Collective Bargaining in the Workplace

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
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.

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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.
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