matter is regulated by the Code of Discipline which was evolved atNainital session of Indian Labour Conference in 1952. The Code of Discipline provides for verification oftrade-union membership by Central Industrial Relations Machinery of the Government. Its voluntary characterhas however, made it ineffective and it has been found difficult to implement it in view of statutory provisionsin the Industrial Disputes Act.At the present not even public sector undertakings are following the Code of Discipline and are bargaining withmore than one union.States like Bombay and Madhya Pradesh have, however, given statutory recognition to the procedure fordetermination of bargaining agent. Both, Bombay Industrial Relations Act 1946 and Madhya Pradesh IndustrialRelations Act, 1960, provide for the determination of represent- tative union by the Registrar of RepresentativeUnions. Special provisions have been made for agreements signed by representative unions. In spite of it, theexperience shows that there had been serious opposition to statutory recognition of a union as sole bargainingagent 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 ofretaliation by unrecognized unions has proved to be the biggest stumbling block in the success of statutoryrecognition system.Multi -UnionismPolitical orientation of trade unions is the primary reason for multi-unionism. Communal sentiments, provincialfeelings and caste are other major causes for multi-unionism.vii Presence of too many unions in an industrydestroys the bargaining strength of workers. Our labour legislation also permits multi-unionism.viiiMulti-unionism adversely affects collective bargaining process. Where there are too many unions, with whomshould management negotiate? Each union may claim recognition. Each union may present separate charter ofdemands in a spirit of rivalry. When conflicting 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
  19. 19. It is well known that the trade-union movement in India is divided on political lines and exists on patronage ofvarious political parties. Most of the trade-union organizations have aligned themselves with a political partywith whom they find themselves philosophically close. It is because of this that the Indian National TradeUnion Congress is considered to be the labour wing of congress (I) whereas H.M.S. is considered to be thelabour wing of Socialist party. Bhartiya Majdoor Sangh pledges its allegiance to B.J.P. and C.I.T.U has thesupport of C.P.I. (M). It is also the case with the . AITUC which had started as a national organization ofworkers but subsequently came to be controlled by the Communist Party of India and is now its official labourwing. Political patronage of trade-unions has given a new direction to the movement whose centre of gravity isno longer the employees or workmen. The centre has shifted towards it leadership whose effectiveness isdetermined by the extent of political patronage and the consequent capacity to obtain the benefit. This shiftingcentre of power is the necessary consequence of political parties search for workers votes, which they seek byconferring benefits on them. Since the public sector which is really the instrumentality of the State, has emergedas 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 agreementsconferring benefits are signed even in those units where financial losses are mounting. It is also our experiencethat inspite of wage increase and improved conditions of service, there has been no corresponding improvementin production or the productivity and most of the losses are being passed on to the consumers by increasingprices of the products. It is in this context that Justice Gupta has, in his, "Our Industrial Jurisprudence" made thefollowing observations:"If our experience is any guide, it reveals that level of increase in wages etc., (in public sector undertaking ) isnow decided by the Bureau of Public Enterprises which takes into consideration only the Political impact andConsumer resistance as two dominant factors. This is the reason why the prices of almost all products ofnecessity like coal, iron and steel, cement, sugar etc. have been constantly increasing. A survey of pending anddecided industrial disputes of the last 10 years reveals that there was virtually no industrial dispute regardingwage structure or bonus in any industry of some significance. There are also not many collective bargainingagreementswhich have tried to link wages with productivity. Clearly, therefore, the basic idea of sharing the prosperitywhich developed because of our commitment to the cause of social justice is no longer current and theexpected end-product of the process of social justice" is no longer expected."ixCritical EvaluationIn