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Collective Bargaining and Workers Participation in Management Notes

This post gives quick bullet points on the second chapter of the Industrial Management book by T.N. Chhabra in the IP University syllabus. It is concisely edited to contain the maximum info in the minimum amount of text. It is also pretty comprehensive, and is probably all you need to know for the exams. It is the second of a ten part series.

Concept and Nature of Collective Bargaining

The process of negotiating the terms of employment between an employer and a group of workers. The terms of employment are likely to include items such as conditions of employment, working conditions and other workplace rules, base pay, overtime pay, work hours, shift length, work holidays, sick leave, vacation time, retirement benefits and health care benefits. Collective bargaining involves discussions and negotiations between two groups as to the terms and conditions of employment. It is called ‘collective’ because of both the employer and the employee act as a group rather than as individuals. It is known as ‘bargaining’ because the method of reaching an agreement involves proposals and counter-proposals, offers and counter-offers and other negotiations.


  1. is a collective process in which representatives of both the management and employees participate
  2. is a continuous process which aims at establishing stable relationships between the parties involved
  3. not only involves the bargaining agreement but also involves the implementation of such an agreement
  4. attempts in achieving discipline in the industry and industrial democracy
  5. is a flexible and dynamic approach, as the parties involved have to adopt a flexible attitude towards negotiations

Subject Matter of Collective Bargaining

The important clauses under collective bargaining agreements include :

  1. Wages, including time rates, piece rates and other incentive methods of payment, and procedure for increasing or decreasing wages in the event of changes in the cost of living.
  2. Hours of work, overtime and rates of pay for overtime; regulation of shifts and rest periods.
  3. Annual holidays and rates of pay for holidays.
  4. Sick leave and leave of absence for other reasons (for example, to enable a worker who has been elected as a trade union official to take part in union activities).
  5. Seniority rights with regard to laying off and rehiring.
  6. Dismissal for disciplinary offences.
  7. Number and training of apprentices.
  8. Fringe benefits
  9. Establishment of fair production standards, including satisfactory quality of output, and methods of increasing productivity and reducing waste.
  10. Joint consultation procedure
  11. Methods of settling grievances and disputes over the interpretation of the agreement.
  12. Prohibition of strikes and lockouts during the periods covered by the agreement.
  13. Duration of the agreement, its subsequent continuation unless notice of termination is given, and the length of such notice.
  14. Procedure for negotiating a new agreement.

Significance of Collective Bargaining

  1. acts as a technique of long-run social change, bringing rearrangements in the power hierarchy of competing groups.
  2. serves as a peace treaty between two parties in continual conflict.
  3. establishes a system of industrial jurisprudence, defining the rights and duties of the conflicting parties.

Benefits of Collective Bargaining

  1. It provides a method for the regulation of conditions of employment by those directly concerned
  2. provides a flexible means of adjusting wages and conditions of employment
  3. leads to better mutual understanding
  4. create an ‘industrial jurisprudence’
  5. better implementation of decisions because both parties are involved in making them.

Process of Collective Bargaining and Negotiation

Various stages involved:

  1. Organization and Recognition form a group of >=7 persons and get a trade union registered, increase membership till majority are members to increase bargaining powers
  2. Preparation for Negotiation fact gathering, goal setting, and strategy development
  3. Negotiation first meeting establishes rules, policies, schedules, specific proposals and counter-proposals are presented
  4. Contract Administration contract must contain a procedure for handling contract disputes and for resolution of grievances

Basic considerations of Collective Bargaining

  1. Recognition of the bargaining agent - selection of representative by secret ballot
  2. Deciding the level of bargaining - enterprise, industry, regional or national level
  3. Determining the scope and coverage of bargaining

Collective Bargaining in India

There are 3 types of collective agreements in India, discussed below:

  1. Bipartite agreement :
    • dynamic relationship evolving in establishment concerned without any pressure from outside
    • drawn in voluntary negotiation between management and union
    • both parties feel confident of the ability to reach the agreement
  2. Settlement :
    • tripartite in nature because it’s usually reached by conciliation
    • conciliation officer plays an important role in bringing about conciliation of the different points of the parties
  3. Consent Award :
    • negotiation takes place between parties when the dispute is actually pending before one of the compulsory adjudicatory authorities

Problems of collective bargaining in India

  1. when bargaining takes place it is limited to large factories and establishments
  2. there is a multiplicity of unions which are weak and unstable and do not represent the majority of the employees
  3. most trade unions have political affiliations and are dominated by politicians
  4. lack of definite procedure to determine which union is to be recognised to serve as bargaining agent
  5. law provides an easy access to adjudication and hence faith in collective bargaining process is discouraged
  6. close association between trade unions and political parties, and trade union movement has leaned towards political orientation rather than collective bargaining
  7. industrial disputes are often settled by inviting political parties to mediate and help the parties arrive at an agreement

Suggestions to make collective bargaining effective

  1. a strong stable and representative state union
  2. compulsory recognition of trade unions
  3. greater emphasis on mutual accommodation rather than conflict or uncompromising attitude
  4. mutual trust and confidence, as both sides must accept each other as responsible parties in the collective bargaining process
  5. efficient bargaining mechanism and permanent bargaining mechanism through:
    • availability of full information
    • selection of proper representatives and
    • recognition of natural temperament of each other
  6. emphasis on problem-solving attitude with the de-emphasis upon excessive legalism
  7. conducive political climate, the government must be convinced that the best method of arriving at the agreements is through mutual voluntary negotiations.

