Problem Solving

Collective Bargaining Process in India: a Critique

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Collective bargaining has been defined by different experts in different ways. Nevertheless, it is treated as a method by which problem of wages and conditions of employment are resolved peacefully and voluntarily between labour and management. However, the term collective bargaining is opposed to individual bargaining1. 

Sometimes, it is described as a process of accommodation between two conflicting interests Here, power stands against power. 

The I.L.O. defines collective bargaining:

“As negotiations about working conditions and terms of employment between an employer, or a group of employers, or one or more employers’ organisations, on the one hand, and one or more representative workers’ organisation on the other with a view to reaching agreement.”

This definition confines the term collective bargaining as a means of improving conditions of employment. But in fact, collective bargaining 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 technique, collective bargaining as a technique of the rise of a new class is quite different …… from the desire to displace or abolish” the “old ruling class”… … to gain equal rights as a class … … to acquire an excessive jurisdiction in that sphere where the most immediate interests, both material and spiritual, are determined, and a shared jurisdiction with the older class or classes in all other spheres.2”


COLLECTIVE BARGANING in India has been the subject matter of industrial adjudication since long and has been defined by our Law Courts. In Karol Leather Karamchari Sangathan v. Liberty Footwear Company3 the Supreme Court observed that,“Collective 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 to achieve social justice on the basis of collective bargaining. In an earlier judgment in Titagarh Jute Co. Ltd. v. Sriram Tiwari , the Calcutta High Court clarified that this policy of the legislature is also implicit in the definition of ‘industrial dispute’.

 In Ram Prasad Viswakarma v. Industrial Tribunal 4the Court observed that, “It is well known how before the days of ‘collective bargaining’, labour was at a great disadvantage in obtaining reasonable terms for contracts of service from its employer. As trade unions developed in the country and Collective bargaining became the rule, the employers found it necessary and convenient 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 action against one or more workmen and as regards of other disputes.”

 In Bharat Iron Works v. Bhagubhai Balubhai Patel 5, it was held that “Collective bargaining, being the order of the day in the democratic ,social welfare State, legitimate trade union activities, which must shun all kinds of physical threats, coercion or violence, must march with a spirit of tolerance, understanding and grace in dealings on the part of the employer. Such activities can flow in healthy channel only on mutual 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.



Collective Bargaining machinery essentially is a reflection of a particular social and political climate. The history of the trade union movement shows that union are affiliated to one or the other political parties. 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.6

 Outsiders in the Process of Collective bargaining:- 

The Trade Unions Act, 1926, permits outsiders to be the office bearers of a union to the extent of half the total number of office bearers. So, it permits one to be the leader of the union who does not actually work in the industry. Sometimes a dismissed employee working as a union leader may create difficulties in the relationship

between the union and the employer. Nevertheless, experience shows that outsiders who have little knowledge of the background of labour problems, history of labour movement, fundamentals of trade unionism and the technique of the industry and with even little general education assume the charge of labour union and become the self-appointed custodian of the welfare of workers. The employers, therefore, have been reluctant to discuss and negotiate industrial matters with outsiders, who have no personal or direct knowledge of day to day affairs of the industry.

  Accordingly employees refuse recognition to the unions which are either controlled by the politicians or affiliated to a particular political party or controlled by a particular individual. Government cannot morally compel employers to accord recognition to unions without driving out the politicians from them. The State must outright ban “outsiders” from the trade union body. Further, provision for political funds by trade unions should be eliminated, since it invariably encourages 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. The Commission hopes that Internal leadership would develop through their education and training. Accordingly the Commission suggests proportion of the outsiders and the workers in a union executive. On realising the problems of outsiders in the Union, the Industrial Relations Bill, 1988 proposes to reduce the number of outsiders to two only.

