Mba 536

1. Define Collective Bargaining.

Collective bargaining is a process of negotiations between employers and a group of employees aimed at
reaching agreements that regulate working conditions. The interests of the employees are commonly
presented by representatives of a trade union to which the employees belong. The collective
agreements reached by these negotiations usually set out wage scales, working hours, training, health and
safety, 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 company's shareholders) or
may negotiate with a group of businesses, depending on the country, to reach an industry wide agreement. A
collective agreement functions as a labor contract between an employer and one or more unions. Collective
bargaining consists of the process of negotiation between representatives of a union and employers (generally
represented by management, in some countries[which?] by anemployers' organization) in respect of the terms
and 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 the
negotiation 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 of
interests who are (under U.S. law) represented by a single labor union in collective bargaining and other
dealings with management. Examples would be "non-management professors"; "law enforcement
professionals"; "blue-collar workers"; "clerical and administrative employees"; etc. Geographic location as well
as 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 least
3 employees, and must have the support of a majority of employees in the bargaining unit. However, the
bargaining unit could be a small portion of a large company, where no other employees are members of a
union.

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 complying
with 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 to
balanced wage developments in the company (with regard to wage disparity, skills, individual and
collective performance and adequate internal communication and collective bargaining on wage issues).’

Minimum Wage
Minimum wages are set both nationally and statewide. The minimum wage gives employers a guideline
as to the legal minimum amount paid to employees. In 1968 the minimum wage served to keep 86% of
workers and their families above the poverty line for a family of four. Today that percentage has dropped
to 64%, in effect leaving 36% of wage earners living at or below the poverty line. The current minimum
wage amounts are roughly half of what the projected living wage is in any given area. Living wage is
defined as the estimated amount of income necessary to live comfortably and put a family into the bracket
of middle class.

Living Wage
According to the living wage calculator from the Poverty in America website, the typical two
parent, two child family forced to live on a minimum wage income puts them closer to the poverty
line 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 the
numbers change to $25.01 for a living wage, $8.00 for the minimum wage and $9.83 for the poverty
wage. It certainly proves that a single income family is a thing of the past. According to
theUniversal Living Wage Website, 10.1 million people are working at minimum wage jobs and
they are staying at these jobs for up to ten years and attempting to raise their families on these
wages. 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

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 the
state representatives.
C.I.B study text (1982:258) observed that since the 1960s there have been certain developments in the system of
collective bargaining. It explains that negotiating arrangements have been introduced in many organizations at local or
plant level, i.e. in "domestic" bargaining. For example, a union might negotiate minimum wage rates at a national or
company level and then separate negotiations at plant level might be concerned with extra payments for special
arrangements, 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?

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 Techniques

There is no formula for effective negotiations, but there are many broad issues about which the union
bargaining committee should be in agreement with respect to meetings with the management committee.

Control of the agenda

Control of the agenda is an exercise of power. In bargaining sessions with the employer's representatives, the
union must not concede control of the agenda to the employer. Control of bargaining sessions may be either
explicit or implicit, and the union committee should take care not to lose such control either way. One concrete
method for maintaining control of the agenda is to make sure that the union speaks through a single, primary
spokesperson. Focusing union power through a single point transmits the appearance of control and power.

Ground rules

One method for assuring some level of control over the agenda of bargaining is to make sure that the parties are
in agreement over procedural matters that can affect the substance of bargaining. It is common for bargaining
ground rules to be negotiated prior to the substance of the collective bargaining agreement, either in preliminary
meetings with the employer or at the earliest bargaining sessions. Some of the matters that should be addressed
as 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.

Documentation

No matter what procedures exist for maintaining an official record of the negotiations with the employer, the
union must have its own mechanisms for the recording of all substantive discussions occurring in bargaining
sessions. All committee members, with the possible exception of the chief spokesperson, should take notes
during bargaining sessions. One member should be given the primary responsibility for maintaining the union
record. One of the values of a caucus is to gain the benefit from multiple records. No matter how effective the
official 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 crept
into the record.

Argumentation

Not everything that takes place in discussions with the employer's committee is necessarily rational, but the
union should have solid arguments prepared to explain and justify its position on every issue introduced in
negotiations. Techniques of argumentation and logic are useful in negotiations for three distinct purposes. One
is the ability to explain the proposals to the management committee. The second is to justify the need for the
proposed language. The third is to persuade the employer's representatives of the merits of the union's position.

Explanation, justification and persuasion are different concepts. The explanation of any proposal should be a
rational and objective discussion of the problems giving rise to the union's proposals. Any proposal put on the
table by the union was placed there for a reason. The union committee should be prepared to define the problem
that gave rise to the proposal and the solution for that problem put forward by the union. The justification of
that proposal goes one step further. Even if the company understands the issue and the solution addressed by the
union's 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 a
superior solution to the identified problem than any other proposed change put forward.

Caucus

An important tactic in the collective bargaining process is the effective use of a caucus, or opportunity for the
union to withdraw temporarily from direct negotiations with the employer. A caucus can and should be used in
a number of different situations to make sure that negotiations are progressing in an appropriate manner. Some
of the major reasons for the union to call a caucus during negotiations are discussed in this section.

One of the most important reasons to call a caucus is to resolve real or apparent conflict within the union
bargaining committee. If there are disagreements about issues or tactics within the committee, those
disagreements should be resolved away from the bargaining table. Whenever it appears that committee
members are advocating conflicting positions, the union committee should call for a caucus. Internal conflict
should 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 of
negotiations. If emotions get out of hand, a break in the tension may be necessary. If sessions become too
chaotic it may be wise to interrupt the flow. A caucus may also be used to increase the pace of negotiations. If a
session moves off course into discussions unrelated to the substance of negotiations, a break in the process may
be a useful mechanism for refocusing attention.

61. Discuss various Wages Differentials.

Types of Wage Differentials
Even a cursory glance at any aspect of the wage structure as mentioned earlier with bring to notice a
bewildering diversity in wage rates, not in the wages for different jobs but also in the wages for the
same 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 the
overlapping nature of some of these differentials.
62. Give the issues in Collective Bargaining.