Indian labour arena we see, multiplicity of unions and inter-union rivalry. Statutory provisions forrecognising unions as bargaining agents are absent. It is believed that the institution of collective bargaining isstill in its preliminary and organizational stage.x State, therefore, must play a progressive and positive role inremoving the pitfalls which have stood in the way of mutual, amicable and voluntary settlement of labourdisputes. The labour policy must reflect a new approach.Hitherto the State has been playing a dominant role in controlling and guiding labour-management relationthrough its lopsided adjudication machinery. The role of the industrial adjudicator virtually differs from that ofa judge of ordinary civil court. The judge of a civil court has to apply the law to the case before him and deciderights and liabilities according to its established laws. Whereas industrial adjudicator has to adjust and reconcilethe conflicting claims of disputants and evolve "socially desirable" rights and obligations of the disputants.5 Indeciding 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 tothe peaceful industrial relations.6 It is accepted that the end of judicial proceeding is pain and penalties. Itcannot solve the problems of industries. Accordingly it is said that:
  20. 20. "While statutes, rules, regulations, pains and penalties have their place in the ordering of industry, they do nottouch the core of the problems of industrial relations."7Moreover, advocates of adjudication contend that as the collective bargaining procedure might end in a strike orlockout, 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 sinceadjudication was adopted after world-war-II? We do agree that industrial peace can be established by theadjudication for the time being. But the conflicts are driven deeper and it will retard industrial production. In theabsence of effective collective bargaining the anti – productivity tendencies are bound to appear. 75. What is wage? Distinguish between money wage and real wage.Cost of using labor as opposed to cost of using capital or land. As a price of labor, it is subjectto the forces of demand and supply in the labor market, which in turn is affected by productivity levelsand ability of the employers to substitute labor with other factors of production such as machinery The real wage, however, is not the same as the money wage. The real wage is the access to goods and services given to a worker in exchange for their labour. A change in the level of money wages is one determinant of a change in the level of real wages. A change in the overall throughput rate is another determinant. Real wages always change as the direct result of movements in other variables. Money wages always change as the result of conscious, deliberate human decision, taken as a human response to changes in other variables. A change in money wages must effect some change in real wages because of its effect on the determinants of real wages. But a change in real wages does not change the money wage; only human responsive action can do that. The change in real wages affected by a change in money wages may be in the same or the opposite direction to the money-wage change, and may be a greater or smaller percent change than that in the money wage. 76. Explain wage and salary administration.Employee compensation may be classified into two types – base compensation and supplementarycompensation. Base compensation refers to monetary payments to employees in the form of wagesand salaries. The term ‗wages‘ implies remuneration to workers doing manual work. The term‗salaries‘ is usually defined to mean compensation to office, managerial, technical and professionalstaff. The distinction, however, is rarely observed in actual practice. Base compensation, it should benoted here, is a fixed and non-incentive payment on the basis of time spent by an employee on thejob. Supplementary compensation signifies incentive payments based on actual performance of anemployee or a group of employees. The term ‗compensation administration‘ or wage and salaryadministration denotes the process of managing a company‘s compensation programme.The goals of compensation administration are to design a cost-effective pay structure that will attract,motivate and retain competent employees‘. 77. Discuss National Wage Policy.National Wage Policy For India.
