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  • Writer's pictureBrain Booster Articles


Author: Tanay Bansal, III year of B.A.,LL.B.(Hons.) from UPES Dehradun


Peace is required for progress, because disputes waste the society's valuable time, effort, and money. But, in reality, confrontation is unavoidable. Commerce, business, development work, administration, and so on all suffer as a result of the lengthy process of settling disputes through traditional courts of law. There are alternate ways of industrial dispute resolution, including as collective bargaining, conciliation[1], mediation, arbitration, worker engagement in management, wage boards, and so on, to get out of this maze of litigation. Collective bargaining is regarded as the greatest option available since it allows disputants to sit down together and address their disagreements in an amiable and respectful manner.Several theories, including those from industrial relations, economics, political science, history, and sociology, as well as writings by activists, workers, and labour groups, have attempted to define and explain collective bargaining. According to one theory, collective bargaining is a human right that deserves legal protection.The Supreme Court of Canada thoroughly analysed the reasons for recognising collective bargaining to be a human right in Facilities Subsector Bargaining Assn. v. British Columbia in June 2007. In this case, the Court made the following observations:

1. The freedom to collectively bargain with an employer increases workers' human dignity, liberty, and autonomy by allowing them to influence the formation of workplace regulations and therefore obtain some control over a major component of their life, namely their employment.

2. Collective bargaining is more than just a tool for achieving external goals...rather, it is organically useful as a self-government experience.

3. Collective bargaining enables workers to attain a sort of workplace democracy while also ensuring the rule of law in the workplace. Workers get a voice to influence the creation of rules that govern a significant portion of their lives.


Origin and Development

Because Collective Bargaining is an offshoot of Trade Union action, it is necessary to first trace the origins of Trade Union activity. N.M. Lokhande, a factory worker himself, is credited with starting the organised labour movement in India. In 1884, he organised an agitation in Bombay and wrote a memorandum asking a weekly rest day, compensation for injuries, and other requests, and in response to these demands, the mill owners of Bombay gave a weekly holiday. In fact, the Bombay Mill Hands' Association was formed in 1890, with Lokhande as chairman, and the workers' journal "Deenabandhu" was launched.The trade union movement gained traction at the end of World War I, and the years 1918-21 were watershed moments in the history of the Indian labour movement. The Madras Labour Union, founded by P.P. Wadia in 1918, was India's first trade union37. By 1920, practically every sector of the Indian economy had a trade union to represent the legitimate interests of the working masses. Collective bargaining formally began in the 1920s in Ahmedabad's textile sector, around the time Mahatma Gandhi introduced the notion of arbitration. Collective bargaining began as a result of the failure of arbitration. Following that, a slew of collective bargaining agreements were put in place, particularly following the country's independence[2].However, because neither British India nor Independent India provided legal procedures for collective bargaining, there was little support for its expansion. Nonetheless, as in many other nations, numerous statutory mechanisms aided collective bargaining in India. The Trade Union Act of 1929, the Bombay Industrial Relations Act of 1946, the Industrial Disputes Act of 1947, and the Madhya Pradesh Industrial Relations Act of 1960 established a consultation mechanism and cleared the path for collective bargaining.

Validity & Recognition

1. Industrial Disputes Act, 1947 –The Act was primarily established to provide a forum for dispute resolution. Section 18 of the Act states that "a settlement reached by agreement between the employer and the worker other than in the course of a conciliation action shall be binding on the parties to the agreement..." Thus, any settlement other than conciliation that may occur as a result of a contractual agreement between the employer and the employee is nothing more than an implication of the collective bargaining agreement. Section 18, in other terms, recognises collective bargaining. In reality, the Act's definition of settlement includes the element of collective bargaining.

The examination of the salient provisions of the Act in the case of Workmen of Dimakuchi Tea Estate vs. The Management of Dimakuchi Tea Estate reveals that the primary objects of the Act are – "(1) the promotion of measures for securing and preserving amity and good relations between the employer and workmen; (2) an investigation and settlement of industrial disputes, between employers and employers, employers and workmen, or workmen and workmen, with a right of reprise.

2. Trade Union Act, 1926 –The Act provides for the registration of trade unions and establishes the union's rights, obligations, and immunities. The primary reason for the formation of a trade union is to govern the relationship between the employer and the employee or between themselves, and it is well documented that collective bargaining is one method of regulating such a relationship.

The court recognises collective bargaining in the case of D.N. Banerjee vs. P.R. Mukherjee. According to Justice Chandra Shekhar Aiyer, "having regard to the modern condition of society in which capital and labour have organised themselves into groups for the purpose of fighting and settling their disputes on the basis of the theory that Union is Strength, collective bargaining has come to stay."

3. The Industrial Employment (Standing Orders) Act, 1946- The employer creates a standing order that outlines the terms of employment. According to Section 3 of the Act, the employer must first submit a draught standing order to the Certifying Officer, which should be as close to the model standing order as practicable. Following that, the said Officer shall forward a copy of the draught to the trade union or to the workmen, if there is no trade union, for objections (if any), and after giving both parties an opportunity to be heard, the Officer shall certify the standing order with necessary modifications (if any) and shall send copies to both parties.