COLLECTIVE BARGAINING ISSUES
Labor unions were formed to help workers achieve common goals in the areas of wages, hours, working
conditions, and job security. These issues still are the focus of the collective bargaining process, though some
new concepts have become the subjects of negotiations. Table 1 lists the issues most often negotiated in
union contracts.
THE SETTLEMENT PROCESS
Union contracts are usually bargained to remain in effect for two to three years but may cover longer or shorter
periods 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 the
contract, the union members must accept or reject the agreement by a majority vote. If the agreement is
accepted, the contract is ratified and becomes a legally binding agreement remaining in effect for the specified
period of time.
If the union membership rejects the terms of the agreement, the negotiating teams from labor and
management return to the bargaining table and continue to negotiate. This cycle can be repeated several
times. 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 voluntarily
to have an impartial third party listen to the proposals of both sides. It is the mediator's job to get the two sides
to agree to a settlement. Once the mediator understands where each side stands, he or she makes
recommendations for settling their differences. The mediator merely makes suggestions, gives advice, and
tries to get labor and management to compromise on a solution. Agreement is still voluntary at this point. The

mediator has no power to force either of the parties to settle the contract, though often labor and management
do come to agreement by using mediation.
If mediation fails to bring about a settlement, the next step can be arbitration, which can be either compulsory
or 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 compulsory
arbitration. In voluntary arbitration, both sides agree to use the arbitration process and agree that it will be
binding. As in mediation, an impartial third party serves in the arbitration process. The arbitrator acts as a
judge, listening to both sides and then making a decision on the terms of the settlement, which becomes
legally binding on labor and management. Ninety percent of all union contracts use arbitration if the union and
management can't come to agreement (Boone and Kurtz, 1999).
SOURCES OF POWER
If the collective bargaining process is not working as a way to settle the differences between labor and
management, both sides have weapons they can use to bolster their positions. One of the most effective union
tactics 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 union's demands. Some
employees, even though allowed to belong to unions, are not allowed to strike. Federal employees fall into this
category. 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 strikes
and picketing when management hires replacement workers, called scabs or strikebreakers, who
Collective Bargaining Issues

Wages Hours Working Conditions Job Security

Regular Compensation Regular Work Hours Rest Periods Seniority

Overtime Compensation Overtime Work Hours Grievance Procedures Evaluation

Incentives Vacations Union Membership Promotion

Insurance Holidays Dues Collection Layoffs

Pensions Recalls

need 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 union's demands.
During a primary boycott, not only union members but also members of the general public are encouraged to
refuse 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 this
situation, management closes down the business, thus keeping union members from working. This puts
pressure 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 its
demands. An injunction is a court order prohibiting something from being done, such as picketing, or requiring
something to be done, such as workers being ordered to return to work.
GRIEVANCE PROCEDURES
Once a collective bargaining agreement is settled and a union contract is signed, it is binding on both the union
and management. However, disagreements with contract implementation can arise and violations of the
contract terms can occur. In these cases, a grievance, or complaint, can be filed. The differences that must be
resolved are usually handled through a step-by-step process that is outlined in the collective bargaining
agreement. The grievance procedure begins with a complaint to the worker's immediate supervisor and, if
unresolved at that level, moves upward, step by step, to higher levels of management. If no resolution is found

at any of these levels, the two parties can agree to have the grievance submitted to an impartial outside
arbitrator 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. Collective
bargaining also allows management to negotiate efficiently with workers by bar gaining with them as a group
instead of with each one individually. Though traditional bargaining can be negative and adversarial, it does
produce collective bargaining agreements between labor and management. Partnership bargaining can lead to
increased understanding and trust between labor and management. It is a positive, cooperative approach to
collective bargaining that also culminates in contracts between labor and management.

63. Discuss the role of Collective Bargaining in India.

COLLECTIVE BARGANING IN INDIA

Collective Bargaining in India has been the subject-matter of industrial adjudication since long and has been
defined by our Law Courts. In Kamal Leather Karamchari Sangathan v. Liberty
Footwear Company1 the Supreme Court observed that, "Collective bargaining is a technique by which dispute
as to conditions of employment is resolved amicably by agreement rather than coercion".

According to the Court, the Industrial Disputes Act, 1947, seeks to achieve social justice on the basis of
colIective bargaining. In an earlier judgment in Titagarh Jute Co. Ltd. v. Sriram Tiwari2 the Calcutta High
Court 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 the
days of 'collective bargaining', labour was at a great disadvantage in obtaining reasonable terms for contracts of
service 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 of
individual workmen, not only for the making or modification of contracts but in the matter of taking
disciplinary 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 of
the day in the democratic social welfare State, legitimate trade union activities, which must shun all kinds of
physical threats, coercion or violence, must march with a spirit of tolerance, understanding and grace in
dealings on the part of the employer. Such activities can flow in healthy channel only on mutual cooperation
between the employer and the employees and cannot be considered as irksome by the management in the best
interests of its business.
Dialogue with representatives of a union help striking a delicate balance in adjustments and settlement of
various contentious claims and issues."

These definitions only bring out the basic element in the concept i.e., civilized confrontation between employers
and 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 means
that the benefits of planned economic development should be distributed among the different sections of the
society.
Therefore, in achieving a socialistic pattern of society, the needs for proper rewards to the working class of the
countryman never is over emphasised.

A national wage policy, thus aims at establishing wages at the highest possible level, which the economic
conditions of the country permit and ensuring that the wage earner gets a fair share of the increased prosperity
of 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 structure
of 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 either
un-organised or inefficiently organised. In other words, to reduce wage differential between the organised and
unorganised sectors.
3. To rationalise inter-occupational, inter-industrial and inter-regional wage differentials in such a way that
disparities are reduced in a phased manner.
4. To ensure reduction of disparities of wages and salaries between the private sector and public sector in a
phased manner.
5. To compensate workers for the raise in the cost of living in such a manner that in the process, the ratio of
disparity 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 labour
thereby reducing employment.
9. To prevent high profitability units with better capacity to pay a level of wages far in excess of the prevailing
level 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 the
real wages of workers.
12.To bring about a more efficient allocation and utilisation of man-power through wage differentials and
appropriate systems of payments. In order to achieve the above objectives under the national wage policy, the
following 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 Act
empowers the government to fix minimum rates of wages in respect of certain sweated and unorganised
employments. 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. It
provides for the appointment of Industrial Tribunals and National Industrial Tribunals for settlement of industrial
disputes including those relating to wages.
3. Wage Boards:
A wage board is a tripartite body with representatives of management and workers, presided over by a
government 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 all
practical 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 in
contracts and ensuring compliance with the terms and conditions, as well as documenting and agreeing on any
changes or amendments that may arise during its implementation or execution. It can be summarized as the
process of systematically and efficiently managing contract creation, execution, and analysis for the purpose of
maximizing financial and operational performance and minimizing risk.[1]

Common commercial contracts include employment letters, sales invoices, purchase orders, and utility
contracts. Complex contracts are often necessary for construction projects, goods or services that are highly
regulated, goods or services with detailed technical specifications, intellectual property (IP) agreements, and
international trade.

A study has found that for "42% of enterprises...the top driver for improvements in the management of contracts
is the pressure to better assess and mitigate risks" and additionally,"nearly 65% of enterprises report that
contract lifecycle management (CLM) has improved exposure to financial and legal risk."[2]

Contracts

A contract is a written or oral legally-binding agreement between the parties identified in the agreement to
fulfill the terms and conditions outlined in the agreement. A prerequisite requirement for the enforcement of a
contract, amongst other things, is the condition that the parties to the contract accept the terms of the claimed
contract. Historically, this was most commonly achieved through signature or performance, but in many
jurisdictions - especially with the advance of electronic commerce - the forms of acceptance have expanded to
include various forms of electronic signature.

