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Collective Bargaining in the Workplace

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Britain has one of the most developed systems of collective

bargaining in the world, especially amongst manual workers. Its

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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

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

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

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,

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

(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

(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

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

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

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

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 busine ss 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

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

enforce ability. In its present form, as s 179 of TULR(C)A 1992, it reads

(1) Any collective agreement shall be conclusively presumed

not to have been intended by the parties to be a legally

contract unless the agreement –

(b) contains a provision which (however expressed) states that

the parties intend that the agreement shall be a legally

(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

There are four main advantages claimed for the legal enforcement of

(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

(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 g roup 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

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

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

(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

(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

(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

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

(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

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

(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

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

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

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

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.

Cite this Collective Bargaining in the Workplace

Collective Bargaining in the Workplace. (2018, Jul 08). Retrieved from https://graduateway.com/collective-bargaining-in-the-workplace/

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