COLLECTIVE BARGAINING CONCEPT AND IMPACT I INDIA N

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 t e adjusted temporarily through the principle of "give and taxe"1. The principle of give a t d take has been infused in the principle of colledive bargaining.

CONCEPT UB COLLECTIVE BARGAIMNG : -

2. Collective bargaining has been &fined' by different experts in different ways. Neqertheless, it is treated as a method by which problem of wages and coAditions of employment are resolved peace&lly and voluntarily between labour and management. However, the term collective bargaining is opposed to individual bargaining.8 Sometimes, it is described as a process of accommodation between two conflicting interests.4 Here, power stands against p o w e ~ P The I.L.O. defines collective bargaining.
"as negotiations about working conditions and terms of employment between an empfoyer, or a grodp of employers

*
1 .

LL-M., Cochin Lecturer, Madhusudan Law College, Cuttack, Orissa. Otto Kahn-Freund, Labour and t l h L-aw, L mdon, Stevens & Sons, (1977?, 2 49. I.L. . ,~ i b o & . Law P P ~ ~ b o u t , ~ e N.M.Tripathi ~ t i m ~ (Pvt) Ltd., ~ o m b a ~ , (1968), P. 29.' N.S. Chandrasekharan & P.P. Paul, "Collective Bargaining and IndustrialRelations in the private sector in India," 6, C.U.L*., 160 (1982). See Msry Sur, Collective Bargaining, Asia Publishing House, Bombay, (1965). P. 7. Otto Kahn-Freund, Supra, n.1 at P. 51.

2.
3.

4.

5 .

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or one or more employers' organisations, on the one hand, and one or more representative workers' organisation OD

the otber wit&a xiew t rgcfring agreement."& g

This definiti'od confines the term collective bargianing as a means of improving conditims of employment. But in fact, collective barga~ning serves something more. Perlman aptly stated, "Collective bargaining is not just a means of raising wages and improving conditions of employment. Nor is it merely democratic government in industry. It is above all techfiique collective bargaining as a technique of the rise of a new class is quite different ......from the desire t o displace o r b&abolish"the "old ruling class".. ....to gain equal rights as a class to acquire an exchsive jurisdiction in that sphere where the most immediate interests. both material and spiritual, are determined, and a shared jurisdiction with the alder class or classes i n all other spheres."?

,....

... ...

3. COLLECTIVE BARGANING in India has been the subjectmatte^ of industrial adjudication since long and has been defined by our Law Courts. In Karoal Leather Karamchari Sangarhrn v. Liberty Footwear Companjg the Supreme Court observed that," Collecthe 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 t o achieve social justice on the basis of collective bargaining. In an earlier judgment in Titagarh Jute Co. Ltd. v. Sriram Tinaris the Calcutta High C o u ~clarified that this policy of the legislature is also t implicit in ihe definition of cindustrial dispute'. In Ram Prasad Viswakarma v. Industrial Tribuoailo the Court observed that, "it is well known how before the days of Gcollective bargaining', labcur bas at a great disadvantage in obtaining reasonable terms for contracts of
6,
7. 8.

Internatiomal Labour Office, Collective Bargaining, Geneva,

(19761, P 3. .

9.
10.

See Eugene V. Schneider, Industrial Sociology, Londm, Mc GrawHill, (1971), P. 344. AIR 1990 SC 247. (1979) Lab LC. 513 [Cal? (1961) I LLJ. 504.