Contracts can be of many types, e.g. sales contracts (including leases), purchasing contracts, partnership
agreements, 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.

Impasse
Collective bargaining situation that occurs when the parties are not able to move further toward settlement
usually because one party is demanding more than the other will offer.
Mediation
Intervention in which a neutral third party tries to assist the principals in reaching agreement
Fact finder
A neutral party who studies the issues in a dispute and makes a public recommendation for reasonable
settlement
Arbitration
The most definitive type of third party intervention in which the power to determine and dictate the settlement
terms:
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 an
impasse can be resolved through a third party is a disinterested person such as a mediator or arbitrator. If the

impasse is not resolved in this way the union may call a work stoppage or strike to put pressure in
management.
Third party involvement
Negotiators use three types of third party interventions to overcome an impasse mediation fact finding and
arbitration with mediation a neutral third party tries to assist the principals in reaching agreement. The mediator
usually holds meetings with each party to determine where each stands regarding its position, and then uses
this information to find common ground for further bargaining. The mediator is always a go between and does
not have the authority to dictate terms or make concessions. He or she communicates assessments of the
likelihood 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 a
neutral party who studies the issues in a dispute and makes a public recommendation for reasonable
settlement. Presidential emergency fact finding boards have successfully resolved impasse in certain critical
transportation disputes.
Arbitration is the most definitive type of third party intervention, because the arbitrator often has the power to
determine and dictate the settlement terms. Unlike mediation and fact finding arbitration can guarantees to an
impasse. With binding arbitration both the parties are committed to accepting the arbitrator‘s award. With
nonbinding arbitration they are not. Arbitration may also be voluntary or compulsory (In other words, imposed
by 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 change
the agreement. Rights arbitration really means contract interpretation arbitration. It usually involves interpreting
existing contract terms for instance when an employee‘s questions the employer‘s right to have taken some
disciplinary action.
Sources of Third Party assistance
Various public and professional agencies make arbitrators and mediators available. For example, the American
Arbitration association (AAA) represents and provides the services of thousand of arbitrators and mediators to
employers and union requesting their services. The US government‘s Federal mediation and Conciliation
Service provides both arbitrators and mediators. For example, its office of arbitration Services maintains a
roster of arbitrators qualified to hear and decide disputes over the interpretation or application of collective
bargaining 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 mediation
services, For example New York State‘s Employment Relations Board provides mediation services to assist in
settling grievance disputes and in the collective bargaining process.
Strikes
A strike is a withdrawal of labor, and there are four main types of strikes. An economic strike results for a
failure to agree on the terms of a contract. Unions call unfair labor practice strikes to protest illegal conduct by
the employer. A wild cat strike is an unauthorized strike occurring during the term of a contract. A sympathy
strike occurs when one union strikes in support of the strike of another union. For example in sympathy with
employees of the Detroit News, Detroit Free press and USA Today The United auto workers enforced a nearly
six year boycott that prevented the papers from being sold at Detroit area auto plants cutting sales by about
20,000 to 30,000 copies a day.
The number of major work stoppages (those involving 1,000 workers or more) peaked at about 400 per year
between 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 demand
price of labour.
Though the wage theories important policy implications some relevance for certain occupations or in certain
regions , 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.

The labour cost is equal to the amount which is necessary for the maintenance of the worker & his family at
the subsistence level.

Conversely, if the wages fall below the subsistence level, children will die or some workers might decide to
have 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 at
the 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 of
the capitalist wage system. Also, the worker did not get full compensation for the time spent on the job. The rate
of surplus value , which is the ratio of surplus labour to necessary labour, is also referred as “rate of
exploitation” 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 was
changing “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 the
wage level & that efforts to discourage the accumulation of capital the wages were bound to lower wages by
reducing them the wages-fund.
This theory showed that productivity of labour was determined by the level of wages. If the rise in wages
could augment the efficiency of labour as well, stimulating to set out more funds in the purchase of labour.
The Marginal Productivity Theory
J.B Clark was the first to develop this theory. Later on, Marshall had made some amendments in the shape of
refinements added to this theory. According to this theory, both demand & supply together determine the factor
price, 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 which
this labour could secure employment in a competitive labour market was equal to the addition to total
production that resulted from employing the marginal unit of the labour force. It was also assumed that
production was carried out under the conditions of diminishing returns to labour.
The Bargaining Theory
John Davidson, an American economist, was the first exponent of the Bargaining Theory of Wages. He argued
that 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 between
these limits are determined by the bargaining power of the employers & the workers. The upper limit marks the
highest wages the employers would be willing to pay, whereas, the lower limit indicates the minimum wages
prescribed under the strength of resistance of the workers at the subsistence wages below which they will not
available for work
Demand & Supply Theory
Alfred Marshall, the chief exponent to this theory, explained the complexity of the economic world tried to
provide a less rigid & deterministic theory. According to him, the determination of wages is affected by the
whole 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 workers
seeking employment; these are the workers who have no alternative livelihood & join the labour market seeking

employment for wages. Secondly, “supply & labour” may refer to the number of hours each worker is available
for work. The supply of labour in this sense increases with any increase in the number of working hours.
The Purchasing Power Theory
Keynes applied a new theory to the economy as a whole & not to an individual firm or industry. According to
him, wages are not only the cost of production for an employer but also incomes for the wage earners who
constitute a majority in the total working population. A major part of the products of an industry is consumed by
the 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 are
low, 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 the
problem.
Behavioural Theories of Motivation
Equity Theory
Equity can be external or external. Internal equity refers to the pay differential between & among the various
skills & levels of responsibility. External equity refers to concerns regarding how wage levels for similar skill
levels 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 & receive
the 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 & the
job demands.

69. Discuss the feature of Collective Bargaining.

Features of Collective Bargaining
The 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.

70. What preparations are to be made for CB.

Pre-requisites for collective bargaining

Effective negotiations and enforcement requires a systematic preparation of the base or ground for bargaining
which 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 Negotiating

With the proposals submitted, and the team selected, the chief negotiator/ leader may recognize the importance of the following
phases of negotiations:

1. PREPARATION

Preparation for any serious negotiations would be incomplete without a thorough examination of factors external and internal to the
workplace which has a bearing on the negotiations.

Examining external factors - the macro-economic environment

Preparation for negotiations will include an examination of macro-economic factors such as employment levels, the rate of inflation, the
foreign reserves, investment, interest rates, and growth in the economy, among other things. Where the macro-economic situation
appears stable and there are signs of prosperity, employers are more likely to make reasonable settlements. A major difficulty in the
Caribbean is that there is a great divergence in macro-economic performance. Some countries have also performed in such a way that
even in years of solid growth, the benefits have not accrued to the mass of workers.

