2014

Collective Bargaining- Definition, Need,

Objectives and Importance

SUBMITTED TO:

SUBMITTED BY:

Mr. Deepak Kapur

MANJALIKA
MBA-HR 2ND YEAR
UBS, PANJAB UNIVERSITY

Collective Bargaining- Definition, Need, Objectives and Importance | Manjalika

TABLE OF CONTENT
DEFINITION ...................................................................................................................... 2
FEW FACTS ABOUT COLLECTIVE BARGAINING ................................................................ 2
COLLECTIVE BARGAINING IN INDIA .................................................................................. 3
OBJECTIVES OF COLLECTIVE BARGAINING ......................................................................... 3
IMPORTANCE OF COLLECTIVE BARGAING.......................................................................... 3
REFERENCES ..................................................................................................................... 5

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Collective Bargaining- Definition, Need, Objectives and Importance | Manjalika

DEFINITION
Collective Bargaining is a process of negotiation between representatives of management
and employees for the purpose of establishing mutually agreeable conditions of employment.
Collective bargaining is a process of discussion and negotiation between two parties, one or
both of whom is a group of persons acting in contest. More specifically it is the procedure by
which an employer or employers and a group of employees agree upon the conditions of
work - (THE ENCYCLOPEDIA OF SOCIAL SCIENCE)
International Labour Organization defined the term asThe negotiations about working conditions and terms of employment between an employer
, a group of employers or one or more employers organizations on one hand and one or
more representative workers organizations on the other with a view to reaching an
agreement.

FEW FACTS ABOUT COLLECTIVE BARGAINING

The phrase Collective bargaining has been coined by Sydney and Beatrice Webb
(Great Britain) which is said to be home of Collective Bargaining.
The idea of collective Bargaining emerged as result of:

INDUSTRIAL CONFLICT &

GROWTH OF TRADE UNION MOVEMENT.

It was first given exposure in U.S by Samuel Gompers.

In India, first Collective Bargaining agreement was concluded in 1920, in textile industry,
Ahmedabad

NEED OF COLLECTIVE BARGAINING

Before the advent collective bargaining era

Workers condition was poor.

Labour was at great disadvantage in obtaining reasonable terms of employment.

Hence, with the emergence of Unions, the collective bargaining became a rule.
Employer found necessary and convenient to deal with representative of workers.
Collective bargaining includes:
Negotiation
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Collective Bargaining- Definition, Need, Objectives and Importance | Manjalika

Administration & enforcement of contract between 2 parties.

Also, includes the process of resolving labour- management conflicts.
Its role for solving the problems arising at plant and industry levels has been widely
recognized.

COLLECTIVE BARGAINING IN INDIA

During the early post-Independence years, efforts were made to develop the system of
collective bargaining as in alternative to compulsory negotiation. But, the recessionary
condition in the industry, the weak bargaining strength of union and the need to maintain
industrial peace to implement the Five-Year Plans necessitated continuing the compulsory
arbitration mechanism as the main plank of the industrial relations machinery. On the other
hand, firstly, the influence of collective bargaining was limited only to a few industries.
Secondly, the scope for bargaining was greatly restricted because of rising industrial
legislations enacted by the various states, which touched upon practically all aspects of wages
and working conditions in factories. Thirdly, its developments were greatly hampered by the
liberal provision of adjudication machinery which prompted trade unions to lean heavily on it,
rather than on their strength to settle disputes. Moreover, the rampant trade union rivalry
and undertrained freedom enjoyed by the minority unions in raising disputes on the
negotiated issues have also posed difficulties in effective working of the collective bargaining
system. The slow progress in the recognition of unions as bargaining agents also limited the
growth of the collective bargaining system.

OBJECTIVES OF COLLECTIVE BARGAINING

Workers participation in decision making.

To maintain cordial relations between the employer and the employees.
To settle disputes/ conflicts relating to wages and working conditions.
To protect the interests of workers through collective action.
To avoid third party intervention in matters relating to employment.
To resolve the differences between workers and management through voluntary
negotiations and arrive at a consensus.
To promote industrial democracy.

IMPORTANCE OF COLLECTIVE BARGAINING

IMPORTANCE TO THE EMPLOYEES
It 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.
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Collective Bargaining- Definition, Need, Objectives and Importance | Manjalika

It increases the morale and productivity of employees.

It restricts managements 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
Easier for the management to resolve issues at the bargaining table rather than taking
up complaints of individual workers.
It tends to promote a sense of job security among employees.
Tends to reduce the cost of labour turnover to management.
It opens up the channel of communication between the workers and the management
and increases worker participation in decision making.
It plays a vital role in settling and preventing industrial disputes.
IMPORTANCE TO SOCIETY
Collective bargaining leads to industrial peace in the country.
It results in establishment of a harmonious industrial climate which supports the pace
of a nations 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.
It is a measure to distribute equitably the benefits derived from industry among all the
participants.

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Collective Bargaining- Definition, Need, Objectives and Importance | Manjalika

REFERENCES
1. Singh P.N & Kumar Neeraj. Employee Relations Management. Pearson
2. Mamoria C.B (2000) Dynamics of Industrial Relations. Mumbai Himalayan Publishers
3. Gupta, Abhishek & Gupta, Neetu. Collective Bargaining Power: Union And
Management. Journal of research in commerce & management, 2(4), pg. 8

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