Collective Bargaining in India: Procedure and Types

Collective bargaining is a process of discussion and negotiation between an employer and a trade union culminating in a written agreement and the adjustment of problems arising under the agreement. The Supreme Court of India has defined the process of collective bargaining as a technique by which, dispute as to conditions of employment is resolved amicably by agreement rather than coercion. Workers, who are generally represented by a trade union, use this medium to express their grievance about various issues such as wages and working conditions. 

Procedure for initiating collective bargaining

1. A charter of demands

The trade union will notify the employer for initiating collective bargaining negotiations. The representatives of the trade union draft a charter of demands which contains issues related to terms of employment and the working conditions namely wages and allowances, bonuses, working hours, benefits, holidays. In some cases, an employer may also notify the trade union and initiate collective bargaining negotiations.

2. Negotiations

Negotiation is the next step after the submission of the charter of demands by the trade union. Both the employer and the employee seek opportunities to suggest compromise solutions in their favour until an agreement is reached. If it impossible to reach out to an agreement, a third party (mediator / arbitrator) may be brought in from outside. If, even with the assistance of the third party, no viable solution can be found to resolve the parties’ differences, the trade union may decide to engage in strikes.

3. Collective bargaining agreement

Pursuant to the negotiations between the parties, a collective bargaining agreement will be executed between the employer and workmen represented by trade unions, setting out the terms of employment and the working conditions of labour.

4. Strikes

If both parties fail to reach an agreement because of mutual consensus, the union may go on a strike, which shall be in accordance with the provisions of the Industrial Disputes Act 1947 (“ID Act”).

5. Conciliation

Once the conciliation officer receives a notice of strike or lockout, the conciliation proceedings shall commence. The State Government may appoint a conciliation officer or a Board of Conciliation to investigate disputes, mediate and promote a settlement. Workers are prohibited from going on strike during the pendency of such conciliation proceedings. Conciliation proceeding may have one of the three outcomes, namely (i) a settlement; or (ii) no settlement; or (iv) reference being made to the appropriate labour court or any other industrial tribunal.

6. Compulsory arbitration or adjudication

When conciliation and mediation fail, parties may either resort to compulsory or voluntary arbitration. Arbitration and the recommendations of the arbitrator may be binding to the parties. Section 7A of the ID Act provides for a labour court or industrial tribunal within a state to adjudicate protracted industrial disputes such as strikes and lockouts. Section 7B of the ID Act provides for constitution of national tribunals to resolve disputes involving questions of national interest or issues concerning more than two states. In the event, a labour dispute is not resolved by conciliation

and mediation, the employer, and the workers may refer the case by a written agreement to a labour court, industrial tribunal or national tribunal for adjudication or compulsory arbitration.

The following types of collective bargaining agreements are prevalent in India:

1. Bipartite agreements

These agreements are a result of voluntary negotiations between employer and trade union and are binding, as per the provisions of the ID Act.

2. Settlements

It is tripartite in nature as it involves the employer, trade union and the conciliation officer. Settlements arise out of specific disputes which is resolved by a reconciliation officer. If, during the conciliation proceedings, the conciliation officer believes at any point of time that there is a possibility of reaching a settlement, then the officer may withdraw himself from the negotiations. The parties are free to finalise the terms of the agreement and must inform the conciliation officer within a specified timeframe if such an agreement is reached after his withdrawal.

3. Consent awards

These are agreements reached while a dispute is pending before an adjudicatory authority. Such agreement is incorporated in the authority’s award and although the agreement is reached voluntarily between parties, it becomes binding under the award passed by the authority.

Conclusion

Refusal by the employer to bargain collectively in good faith is an unfair labour practice as per the ID Act. Collective bargaining agreements between the trade union and employers are enforceable under Section 18 of the ID Act. For a successful process of collective bargaining, it must begin with proposals

rather than demands and the parties should be ready to negotiate and compromise. The process of collective bargaining enables healthy discussions between workers and employers and facilitate the growth of industrial relations. Having said that, collective bargaining by trade unions often tends to be an arm-twisting exercise given the political affiliation of trade unions in India and it is more about the show of strength by the trade union as opposed to a good faith effort to negotiate genuine demands of workers.

Contributed by Anshul Prakash (Partner) and Abhimanyu Pal (Associate)