Examining internal factors - enterprise performance

An examination of the internal performance of the business enterprise is even more important than information on the macro-economic

environment. The sharing of business information is critically important for effective negotiations. In too many instances management
refuses to provide vital information to trade unions. This is especially so where there are single owner proprietorships, partnership, and
private limited liability companies. Branch plant operations of foreign-owned companies also often refuse to share information.

2. ARGUING

Negotiators are expected to argue effectively in support of their submissions. Negotiations are not discussions, and they are not
consultations. 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. SIGNALLING

Negotiating is interactive and dynamic. Active listening is a skill which has to be developed. Also, negotiators have to be able to ask
questions to elicit useful responses. Negotiators send signals through words, some plain and easily apprehended, others are more
obtuse. Negotiators also send signals through body language. For those who are adept at receiving signals, the process of moving
negotiations 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. PROPOSING

Armed with the reading of signals, a negotiator will then know which proposals can be prioritized with almost certain chances of
success.

5. PACKAGING

The negotiator may then decide to package proposals, making concessions and linking strong winners with others with less chances of
success. A total package proposal is placed on the table with an agreement of all elements crucial for settlement.

6. BARGAINING

At this stage, it is likely that both sides will be proposing packages, each with a core that signifies „the irreducible‟ that is required by
each 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 out
of formal negotiations and engage in creative scenario building on a menu of options that may provide a settlement. Negotiators talk
about taking “pens off the table”, instructing the takers of minutes not be record the creative exercise in problem-solving. In case the
creative efforts fail, the negotiators can return to formal discussions at the level of their last formal submissions. Bargaining in earnest
can be a painstaking and lengthy exercise with all of the features of an Olympic exercise between formidable contestants.

7. CLOSING

Expert negotiators develop a sense of when it is best to close negotiations. Closing too early or too late can lead to the loss of the
strategic moment when greatest success can be reached. In assessing the best time to close, consideration must be given to issues
such 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. AGREEING

The final stage in the formal negotiation process is reached when the draft agreement has been vetted, and has been produced in a
formal 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 retroactive
pay, where relevant; the timing of the introduction of new benefits; and indeed, areas of housekeeping and tidying up the business of
the table. The discussions are then closed with appropriate addresses, bringing a civilized end to a round of negotiations.

73. Explain process of collective bargaining/negotiation.

All Caribbean countries have developed a legislative and institutional framework supportive of collective bargaining.

Stages in Collective Bargaining

The first step in the collective bargaining process is that of organizing a group of workers, gaining recognition and developing a body of
proposals to submit to the employer as the basis of a collective agreement. The development of proposals to be submitted on behalf of
workers 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 their
contracts which they require. Such a meeting may demonstrate differences among the members on serious issues, such as levels of
remuneration. The submission of many issues, including levels of compensation and conditions, will have to be examined against
market considerations. The role of a research facility within a union is thus very important.

Elements of submissions

Negotiators recognize that the submission must encompass various elements. Industrial relations existed at the workplace before the
entry of the union. A pattern of benefits, conditions, rules and regulations is usually in place. The negotiator must make an assessment
of 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 be
confused with a revision. In a situation where wages/salaries are very far below the market value in circumstances that cannot be
justified, trade unions can sometimes achieve significant improvements for workers. In some cases, wages/salaries may already be
competitive 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 be
enclosed in a draft collective agreement which helps to ensure that a collective agreement is signed early after the closure of
negotiations.

With recognition agreed, and proposals submitted, the union will usually inform the employer of the names of the shop stewards at the
workplace, and request the extension of courtesies in the performance of their functions.

Composition of negotiating team

In 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‟s
team.

Many trade union negotiating teams are led by generalists who have to develop expertise on a wide area of subjects such as
compensation practices, benefit schemes, pensions and safety and health conditions. They must also have some legal training for
drafting language in agreements.

There is a growing tendency for specialists to sit on negotiating teams. Thus one person will deal with pension issues, another with
health care and so on.

In large companies with Human Resource Management Structures, there are officers who specialize in different areas of industrial
relations such as counselling, training, safety and health, negotiations, benefits, management and personnel matters.

An Eight (8) Step Approach to Collective Bargaining or Negotiating

With the proposals submitted, and the team selected, the chief negotiator/ leader may recognize the importance of the following
phases 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 „contested
terrain‟, that the process is akin to an act of war, where words, wit and logic take the place of lethal weapons.

Communicating with the union membership

Mention has already been made of the fact that negotiation leaders must always keep their principals informed and seek their support
in reaching acceptable settlements. To this end, they should hold a general meeting to get workers to vote for the settlement they
propose 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 if
they 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 his
agreement. He should not however, be unduly concerned if support is not unanimous. He should be wary, nevertheless, if there is
resistance from a substantial minority of his principals.

Breakdown in Collective Bargaining

Trade unions have traditionally recognized the value and importance of industrial action when there is a failure to reach agreement
through the established procedures. Industrial action can take many forms:

1. work-to-rule
2. go slow
3. strike

In 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 INDIA
Collective Bargaining machinery essentially is a reflection of a particular social and political climate. The
history of the trade union movement shows that union are affiliated to one or the
other political parties. As a result most of the trade unions are controlled by outsiders. Critic says that the
presence of outsiders is one of the important reasons for the failure of collective bargaining in India.i
Outsiders in the Process of Collective Bargaining
The Trade Unions Act, 1926, permits outsiders to be the office bearers of a union to the extent of half the total
number of office bearers.ii So, it permits one to be the leader of the union who does not actually work in the
industry. Sometimes a dismissed employee working as a union leader may create difficulties in the relationship
between the union and the employer.iii Nevertheless, experience shows that outsiders who have little knowledge
of the background of labour problems, history of labour movement, fundamentals of trade unionism and the
technique of the industry and with even little general education assume the charge of labour union and become
the self-appointed custodian of the welfare of workers. The employers, therefore, have been reluctant to discuss
and negotiate industrial matters with outsiders, who have no personal or direct knowledge of day to day affairs
of the industry.
Accordingly employers refuse recognition to the unions which are either controlled by the politicians or
affiliated to a particular political party or controlled by a particular individual. Government cannot morally
compel employers to accord recognition to unions without driving out the politicians from them. The State must
outright ban "outsiders" from the trade union body. Further, provision for political fundiv by trade unions should
be eliminated, since it invariably encourages the politicians to prey upon them. The National Commission on
Labour has overlooked this aspect. The Commission does not favour a legal ban on non-employees for holding
the union office. It says that without creating conditions for building up the internal leadership, a complete
banning of outsiders would only make unions weaker. The Commission hopes that internal leadership would
develop through their education and training. Accordingly