Thus, the process of creating a standing order plainly indicates that both the employer and the employee participate in it, rather than it being in the hands and whims of either of them, albeit with the assistance of the Certifying Officer who works as a negotiator. In other words, drafting a standing order is a form of negotiation with the assistance of a third party (the Certifying Officer), and it involves the collective bargaining process. In the case of Glaxo Laboratories. Labour Court Justice Desai assesses the Act's impending need: "In the days of laissez-faire, when industrial relations were governed by the harsh and weighted law of hire and fire, the management was the supreme master, the relationship being referable to a contract between unequals and the action of the management treated almost sacrosanct." As the long title suggests, the Act obliged employers in industrial facilities to specify with sufficient precision the terms of employment under them and to make those circumstances known to the workers employed by them. The contract was imposed by statute rather than negotiated by two unequal parties."

4. The Constitution of India –The validity of collective bargaining is justified in the Indian Constitution's Chapters on Fundamental Rights and Directive Principles of State Policy. In this context, Article 19 allows for the formation of associations, which calls into question the validity of trade unions, and as previously said, one of the primary goals of trade unions is collective bargaining. Furthermore, various Directive Principles justify rules for improving labour conditions in general, and Article 43-A in specifically states that the State shall ensure worker engagement in management. Although the aforementioned Directives are not immediately enforceable in a court of law, their binding nature can be demonstrated with the help of various Apex Court of India judgements.

In the case of Re Kerala Education Bill[3], the Supreme Court stated that, while directive principles cannot override fundamental rights, the court should use "the principles of harmonious construction and should attempt to give effect to both as much as possible" in determining the scope and ambit of fundamental rights.


The readiness of an employer or an employers' association to bargain with a certain union is referred to as the union's "recognition". Thus, recognition is the process through which management recognises and accepts a trade union as representing some or all of the workers in an enterprise or industry and agrees to hold negotiations on any matters affecting those workers. When this acceptance includes the management's readiness to bargain with that union or unions, they are referred to as a negotiating agent or agents. The National Commission on Labour placed a high value on the issue of union recognition.The provision for union recognition has been realised, according to the Commission, as evidenced by the...Bombay Industrial Relations Act, 1946 and certain other state Acts (Madhya Pradesh and Rajasthan), the amendments incorporated (but not enforced) in the Trade Union Act and the Code of Discipline, and the fact that it was included in the Second Plan. The Commission proposed that all enterprises employing 100 or more workers or investing more than a certain amount of capital be required to recognise the union under a Central Law. The Commission also advocated for the rights of recognised unions. Nonetheless, there is no national law requiring trade unions to be recognised.However, other states have enacted legal provisions for recognition, including Maharashtra, Andhra Pradesh, Madhya Pradesh, West Bengal, and Orissa. Thus, notwithstanding the absence of expressly centrally mandated regulations on collective bargaining in India, there are sufficient safeguards to ensure the relevance of collective bargaining in India.


Collective bargaining is a process of making common decisions that essentially symbolises a democratic way of life in the workplace. For collective bargaining to be successful, the process must begin with proposals rather than demands, and the participants must be ready and willing to compromise; otherwise, the entire concept of collective bargaining would be frustrated. The problem in the Indian context is that the absence of any statutory provisions at the Central Level for the recognition of a representative trade union by an employer impacts the trade union's bargaining strength. Aside from the fact that unorganised labour is a barrier, unions are often weak.Rivalry based on caste, creed, and religion is another feature of Indian Trade Unions that impedes good collective bargaining. Furthermore, split of unions based on political views and a poor financial situation stifle the growth of Trade Unions.

As a result, it is advised that India provide for trade union recognition at the central level in order to maintain peace and harmony among management and workers, which in turn can provide better service to the community and thus lead to economic growth and progress. In fact, India is required by international law to establish an effective process for collective bargaining. In this regard, it is also suggested that India ratify ILO Conventions No. 87 of 1948 and No. 98 of 1949, which both guarantee the right to effective collective bargaining. In a nutshell, we might say that the time has arrived to repeat history.According to Sir Henry Maine, a progressive society shifts from status to contract. However, given the importance of collective bargaining as an effective tool for the resolution of industrial disputes, the progressive society must go in the other direction, i.e. from contract to status rather than status to contract.

[1]1 In this method, a third party provides assistance with a view to help the parties to reach an agreement. The conciliator brings the rival parties together and discusses with them their differences and assists them in finding out solution to their problems. Conciliation may be voluntary or compulsory: It is voluntary if the parties are free to make use of the same, while it is compulsory when the parties have to participate irrespective of whether they desire to do so or not. (See Secs. 4 & 5 of the Industrial Disputes Act, 1947) [2]Some of the notable agreements include agreements signed by Ahmedabad Mill Owners Association and the Ahmedabad Textile Labour Association, T.I.S.C.O, India Aluminium Company and Bata Shoe Company 1948, the T.I.S.C.O and Tata Workers Union in 1956 etc. The National Joint Consultative Committee for the steel industry also arrived at a number of agreements covering the wages structure and allied matters for different categories of employees. [3]AIR 1957 SC 956.


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