NАTIONАL LАW INSTITUTE UNIVERSITY (N.L.I.

U),
BHOPАL (M.P)

SUBJECT: LABOUR LAW 1

TOPIC: COLLECTIVE BARGAINING IN INDIA

SUBMITTED TO

ASSISTANT PROF. MR. MAHENDRA SONI

SUBMITTED BY: VAIBHAV GUPTA

ROLL NUMBER: 2016 B.А.LL.B 100

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 АCKNOWLEDGEMENT
I tаke this opportunity to thаnk everyone who helped me out in completing this project work
directly or indirectly. I show а speciаl token of grаtitude towаrds our Assistant Professor Shri
Mahendra Soni without whose guidаnce аnd support, it would hаve been quite difficult to
complete this project. I would аlso like to thаnk NLIU’s librаry, which helped me а lot in the
construction of this project.
- VAIBHAV GUPTA

2016 B.А.LL.B 100

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Table of Contents
INTRODUCTION...........................................................................................................................1
RESEARCH METHODOLOGY....................................................................................................3
DEFENITIONS OF COLLECTIVE BARGANING.......................................................................4
ANALYSIS OF THE CONCEPT OF COLLECTIVE BARGANING...........................................6
Features of Collective Bargaining...............................................................................................6
Significance of Collective Bargaining.........................................................................................7
Functions of Collective Bargaining.............................................................................................7
Subject-matter of Collective Bargaining.....................................................................................8
Importance of Collective Bargaining...........................................................................................9
Principles of Collective Bargaining...............................................................................................11
Advantages and Disadvantages of Collective Bargaining.............................................................12
Advantages of Collective Bargaining........................................................................................12
Disadvantages of Collective Bargaining...................................................................................12
COLLECTIVE BARGAINING PROCESS..................................................................................14
Collective Bargaining Issues.....................................................................................................14
The Settlement Process..............................................................................................................15
Sources of Power.......................................................................................................................15
Grievance Procedures................................................................................................................16
Levels of Collective Bargaining................................................................................................16
STRIKE AND LOCKOUT AS A METHOD OF COLLECTIVE BARGAINING.....................18
The Right to Strike as Method of Collective Bargaining..........................................................18
Lockouts as Weapon of Collective Bargaining.........................................................................19
COLLECTIVE BARGAINING AGREEMENT...........................................................................20
EVOLUTION OF INDUSTRIAL JURISPRUDENCE IN INDIA...............................................21
Indian Constitution and Social Justice.......................................................................................21
COLLECTIVE BARGANING IN INDIA....................................................................................22
Types of Collective Bargaining Agreements in India...............................................................23
POSITION OF COLLECTIVE BARGAINING IN INDIA.........................................................25
Outsiders in the Process of Collective Bargaining....................................................................25
Multi -Unionism........................................................................................................................26
LAWS RELATING TO COLLECTIVE BARGAINING IN INDIA...........................................27
PROBLEMS RELATING TO COLLECTIVE BARGAINING IN INDIA.................................29
CONCLUSION..............................................................................................................................30
BIBLIOGRAPHY..........................................................................................................................33

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INTRODUCTION

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" 1,
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’s 2. 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 Ahmadabad3.

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
1
Otto Kahn-Freund, Laboar aad the Law, L mdon, Stevens & Sons, (1977\ .). 49
2
Webb, Sydney and Beatrice, Industrial Democracy,1902,p.185
3
Report of Royal Commission on Labour in India, 1931; p. 336-337

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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.

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RESEARCH METHODOLOGY

Aims and objective

The aim of this project is to analyze the process of “Collective Bargaining” and the objective has
been to understand the impact of Collective Bargaining in India.

Scope and limitation

The researcher has limited the scope of the project paper to the concept of collective bargaining
and its impact in India.

Method of analysis

The researcher has endeavored to use a combination of critical and descriptive styles of writing
throughout this project and has cited various cases to critically analyze the theory of collective
bargaining.

Research questions

Following are some the basic questions the researcher has tried to answer in this paper;
1. What is the concept of collective bargaining?
2. Whether strike and lockouts are established means of weapons of collective bargaining?
3. What is the impact of collective bargaining in India?
4. What are the problems related to the collective bargaining process in India?
5. How can collective Bargaining be strengthened as a mode of settling industrial disputes?

