Collective Bargaining Essay, Research Paper

Britain has one of the most developed systems of collective bargaining in the world, especially amongst manual workers. Its sophistication is one of the main reasons why British workers traditionally pressed less for the statutory provision of basic rights in the work place than their Continental colleagues. Most trade unionists prefer to put a grievance through procedure rather than go to an industrial tribunal. Dubin has described collective bargaining as the great social invention that has institutionalised industrial conflict and by the Donovan Commission as right which is or should be the prerogative of every worker in a democratic society . It could be also defined as a method of determining terms and conditions of employment through the process of negotiation and agreement between representatives of management and employees. Collective bargaining does not require a comprehensive collective agreement for a stated period of time. It requires only the recognition of the bargaining agency and the principle of action that mutual problems be jointly considered and jointly decided. The desire of each party to be assured about the other s future conduct – that is, the desire for stability and security – makes the comprehensive collective agreement for a term the normal concomitant of collective bargaining. It requires each party to think into the future, to anticipate situations and to determine solutions before situations arise. It requires the making of policy – which, when agreed upon, becomes the collective agreement.The heart of the collective agreement – indeed, of collective bargaining – is the process for continuous joint consideration and adjustment of plant problems. And it is this feature which indicates the difference between the collective labour agreement and commercial contracts generally. Commercial contracts are concerned primarily with end results ; collective agreements, with continuous process. Workers organised into trade unions and bargaining with employers provides a measure of countervailing power to the powers of management, and that is fundamental to industrial relations. The collective bargaining process provides a formal channel through which the differing interests of management and employees may be resolved on a collective basis. The collective agreement is not made between parties who seek each other out for the purpose of entering into a business transaction and who can shop around among competitors for the most favourable connection. It is made between parties who find themselves already in a joint enterprise and who have little or no choice in selecting each other for the relationship. The union does not choose the employer and the employer does not choose the union. Both are dependent on the same enterprise and neither can pull out without destroying it. Even when a dispute between them results in suspension of operations, they must strive so to adjust the dispute as to resume their relationship.Whilst undoubtedly the process of collective bargaining has become more formalised at the organisation level, many arrangements (agreements) are still made between managers and shop stewards in respect of operational situations at the departmental or workgroup level. Collective bargaining through collective agreements places social constraints upon managerial discretion. One type of constraint consists of the labour standards or norms established by collective agreements relating to pay and hours which are translated into the terms and conditions of employment for employees represented by trade unions. Such standards limit managerial discretion in setting wage, hours and other substantive terms of employment. At the same time these standards also offer the advantage to management of harmonising labour costs throughout the industry.The second constraint is related to the bargaining over the rules, which govern the continuing relationship between unions and employers. These rules are often recorded in procedure agreements or the procedural clauses of collective agreements: negotiating procedures, bargaining rights and management rights clauses, shop stewards facilities, redundancy, disciplinary and grievance procedures. This is the so-called contractual function of collective agreements.Also collective agreements can provide a joint policy for redundancies or the introduction of new technology providing consultation rights for trade union representatives as well as rights governing seniority, job guarantees and measures to avoid redundancies. Collective rather than individual bargaining with an employer is necessary for effective voice at the work place for two reasons. First, many important aspects of an industrial setting are public goods , which affect the well being of every employee. As a result the incentive for any single person to express his preferences, and invest time and money to change conditions is reduced. Safety conditions, lighting, heating, the firm s policies on dismissal, work-sharing, promotion, its formal grievance procedure and pension plan – all obviously affect the entire work force in the same way that defence, sanitation, and fire protection affect all citizens of a town. Public goods at the work place require collective decision-making. Without a collective organisation, the incentive for the individual to take into account the effects of his actions on others, or express his preferences, or invest time and money in changing conditions, is likely to be very small.A second reason collective action is necessary is that workers who are not prepared to exit will be unlikely to reveal their true preferences to their bosses, for fear of some sort of punishment. The essence