Collective Bargaining Definition

Definition

The process of negotiation between management and trade union representatives over terms of employment is called collective bargaining. For collective bargaining to take place, a trade union must be recognised, which means that the employer formally agrees to conduct negotiations on pay and working conditions with a trade union instead of bargaining indiviudally with each worker. Terms of employment include conditions of work, salary or wage, working hours, shift durations, holiday entitlements, retirement benefits, and health care benefits. The goal of collective bargaining is to come up with the collective bargaining agreement through a written contract. Collective bargaining is an essential right for all employees, according to the International Labour Organization (ILO).

Objective

The objective of collective bargaining for both parties, i.e., for the employer and the employee’s representatives, is to come to an agreement or contract on employment terms.

Example

In 2021, John Deere’s employees conducted a strike, and their demand was to get revised employment contracts with the agriculture machinery manufacturer. During this time of high profits for John Deere, most of the workers believed that this company could give better pay and retirement benefits as compared to what the company offered first. Due to this industrial action from workers, John Deere offered them new and revised employment contracts that met every worker’s need. This strike continued for a month and ended on November 17, 2021.

Explanation

The ILO states that collective bargaining is the essential right obtainable to all workers, which means that all employees are authorised to present their demands to their employers and be able to negotiate them. The collective bargaining also helps reduce inequalities and injustices in the workplace while providing their workers with labour protection. Generally, collective bargaining takes place between members of corporate management and leaders of labour unions. The trade union leaders or representatives are elected by unionised workers to represent them and their interests. Normally, collective bargaining takes place when employee contracts are renewed or when employer firms need to make changes in the labor contract.

Terms of Employment

The following are some terms of employment that can be negotiated during collective bargaining:

Working conditions and other workplace rules for employees
Employment conditions and constraints
Gross pay, wages, and overtime pay
Shift length and working hours
Sick leave, holidays, and vacation time
Benefits related to issues like healthcare and retirement

The employment-related issues can be categorised into three different categories:

A diagram illustrating different categories of employment-related issues.

Voluntary Subjects

Those negotiable things that the law does not require are included in voluntary subjects. For example, union decisions and issues related to employer board members.

Illegal Subjects

Anything that violates law is included in the illegal subjects. For example, workplace discrimination and inequality.

Mandatory Subjects

Anything that the law requires of the employer is included in mandatory subjects. For example, overtime pay, salary, and workplace safety.

Collective Bargaining Agreement

The collective bargaining agreement is the ultimate goal of collective bargaining, which is meant to establish rules and regulations of employment for a specific number of years. The union members have to pay the cost of this representation in the form of union dues.

Steps of the Collective Bargaining Process

The process of collective bargaining can be an intense one, which can be difficult and stressful for all parties involved in the process. Sometimes, this process involves offers with counteroffers, but the end goal is to reach an agreement. The process of collective bargaining consists of multiple steps:

Identifying Issues and Preparing Demand

The first step is to identify the issues and grievances, for instance, low salaries or unethical and abusive management practices.

Negotiation

In the second step, the union of an organisation or workplace officially hires a team of professional negotiators who are responsible for reaching an agreement between two parties. The employer also hires negotiators, and both sides continue to meet until they find a satisfactory agreement.

Coming to an Agreement

When an agreement is reached, then both negotiators submit the agreement to their electors. In this step, any last-minute issue is raised as the details are negotiated.

Accepting and Approving the Agreement

In this step, the agreement is submitted to the union members, who then have the authority to vote for or against the new agreement or contract.

Regulating the Agreement

In the last step, after finalising the agreement, the workers continue monitoring to ensure that the employer company is persisting in its obligations.

Collective Bargaining Law

In most industrialised countries, they have laws to protect the rights to participate in collective bargaining and to form unions, but there are also some restrictions on particular industries. For example, the National Labor Relations Act (NLRA) in the United States protects the rights of many workers to participate in collective bargaining activities.

The NLRB (National Labor Relations Board) is the government body that authorises labor practices and collective bargaining under the National Labor Relations Act (NLRA). This government body is also responsible for supervising labor union elections and ensuring that the workers are not pressurised to vote in any way.

Types of Collective Bargaining

All types of collective bargaining are not the same. The following are some types of collective bargaining:

A diagram illustrating types of collective bargaining.

Concessionary Bargaining

The concessionary bargaining mainly focuses on the union leaders and making concessions in exchange for job security. This bargaining process is common during economic downturns or recessions. In this type, union leaders agree to give up a particular benefit to guarantee the survival of the employment pool and the business.

Composite Bargaining

This type of bargaining has nothing to do with compensations. Although it focuses on other sides, like job security, conditions of work, and some other corporate policies, it consists of hiring and firing of workers along with workplace discipline. The primary goal of composite bargaining is to offer a suitable agreement that leads to lasting industrial relations between the workers and their employers.

Integrative Bargaining

Every party in an agreement tries to benefit through integrative bargaining; that is why it is often called win-win bargaining. In integrative bargaining, each side tries to consider the position of another and bring issues to the table that aim to benefit both parties equally.

Distributive Bargaining

In this type of bargaining, a process of benefiting one party in financial terms at the expense of another. This can be done by offering increased bonuses, salaries, or any other financial benefits. Normally, distributive bargaining focuses more on workers as compared to employers.

Productivity Bargaining

This type of bargaining typically revolves around the productivity and compensation of employees. For example, labour union leaders use the method of higher salaries or compensations in order to enhance their employees’ productivity, which automatically leads to higher profit margins and value for the employer.

Criticism of Collective Bargaining

Collective bargaining is a controversial subject, especially in the case of public sector workers, because tax revenues generated by government fund wages for public sector employees. Critics claimed that these practices lead to pay increase that puts undue pressure on taxpayers.

Supporters of the collective bargaining process argued that public sector employees or workers covered by the collective bargaining contract earn almost 5% more than their non-union peers.

Pros and Cons of Collective Bargaining

A table containing the pros and cons of collective bargaining.

Conclusion

In conclusion, collective bargaining is the process in which workers shake hands together to demand higher wages, improved working conditions, and increased benefits. Workers can negotiate much more leverage by negotiating together as a team or unit as compared to negotiating alone. Collective bargaining saves precious management time and makes communication easy because terms of employment are negotiated collectively as compared to negotiating with each worker individually.