Collective Bargaining PDF

Preview

Summary

Types of bargaining by trade unions. Collective bargaining is one of the most common. This discusses collective bargaining in the us, uk and india...

Description

COLLECTIVE BARGAINING IN INDIA Faisal Fasih Research Assistant The West Bengal National University of Juridical Sciences (NUJS) Dr. Ambedkar Bhavan, 12 LB Block, Sector III, Salt Lake, Kolkata Email: [email protected]

Abstract The term “collective bargaining” simply means negotiation. It provides an opportunity to the workers to achieve industrial democracy. It is applied in different levels starting from craft-level to national level. In Indian industry, the process of collective bargaining started in the second half of the 19th century and got legislative recognition in the first half of the 20th century. This paper dwells upon the concept of collective bargaining in general which includes the discussion of its scope, objectives, types, conditions, environment, theories and different levels. Besides, the relevant provisions of Industrial Disputes Act, Trade Union Act, Standing Order and the Constitution, along with some cases of the Apex Court have been dealt with for justifying the legality of collective bargaining. Finally, recognition of collective bargaining at the State level has been discussed briefly.

Introduction Peace is sine qua non for development and disputes dissipate valuable time, effort and money of the society. But, in a realistic sense, conflict is inevitable. Commerce, business, development work, administration, etc., all suffer because of long time taken in resolving disputes through traditional court of law. To get out of this maze of litigation, there is an alternative methods of industrial dispute resolution namely; collective bargaining, conciliation 1, mediation2, arbitration 3, worker’s participation in management, wage boards etc. Of all these, collective bargaining is considered as the best possible method because in this the disputants themselves sit together and resolve their differences in an amicable and respectable manner. A number of theories – from the fields of industrial relations, economics, political science, history and sociology as well as the writings of activists, workers and labour organizations have attempted to define and explain collective bargaining. One theory suggests that collective bargaining is a human right and thus deserving of legal protection4. In June 2007 the Supreme Court of Canada in Facilities Subsector Bargaining

1

In this method, a third party provides assistance with a view to help the parties to reach an agreement. The conciliator brings the rival parties together and discusses with them their differences and assists them in finding out solution to their problems. Conciliation may be voluntary or compulsory: It is voluntary if the parties are free to make use of the same, while it is compulsory when the parties have to participate irrespective of whether they desire to do so or not. (See Secs. 4 & 5 of the Industrial Disputes Act, 1947) 2 Like conciliation, in mediation, a third party provides assistance with a view to help the parties to reach an agreement. But unlike conciliator, mediator is more actively involved while assisting the parties to find an amicable settlement. Sometimes he submits his own proposals for settlement of their disputes. 3 The resort to arbitration procedure may be compulsory or arbitrary. Compulsory arbitration is the submission of disputes to arbitration without consent or agreement of the parties involved in the dispute and the award given by the arbitrator being binding on the parties to the dispute. On the other hand in case of voluntary arbitration, the dispute can be referred for arbitration only if the parties agree to the same. 4 United Nations General Assembly (1948). "Article 23". Universal Declaration of Human Rights. Paris. Retrieved on 29 August 2007. Article 23 of the Universal Declaration of Human Rights identifies the ability to organise trade unions as a fundamental human right. Further, Item 2(a) of the International Labour Organization's Declaration on Fundamental Principles and Rights at Work defines the "freedom of association and the effective recognition of the right to collective bargaining" as an essential right of workers. (International Labor Organization (1998). Declaration on Fundamental Principles and Rights at Work. 86th Session: Geneva.