service from its employer. As trade uBions developed in the tpptry and collective bargaining became the rule, the employers found it necessary and consenient 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 actton U against one or more workmen and as regaras a othcr disputes." In Bharat Iron Works v. Bhagubkaf Bahbbai Patel" it was held that Collective bargaining, being the order of the day in fhe democratic social welfare State, legitimate tiade union activities, which must &un all kinds of physical threats, coercion or violence, must march with a spirit of toIerance, understrlnding and grace in dealings on the part of the employer. Such activities can flow in healthy channel only on motual cooperation between the employer and the employees and cannot be considered as irksome by the management in the best interests of its business. Dialogue with representatives of a union help striking a delicate balance in adjustments and settlement of various contentious claims and issues." These definitions only bring out the basic element in the concept i.e., civilized confrontation between employers and employees and the whole process is regulated by statutory provisions.
4. Themitically, collective bargaining is based on the principIe of balance of power. Compromise or co-operation is based only on the relative power of each side. Even peaceful collective bargaining relationships or even those marked by friendliness and a spirit of give and take are the outer shell, underneath a constant testing and matching of rival power is going on.

IMPORTANCE OF COLLECTIVE BARGAINING :-

5. Collective bargaining is the means by which a 'normative system' is created fop regulating industrial conflict. However, collective bargaining does not prevent industrial conflict but it provides a forum for discussion and a means for systematic social change in the working code govedng .managementmen relations. By providing a
1. 1

(1976) Lab. 1..~:.4 [S.C.]

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forum fair lhk!etTrfg between management and union, collective barg-

ain& c%nhe@16 facilitate impmved relations and gradual change of

the ifrcttlstiy and productivity.12 Management always expects that labour should be available at a lower rate, which permits a reasonable margin of ptofit Eqdfly dorkkrs expect that level of real wag& will not only be maintained but steadily in'creased. Managedent is inbre$ted to get the most qualified hnd experienced worker available. Management expects to earn profit without interruption of production, employees equally realise that without the power to stop work collectively, it is impossible for them to get bette~treatment. All these ex@tatidrl's are projected at the bargaining table And adjubted as far a s pbssble.ls But they can not adjw their expectations bey@ certain limit. Ross Stragner and Hijalrnm Rose1114 have identified a barganining zone, which is based between tolerance z6ne and solution zone.

&CUTHE BAhlGAJNNG TABLE

MANAGWENCS TOLERANCE LIMIT MANAGEMENT'S EXPECTATIONS

BARGAINING ZONE

EMPLOYEE ORGANIZATION'S TOLERANCE

LIMIT

%~ANAGEMENT'S DESIRED SOLUTIONS

12.

k.Dubin, "Constructive

13.

aspect9 of industrial conflicts," cited in A. Kornhau&r, R. Dubid and A M. Ross (Ed.), Iadastrial Conflict, Mc Grow-Hrll, New York, (1954), P. 46. See Otto Kahn-Freund, Sllpta, n.1 at P. 49.
See Charles W. Maddox, C d e c t i v e Bargain;U.S.A., Charles C, Thomas, (197% P. 62.
k Law Enforcemat

14.

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6. For successful collective bargaining certain pre-requisites are essential viz :(a) strong independent and well organised unions,l5 (b) recognition of the union as the bargaining agent>= (c) willingness to "Give and Take,"l* (d) a favourable political climate,ls (e) mutual trust and good fait4,lS (f ) a problem solving approach rather than a fire fightinp approach. Further more, the success of this process is based on strike/lock-out and the financial capacities of both parties. Seen from the above discussion, one may ask s6Does collective Bargaiging exist in India ? if not, what are probIems ? Why it is not succsssfql to the extent it is expected 7 How far are employers, employees, unions and government responsible for its failttre ? Let us consider some c f r the important factors. POSITION OF COLLECTIVE BARGAINING IN INDIA :-

7.

Collective Bargaining machinery essentially is a reflection of

o particular social and political climate. The history of the trade union motement shcws t l a t union are amiated to one o r the other political pal~ties. 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.21
Dr. Shanti Patel, "Collective Bargaining in India." 6, C.U.L.R., 153 (1982). P D. Shenoy ,"Collective Bargaining and Conciliation," 17, I.J.I.R., 287 (1981). . International Labour Office, Supra, n 6 at P. 28. Id. at P. 26, See also Stpra, n.11. See Eugine V. Schneider, Op. cit , 359, Charles P. Maddox, Op. cit., PP. 4-5. Sri A V. Rajagopalan, "Approaches to coltective bargaining Intricacies," 2 Labour Law Notes, 42 (1982). S.N. Dhyani, Tnde Udon end the R-t to Strike, S. Chand & Co. (Pvt.) Ltd , New Delhi, PP. 374-380.