the Commission suggests proportion of the outsiders and the workers in a union executive.v On realizing the
problems of outsiders in the union, the Industrial Relations Bill, 1988 proposes to reduce the number of
outsiders to two only. Another hurdle in the success of collective bargaining in India, is the absence of a
compulsory „recognition‟ provision in the Act.
Impact of Recognition as Bargaining Agent in Collective Bargaining
In view of the prevailing multi-trade-unionism in the country, recognition of a bargaining agent has assumed
importance. Unfortunately, no attempt has been made at the national level to either lay down a procedure for
recognition of a trade-union as bargaining agent or work out a procedure. There is no provision either in the
Indian Trade Union Act 1926 or in the Industrial Disputes Act 1947 for the purpose. The Government of India
proposed an amendment in the
Trade Union Act in 1950 making recognition of a union compulsory. The measure however, faced serious
opposition and remained unimplemented. The Standing Labour Committee (l8th Session) and National
Commission on Labour favoured a statutory -provision for the purpose but their recommendations have yet to
be accepted. The National Commission on Labour attached considerable importance to the matter of recognition
of unions and observed as under:

"Industrial Democracy implies that the majority union should have the right to sole representation, i.e., the right
to speak and act for all workers and enter into agreements with the employer."vi

In the absence of statutory provision, the matter is regulated by the Code of Discipline which was evolved at
Nainital session of Indian Labour Conference in 1952. The Code of Discipline provides for verification of
trade-union membership by Central Industrial Relations Machinery of the Government. Its voluntary character
has however, made it ineffective and it has been found difficult to implement it in view of statutory provisions
in the Industrial Disputes Act.
At the present not even public sector undertakings are following the Code of Discipline and are bargaining with
more than one union.

States like Bombay and Madhya Pradesh have, however, given statutory recognition to the procedure for
determination of bargaining agent. Both, Bombay Industrial Relations Act 1946 and Madhya Pradesh Industrial
Relations Act, 1960, provide for the determination of represent- tative union by the Registrar of Representative
Unions. Special provisions have been made for agreements signed by representative unions. In spite of it, the
experience shows that there had been serious opposition to statutory recognition of a union as sole bargaining
agent 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 of
retaliation by unrecognized unions has proved to be the biggest stumbling block in the success of statutory
recognition system.

Multi -Unionism

Political orientation of trade unions is the primary reason for multi-unionism. Communal sentiments, provincial
feelings and caste are other major causes for multi-unionism.vii Presence of too many unions in an industry
destroys the bargaining strength of workers. Our labour legislation also permits multi-unionism.viii

Multi-unionism adversely affects collective bargaining process. Where there are too many unions, with whom
should management negotiate? Each union may claim recognition. Each union may present separate charter of
demands 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

It is well known that the trade-union movement in India is divided on political lines and exists on patronage of
various political parties. Most of the trade-union organizations have aligned themselves with a political party
with whom they find themselves philosophically close. It is because of this that the Indian National Trade
Union Congress is considered to be the labour wing of congress (I) whereas H.M.S. is considered to be the
labour wing of Socialist party. Bhartiya Majdoor Sangh pledges its allegiance to B.J.P. and C.I.T.U has the
support of C.P.I. (M). It is also the case with the . AITUC which had started as a national organization of
workers but subsequently came to be controlled by the Communist Party of India and is now it's official labour
wing. Political patronage of trade-unions has given a new direction to the movement whose centre of gravity is
no longer the employees or workmen. The centre has shifted towards it leadership whose effectiveness is
determined by the extent of political patronage and the consequent capacity to obtain the benefit. This shifting
centre of power is the necessary consequence of political parties search for workers votes, which they seek by
conferring benefits on them. Since the public sector which is really the instrumentality of the State, has emerged
as 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 agreements
conferring benefits are signed even in those units where financial losses are mounting. It is also our experience
that inspite of wage increase and improved conditions of service, there has been no corresponding improvement
in production or the productivity and most of the losses are being passed on to the consumers by increasing
prices of the products. It is in this context that Justice Gupta has, in his, "Our Industrial Jurisprudence" made the
following observations:

"If our experience is any guide, it reveals that level of increase in wages etc., (in public sector undertaking ) is
now decided by the Bureau of Public Enterprises which takes into consideration only the 'Political impact' and
'Consumer resistance' as two dominant factors. This is the reason why the prices of almost all products of
necessity like coal, iron and steel, cement, sugar etc. have been constantly increasing. A survey of pending and
decided industrial disputes of the last 10 years reveals that there was virtually no industrial dispute regarding
wage structure or bonus in any industry of some significance. There are also not many collective bargaining
agreements
which have tried to link wages with productivity. Clearly, therefore, the basic idea of 'sharing the prosperity'
which developed because of our commitment to the cause of 'social justice' is no longer current and the
expected end-product of the process of 'social justice" is no longer expected."ix

Critical Evaluation

In Indian labour arena we see, multiplicity of unions and inter-union rivalry. Statutory provisions for
recognising unions as bargaining agents are absent. It is believed that the institution of collective bargaining is
still in its preliminary and organizational stage.x State, therefore, must play a progressive and positive role in
removing the pitfalls which have stood in the way of mutual, amicable and voluntary settlement of labour
disputes. The labour' policy must reflect a new approach.

Hitherto the State has been playing a dominant role in controlling and guiding labour-management relation
through its lopsided adjudication machinery. The role of the industrial adjudicator virtually differs from that of
a judge of ordinary civil court. The judge of a civil court has to apply the law to the case before him and decide
rights and liabilities according to its established laws. Whereas industrial adjudicator has to adjust and reconcile
the conflicting claims of disputants and evolve "socially desirable" rights and obligations of the disputants.5 In
deciding 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 to
the peaceful industrial relations.6 It is accepted that the end of judicial proceeding is pain and penalties. It
cannot solve the problems of industries. Accordingly it is said that:

"While statutes, rules, regulations, pains and penalties have their place in the ordering of industry, they do not
touch the core of the problems of industrial relations."7

Moreover, advocates of adjudication contend that as the collective bargaining procedure might end in a strike or
lockout, 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 since
adjudication was adopted after world-war-II? We do agree that industrial peace can be established by the
adjudication for the time being. But the conflicts are driven deeper and it will retard industrial production. In the
absence 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 subject
to the forces of demand and supply in the labor market, which in turn is affected by productivity levels
and 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 supplementary
compensation. Base compensation refers to monetary payments to employees in the form of wages
and 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 professional
staff. The distinction, however, is rarely observed in actual practice. Base compensation, it should be
noted here, is a fixed and non-incentive payment on the basis of time spent by an employee on the
job. Supplementary compensation signifies incentive payments based on actual performance of an
employee or a group of employees. The term ‗compensation administration‘ or wage and salary
administration 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.