El

t

i

il bl

t htt //

/ b t

t 1968208

Assn. v. British Columbia5 extensively reviewed the rationale for considering collective bargaining to be a human right. The Court made the following observations in this case:  The right to bargain collectively with an employer enhances the human dignity, liberty and autonomy of workers by giving them the opportunity to influence the establishment of workplace rules and thereby gain some control over a major aspect of their lives, namely their work.  Collective bargaining is not simply an instrument for pursuing external ends…rather [it] is intrinsically valuable as an experience in self-government.  Collective bargaining permits workers to achieve a form of workplace democracy and to ensure the rule of law in the workplace. Workers gain a voice to influence the establishment of rules that control a major aspect of their lives. This paper dwells upon the concept of collective bargaining in general which includes the discussion of its scope, objectives, types, conditions, environment, theories and different levels. Besides, the relevant provisions of Industrial Disputes Act, Trade Union Act, Standing Order and the Constitution, along with some cases of the Apex Court have been dealt with for justifying the legality of collective bargaining. Finally, recognition of collective bargaining at the State level has been discussed briefly. Concept of Collective Bargaining Sydney and Beatrice were the persons who coined the expression ‘collective bargaining’6. There is divergence of opinions regarding the exact meaning of the term “Collective Bargaining”. The Encyclopaedia of Social Sciences defines collective bargaining as a process of discussion and negotiation between two parties, one or both of whom is a group of persons acting in concert, more specifically it is the procedure by which an employer or employees and a ground employees agree upon the conditions of work.7 ILO has defined collective bargaining as “the negotiations about working conditions and terms of employment between an employer, a group of employers or one or more employers’ organization on the one hand, and one or more representative workers organizations on the other hand, with a view to reaching an agreement”8 Similarly, according to Ludwing and Teller, collective bargaining is “an agreement between a single employer or an association of employers on the one hand and labour union on the other hand which regulates terms and conditions of employment”9 The Webbs describe collective bargaining as an economic institution, with trade unionism acting as a labour cartel by controlling entry into the trade. Prof. Allan Flanders has argued on the other hand, that collective bargaining is primarily a political rather than an economic process. The Supreme Court of India in the case of Karnal Leather Karamchari Sanghatan vs. Liberty Footwear Co.10 has held that collective bargaining is a technique by which dispute between labour and capital are resolved amicably by agreement rather than by question. The dispute is settled peacefully and voluntarily although reluctantly between labour and management. Likewise it is said that collective bargaining as a method by which problems of wages and conditions of employment are resolved amicably, peacefully and voluntarily between labour and management.11

5

2007 SCC 27. Sydney and Beatrice, Industrial Democracy (1987). 7 Encyclopaedia of Social Sciences, Vol. 3, p. 628 8 International Labour Office, Collective Bargaining (A Worker’s Education Manual) (1960), p.3. 9 Teller, Labour Disputes and Collective Bargaining, Vol. 1, p. 476 10 (1989)4 SCC 448 11 Indian Law Institute, Labour Law and Labour Relations (1968), p. 29 6