of the employment relationship under capitalism is the exchange of money between employer and employee in return for the employer s control over a certain amount of the worker s time. The employer seeks to use his employee s time in a way that maximises the value of the output the employee produces. As a result, the way in which the time purchased is utilised must be determined by some interaction between workers and their boss. Since the employer can dismiss a protester, individual protest is dangerous. In a unionised setting, by contrast, the union takes account of the preferences of all workers to form an average preference that typically determines its position at the bargaining table. Through collective bargaining employees can achieve better terms because the employer cannot take advantage of the individual s differing personal circumstances and needs. As Harbinson stated, the important difference between individual and collective bargaining lies in the fact that the latter is strictly a relationship between organisations and therefore an indirect regulation of the relationship between management and employee.There are three basic functions of collective bargaining: (a) A market or economic function – it determines on what terms labour will continue to be supplied to a company by its present employees or will be supplied in the future by newly hired workers. In this context the collective agreement may be regarded as a formal contract and the grievance procedure as a non-legal means for ensuring the employer s compliance with its terms. The process is primarily concerned with determining the substantive terms on which people are being employed.(b) A governmental function in which collective bargaining may be regarded as principally a political process based on the mutual dependency of the parties and the power of each to veto the acts of the other. The content of collective bargaining is concerned as much with procedural issues and the distribution of power and authority as it is with substantive issues and the distribution of money.(c) A decision making function which allows workers, through their union representatives, to participate in the determination of the policies, which rule their working conditions. The collective agreement is in effect, a formal memorandum of the decisions that have been reached and is a limitation on management s freedom and discretion to act unilaterally. Here is important to note the necessary conditions under which collective bargaining can exist and function: (a) the employees themselves are prepared to identify a commonality of purpose, organise and act in concert; and(b) management is prepared to recognise their organisation and accept a change in the employment relationship, which constrains its ability to deal with employees on an individual basis. The determinants of conflict between the management and the workers union in an organisation are easy to see when we consider the objectives of both sides. Management s objective in collective relations may fall into four broad categories: first, the preservation and strengthening of the business enterprise; second, the retention of effective control over the enterprise; third, the establishment of stable and businesslike relationships with the bargaining agents; and fourth, promotion of certain broad social and economic goals.The union may threaten the survival and growth of the enterprise in several ways. It may press demands, which impair the financial health of the business, or it may undermine management s efforts to build a loyal organisation.On the other hand the of the union leadership fall into the following categories: first, the preservation and strengthening of the union as an institution; second, the carrying out of the formal purpose of the union to get more for the membership; third, the acquisition of a greater measure of control over jobs to implement the first two objectives; and fourth, the pursuit of certain broad social and economic goals.So, simply placing management s objectives alongside those of the union gives us a partial explanation of why labour-management relations in the mass production industries often involve a struggle for power. The union s quest for more appears to be in conflict with management s desire to protect the financial well being of the firm. Management s concern for retaining its prerogatives must often be in basic conflict with the union s objectives of acquiring control over jobs. The labour leader s notion of human welfare often conflicts with management s picture of the economic facts of life . Management and union leaders are simply after different things when they face each other at the bargaining table. The story of the long period of voluntarism from the mid-nineteenth century to the early 1960s and the emergence of fully developed collective bargaining system without legal support was partly a product of a strong trade union movement. Trade unions are regarded as a form labour cartel which function is to redress the imbalance in the labour market indirectly by restricting employee competition for work through control of the number of entrants and directly by regulating the price of labour. Some employers and employers associations, from the early stage, were prepared to establish systems of collective bargaining first, at district level, later at industry-wide level and more recently at company-wide level. However, throughout the formative years of UK labour relations a significant number of employers were prepared to recognise trade unions and deal with them on the basis of voluntary joint dispute procedures and collective agreements. Those employers and employers organisations who gave early recognition to the trade union