  21. 21. In Indian Democracy, the entire citizen is equal, whether he/she is a SCAVENGER OF THE VILLAGEPANCHYAT or the PRESIDENT OF THE NATION.For example, the SCAVENGER EARNS Rs: 5000=00 & the PRESIDENT EARNS Rs: 50,000=00, per month.For both, 1 kg Rice costs Rs: 20=00.For the PRESIDENT Rs: 20=00 is like just 2 Paisa. But, for the SCAVENGER, Rs: 20=00 is more than Rs:200=00.Both have to live. The PRESIDENT lives easily. But, the SCAVENGER, he has to struggle hard "EveryMoment".My Humble appeal to the Government of India is:For example, in the field of Education,For both the employees of the State and Center, there must be equal salary for:1. Scavengers2. Attenders3. S.D.C., F.D.C., & other higher categories4. Teachers of Primary, Secondary,5. Lecturers of P.U.C., College, Post-Graduate University Departments.6. Readers of P.U.C., College, Post-Graduate University Departments.7. Professors of P.U.C., College, Post-Graduate University Departments.I. Equal wage for Teachers with the same qualifications, working in State and Central Schools.II. Equal wage for Lecturers with the same qualification, working in Aided & govt.Colleges. Similarly forReaders & Professors.III. Equal wage for Lecturer, Reader, & Professor - working in the Aided College, in the Govt. College,Post-graduate University Departments.IV. Equal wage for Lecturer-Reader-Professor working in the State University and Central University, withthe same Qualification.V. In this way, Equality must be maintained among all the different types of employees, without makingthe distinction as STATE AND CENTER GOVERNMENT EMPLOYEES. 78. Discuss the strategies to CB.-Book-Page-25 79. Give the tactics used in CB.TACTICS USED IN COLLECTIVE BARGAINING1.ANTICIPATE --- THE PROPOSALS / DEMANDS, THE INTENTION OF THEDEMANDS, & ALSO THE DIRECTION INWHICH THESE WILL BEPRESENTED OR PLACED.2. TEAM SPIRIT --- SHOULD BE MAINTAINED THROUGHOUT THENEGOTIATIONS. IT REQUIRES SYNCHRONIZATIONOF THE TEAMMEMBERS‘ VIEWS DURING THE DISCUSSION. A REHEARSALBEFOREHAND MAY CLEAR THE ROLE &RESPONSIBILITY OF EACH OF THE MEMBER.3.SEPARATE RESPONSIBILITIES FROM PROBLEMS ---THIS WILL PROVIDE APLATFORM TO GIVEIMPORTANCE ON ISSUES & NOT THE PEOPLEBEHIND THE ISSUES.4.COUNTER PROPOSAL--- THE MANAGEMENT SHOULD PRESENT ACOUNTER PROPOSAL AGAINST THEDEMAND RAISED BY THE UNION.e. g. IF A DEMAND IS ON WAGE HIKE, THE MANAGEMENT SHOULDRAISE THEISSUE OF PRODUCTIVITY, WORKLOAD etc.5.EMOTIONAL MATURITY ---- MUST BE MAINTAINED BY BOTH MEMBERSOF UNION T THE REPRESENTATIVES OFMANAGEMENT. PATIENTLISTENING & MUTUAL UNDERSTANDING WILL FACILITATE THEPROCESS OF DECISION-MAKING.6.PROPER MANAGEMENT REPRESENTATIVES -----PERSONS WITH PROPERAUTHORITY TO COMMIT &STANDBY SHOULD BE DEPUTED BY THEMANAGEMENT AT THE NEGOTIATION TABLE. PRESENCE OF A Jr
  22. 22. RANK PERSON WILL SEND A WRONG SIGNAL TO THE UNION REGARDING THE SERIOUSNESS OF THEMANAGEMENT.7.PHASE OUT THE ISSUES --- IT IS DESIRABLE TO TAKE UP THE ISSUESWHICH DO NOT COST OR COSTLESS TO THE MANAGEMENTINITIALLY & THEN SWITCH OVER TO HIGH COST INVOLVEMENTITEMS. THIS WILLCREATE A GOOD ENVIRONMENT FORNEGOTIATIONS.8.SAFETY VALVE -----EVEN IF THE NEGOTIATION IS DIFFICULT, THERESHOULD BE SAFETY VALVE WHICHSHOULD NOT BE CROSSED BY THE NEGOTIATING TEAMS EXCEPT IN EXCEPTIONAL CIRCUMSTANCES.9.BE GOOD LISTENER ----IT IS NOT DESIRABLE TO TALK MUCHWITHOUT ALLOWING THE OTHER PARTY TOSPEAK. IT GIVES THEOTHER PARTY YOUR POSITION BUT LEAVES YOU WITH LITTLEKNOWLEDGE OF HIS POSITION& POTENTIAL TRADE-OFF.10.DO NOT GIVE-UP ---THE PARTIES INVOLVED IN THE NEGOTIATIONSSHOULD NOT GIVE UP TOO SOONOR BACK OFF TOO QUICKLY.SANMAN KULKARNI11. JUDGE THE PARTIES ---IT IS NOT DESIRABLE TO UNDERESTIMATE OROVERESTIMATE THE OTHER PARTY.12.GOOD END —THE RESULT OF A COLLECTIVE BARGAINING STRATEGYSHOULD END IN A GOOD AGREEMENTOR SETTLEMENT 80. Explain CB and technological change.-Book-Page-70 81. Discuss the problems of CB.PROBLEMS RELATING TO COLLECTIVE BARGAINING IN INDIAThe collective bargaining scene in India is not very encouraging. The major emphasis of both union andemployers is to settle the disputes through adjudication rather than sorting out the issues among themselves.Whatever bargaining takes place, it is limited to large plants only. Smaller organisations generally do not preferthis form of handling the issues.As discussed in the previous chapter, several factors are responsible for this state of affairs. These are listedbelow: I. Due to the dominance of outsiders in trade unionism in the country, there is multiplicity of unions which are weak and unstable, and do not represent majority of the employees. Moreover, there are inter-union rivalries, which further hinder the process of collective bargaining between the labour and the management. II. Since most of the trade unions are having political affiliations, they continue to be dominated by politicians, who use the unions and their members to meet their political ends. III. There is a lack of definite procedure to determine which union is to be recognised to serve as a bargaining agent on behalf of the workersIV. In India, the law provides an easy access to adjudication. Under the Industrial Disputes Act, the parties to the dispute may request the Government to refer the matter to adjudication and the Government will constitute the adjudication machinery, i.e., labour court or industrial tribunal. Thus, the faith in the collective bargaining process is discouraged. V. There has been very close association between the trade unions and political parties. As a result, trade union movement has leaned towards political orientations rather than collective bargaining. 