In Indian Democracy, the entire citizen is equal, whether he/she is a SCAVENGER OF THE VILLAGE
PANCHYAT 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 "Every
Moment".

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. Scavengers
2. Attenders
3. S.D.C., F.D.C., & other higher categories
4. 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 for
Readers & 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, with
the same Qualification.

V. In this way, Equality must be maintained among all the different types of employees, without making
the 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 BARGAINING
1.ANTICIPATE --- THE PROPOSALS / DEMANDS, THE INTENTION OF THEDEMANDS, & ALSO THE DIRECTION IN
WHICH THESE WILL BEPRESENTED OR PLACED.
2. TEAM SPIRIT --- SHOULD BE MAINTAINED THROUGHOUT THENEGOTIATIONS. IT REQUIRES SYNCHRONIZATION
OF 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 GIVE
IMPORTANCE ON ISSUES & NOT THE PEOPLEBEHIND THE ISSUES.
4.COUNTER PROPOSAL--- THE MANAGEMENT SHOULD PRESENT ACOUNTER PROPOSAL AGAINST THE
DEMAND RAISED BY THE UNION.e. g. IF A DEMAND IS ON WAGE HIKE, THE MANAGEMENT SHOULDRAISE THE
ISSUE OF PRODUCTIVITY, WORKLOAD etc.
5.EMOTIONAL MATURITY ---- MUST BE MAINTAINED BY BOTH MEMBERSOF UNION T THE REPRESENTATIVES OF
MANAGEMENT. 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

RANK PERSON WILL SEND A WRONG SIGNAL TO THE UNION REGARDING THE SERIOUSNESS OF THE
MANAGEMENT.
7.PHASE OUT THE ISSUES --- IT IS DESIRABLE TO TAKE UP THE ISSUESWHICH DO NOT COST OR COST
LESS TO THE MANAGEMENTINITIALLY & THEN SWITCH OVER TO HIGH COST INVOLVEMENTITEMS. THIS WILL
CREATE A GOOD ENVIRONMENT FORNEGOTIATIONS.
8.SAFETY VALVE -----EVEN IF THE NEGOTIATION IS DIFFICULT, THERESHOULD BE SAFETY VALVE WHICH
SHOULD 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 TO
SPEAK. 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 SOON
OR BACK OFF TOO QUICKLY.
SANMAN KULKARNI
11. 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 AGREEMENT
OR SETTLEMENT

80. Explain CB and technological change.-Book-Page-70
81. Discuss the problems of CB.

PROBLEMS RELATING TO COLLECTIVE BARGAINING IN INDIA
The collective bargaining scene in India is not very encouraging. The major emphasis of both union and
employers 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 prefer
this form of handling the issues.
As discussed in the previous chapter, several factors are responsible for this state of affairs. These are listed
below:
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 workers

IV. 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 for
more investment and profits while the other argues for better standard of living. These two conflicting interests
can be adjusted temporarily through the principle of "give and take"xi, The principle of give and take has been
infused in the principle of collective bargaining.

The phrase "collective bargaining" was coined by British labor reformers Sidney and Beatrice Webb of Great
Britain which was the “home of collective bargaining” in the 1890‟sxii. The idea of collective bargaining
emerged as a result of industrial conflict and growth of trade union movement and was first given currency in

the United States by Samuel Crompers. In India the first collective bargaining agreement was conducted in
1920 at the instance of Mahatma Gandhi to regulate labour management relation between a group of employers
and their workers in the textile industry in Ahmadabadxiii.

Advocates of collective bargaining in the early decades of the twentieth century thought it essential for three
reasons. First and foremost, a system of peaceful and routine bargaining would eliminate industrial strife and
violence. Second, collective bargaining stood for "industrial democracy," and finally, collective bargaining
promised to make capitalism work.

In any industrial establishment the friction between employer and the workmen is inevitable. There are demands
by the workmen and if those demands are resisted by the employer, industrial dispute arises resulting in
industrial tension and disturbing the peace and harmony in the industry. Collective Bargaining is one of the
methods 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 tensions
and provide the mechanics of dispute resolution. When Industrial Disputes Act, 1947 was passed in India, it was
passed to provide machinery and form for the investigation of industrial disputes and for the settlement thereof
and for the purposes analogous and incidental thereto. As is evident from the Act itself that it is piece of
legislation 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 of
workmen and as a corollary to that collective bargaining came into its own and lest the conflicting interests of
the workmen and the employer disturb the industrial peace and harmony, a machinery for adjustment of such
conflicting interests became the need of the time. The Act therefore was enacted to provide machinery and
Forum for adjustment of such conflicting and seemingly irreconcilable interests without disturbing the peace
and 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 union
Government. Before the adoption of the collective bargaining the labour was at a great disadvantage in
obtaining reasonable terms for contract of service from its employer. With the development of the trade unions
in the country and the collective bargaining becoming the rule it was equally found by the employers that
instead of dealing with individual workmen it is convenient and necessary to deal with the representatives of the
workmen not only for the making or modification contracts but also in the matter of taking disciplinary action
against the workmen and regarding other disputes. So, collective bargaining has come to stay having regard to
modern conditions of the society where capital and labour have organized themselves into groups for the
purpose of fighting and settling their disputes.

83. Give the types of wages.
Type of wages
The main types of wages are:
1. Subsistence wage;
2. Minimum wage;
3. Fair Wage; and
4. Living Wage
Subsistence Wage: - The wage that can meet only bare physical needs of a worker and his family is
called subsistence wage.
Minimum Wage: - Minimum wage is the wage that is able to provide not only for bare physical needs
but also for preservation of efficiency of worker plus some measure of education, health and other
things.
Fair Wage:- Fair wages is an adjustable step that moves up according to the capacity of the industry
to pay, and the prevailing rates of wages in the area of industry.

Living Wage:- Living wage is that which workers can maintain the health and decency, a measure of
comfort 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 financial
condition 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 capacity
of 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 other
words, 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-

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 employee's salary.
Instructions
1. Calculation
1. Determine how bonuses are to be decided. Bonuses can be based on a percentage of the
employee's 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 employee's 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 employee's 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 employee's 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 :

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% under
the 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 or
less, if, it is less then Rs.3500.00

4.Multiply the yearly sum of salary thus worked out as per above clause 3 with rate of bonus. The figure is
bonus 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
examples

Collective 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 Bargaining
Scope 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.