of skilled craftsmen, were careful to prevent the right to manage in the structure of collective bargaining. Collective bargaining was not based on the work shop where management decisions about workings, the place of work or discipline and dismissal could be brought into collective negotiation. The evolution of trade union along occupational lines was favourable to employers because it reinforced the structure of district bargaining and divided the work force in any firm or work place. The employers acceptance of the recommendations of the Whitely Committee of 1918 for the formal conciliation and negotiating machinery at industry-wide level which led to the development of industry-wide collective bargaining in the UK by the 1940s, occurred because employers saw such structure in their interest. From the employer s viewpoint voluntarism had the advantage of limiting the extent of legal regulation of business activity and managerial decision making. Despite its role as a central activity of the industrial relations system, collective bargaining is most noted for its lack of legal regulation. In the UK, unlike the USA and other countries, there is no legal requirement on the employer either to recognise a trade union for collective bargaining, nor have collective agreements been regarded as contracts capable of legal enforcement between the signatory parties – the employer and union. It is only through the express or implied incorporation of the collective agreement into the individual contract of employment that there is any legal basis for enforcing the terms of a collective agreement. This lack of external regulation has given rise to the notion of voluntary collective bargaining. From 1871 to 1971 the legal status of collective agreements was unclear. In 1968, the Donovan Commission reported a consensus of opinion against an assumption of intention for legal enforceability. The consensus suggested in the Ford case that collective agreements could be presumed not to be legally binding was first challenged in the Industrial Relations Act 1971. This Act choose to give legal weight to the peace obligation contained in collective agreements by creating a statutory presumption that collective agreements were legally binding unless the parties stipulated otherwise. But there was an almost universal tendency for employers to join with trade unions to negate the statutory presumption by inserting into the agreement the phrase This is not a legally enforceable agreement – (the Tinalea section). When the Labour party was returned to power in 1974, s 34 of the 1971 Act was replaced by s 18 of the Trade Union and Labour Relations Act 1974 which restored the presumption against legal enforceability. In its present form, as s 179 of TULR(C)A 1992, it reads as follows: (1) Any collective agreement shall be conclusively presumed not to have been intended by the parties to be a legally enforceable contract unless the agreement -

(a) is in writing, and(b) contains a provision which (however expressed) states that the parties intend that the agreement shall be a legally enforceable contract(2) Any collective agreement which does satisfy these conditions in subsection (1)(a) and (b) above shall be conclusively presumed to have been intended by the parties to be a legally enforceable contract. There are four main advantages claimed for the legal enforcement of collective agreements: (a) collective agreements would have to become both more comprehensive and more precise in defining the rights and obligations of each party if their meaning and intend is to be capable of legal interpretation should the need arise;(b) it would put pressure on union officials, as representatives of one of the signatory parties, to use their best endeavours to ensure that their members complied with the terms of the agreement – particularly the no strike clause. This, it is anticipated, would reduce the incidence of unconstitutional strikes;(c) it would allow management to manage the organisation secure in the knowledge that once an agreement had been concluded, its terms would be adhered to;(d) it would induce a long-term attitudinal change in industrial relations, which could result in employees benefiting by increased wages and greater job security. British employers today continue to be divided in their approach to trade unionism and collective bargaining. Trade union membership as a percentage of the work force is declining in response to changes in the composition of the work force. Employers are engaged in derecognition policies in increasing numbers. Recent industrial relations surveys indicate that almost half of all employers who are prepared to reach an accommodation with trade unions and engage in collective bargaining. Recognition is spread mainly by custom and practice, although increasingly comprehensive management-union agreements are being drawn up. These are valuable in that they specify in detail who the employer would negotiate with, where, and over what issues, and also questions such as trade union facilities on the employer s premises, and the automatic deduction of union subscriptions from the employee s pay packet. Employers prepared to reach an accommodation with trade unions vary in their approach. One minority group has been identified as constitutionalists , such as Ford, who codify rules in the collective bargaining. A majority group consists of more informal consultors , such as large oil companies, in which trade unions are recognised and collective bargaining is well developed, but the management does not codify everything in a collective agreement. Another group consists of firms, which insist on strike free agreements with single unions or single table bargaining . A