82. Give the historical introduction to collective bargaining.The conflict between the management and the employee is inherent in an industrial society. One argues formore investment and profits while the other argues for better standard of living. These two conflicting interestscan be adjusted temporarily through the principle of "give and take"xi, The principle of give and take has beeninfused in the principle of collective bargaining.The phrase "collective bargaining" was coined by British labor reformers Sidney and Beatrice Webb of GreatBritain which was the “home of collective bargaining” in the 1890‟sxii. The idea of collective bargainingemerged as a result of industrial conflict and growth of trade union movement and was first given currency in
  23. 23. the United States by Samuel Crompers. In India the first collective bargaining agreement was conducted in1920 at the instance of Mahatma Gandhi to regulate labour management relation between a group of employersand their workers in the textile industry in Ahmadabadxiii.Advocates of collective bargaining in the early decades of the twentieth century thought it essential for threereasons. First and foremost, a system of peaceful and routine bargaining would eliminate industrial strife andviolence. Second, collective bargaining stood for "industrial democracy," and finally, collective bargainingpromised to make capitalism work.In any industrial establishment the friction between employer and the workmen is inevitable. There are demandsby the workmen and if those demands are resisted by the employer, industrial dispute arises resulting inindustrial tension and disturbing the peace and harmony in the industry. Collective Bargaining is one of themethods 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 tensionsand provide the mechanics of dispute resolution. When Industrial Disputes Act, 1947 was passed in India, it waspassed to provide machinery and form for the investigation of industrial disputes and for the settlement thereofand for the purposes analogous and incidental thereto. As is evident from the Act itself that it is piece oflegislation which mainly provides for investigation and settlement of Industrial disputes.In the words of Justice Desai the emergence of the concept of welfare state implies an end to exploitation ofworkmen and as a corollary to that collective bargaining came into its own and lest the conflicting interests ofthe workmen and the employer disturb the industrial peace and harmony, a machinery for adjustment of suchconflicting interests became the need of the time. The Act therefore was enacted to provide machinery andForum for adjustment of such conflicting and seemingly irreconcilable interests without disturbing the peaceand 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 unionGovernment. Before the adoption of the collective bargaining the labour was at a great disadvantage inobtaining reasonable terms for contract of service from its employer. With the development of the trade unionsin the country and the collective bargaining becoming the rule it was equally found by the employers thatinstead of dealing with individual workmen it is convenient and necessary to deal with the representatives of theworkmen not only for the making or modification contracts but also in the matter of taking disciplinary actionagainst the workmen and regarding other disputes. So, collective bargaining has come to stay having regard tomodern conditions of the society where capital and labour have organized themselves into groups for thepurpose of fighting and settling their disputes. 83. Give the types of wages.Type of wagesThe main types of wages are:1. Subsistence wage;2. Minimum wage;3. Fair Wage; and4. Living WageSubsistence Wage: - The wage that can meet only bare physical needs of a worker and his family iscalled subsistence wage.Minimum Wage: - Minimum wage is the wage that is able to provide not only for bare physical needsbut also for preservation of efficiency of worker plus some measure of education, health and otherthings.Fair Wage:- Fair wages is an adjustable step that moves up according to the capacity of the industryto pay, and the prevailing rates of wages in the area of industry.