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DEFENITIONS OF COLLECTIVE BARGANING

There is no precise definition of “Collective bargaining”. In fact keeping in view the change in
the society with its fast changing social norms the scope and content of collective also varies
from country to country. Nevertheless, Collective bargaining has been defined by different
experts in different ways. It is treated as a method by which problem of wages and conditions of
employment are resolved peacefully and voluntarily between labour and management.4

This chapter deals with the various definitions of collective bargaining which will be helpful in
understanding the concept of collective bargaining, its ambit and scope as has been coined by
various writers.

According to K. Alexander

“Collective bargaining is a process of bargaining between the employers and their workers by
which they settle their disputes among themselves relating to employment or non-employment or
terms of employment or conditions of labour of the workmen, on the strength of the sanctions
available to each side. Occasionally such bargaining results in amicable settlement arrived at
voluntarily and peaceful between the parties. But quite often the workers and the employers have
to apply sanctions by resorting to the weapons of strikes and lock-outs to pressurize one another
which makes both the sides aware of the strength of one another and that finally forces each to
arrive at a settlement in the mutual interests. It is thus the strength of the parties which
determines the issues rather than the wordy duals which are largely put on for show as any
element of strength in one party is by the same token an element of weakness in another”.

Convention 154 of International Labour Organization (ILO) under Article 2 says: For the
purpose of this Convention the term collective bargaining extends to all negotiations which take
place between an employer, a group of employers or one or more employers' organizations, on
the one hand, and one or more workers' organizations, on the other, for –

4
I.L., Labour Law and Labour Relations, N.M. Tripathi (Pvt) Ltd., Bombay, (1968), P.29:

7
(a) determining working conditions and terms of employment; and/or
(b) regulating relations between employers and workers; and/or
(c) regulating relations between employers or their organizations and a workers' organization

ILO has defined collective bargaining as,

“negotiation about working conditions and terms of employment between an employer and a
group of employees or one or more employees’ organizations with a view to reaching an
agreement wherein the terms serve as a code of defining the rights and obligations of each party
in their employment/industrial relations with one another”.

This definition however confines the term collective bargaining as a means of improving
conditions of employment. But in fact, collective bargaining serves something more.

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ANALYSIS OF THE CONCEPT OF COLLECTIVE BARGANING

Collective bargaining is concerned with the relations between employers acting through
management and organised labour. It is concerned not only with the negotiation of a formal
labour agreement but also with the day-to-day dealings between management and the union.
Collective bargaining is a voluntary process under which the representatives of both employers
and labour enter into an agreement. The process does not stop as soon as a bargain is reached at
between the employer and the trade union. It is a continuous process because the contract is only
the beginning 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;
 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;

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 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.

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.
3. For establishing industrial jurisprudence it analyses the rights and duties of conflicting
parties.

Subject-matter of Collective Bargaining

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Collective bargaining has two pronged concerns:

(1) Chalking out a broad contract of employment relationship between employers and
workers, and
(2) The administration of the contract.

In fact, it has been recognised as a method of determining the wage rates and other terms and
conditions of employment and of regulating the relations between the management and
organized labour. Collective bargaining includes provisions with respect to hiring, lay-offs,
promotions, transfers, work scheduling, work assignment, wages, welfare programmes,
retirement benefits, discipline, etc.

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;

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 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;

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.

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

12
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.

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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 agreement5.

5
[ALJ, (1965) p.39]

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COLLECTIVE BARGAINING PROCESS

The collective bargaining process begins when the majority of workers of an organization vote to
be represented by a specific union. The National Labor Relations Board (see Labor Unions) then
certifies the union. At this point, the management of the organization must recognize the union
as the collective bargaining agent for all the employees of that organization. Once this part of the
process is completed, collective bargaining can begin.

The traditional style of bargaining has been used since collective bargaining began between
management and the early labor unions. It is an adversarial style of negotiating, putting one side
against the other with little or no understanding of, or education about, the other on the part of
either party. Each side places its demands and proposals on the table, and the other side responds
to them with counterproposals. The process is negative and involves a struggle of give-and-take
on most issues. Even with its negative connotations, however, the traditional style of negotiating
is still used effectively in bargaining many union contracts.