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Outside

in the Process o CoHeethe bargahing : f -

TheTradeUnionsAct,1926, permits outsiders tobetheoffice So, it permits one to be the leader of the union who does

bearers of a union to the extent of half the total number of office bearers= not actually work in the industry. Sometimes a dismissed employee working as a union leader may create difficulties in the relationslip between the union and the employer. Nevertheless, experience shows a that outsiders who have little knowledge of the background of labour problems, hidory of ldmur movement, fundamentals of trade unionism

and the technique of the industry and with even little general education assume the charge of l a b o u ~union and become the self-appointed custodian of k e welfare of workers. T e employers, therefore, have h h

been reluctant to discuss and negotiate industrial mattelrs with outsiders, who have no personal or direct knowledge of day affairs of the industry. to day

Accordingly employets refuse rmgnition to the unions which 9. are either controlled by the politicians o r affiliated to a particular political pprty or controlled by a particulur individual. Go~ernment

can not morally wmpel employers to accord recognition ro unions without driving out the politicians from them. The State must omright ban "outsiders" from the trade union body. Further, provision for political funds by trade unions should be eliminated, since it invariably encourage 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 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 .a5 The Commission hopes that internal 1eader22. 23.
24. See Section 22 of the Trade Unions Act, 1926. See Report of the Notiend Commission gn Labour, (1969), P. 288. See Sectioo-16 of the Vade U n i ~ n s Act, 1925. See, Supra, n,20, P. 290,

25.

COLLECTIVE BARGAMING
ship would develop through their educatiou and training. Accordingly ihe Commission suggests proportion of the outsiders and the workers in aunion excutive.a6 On realising the problems of outsiders in the union, the Industrial Relations Bill, 1988 proposes to reduce the number of outsiders to two cnly. Another hurdle in the success of collective bargaining in India, is the absence of a compulsory &recognit;on' provision in the Act.
Impact ul Recugirition as Bargaining Ageat in Collective Bargaining : -

10. In v;ew of the prevailing multi-trade-unionism in the country, recognition of a bargaining agent has assumed importance. Unfortunaiely, no attempt has been made a t the national level to either lay down a procedure for recognition of a trade-&ion as bargaining agent or work out a procedure. There is no provision either in the Indian Trade Union Act 1926 or in the Industrial Disputes Act 1947 for the purpose. The Government of India proposed a n amendment in the Trade Union Act in 1950 making recognition of a union compulsory. The measure however, faced serious opposition and remained .unimplemented. The Standing Labour Committee (18th Session) and National Commission on Labour favoured a statutory provision for the purpose but their recommendations have yet to be accepted. The National Commission on Labour attached considerable imoortance to ;the matter of recognition cf unions and observed a s under :L61ndustrial Democracy implies that the majority union should have the right to sole representation, i.e., the right to speak and act for all workers and entel! into agreements with the employer.'m
26.

Id. at P. 291, The Commission has recommended as fdlows : Where tbe membership of union is;

4 i ) below 1,000 the number of outsiders should not be more than 10% <ii ) between 1,000-10,000 .. ... -.. 20%
~ ( i i i ) above 10,000

..-

...

..-

...

30%

(iv) -the permiSsibb limit for mdustry-wise unions should be 30%

27.

Report of the National Commission on Labour, 11969) p. 329.

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In the absence of statutory provision, the matter is regulated 11. by the Code of Discipline which was evolved at Nainital session of Indian Labour Conference in 1952. The Code of Discipline provides 'for verification of trade-union membership by Central Industrial Re!ations Machinery of the Government. Its voluntary character has however, made it ineffective and it has been found difficult to impleme& it in view of stafutoiy provisions in the Indust~ialDisputes Act. At the present not even public sector undertakings are following the Code of Discipline and are bargaining with more than one union.