  24. 24. Living Wage:- Living wage is that which workers can maintain the health and decency, a measure ofcomfort and some insurance against the more important misfortune of lie.In any even the minimum wage must be paid irrespective of the extent of profits, the financialcondition of the establishment or the availability of workmen at lower wages.The wages must be fair, i.e. sufficiently high to provide standard family with ,food, shelter, clothing,medical care and education of children appropriate to the workmen.A fair wage lies between the minimum wage and the living wage which is the goal.Wages must be paid on an industry wise and region basis having due regard to the financial capacityof the unit. 84. Explain different types of bargaining.Types of Collective Bargaining Conjunctive / Distributive Bargaining:Distributive bargaining is the most common type of bargaining & involves zero-sum negotiations, in otherwords, one side wins and the other loses.Both parties try to maximize their respective gains.They try to settle economic issues such as wages, benefits, bonus, etc.For Example, Unions negotiate for maximum wages & the management wants to yield as little as possible –while getting things done through workers. • In distributive bargaining, unions and management have initial offers or demands, target points (e.g.: desired wage level), resistance points (e.g.: unacceptable wage levels) & settlement ranges (e.g.: acceptable wage level). Another name for this type of bargaining is conjunctive bargaining. Cooperative /Integrative Bargaining: Integrative bargaining is similar to problem solving sessions in which both sides are trying to reach a mutually beneficial alternative, i.e. a win-win situation. • Both the employer & the union try to resolve the conflict to the benefit of both parties. Both sides share information about their interests and concerns and they create a list of possible solutions to best meet everyone‟s needs. • For Example, when companies are hit by recession, they cannot offer the kind of wages and benefits demanded by workers. At the same time they cannot survive without the latter‟s support. Both parties realize the importance of surviving in such difficult times and are willing to negotiate the terms of employment in a flexible way. Productivity Bargaining: • The concept of productivity bargain involves a good understanding of the following concepts. Based on these concepts both the parties must develop a productivity linked scheme. • Difference between productivity & work intensity • How to conduct work study • ILO guidelines for work study – Personal needs allowance, Fatigue allowance, hazardous allowance , etc. • Other Methods like MOST (Maynard Operational Sequence Techniques) • Systems improvement and method improvement • Required Skills and Knowledge for productivity settlement Composite Bargaining: • Workers believed that productivity bargaining agreements increased their workloads. Rationalization, introduction of new technology, tight productivity norms have added to this burden and made the life of a worker some what uneasy. As an answer to such problems, labor has come in favor of composite bargaining. • In this method, labor bargains for wages as usual, but goes a step further demanding equity in matters relating to work norms, employment levels, manning standards, environnemental hagards , sub-
  25. 25. contracting clauses etc. This works in the favor of the workers, for e.g., when unions negotiate standards they ensure the workload of workers don‟t exceed .  Concessionary Bargaining: • Quite opposite to the other forms of bargaining, where the unions demanded from the employers, in concessionary bargaining, the objective is to giving back to management some of what it has gained in previous bargaining. • Why should labor be willing to give back what it has worked so hard to obtain? • A good example is the agreement between General Motors & the International Union of Electric Workers that granted GM around the-clock operations, wages and benefits concessions for the new hires, and a two-week mass vacation. The concessions were made to save over 3,000 jobs. • In some cases, despite a financial crisis, the union may not be willing to concede. This may be because the union doesn‟t view management‟s arguments as credible. Thus, the degree of trust and credibility between the management and the union may influence the extent to which concessionary bargaining occurs. 