Concept of Industrial Democracy

Organization of any factory or any other business institution into a little democratic state with the legislative government which shall have both the legislative and executive phases.

Concept of Workers Participation in Management

Industrial Relations experts consider workers participation in management as an association of labour with management without the final authority or responsibility in the general area of managerial functions. To them, it means that the management shares in an appropriate manner the decision making power with the lower ranks of the organisation. The principal forms of workers participation are :

  • information sharing
  • join consultation
  • suggestion schemes

Scope of Workers Participation

  1. Information sharing :
    • participation takes place when the management solicits the opinion of workers before taking a decision
    • workers are given a say or an opportunity to influence decisions
  2. Sharing decision-making :
    • participation of an individual in something occurs when he actively takes a part in that thing
    • workers may be members of work committee, joint management council along with representatives of management
    • decisions are taken from mutual discussions between the representatives and the management
  3. Self Control :
    • management and workers are not visualised as two distinct groups but as active members with equal voting rights
    • subordinates exercise control on the mechanism of decision making as full and active members
    • formal involvement of workers in the determination of the course of action

## Significance of Workers Participation in Management

  1. higher productivity
  2. greater commitment
  3. reduced industrial unrest
  4. industrial democracy
  5. improved decisions
  6. human resource development, initiative and creativity among participants
  7. reduced resistance to change

Forms of Workers Participation in Management

  1. Suggestion Schemes
    • enlisting man’s creative ability providing him with an opportunity for self-expression
    • motivating him towards increase productivity
    • management invites suggestions from workers concerning matters such as working conditions, safety and life welfare facilities
    • suitable incentive schemes may also be introduced
    • suggestions that help in cutting costs or wastage or increasing productivity or even showing originality will be suitably rewarded in cash or kind
  2. Joint Consultation
    • there are arrangements for consultation between management and employees about matters of common interest, outside the scope of negotiating procedures
    • decisions of such committees are advisory in nature
    • decisions are the outcome of joint deliberations between labour and management
    • it requires that the management be genuinely receptive to the ideas of workers so that the latter can perceive that their ideas are useful
  3. Employees Representation on the Board of Directors
    • this is the highest level of workers participation in management
    • workers are given the right to elect a certain number of the representatives for nomination on the board of directors
    • they put forth workers viewpoints on various issues that interest them
    • make the workers a party to the various decisions concerning the establishment
  4. Co-partnership
    • workers of an enterprise contribute to its equity and thus become co-owners of the company
    • may also get elected on the board of directors
    • workers share not only the profits and losses of the firm but also share the management decisions
    • develops a sense of commitment and partnership
  5. Quality Circles
    • voluntary regular meetings of 5 to 10 employees with a shared area of responsibility
    • meeting on company time to discuss quality problems with the object of suggesting improvements and arranging for their implementation
    • topics discussed include quality, cost reduction, use of equipment, safety and efficiency of working

Requirements of effective workers participation

  1. the overall climate in the organisation should be favourable to workers participation
  2. there must be sufficient time to participate before action is required
  3. the subject of participation must be relevant to the enterprise
  4. the worker’s representatives should have the ability such as intelligence and knowledge to participate
  5. there must be an effective system of communication
  6. participation should not adversely affect the status or authority of the participants
  7. the financial cost of participation should always be lesser than the benefits of participation
  8. participation should be within the framework of the overall policy of the enterprise
  9. participation should be an ongoing activity in the organisation and should not be restricted to unfavourable situations only

Workers Participation in India

Reasons for failure of Workers Participation in Management in India

  1. there is a lack of follow-up measures on the part of the government for the implementation of the various schemes announced by it
  2. a vast majority of workers in India are not strongly motivated to assume decision-making responsibility directly or through the representatives
  3. management by and large lack a positive response to the idea of workers participation
  4. trade unions in India are not very strong and responsible, there under the domination of politicians
  5. representatives in the participation forums have to assume the double role of workers
  6. lack of initiative on part of management and trade unions
  7. emphasis has been given to participants at the higher levels active involvement is confined only to a few
  8. the creative potential of rank and file workers are ignored

Suggestions to make workers participation effective

  1. both the workers and management should be made conscious of the benefits of participation
  2. one and only one Union should be recognised for each industrial unit so that inter-Union rivalry ceases to play the disruptive role
  3. all-out efforts should be made to eradicate illiteracy among industrial workers
  4. workers in general and their representatives, in particular, should get equipped with the skills and knowledge required for understanding management and management decisions
  5. atmosphere of trust should be created on both sides
  6. union should feel that the management is not side-tracking the effective union through work committees
  7. management should equally realise that some of their known prerogatives are meant to be parted with
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