• A statement of principles such as rights and responsibilities of both parties.
• Recognition of union by management and acceptance of the union’s right to organize the
workers and to carry out all the normal activities of a trade union.
• A section dealing with remuneration, including basic pay scales, grades and job classification,
dearness allowance and other allowances, incentives schemes and annual bonus.
• A section on working conditions such as hours of work, overtime, recruitment, transfer,
promotion, etc.
• A section on service benefits and amenities such as leave, public holidays, medical benefits,
sick pay, retirement age, pension or gratuity scheme, provident fund etc.
• Clauses relating to special joint machinery may be included. These include joint production
committees, joint labour relations, job evaluation, discipline, safety and welfare committees as
well as workers’ committees.
• Grievance procedure of two kinds may be incorporated in an agreement.
First the procedure for dealing with individual grievances as they arise day to day within the
establishment. This may follow to a lesser or greater degree the model drawn up by the Indian
labour conference.
Second is the method of settling any dispute over interpretation of any part of agreement. This
procedure includes voluntary arbitration.

LAWS RELATING TO COLLECTIVE BARGAINING IN INDIA

As discussed earlier, collective bargaining is a technique by which disputes of employment are resolved
amicably, peacefully and voluntarily by settlement between labour unions and managements. The method of
collective bargaining in resolving the Industrial dispute, while maintaining industrial peace has been recognized
as the bed rock of the Industrial Disputes Act, 1947. Under the provision of the Act, the settlement arrived at by
process of collective bargaining with the employer has been given a statutory recognition under Section 18 of
the Act.

Under the Act two types of settlement have been recognised:

1. Settlement arrived in the course of conciliation proceeding before the authority. Such settlements not
only bind the member of the signatory union but also non-members as well as all the present and future
employees of the management.
2. Settlement not arrived in the course of conciliation proceedings but signed independently by the parties
to the settlement, binds only such members who are signatory or party to the settlement.

Section 19 of the Act prescribes the period of operation inter alia of such a settlement and envisage the
continuation of the validity of such a settlement unless the same is not replaced by another set of settlement,
while Section 29 prescribes the penalty for the breach of such a settlement.

The Industrial Disputes Act, 1947 provides for the appointment of Conciliation Officers, charged with the duty
of mediation in promoting the settlement of industrial disputes. On a reference to the Conciliation Officer, a
Conciliation Board is constituted consisting of representatives of employees and employer with the conciliation
officer as the chairman. The memorandum of settlement duly signed by the conciliation officer is to go from
one camp to the other and find out greatest common measure of agreement, to investigate the dispute and to do
all such things as he thinks fit to arrive at a fair and amicable settlement of the dispute.xiv

A settlement arrived at by agreement between the employer and the workmen otherwise than in the course of
conciliation proceedings shall be binding on the parties to the agreement. A settlement comes into operation on
such date as is binding on the parties to the agreement, and for such period as has been agreed upon. Dealing
with the binding nature of settlement Chagla, J has observed that; “Industrial Law takes no notice of any private
settlement or agreement arrived at between parties in the course of industrial dispute. Such a private agreement
belongs to the realm of contract, it may give rise to contractual rights; it has no sanctions in industrial law and
industrial dispute does not end until a settlement is arrived at which has been given a binding effect under the
provision of S.19 (2) and such settlement can be only arrived at when conciliation proceedings are held under
S.12 of the Industrial Disputes Act, 1947”.xv From this observation, it would be wrong to infer that a private
settlement in respect of an industrial dispute does not end an industrial dispute. In this respect the following
observation of chief Justice Chagala are relevant, “But when parties do arrive at a settlement, the law gives to it
a greater sanctity than it gives to an award and therefore , the industrial law does not contemplate any
interference with the finality of a settlement and it compels the settlement to run on for the period mentioned in
the settlement itself and neither party is permitted to challenge that settlement during its duration.”xvi

Types of Collective Bargaining Agreements in India

Collective bargaining as it is practiced in India can be divided into three classes. First is, the bipartite agreement
drawn up in voluntary negotiation between management and union. The second type is known as a settlement,
while the third type of collective agreement is consent award. These are discussed below:

1. Bipartite Agreements: These are most important types of collective agreements because they represent
a dynamic relationship that is evolving in establishment concerned without any pressure from outside.
The bipartite agreements are drawn up in voluntary negotiation between management and union.
Usually the agreement reached by the bipartite voluntarily has the same binding force as settlement
reached in conciliation proceedings. The implementations of these types of agreements are also not a
problem because both the parties feel confident of their ability to reach the agreement.

2. Settlements: It is tripartite in nature because usually it is reached by conciliation, i.e. it arises out of
dispute referred to the appropriate labour department and the conciliation officer plays an important role
in bringing about conciliation of the differing view points of the parties. And if during the process of
conciliation, the conciliation officer feels that there is possibility of reaching a settlement, he withdraws
himself from the scene. Then the parties are to finalise the terms of the agreement and should report
back to conciliation officer within a specified time. But the forms of settlement are more limited in
nature than bipartite voluntary agreements, because they strictly relate to the issues referred to the
conciliation officer.

3. Consent Award: Here the negotiation takes place between the parties when the dispute is actually
pending before one of the compulsory ad judicatory authorities and the agreement is incorporated to the
authorities, award. Thus though the agreement is reached voluntarily between the parties, it becomes
part of the binding award pronounced by an authority constituted for the purpose.

The idea of national or industry-wide agreements and that too on a particular pattern may appear to be a more
ideal system to active industrial relation through collective bargaining, but the experience of various countries
shows that it is not possible to be dogmatic about the ideal type of collective bargaining, because it largely
depends upon the background, traditions and local factors of a particular region or country.

Levels of Collective Bargaining

Collective bargaining operates at three levels:
1. National level
2. Sector or industry level
3. Company/enterprise level

Economy-wide (national) bargaining is a bipartite or tripartite form of negotiation between union
confederations, central employer associations and government agencies. It aims at providing a floor for lower-
level bargaining on the terms of employment, often taking into account macroeconomic goals

Sectoral bargaining, which aims at the standardization of the terms of employment in one industry, includes a
range of bargaining patterns. Bargaining may be either broadly or narrowly defined in terms of the industrial
activities covered and may be either split up according to territorial subunits or conducted nationally.

Company/enterprise level, this bargaining level involves the company and/or establishment. As a
supplementary type of bargaining, it emphasizes the point that bargaining levels need not be mutually exclusive.

Advantages and Disadvantages of Collective Bargaining
Advantages of Collective Bargaining
According to National Commission Report on labour collective bargaining has been preferred over compulsory
adjudication system for several reasons:
(a) It is a system based on bipartite agreements, and as such, superior to any arrangement involving third
party intervention in matters which essentially concern employees and workers;
(b) It is quick and efficient method of settlement of industrial disputes; and
(c) It is democratic method of settlement of industrial disputes;
Disadvantages of Collective Bargaining
Two vital defects in collective bargaining have been pointed out by Willcox. These defects are:
(a) There are situations in which a serious strike and prolonged strike simply cannot be tolerated.
(b) The second great flaw in collective bargaining as a solvent for labour disputes is the lack of
representation of the public interest at the bargaining table. Whether prices can be raised without
strangling and ability to sell goods or services, unions and companies are in a position to agree on wage
increase that will cause higher prices, then the consumer must shoulder the full burden of their
agreementxvii.
Principles of Collective Bargaining
As mentioned before that the collective bargaining has succeeded in introducing industrial democracy in
industrial and labour managements. Industrial democracy implies that the majority union should have the right
to sole representation i.e. the right to speak and act for all workers and to enter into agreements with the
employer. There are certain principles which have to be followed by both the management and workers for
collective bargaining. These principles are as follows:

1. There should be a realization on the part of both unions and managements that for taking wiser an more
expedient decisions, collective bargaining is a proper method.