The partnership style of bargaining is the more modern approach to negotiations. It strives for
mutual understanding and common education on the part of both labor and management, and it
focuses on goals and concerns common to both parties. Because of its emphasis on each side's
being aware of the issues concerning the other side, partnership-style bargaining is also known as
interest-based bargaining. In this process, labor and management each list and explain their
needs, and the ensuing discussion revolves around ways to meet those needs that will be not only
acceptable but also beneficial to both parties. This style of bargaining is very positive and
imparts a much more congenial atmosphere to the negotiating process. Many modern union-
management contracts are bargained very successfully using the partnership style.

Collective Bargaining Issues

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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.

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.

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.

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 lockout. 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.

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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

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.

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STRIKE AND LOCKOUT AS A METHOD OF COLLECTIVE
BARGAINING
The Right to Strike as Method of Collective Bargaining

The right to strike is labors’ ultimate weapon and in the course of the century, it has emerged as
the inherent right of every worker. It is an element, which is of the very essence of the principle
of collective “Bargaining”6. In Conway v Way7 the Court adopted the phrase “industrial warfare”
where the Court described ‘strike’ and ‘lock-outs’ as the ‘weapons allowed by the law’. The
strike is the antithesis of lockout. It is regarded as a powerful weapon of collective bargaining
and is generally fraught with a possibility of industrial dislocation with all its attending hardships
and evils, the occurrence of which is regarded as one of the powerful levers to bring about
agreements. The trade unions with sufficient memberships strength are able to bargain more
effectively with the management than individual workmen.

But the right to strike is not absolute and the industrial jurisprudence has subjected it to certain
limitations.8 In Syndicate Bank v K.Umesh Naik9, Sawant, J stated the law in the following
words-

“The strike, as a weapon, was evolved by the workers as a form of direct action, during their
long struggle with the employers. It is essentially a weapon for the last resort being an abnormal
aspect of the employer employee relationship and involves withdrawal of labour disrupting
production, services and the running of the enterprise. It is a use by the labour of their economic
power to bring the employer to see and meet their point of view over the dispute between them.
The cessation or stoppage of works whether by the employee or the employer is detrimental to
the production and economy and the well being of the society as a whole. It is for this reason that
the industrial legislation while not denying the right of workmen to strike, has tried to regulate it
along with the right of the employer to lock out and has also provided a machinery for peaceful
investigation, settlement, arbitration, adjudication of the disputes between them. The strike or
6
AP State Road Transport Corporation Employee’s Union v APSRTC (1970) Lab IC 1225 (AP
7
Conway v Way (1909) AC 506 (HL)
8
B.R.Singh v Union of India (1990) Lab IC 389
Syndicate Bank v K.Umesh Naik, AIR 1995 SC 319
9
Syndicate Bank v K.Umesh Naik, AIR 1995 SC 319

18
lock-out is not to be resorted to because the concerned party has a superior bargaining power or
the requisite economic muscle to compel the other party to accept its demand. Such
indiscriminate use of power is nothing but assertion of the rule of ‘might is right’. Its
consequences are lawlessness, anarchy and chaos in the economic activities, which are most vital
and fundamental to the survival of the society.

Lockouts as Weapon of Collective Bargaining

Lockout can be described as the antithesis of a strike. Just as strike is a weapon available to the
employee for enforcing their industrial demand, a lock out is a weapon available to the employer
to persuade by a coercive process the employee to see his point of view and to accept his
demands. In the struggle between the capital and labour the weapon of strike is available to
labour and is often used by it, so is the weapon of lock out available to the employer and can be
used by him.

Lock out was comprehensively defined in the repealed Trade Disputes Act, 1929 as “closing of
place of employment or suspension of work or refusal by an employer to continue to employ any
number of persons employed by him in consequence of a dispute done with a view to compelling
those persons or to aid another employer in compelling persons employed by him to accept terms
or conditions of or affecting employment”. This definition was based on the definition of lock
out in the English statute.