12. States like Bombay and Madhya Pradesh have, howeber, given statutony recognition to the procedure for determination of bargaining agent. Both, Bombay ~ndustrial Relations Act 1946 and Madhya Pradesh Industrial Relations Act, 1960, provide for the determination of representative union by the Registrar of Representative Unions. Special provisions have been made for agreements signed by representative unions. Inspite of it, the experience shows that there had been serious opposition to statutory recognition of a union as sole bargaining agent of the workers of the establishment. Indeed the experience is that wherever there is a union recognition, representative of rival unions have come together to force the employer to bargain with them. The fear of retaliation by unrecognised unions has proved to be the biggest stumbling block in the success of statutory recognition system,

13.

Political orientation of trade unions is the primary reasm

28.
29.

for multi-uni~nism. Communal sentimeets, provincial feelings and caste are other major causes for multiunionism.~~ Presence of too many unions in an industry destroys the balgaining strength of workers. Our labour legislation also permits multi-unionism.29
Mrs. P. Chakravzrthy, Strike and Morale in Industry, Calcutta, Navana Printing Works, Pvt. Ltd., (1969) PP. 37-38. .See Section-4 of the Trade Unions Act, 1926, permits any tieven members to form a union and get registered.

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Multi-unionism adversely affects collective bargaining process.

Where there ale too many unions, with whom should management negotiate ? Each union may claim recognition. Each union may pre:ent sepslrate charter of demands in a spirit of rivalry. Whea .confl:'cting demands are made, it may be impcssible 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 co3lective bargainitig process in India.
Politicization of Trade-Union Movemeat io India : 15.

It is well known that the trade-union movement in India is

divided on paiitical lines a3d exists on patronage of various political Parties. Most of the trade-hnion organizations have aligned themseives with a political party with whom they find themselves philosophical~y close. It is because o'f this that the Indian Natlonal Trade Union Congress is considered to be the labour wing of congress

(1) whereas H.M.s. is considered to be the labour wing of Socialist party. Bhartiya Majdoor Sangh pledges its allegiance t o B.J.P. and

C.I.T.U. has the support of C.P.I. (M). It is also the case with the
AITUC which had stafted a s a national organization of workers but subsequently came to be conuolled by the Communist Party of India an$ is now it's official labour wing. Political patronage of trade-unions has given a new direction to the movement whose centre of gravity is n o longer the employees or workmen. The centre has shifted towards it leadership whose effective~less determined by the extent of political is patronage and the consequent capacity to obtain t%e benefit. This shifting centre of power is the necessary cons'equence of political parties search for workers votes, which they seek by conferring benefits on them. Since the public sector which is really the instrumentality of the State, has emerged as the biggest employer in this country, the collective barg&ning -between the union patronized

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by the party-in-power and the employer has become an important methodology. It is because of this process that agreements conferring benefits are signed even in those units where financial losses are mounting. It is also our experience that insp'te of wage increase end improved conditions of service, there has been no corresponding improvement in prcduction or the productivity 2nd most of the losses are being passed on t o the consumers by increasing prices of the pfoducts. It is in this context that Justice Gupta has, in his, 'Our Industrial Jurisprudence" made the following observations : <<If experience is any guide, it reveals that Ievel of our increase in wages etc., ( in public sector undertaking ) is now decided by the Bureau of Public Enterprises which takes into consideration only the cPolitica1 impacty and 'Consumer resistence' as two dominant factors. This is the reason why the prices of almost all products of necessity like coal, iron and steel, cement, sugar etc. hale been constantly increasing. A survey of pending and decided industrial disputes of the last 10 years reveals that there was virtually no industrial dispute reparding wagestructure or bonus in any industry of some significance, There are also not many collective bargaining agreements which have tried to link wages with productivity. Clearly, therefore, the basic idea of <sharing the prosperity' which developed because of our commitment to the cause of 'social justice' is no longer current and the expected endproduct of the process of longer expected."m

' social

justice ' is no

16. The process of collective bargaining~is not likely to succeed unless the threat of strike/lockout is there in the back-ground. Strike
30.