2. An opportunity should be provided to trade union leaders for putting their complaints, demands, needs,
etc. before the managements and the management should explain to them the circumstances and make
efforts to redress the grievances/complaints of the workers.

3. The presence of genuine spirit of mutual trust, goodwill and bargaining should be there on the part of
both the parties;

4. Competence for bargaining with mutual respect and implementation of the agreement arrive at should
be possessed by both the parties.

5. The parties to collective bargaining should be honest and the agreement should be conducted by these
honest, competent and reasonable leaders;

6. Keeping in view the changing circumstances, it is desirable that the management should change their
policies and should keep in view the dignity of the workers. Appropriate labour policy should be
adopted by the management and this policy to be followed by all employees. Necessary precautions
must be taken.

7. If there are more than one union the management should enter into negotiation with union having
majority representation.

8. It is equally desirable on the part of the union to raise reasonable demands. They should not put up such
demands as are beyond the paying capacity of the establishment or may be against the national policies.

Scope of Collective Bargaining

The growth of collective bargaining is associated with the recognition of trade unionism. With the growth of
trade unions and industrialization the scope of collective bargaining is expanding. Initially collective bargaining
was used for determining hours of work, wages and terms of employment, but now within its purview are
included the issues like leave with pay, regulation of forced leave, pension, seniority promotions, sickness and
maternity benefits, etc. Since in the field of bargaining collective action is now common, collective bargaining
has assumed an institutional form. In the words of C.W. Randle:

“The subject matter of collective bargaining had broadened until it has virtually eliminated the field of the
management prerogatives. The area pattern of bargaining has moved from simple style plant bargaining to
region-wise and finally to dynamic nature of the scope of collective bargaining. At the same time, they show
how important negotiation has become as an institution. And the future holds promise of an even greater role
for collective”.

Importance of Collective Bargaining

Collective bargaining is an important method of regulating relations between employers and employees. It
involves negotiation, administration and enforcement of the written contracts between the employees and the
employers. It also includes the process of resolving labour-management conflicts.

Healthy collective bargaining generates a spirit of self-confidence and self-reliance among the workers. It is
based on a „give and take‟ policy on both sides. Collective bargaining leads to increased goodwill and
understanding between labour and management. This in turn helps to create peaceful and comfortable
atmosphere in industrial relations.

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;
 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

 It becomes easier for the management to resolve issues at the bargaining level rather than taking up
complaints of individual workers.
 Collective bargaining tends to promote a sense of job security among employees and thereby tends to
reduce the cost of labor turnover to management.
 Collective bargaining opens up the channel of communication between the workers and the management
and increases worker participation in decision making.
 Collective bargaining plays a vital role in settling and preventing industrial dispute

Importance to society

 Collective bargaining leads to industrial peace in the country;
 It results in establishment of a harmonious industrial climate 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;
 The discrimination and exploitation of workers is constantly being checked;
 It provides a method or the regulation of the conditions of employment of those who are directly
concerned about them.

Functions of Collective Bargaining

The functions of the collective bargaining are as under:
1. Adjustment and balance of power between the management and union when they are in conflict with
each other. This function of the system of collective bargaining is one of the methods of effecting social
change.

2. When two parties are in a state of continuous conflict, it helps in bringing about compromise, truce or
agreement for establishing peace between the parties. Industrial truce results when two parties to a
dispute arrive at a compromise or agreement without resorting to strike or lock-out. Such truce may be
stable or temporary. It depends upon the parties as to what extent one party is willing to sacrifice and the
other party is willing to accept the demands, or terms. Both the parties are morally bound to implement
the agreement once it is signed.
3. For establishing industrial jurisprudence it analyses the rights and duties of conflicting parties.

4. It also adjusts labour management disputes apart from performing functions like negotiation,
administration and enforcement of agreements by which union management relationship is governed.

Significance of Collective Bargaining

In an Industrial Establishment to solve the problems arising at the plant or industry level the need of the
collective bargaining is eagerly felt. Through negotiations the solution to the common problems can be directly
found out between the management and workers and here the collective bargaining plays significant role and its
scope is very great. In so far the determination of terms and conditions of employment are concerned, one
important consequence of collective bargaining has been that it has enabled trade unions to participate in the
decision making process regarding hours of work, wages, working conditions etc. Earlier the employer used to
decide these issues unilaterally, but now they have become subjects of bilateral negotiations with the advent of
collective bargaining. Thus an element of industrial democracy has been introduced by collective bargaining in
the field of industrial and labour management.

Collective bargaining is really useful from the stand point of management, trade unions and workers. Among
workers it develops a sense of responsibility and self respect if it works well and thus contributes to a great
extent to employee‟s morale and productivity. It opens up channels of communication between top and bottom
of an undertaking which is difficult otherwise. Further the management‟s freedom of action is restricted because
the establishment loses its unilateral discretion regarding bargainable issues even when management‟s security
is intact and thereby learns a new code of behavior by conceiving of the union as a method of dealing with the
employees not an obstacle to such dealing.

The significance of collective bargaining from the national stand point is that it helps in creating peaceful
industrial climate if properly conducted, thereby increases the pace of the country‟s efforts towards social and
economic development. Collective bargaining as an instrument of industrial peace has no parallel. It extends the
democratic principle from the political to the industrial field and is an important aspect so far as the labour and
management relations are concerned.

xi Otto Kahn-Freund, Laboar aad the Law, L mdon, Stevens & Sons, (1977 .). 49
xii
Webb, Sydney and Beatrice, Industrial Democracy,1902,p.185
xiii
Report of Royal Commission on Labour in India, 1931; p. 336-337

Factors influencing Collective Bargaining

According to the N.U.T study circle materials (1992: 68), some of the factors that influence collective bargaining are
itemized below:

(i) The ability to pay

(ii) The mandate of the employers representative

(iii) The relative strength of the union and management

(iv) The sensitive nature of the job and the importance society attaches to it.

(v) Strategies adopted by the union officials

(vi) The quality of work.

(vii) Influence of international financial institution e.g. I.M.F.

(viii) Statistics, which are generally economic in nature, collective, collated and interpreted by the union officials.

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