What is Collective Bargaining? How It is Helpful in Business?

Collective Bargaining

Collective Bargaining can be rightly defined as the form of negotiation between the employer and the representatives of workers or employees, such as a trade union that establishes the terms and conditions of employment. The main purpose behind collective bargaining is to determine the working conditions, as well as, to regulate the relations of employers and workers to protect the rights of both parties.

It would not be wrong to call it a bipartite process, wherein employers and a group of employees are the two parties involved in joint decision-making on various matters regarding the working conditions and benefits in an organization. According to experts of assignment writing firm, the main idea behind collective bargaining is to establish the working conditions, as well as to regulate the relations of employers and workers.

Collective Bargaining In Business:

Collective bargaining can be called regarded as one of the most important elements in industrial relations. It helps to make the relationship between employees and employers smooth and lasting. A strong bond between the employers and employees contributes to the successful working of an organization. When the management and employees communicate with each other for reaching an agreement it can be termed as an outcome of collective bargaining.

Many people believe collective bargaining to be the process in which union members of the employees talk with employers for getting benefits. However, collective bargaining is the process through which conclusions regarding crucial matters are reached regarding wages of employees, working hours of employees, and working conditions at the company. It has been observed that trade unions are regularly criticized for creating strife within the workplace environment fighting for workmen’s compensation.

However, experts believe that the concept of Collective Bargaining is a continuous strategic process in determining terms and conditions of employment where management and employees participate at a workplace to oversee establishing stable relationships. It was primarily developed as an alternative to ad-hoc based on an agreement with the employees related to managing discipline and employee claims. Collective bargaining can only function effectively if it is conducted freely and in good faith by all parties. It implies:

  • Making efforts to reach an agreement
  • Carrying out genuine and constructive negotiations
  • Avoiding unjustified delays
  • Respecting the agreements concluded and applying them in good faith, and
  • Giving sufficient time for the parties to discuss and settle collective disputes

Bargaining in good faith aims to reach mutually acceptable collective agreements without any hard feelings. When the arguments are not settled or reached, dispute settlement procedures ranging from conciliation through mediation to arbitration may be used.

Objectives Of Collective Bargaining:

As an effective way through which the employer and the trade union can set fair wages and working conditions, collective bargaining improves the quality of labor relations. Its main objectives are:

  • To settle the disputes and conflicts amidst the parties
  • To strengthen and maintain cordial and harmonious relations amidst management and workers
  • To safeguard the interest of both the parties involved in the discussion
  • To arrive at a decision or settlement that is mutually favorable
  • To encourage democracy in the industry

How Collective Bargaining Helps In Business:

Collective bargaining plays a very crucial role in business. Some of its benefits are:

  • It helps to improve wages and working conditions, as well as promotes equality among workers
  • It provides a platform to both the parties, i.e. the management and workers can stand on the same level at the negotiation table and pay attention to what the other party as to say and address their concerns
  • It ensures the adaptability of the companies and economies during the economic crisis
  • It helps in developing trust and mutual respect between employers, workers, and their organizations that lead to greater benefits in the long run
  • It increases stability that in turn enhances performance and productivity in labor relations
  • It benefits both the parties; the workers get fair remuneration for the work performed, without affecting or compromising the employers’ profit ratio
  • It facilitates the adaptability of the enterprise to a short term rise or falls in demand
  • It facilitates instant implementation of the decisions, made during the bargaining process which keeps both parties satisfied
  • It results in an increased worker’s commitment and enables information sharing
  • It also eliminates income inequality which is the main reason people switch jobs or leave organizations even after they have put in years of hard work
  • It demonstrates the relative strength of the opposing parties

Collective bargaining is the discussion or the agreement between employers and workers. It helps them negotiate new contracts, as well as renegotiate the existing ones.

Types Of Collective Bargaining:

There are four types of collective bargaining. Each type has been classified based on its nature and objectives. Employers and employees can practice these types of collective bargaining depending on the different situation requirements.

Conjunctive Or Distributive Bargaining:

In this form of collective bargaining, the parties, the employee and the employer try to maximize their respective gains. It is based on the principle, “my gain is your loss, and your gain is my loss” i.e. one party wins over the other.

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Co-Operative Or Integrative Bargaining:

Both the employee and the employer sit together and try to resolve the problems to reach an amicable solution. The workers may agree to the low wages if they are getting other benefits, or the management may agree to adopt the modernized methods to ensure better production.

Productivity Bargaining:

This type of bargaining is done by the management, and the workers are given the incentives or the bonus for enhanced productivity.  Through this type of bargaining, the employer and the employee enjoy the benefits in the form of increased production and the increased pay.

Composite Bargaining:

In this type of collective bargaining, the workers also express their concern over the working conditions, recruitment and training policies, environmental issues, mergers and amalgamations with other firms, pricing policies, etc. They want to safeguard their interest and protect the dilution of their powers.

Collective bargaining strives to create a mutual agreement between the employee and the employer concerning employment terms and provides them a chance to enjoy a long-term relationship with each other.