Section 2(1) of the Industrial Disputes Act, 1947 defines a “lock out” as meaning the closing of a
place of employment, or the suspension of work, or the refusal by an employer to continue to
employ any number of persons employed by him. A lockout is the closure of an industrial
undertaking because of the existence of or apprehension of an industrial dispute, violence and
damage to property. It is the suspension of employment in so far as the employer refuses to give
work to the workmen until they yield to his demand or withdraw the demands made on him; or
because of closing down of a place of employment and the suspension of the work.

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EVOLUTION OF INDUSTRIAL JURISPRUDENCE IN INDIA

The evolution of Industrial Jurisprudence in India can be traced back to the period of post
Independence. Before the Independence, the industrial jurisprudence existed in a rudimentary
form. The paramount concern of the Pre-independence industrial jurisprudence was the
amelioration of the working condition of the workers at the factories. There was hardly any deal
with the social justice to the working class. It was only after the commencement of our
Constitution, that the adequate provisions for the social justice to the workers were inserted.

The aspect of industrialization in India was based on the program of planning, which was
accepted after thirties. It is important to take into consideration that the plantation industry of
Assam was the first to attract the industrial legislation. The situation there was that the employers
exercised hard practices against the employees. The employees were not allowed to leave the tea
gardens. A number of Acts were passed from 1863 onward, but they only protected the interests
of the employers. Some other Acts were also passed to regulate the condition. But the
Workmen’s Compensation Act, 1923 was the landmark Act.

Indian Constitution and Social Justice

Industrial Jurisprudence was not in a much developed form before the commencement of the
Constitution of India. Before the Independence, the paramount concern of the Government was
to ameliorate the condition of the factory workers. It was after the commencement of the
Constitution that the paramount concern of the Government shifted towards the social justice for
the labourers, who constituted the bulk of the population. Bhagwati J., in a landmark case
opined that concept of justice does not emanate from the fanciful notions of any particular
adjudication but must be founded on a more solid foundation 10. Justice Gajendragadkar opined
that “the concept of social and economic justice is a living concept revolutionary import; it gives
sustenance to the rule of law and meaning and significance to the idea of welfare state”11.

10
 Muir Mills Ltd. v. Suti Mill Mazdoor Union, (1955 1 LJJ 1 (SC)
11
State of Mysore v. Workers of Gold Mines, AIR 1958 SC 923

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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 Company12 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
Tiwari13 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 Tribunal 14 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 Patel 15 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.

12
AIR 1990 SC 247
13
(1979) Lab I.C. 523 (Cal)]
14
(1961) I LL.J 504
15
(1976) Lab. I.C. 4 [S.C]

21
Dialogue with representatives of a union help striking a delicate balance in adjustments and
settlement of various contentious claims and issues."

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.

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.

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.

22
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.16

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.17 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. 18 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 fund19 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
16
S.N. Dhyani, Trade Union and the right to strike, S. Chand & Co. (Pvt.) Ltd, New Delhi, PP. 374-380.
17
See Section 22 of the Trade Unions Act, 1926,
18
See Report of the National Commission on Labour, (1969), P. 288
19
See Section-16 of the Trade Unions Act. 1926.

23
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. 20 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.

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.21 Presence of
too many unions in an industry destroys the bargaining strength of workers. Our labour
legislation also permits multi-unionism.22

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.

LAWS RELATING TO COLLECTIVE BARGAINING IN INDIA

20
id. at P. 291, The Commission has recommended as follows :
Where the membership of union is;
( i) below 1,000 the number of outsiders should not be more than 10%
{ii) between 1,000-10,000 … …. …. ….. ….. ….. ….. ….. 20%
(iii) above l,000 … …. …. ….. ….. ….. ….. ….. …. … …30%
(iv) 'the permissible limit for industry -wise unions should be 30%
21
Mrs. P. Chakravarthy, Strike and Morale in Industry, Calcutta. Navana Printing Works, Pvt. Ltd. (1969) PP. 37-
38.
22
See Section-4 of the Trade Unions Act, 1926, permits any seven members to form a union and get registered.

24
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.

PROBLEMS RELATING TO COLLECTIVE BARGAINING IN INDIA

25
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.