 Politicization of Trade-Union Movement in India:-

 It is well known that the trade-union movement in India is divided on political lines and exists on patronage of various political Parties. Most of the trade-union organizations have aligned themselves with a political party with whom they find themselves philosophically close. It is because of this that the Indian National Trade Union Congress is considered to be the labour wing of congress, whereas H.M.S. is considered to be the labour wing of Socialist party. Bhartiya Majdoor Sangh pledges its allegiance to 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 started as a national organization of workers but subsequently came to be controlled by the Communist Party of India and 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 no longer the employees or workmen. The centre has shifted towards it leadership whose effectiveness is determined by the extent of political patronage and the consequent capacity to obtain the benefit. This shifting centre of power is the necessary consequence of political parties search for workers votes, which they seek by conferring benefits on them. Since the public sector which is really the instrume
ntality of the State, has emerged as the biggest employer in this country, the collective bargaining -between the uni
on patronized 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 in spite of wage increase end improved conditions of service, there has been no corresponding improvement in production or the productivity. Also,most of the losses are being passed on to the consumers by increasing prices of the products. It is in this context that Justice Gupta has, in his, ‘Our Industrial Jurisprudence” made the following observations:“If our experience is any guide, it reveals that Ievel of increase in wages etc., ( in public sector undertaking )is now decided by the Bureau of Public Enterprises which takes into consideration only the Political impact 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. have been constantly increasing. A survey of pending and decided industrial disputes of the last 10 years reveals that there was virtually no industrial dispute regarding wage structure 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 end product of the process of ‘ social justice ‘ is no longer expected. “7

 The process of collective bargaining is not likely to succeed unless the threat of strike/lockout is there in the back-ground. Strike and lock-out are the weapons used by both the parties daring the collective bargaining process. Without having these weapons at hands, neither of the party to the dispute can defeat the claim 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:-

In Indian labour arena we see, multiplicity of unions and Inter-union rivalry. Statutory provisions for recognizing unions as bargaining agents are absent. It is believed that the institution of collective bargaining is still in its preliminary and organisational stage. State, therefore, must play a progressive and positive role in removing the pitfalls which have stood in the way of mutual, amicable 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 labour-management relation through its lopsided adjudication machinery. The role of the industrial adjudicator 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 conflicting claims of disputants and evolve “socially desirable” rights and obligations of the disputants. In deciding  industrial disputes the adjudicator is free to apply the principle of equity and good conscience. 

 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 cannot solve the problems of industries.Accordingly it is said that,”While statutes, rules, regulations, pains and penaltieshave their place in the ordering of industry, they do not touch the core of the problems of industrial relations.”8

Moreover, advocates of adjudication contend that as the collective bargaining procedure might end in a strike or lockout, which implies a great loss to the parties concerned and the country, so for the sake of industrial peace, the adjudication becomes necessary.

Industrial peace can be established by the adjudication for the time being. But the conflicts are driven deeper and it will retard industrial production. In the absence of effective collective bargaining the anti–productivity tendencies are bound to appear.


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

Ø Recognition of trade union has to be determined through verification of fee membership method. The union having more membership should be recognised as the effective bargaining agent. 

Ø The State should enact suitable legislation providing for compulsory recognition of trade union by employers. 

Ø Section 22 of the Trade Unions Act, 1926 should be amended. 

Ø The provision for political fund by trade unions has to be done away with-since it unvariably encourages the politicians to prey upon the union.

 Ø 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.


1.  N.S. Chandrasekharan & P.P. Paul, “Collective Bargaining and IndustrialRelations in the private sector in India,” 6, C.U.L.R,160 (1982).

2. Eugene V. Schneider, Industrial Sociology, London, Mc Graw-Hill, (1971), P. 344.

 3. AIR 1990 SC 247

 4. (1961) I LLJ. 504

 5. (1976) Lab. 1.C:.4 [S.C.]

 6. S.N. Dhyani, Trade Union and the Right to Strike,S. Chand & Co. (Pvt.) Ltd , New Delhi, PP. 374-380.

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

 8. Kir Kaldy, The spirit of Industrial Relations (1974) P. 58,cited in S.N. Dhyani’s np. cit., P. 396.


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