A Business Encyclopedia

Process of Collective Bargaining

Definition: The Collective Bargaining is a technique to reach a mutual agreement between the employer and the employee. Here the representatives of both the parties viz. The union and the employer meet and discuss the economic issues such as wage, bonus, number of working hours and other employment terms.

The process of collective bargaining comprises of five steps that are followed by both the employee and the employer to reach an amicable solution.

Process of Collective Bargaining

process of collective bargaining

  1. Preparation: At the very first step, both the representatives of each party prepares the negotiations to be carried out during the meeting. Each member should be well versed with the issues to be raised at the meeting and should have adequate knowledge of the labor laws.

    The management should be well prepared with the proposals of change required in the employment terms and be ready with the statistical figures to justify its stand.

    On the other hand, the union must gather adequate information regarding the financial position of the business along with its ability to pay and prepare a detailed report on the issues and the desires of the workers.

  2. Discuss: Here, both the parties decide the ground rules that will guide the negotiations and the prime negotiator is from the management team who will lead the discussion. Also, the issues for which the meeting is held, are identified at this stage.

    The issues could be related to the wages, supplementary economic benefits (pension plans, health insurance, paid holidays, etc.), Institutional issues(rights and duties, ESOP plan), Administrative issues (health and safety, technological changes, job security, working conditions).

  3. Propose: At this stage, the chief negotiator begins the conversation with an opening statement and then both the parties put forth their initial demands. This session can be called as a brainstorming, where each party gives their opinion that leads to arguments and counter arguments.
  4. Bargain: The negotiation begins at this stage, where each party tries to win over the other. The negotiation can go for days until a final agreement is reached. Sometimes, both the parties reach an amicable solution soon, but at times to settle down the dispute the third party intervenes into the negotiation in the form of arbitration or adjudication.
  5. Settlement: This is the final stage of the collective bargaining process, where both the parties agree on a common solution to the problem discussed so far. Hence, a mutual agreement is formed between the employee and the employer which is to be signed by each party to give the decision a universal acceptance.

Thus, to get the dispute settled the management must follow these steps systematically and give equal chance to the workers to speak out their minds.

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