El

t

i

il bl

t htt //

/ b t

t 1968208

Thus, collective bargaining is the process of negotiation between firm’s and worker’s representatives for the purpose of establishing mutually agreeable conditions of employment. The parties often refer to the result of the negotiation as a collective bargaining agreement or as a collective employment agreement. It is called ‘collective’ because both the employer and the employee act as a group rather 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 negotiation. Collective bargaining provides for procedural and substantive rules. While procedural rules concern mechanism for dealing with interpretation and implementation of agreements as well as resolving conflicts, substantive rules concern the substance of the agreement, both market (terms and conditions of employment) and managerial relationship (control on manning, transfers, promotions etc)12 Aims and Objectives – The aims and objectives of collective bargaining includes the following: 1. Balances the Legitimate Expectations – Management can legitimately expect that most qualified labour will be available at a price which permits a reasonable margin for investment. On the other hand, labours can claim job for each worker and steady increment in the wages. In other words, management’s interest in planning production and in being protected against its interruption is the exact equivalent to the worker’s interest in planning his and his family’s life and in being protected against an interruption in his mode of existence, either through a fall of his real income or through the loss of his job13. Collective Bargaining balances this conflicting interest through the process of negotiation14. 2. Maintain Equality – Collective Bargaining is a means to maintain equality between the worker and the workmen as the latter is at least advantageous position from the outset. The bargaining power of an individual worker is, more often than not, quite weak because of factors like illiteracy, indebtedness and socio-economic backwardness. Therefore, there is no match for the economically and consequently, political, superior employer. These expose the worker to exploitation, discrimination and indignities. As Lord Wedderburn rightly argues, “the Common Law assumes that it is dealing with a contract made between equals, but in reality, save in exceptional circumstances, the individual worker brings no equality of bargaining power to the labour market”15 3. Promote Industrial Democracy – Trade Union seeks to promote industrial democracy. They have now come to symbolize: workers’ right to organize, to put forth their demands collectively16 and to resort to industrial action, i.e; strike, when their demands are not conceded by their employers. They seek to impress upon their employers that their collective voice be heard when decisions affecting their working lives are made. Thus, union assures that individual interest should be subordinated to the collective well being of its members. Given that joint regulation takes place of authoritarian decision making, collective bargaining can be a vehicle for the democratization of industrial life17. The International Confederation of Free Trade Union stated that the objects of the collective bargaining is to express in practical terms the workers’ desire to be treated with due respect and to achieve democratic participation in decision affecting their working conditions18. 4. Rule-making Function – Collective bargaining performs rule-making function. Collective Agreements govern employment relationships in the bargaining unit and thereby create generally applied standards. This indicates the power of groups to provide for their own internal regulation

12

See Collective Bargaining in Industrialised Market Economics, A Reappraisal, J.P. Windmuller et al, ILO, Geneva, 1987 13 Otto Kahn Freund, Labour and the Law, N.M. Tripathi Pvt. Ltd., Bombay. 14 Power stands against power. It is the conflict of interests which makes their agreements a valid instrument of social engineering. 15 Lord Wedderburn, The Worker and the Law (1986) 16 V.V. Giri, Labour Problems in Indian Industry (1966) 17 R. Blanpain & C. Engels, Industrial Relations and Labour Laws, 4th Ed. Reprint, 2002, Vikas Publishing House Pvt. Ltd., New Delhi. 18 Quoted in Mary Sur, Collective Bargaining (1965)

(e.g; by custom and practice) and that there are limits to the sovereign power of an employer. Collective bargaining can thus be regarded as an expression of pluralism19. Thus, collective bargaining is not just a means for raising wages and improving conditions of employment. Nor is it merely democratic government in industry. It is above all a technique whereby an inferior social class or group exerts a never- slackening pressure for a bigger share in social sovereignty, as well as for more welfare and greater security and liberty20. In short, collective bargaining helps in establishment and maintenance of the mutual relations of the workers and the management 21 . Consequently, it strengthens the union as an organization. Further, it makes enterprise more responsive to human needs. Types of Collective Bargaining – There are two types of bargaining exercises – conjuritive or distributive bargaining and intergrative or Cooperative bargaining. Though both aim at joint decision making, their processes are not same. Distributive bargaining deals with issues in which parties have conflicting interests and each party uses its coercive power to a maximum extent possible. In such a situation, one party’s gain is the other’s loss. Wages bargaining is an obvious example of distributive or conjunctive bargaining. In contrast to the win-lose syndrome, integrative bargaining is concerned with the solution of problems confronting both parties. It is a situation where neither party can gain unless the other gains as well. It makes a problem solving approach in which both the parties make a positive joint effort to their mutual satisfaction. Productivity bargaining is an instance of integrative bargaining. Productivity bargaining may broadly be described as agreements in which advantages of one kind or another, such as higher wage or increased leisure, are given to workers in return for agreement on their part accept changes in work practices, methods work, etc. Conditions of Collective Bargaining – There are certain preconditions without which collective bargaining cannot exist. These are generally as follows:22 1. Parity of Power Between The Two Parties – management and unions should be more or less equal in the matter of power or strength to achieve genuine bargaining status. A weak union cannot force management even to bargain, let alone achieve anything of substance for its members. Similarly, weak management can surrender so many things to powerful unions that the agreement cannot be rightfully said to represent the results of a bargain. For example, excessive political interference and supervision by the ministries weakens the management and make union appears larger than they really are. 2. Bargaining in Good Faith – the bona fides of the bargaining parties have to be clear right from the start and the existence of hidden agendas can only hamper the process. For example, if bargaining is taken towards deadlock as a pretext to close down the plant. 3. Mechanism to Break a Deadlock – bargaining may often result in a stalemate, with neither managements nor unions budging from their respective offers or demands. The breaking of this deadlock can be achieved in two ways, either through an ultimatum like strikes or lockouts, or through third party mediation, like arbitration or conciliation. Environment of Collective Bargaining – Collective bargaining does not depend entirely on the management and the labour, but certain other factors also play an important role in determining the scope of collective bargaining. Firstly, the economic environment both at the macro and the micro 19