third group of managers take more pragmatic approach to trade unions and industrial relations altering it as circumstances change and making little real attempt to achieve consistency between different establishments of the firm. What all categories have in common is that they are firms in which management legitimises the union s role in certain areas of joint decision making because it sees this role as conductive to its own interests as measured by stability, promotion of consent, effective communication, etc. On the other hand, the firms, which oppose trade unions also, display differences in style. One group consists of forceful opposition , in which directors and senior managers have virtually no contact with trade unions and are determined to use all legal means to prevent trade union membership and activity among the work force. Another group consisting of US firms such as IBM, Hewlett Packard and Kodak, and British firms such as Marks and Spencer, adopts a more indirect form of opposition in the form of sophisticated paternalism . These companies firmly refuse to recognise trade unions and take the position that they can best look after their employees interests but they take great care in recruitment, selection, training, counselling and remuneration to keep employees sufficiently happy to be unattracted to trade unions.Recognition remains the threshold for various new statutory rights including information relevant to collective bargaining, consultation over redundancies and time off for trade union activities. There are many levels of collective bargaining. The agreements may be at a national level between either one union or confederation of unions on the workers side, and a single employer or an employers association representing management. The purpose of industry-level bargaining has two viewpoints:(a) From the trade union point of view it ensures that a common rule is applied across as wide area as possible. In the wages sphere it reinforces the concept of a rate for the job based on the inherent nature of the job rather than the financial or productivity position of a particular organisation.(b) From the management point of view it allows organisations to present a collective response to trade union pressure; it stabilises the wage costs for all organisations at a uniform level and prevents unfair competition between organisations based on differing wage levels. However, the wage rate set at the national level in many private manufacturing industries tends to be that which can be afforded by the least productive and profitable within the industry.The increased emphasis on organisational bargaining in the private sector from the 1960s onwards is a result mainly because of the inability, and inappropriateness of formal industry agreements to regulate the increasing range of issues which were becoming subject to collective bargaining, such as changes in working methods and improvements in productivity, which are difficult to be regulated effectively from the national level, given the diversity of organisational requirements. Organisational bargaining covers a variety of different levels and forms of collective bargaining: (a) Company – or group-level bargaining where all employees of a given type within the organisation, irrespective of their place of work, are covered by a single bargaining agreement.(b) Plant or site bargaining in multi-site organisations. This level of bargaining is particularly important in those organisations, which are multi-industry as well as multi-site and therefore the nature of the work, and process involved will vary between the sites and require different terms and conditions of employment. (c) Departmental or workshop bargaining relating to such issues as bonus schemes and work arrangements. It is important to say that organisational bargaining is not confined to one or other level but may take place at a combination of levels. In addition to any industry-level bargaining, there may be bargaining at the company-level (pensions), the site-level (enhancement of nationally agreed terms) and the departmental level (the employees actual working arrangements). Organisational bargaining has two important advantages: (a) It encourages management to develop a more positive approach to industrial relations within its organisation – particularly in respect of wage bargaining. Industry-level bargaining tends to weaken management s control of its wage costs in that the determination of wage rates is outside its direct control and may be inappropriate to its circumstances. Management, by bargaining at the organisational level, is better able to link wages with changes in work methods and increased productivity.(b) Both management and employee representatives become responsible for, and committed to, the agreement they reach. The terms of the collective agreements are no longer decided for them by people outside the organisation and over whom they have little direct control. However, organisational-level bargaining may also present some problems: (a) In the area of pay bargaining, it may provide greater scope for comparability inflation. The granting of a pay increase in one organisation, because of changes in work methods can easily give rise to expectations that similar increases will be given in the future or in other organisations. It provides the opportunity for the development of a key bargaining strategy on the part of trade unions; that is, selecting one organisation which can afford the pay increase and than trying to achieve the same level of pay in other organisations.(b) The existence of too many small bargaining units, each with its own separate agreement, can lead to constant comparability claims between the various groups.