Justice Gulab Gupta, Our Industrial Jurisprudence, 1987, p. 133.

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and lock-out are the weapons used by both the palties daring the collective bargaining process. Without having these weapons a t hands, neither of the parti- to the dispute can defeat the J a i m of the other. The peculiar feature of our country while compared to the advanced nations of the world is that the economic conditions of the workers is very poor and as a result they can not afford a long-standing strike.
Critical Evaluation :-

17. In Indian labour arena we see, multipli , i t ~of unions and inter-union rivalry. Statutory provisions for recognisjng unions as bargaining agents are absent. Tt is believed that the institution of collective bargaining is still in its preliminary and organisational stage.31 State, therefore, must play a progressive and positive role in removing the pitfalls which have stood in the way of mutual, amicabIe and voluntary settlement of labour disputes. The labour policy must reflect a new approach. Hitherto the State has been playing a dominant role in controlling and guiding labow-management relation through its lopsided adjudication machinery. The role of the industrial adjudicator
18.

virtually differs from that of a judge of ordinary civil court. The judge of a civil court has to apply the law to the case before him and decide rights and liabilities according to its established laws. whereas industrial adjudicator has to adjust and reconcile the conacting claims of disputants and evohe fisocially desirable" rights and obligations of the disputants.32 In deciding industrial disputes the adjudicato~: free to apply the principle of equity and good conscience. i$

31.
32.

,Dr. B.R. Patil, "Collective Bargaining and Conciliation in India," 12, I.J.I.R. 41 (1976). Anirudh Prasad Singh, "New Dimension of Employer-Employee Relations in Progressive Industrial Society," 9, Lawyer, 164 (1977).

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However, it is said that the impact of the romantic attitude of

the judiciary towards workers has not proved conducive to the peaceful industrial relations.= It is accepted that the end of judicial proceeding is pain and penalties It can not solve the problems of industries. Accordingly it is said that ; "While statutes, rules, regulations, pains and penalties have their place in the ordering of industry, they do not touch the core of the problems of indust~ialrelations."% Moreover, advocates of adjudication contend that as the collective bargaining procedure might end in a strike or lockout, which imp!ies a great loss to the parties concerned and the country, if for the sake of industrial peace, the adjudication becomes necessary. But has there been industrial peace and satisfactory progress since adjudication was adopted after world-war-I1 ? We do agree that industrial peace can be established by the adjudication for the time being. But the co~flicts are driven deeper and it will retard industrial production. In the absence of effective collective bargaining the anti - productivity tendencies are bound. to appear

Suggestion : 20. For an effective Collective Bargaining in India the following suggestions are made :

(1)

Recognition of trade union has to be determined through verification of fee membership method. The union having more membership should be recognised as the effectiwe bargaining agent.
See Dr. Ahmedullah Khan, 6bJudicialRegulntion of industrial Relations" 9, Awards Digest, 177 (Where the author emphaticaliy discussed the defects of judiciary as far a s labour-management relation is concerned.) Kir Kaldy, T h e spirit of Indastrial Relations (1974) P. 58, cited in S.N. Dhyani's np. cit., P. 396.

- 33.

34.

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To know the actual members of a particular union, check off " system should be adopted.

The State should enact suitable legislation providing for compulsory recognition of trade union by employers. Section 22 of the Trade Unions Act, 1926 should be amended.
I

The prodision for political fuhd by trade unions has t o be done away with-since it unvariably encourages the politicians

to pfey upon the union. State has to play a progressive role in removing the pitfalls which stand in the way of mutual, amicable and voluntary settlement of labour disputes. The new labodr policy must reflect the new approach and new objectives.