85. Give the calculation of bonus. How to Calculate Employee Bonuses Bonuses are extra pay above and beyond the set pay rate. Bonuses are extra pay provided to employees above and beyond their regular salary, hourly wages, or commissions. Used correctly, bonuses can improve employee performance and loyalty. Set too low, employee bonuses become demoralizing or devalued. Employee bonuses can be calculated based on an even distribution to all employees, a reward to star performers, or be given as a percentage of each employees salary. Instructions1. Calculation 1. Determine how bonuses are to be decided. Bonuses can be based on a percentage of the employees salary, sales generated, or as a reward to stellar employees. 2. Create a list of all employees who are eligible for bonuses or are named by management as deserving of bonuses. If bonuses are to be based on their current salary, include the salary of each nominated employee. 3. Review the company budget to determine how much money is available for employee bonuses. Determine the employee bonus budget upon which individual employee bonuses will be calculated. 4. Divide the budgeted amount for bonuses among the employees. If an equal amount is to be given to each employee, divide the bonus budget by the number of employees eligible or nominated. If bonuses are to be based as a percentage of each employees salary, first total the salaries of the nominated employees. Then divide the bonus budget by the salary total. This provides a percentage to apply to each employees salary to provide bonuses to each with an equal weight to their individual salaries. 5. List the bonus amount to be given to each employee, whether it is a lump sum equally divided among employees or set as a percentage of each employees pay. Provide this list to the payroll department so that the calculated employee bonuses can be paid to each eligible individual. OR Bonus to be paid under Payment of Bonus Act,1965 is to be calculated as under :
  26. 26. 1. It depends upon the percentage on which your company wants to give bonus to its employees.Minimum bonus is 8.33% of basic salary earned during the accounting year and Maximum is 20% underthe payment of Bonus Act,1965.2. Eligibility : Bonus under Payment of Bonus Act,1965 is required to be to employees whose salary (Basic) is of less than Rs.10000.00 per month during the accounting year for which bonus is to be paid.3. Bonus is to be calculated for eligible employees assuming salary ( Basic) as Rs.3500.00 per month orless, if, it is less then Rs.3500.004.Multiply the yearly sum of salary thus worked out as per above clause 3 with rate of bonus. The figure isbonus payable to employee under the act.5.Payment is to be made on Register prescribed under the act.6. Return of payment of bonus is to be submitted with ALC or other designated authority under the act ,within 30 days of payment of bonus to employees. 86. Describe the concept of collective bargaining, with suitable illustrations. 87. Outline the historical developments in the area of collective bargaining by citing examples. 88. Explain the salient features of various techniques of collective bargaining. 89. Highlight important issues involved in collective bargaining. Explain with examples. 90. What are important reasons for the breakdown in the collective bargaining process? 91. Critically examine the developments in the area of collective bargaining in India 92. Highlight features of important theories of wages. 93. Explain salient features of National Wage Policy of India. 94. Should wages be linked with the productivity? Give arguments in support of your answer. 95. What are the merits and demerits of having a policy of wage differential in an organization? 96. Outline the rationale for giving dearness allowance to the employees. 97. What are the important factors to be kept in mind while conducting negotiations? Illustrate with examplesCollective Bargaining Vs. Joint Consultation• There is a lot of differences between the two processes.• Collective bargaining The object is to arrive at an agreement on wages and other conditions of employment about which the parties start with divergent viewpoints but ultimately attempt to make compromise. As soon as the bargain is made, the terms of the agreement are put into action.• Joint consultation such as joint councils refers to the sharing of information and suggestions with regard to issues of common interest including health, safety, welfare and productive efficiency. Although the results differ, course of activities may be in the form of recommendations, the ultimate decisions lies with the management.Scope of Collective BargainingScope of collective bargaining is based on the following guide lines(in India)• A preamble stating why the parties had met together, usually making reference to the union’s charter of demands which formed the starting point for discussions.