Id. Selig Pearlman, “The Principles of Collective Bargaining” Annals of the American Academy of Political and Social Science (March 1936) quoted in Mamorias, Dynamics of Industrial Relations (1983) 21 According to the International Confederation of Free Trade Union, the object of the Union in collective bargaining is to establish and build up union recognition as an authority in the work place (Referred in Mary Sur, Collective Bargaining (1965) 22 Ratna Sen, Industrial Relation in India, Shifting paradigm, Macmillan, 2003 20

level influenced collective bargaining like in the former, inflation may act as a boon for the union to demand more whereas; micro economic factors include cost facts and trends, rate of profits etc. Secondly, industrial environment like size of plant and technological growth affect collective bargaining. Thus, larger plants are better able to absorb increases in wages but seasonal production units face a number of constraints in allowing wage increases. Besides, social and political factors also determine collective bargaining such as the percentage of women in the workforce and rivalry among the unions. Finally, collective bargaining is also dependent on the time and era. Collective bargaining has developed more rapidly in the period when government intervention weakened.23 Theories of Collective Bargaining – Chamberlain and Kuhn have described the theories of collective bargaining on the basis of the marketing, the governmental and the industrial relations concepts. The Marketing concept grew in the early days of industrialisation which viewed collective bargaining as the process for determining the terms of which the labour will be supplied to the market and union were regarded primarily as an agency for regulating the labour market and the price of labour or wage. Under governmental concept, the collective agreement is considered as the constitution for the workplace on the basis of which a system of industrial governance for the plant or the industry was established. Thus unions and management acted much as a government do on the basis of checks and balances. The third concept or the industrial relations view collective bargaining as a method for the representation of the union in the decision making and allowed workers to participate in determining policies, which guided and ruled their work lives24. Levels of Collective Bargaining – Collective bargaining takes place in varied ways. The forms vary from those where the government plays a negligible role to those where the government intervenes substantially, or to those where it is out and out tripartism. Technically speaking, collective bargaining varies in levels from national to craft. 1. National-Level Bargaining – This type of bargaining takes place between employers’ organisations and the dominant union centre over issues which are rudimentary and basic to industrial working. These could be basic wage rates or the basic formula for cost of living adjustment and may take place annually or after gaps of two or three years. The implication would be that these basic issues are uniformly accepted by all industries and all industrial workers. This type of bargaining is relatively easier to follow in small homogeneous industrial structure 25 . Therefore it is not possible in India because of its large size and heterogeneity26. However, in India, since the early 1970s, sectoral bargaining at the national level is occurring27 in industries in which the government is a dominant player 28 . The advantage of this type of bargaining is its standardisation of wage and avoidance of disputes on the plea of disparity. But, there is little room for flexibility and therefore does not allow variations on the issues29. 2. Industry-Level Bargaining – In this type, employers’ organisations or bodies in one industry jointly bargain with unions in that industry. These Unions are organised either as industry federations or registered on the industry basis, with branches in different plants of that industry. The issues in this...