CONCLUSION

26
A lot has been said about the development of collective bargaining in India. But in fact,
collective bargaining which is a two way affair, has been used at present only as a one-way
exercise in which the union, as the aggressive partner, makes the demands, and the management ,
as the passive partner, derives satisfaction merely by countering the extent to which it is able to
minimize the additional burdens while meeting the union’s demands. There are not many
examples even now where union as well as the management, as equal partners, have approached
the process of collective bargaining with the objective and spirit that collective bargaining must
bring concrete benefit to both the parties.

The following steps should be taken for the success of collective bargaining.

1. Strong Trade Union: A strong and stable representative trade union is essential for
effective collective bargaining. For having such a trade union, workers should have
freedom to unionize so that they can exercise their right of unionization and form a trade
union for the purpose of electing their representatives for collective bargaining.

2. Compulsory Recognition of Trade Unions: There must be an acceptable and

recognised bargaining agent. That means that there must be recognised union or unions to
negotiate the terms and conditions of the agreement with the management.

Recognition of trade union has to be determined through verification of fee membership

method. The union having more membership should be recognised as the effective
bargaining agent. A strong, stable and the most representative union should be recognised
by the employers for the purpose because any agreement with that union will be
acceptable to majority of workers and it will help in establishing sound industrial
relations in the organisation.

3. Mutual Trust and Confidence: Trade unions and management must accept each other
as responsible parties in the collective bargaining process. There should be mutual trust
and confidence. In fact in any relationship trust is the most important factor.

27
 Management must accept the union as the official representative. The union must accept
the management as the primary planners and controllers of the company’s operations.
The union must not feel that management is working and seeking the opportunity to
undermine and eliminate the labour organisation. The company management must not
feel that the union is seeking to control every facet of the company’s operations.

4. Efficient Bargaining Mechanism: No ad-hoc arrangements are satisfactory for the

reason that bargaining is a continuing process. An agreement is merely a framework for
every day working relationships, the main bargain is carried on daily and for this there is
a need to have permanent machinery.

As for machinery being efficient, it has three aspects:

(a) Availability of full information
(b) Selection of proper representatives
(c) Recognition of natural temperament of each other.

5. Emphasis on Problem-solving Attitude: There should be an emphasis upon problem-

solving approach with a de-emphasis upon excessive legalism. Litigation leads to loss of
time and energy and it does not benefit anyone. Therefore the emphasis is to look for
mutually acceptable solutions rather than creating problems for each other.

6. Political Climate: For effective collective bargaining in a country, it is important to have

sound political climate. The Government must be convinced that the method of arriving
at the agreements through mutual voluntary negotiations is the best for regulating certain
conditions of employment. The provision for political fund by trade unions has to be
done away with-since it unvariably encourages the politicians to prey upon the union.

28
BIBLIOGRAPHY

Books referred..
1) Bhagoliwal, T.N., Economics of Labour& Industrial Relations, 1989, Sahitya
Bhawan, Agra.
2) Goswami, V.G., Labour and Industrial Law, 2004 Central Law Agency, Allahabad.
3) Teller Ludwig, Labour Disputes and Collective Bargaining, Vol I, 1940 Barker Voorhis&
co. INC New York.

Articles referred.
1) Right to Strike : An Analysis, B.P.Rath and B.B.Das, IJIR 1999,pg 248-259.
2) Perspectives On Collective Bargaining In India, LLJ, Vol 1, 2005 p.21-34
3) “Strikes and Lock outs”, Pankaj and Dharamveer Singh, Lab&IC, Vol 1,2005
pg12-21.
Websites.
http://www.tradeunionindia.org/miscellaneous/public_rights.htm.
http://echo.ilo.org/pls/declaris/DECLARATIONWEB.DOWNLOAD_BLOB?
Var_DocumentID=1655.
http://www.unccr.ch/tbs/doc.nsf/(Symbol)/E.C.12.2002.12.En?Opendocument.(ILO )
http //www.google.co.in/
www.indialaw.com
www.lawsofindia.com

BOOKS/JOURNALS
International Labour Review, Vol. 139 (2000), No.1.

G. B. Pai , Labour Law in India, Vol. I.

Indian Bar Review, Vol.29, (2002),pp 1-4

29