(c) Because of the multiplicity of negotiations and agreements, organisational bargaining is less susceptible than industry bargaining to external verification and regulation during periods of income policy. So far as industry bargaining is concerned it is important to distinguish between three potential roles for industry-level bargaining: (a) It may determine actual rates to be paid – as in the public sector.(b) It may act as a floor. Elliot explains this situation as follows: when national rates rise all workers who currently enjoy rates in excess of the nationally agreed rate have their rates adjusted upwards either to re-establish some fixed relationship with the nationally agreed rate or because the change in the national rate provides the agreed signal for a change in workplace rates. (c) It may act as a safety net. Elliot states that in this situation the industry level provides only some agreed minimum below which nobody will be allowed to fall and therefore any increase in the national rate will only affect those who were marginally above the old national rate but are now below the new national rate. Legal support for trade union recognition was introduced quite late in Britain. Even as late as the 1960s the TUC could argue that trade unions in Britain have succeeded through their own efforts in strengthening their organisation and in obtaining recognition, not relying on the assistance of government through legislation . However, by that time, changes in the labour market away from manual to non-manual employment and the decrease in employment in industries with high trade union densities indicated that the historical base for trade unionism in the private sector was eroding.The repeal of the statutory recognition procedure in 1972 did not dramatically affect the statutory trade union rights to disclosure of information, consultations over redundancies, transfers of the undertaking, health and safety pensions as well as the right to time off for trade union duties and the right to appoint safety representatives. For while all these rights presuppose that a trade union has been recognised by the employer for the purposes of collective bargaining, it is not necessary for the recognition to have been granted under the s. 11 procedure.The Employment Protection Act 1975 also included a statutory trade union right to disclosure of information for the purposes of collective bargaining, which has been retained. Contained now in s 181 of TULR(C)A, this trade union right requires employers to disclose information in connection with collective bargaining. One reason for this legislation is that it is not simply an advantage for trade unions in the bargaining process. It is also useful to prompt employers to present information in such a way as to produce more realistic demands by trade unions by convincing them to take into greater account the economic problems of the firm. Employers do not have to provide original documents, or even copies of original documents, but are entitled to prepare information in a special form to be disclosed to trade unions.A recognised, independent trade union is entitled to all information relating to the employer s undertaking as is in his possession, which applies to any stage of collective bargaining. Another statutory right of trade unions is the right for collective consultation over redundancies. Employers are required to consult with recognised trade unions to notify the government in advance of redundancies.Under s 188 of TULR(A) an employer who proposes to make one or more employees redundant has an obligation to inform and consult about such a decision with a trade union which has been recognised for collective bargaining for that grade of employee.In addition to the obligation to consult recognised trade unions, employers are required to notify the DE when they propose to dismiss ten or more employees for redundancy (s 193). The idea behind this provision is to put the DE in a position to help to place redundant employees in new jobs or in government retraining courses. Section 168(1) of TULR(C)A entitles employees who are officials of an independent recognised trade union to have reasonable time off with pay to carry out any duties, as such an official, which are concerned with either negotiations with the employer related to collective bargaining matters for which the trade union has been recognised (s 168(1)(a)) or the performance of trade union functions agreed with the employer (s 168(1)(b)) and to receive training in issues of industrial relations relevant to his duties concerned with the collective bargaining matters in s 168(1). The Code of Practice clearly indicates that the purpose of the section is to extend the rights of trade union representatives at work place level within a framework agreed between management and the union. It promotes the idea that managers should give shop stewards facilities including office space and that employers should allow paid time off for a wide range of trade union sponsored training. In conclusion we may say that legislation still prones obstacles in the way of trade union renovation in new areas and increasing trade union membership. More precisely, the narrowing of trade union immunities has created difficulties for trade unions to use secondary industrial pressure. Moreover, it encourages employer policies of derecognition and decollectivisation. While the scale of collective bargaining in the 1990s is under threat owing to the changing attitudes of employers who take in consideration the centrality and significance of collective bargaining arrangements with their organisation, it is still the case that more than 60% of the work force are covered by collective arrangements.