COLLECTIVE BARGAINING IN INDIA

Faisal Fasih
Research Assistant
The West Bengal National University of Juridical Sciences (NUJS)
Dr. Ambedkar Bhavan, 12 LB Block, Sector III, Salt Lake, Kolkata
Email: faisal.calcutta@gmail.com

Abstract
The term collective bargaining simply means negotiation. It provides an opportunity to the
workers to achieve industrial democracy. It is applied in different levels starting from craft-level to
national level. In Indian industry, the process of collective bargaining started in the second half of
the 19th century and got legislative recognition in the first half of the 20th century. This paper dwells
upon the concept of collective bargaining in general which includes the discussion of its scope,
objectives, types, conditions, environment, theories and different levels. Besides, the relevant
provisions of Industrial Disputes Act, Trade Union Act, Standing Order and the Constitution, along
with some cases of the Apex Court have been dealt with for justifying the legality of collective
bargaining. Finally, recognition of collective bargaining at the State level has been discussed briefly.

Introduction
Peace is sine qua non for development and disputes dissipate valuable time, effort and money of the
society. But, in a realistic sense, conflict is inevitable. Commerce, business, development work,
administration, etc., all suffer because of long time taken in resolving disputes through traditional
court of law. To get out of this maze of litigation, there is an alternative methods of industrial
dispute resolution namely; collective bargaining, conciliation1, mediation2, arbitration3, workers
participation in management, wage boards etc. Of all these, collective bargaining is considered as
the best possible method because in this the disputants themselves sit together and resolve their
differences in an amicable and respectable manner. A number of theories from the fields of
industrial relations, economics, political science, history and sociology as well as the writings of
activists, workers and labour organizations have attempted to define and explain collective
bargaining. One theory suggests that collective bargaining is a human right and thus deserving of
legal protection4. In June 2007 the Supreme Court of Canada in Facilities Subsector Bargaining

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
Like conciliation, in mediation, a third party provides assistance with a view to help the parties to reach an agreement.
But unlike conciliator, mediator is more actively involved while assisting the parties to find an amicable settlement.
Sometimes he submits his own proposals for settlement of their disputes.
3
The resort to arbitration procedure may be compulsory or arbitrary. Compulsory arbitration is the submission of
disputes to arbitration without consent or agreement of the parties involved in the dispute and the award given by the
arbitrator being binding on the parties to the dispute. On the other hand in case of voluntary arbitration, the dispute can
be referred for arbitration only if the parties agree to the same.
4
United Nations General Assembly (1948). "Article 23". Universal Declaration of Human Rights. Paris. Retrieved on
29 August 2007. Article 23 of the Universal Declaration of Human Rights identifies the ability to organise trade unions
as a fundamental human right. Further, Item 2(a) of the International Labour Organization's Declaration on
Fundamental Principles and Rights at Work defines the "freedom of association and the effective recognition of the
right to collective bargaining" as an essential right of workers. (International Labor Organization (1998). Declaration on
Fundamental Principles and Rights at Work. 86th Session: Geneva.

Electronic copy available at: http://ssrn.com/abstract=1968208

Assn. v. British Columbia5 extensively reviewed the rationale for considering collective bargaining
to be a human right. The Court made the following observations in this case:
The right to bargain collectively with an employer enhances the human dignity, liberty and
autonomy of workers by giving them the opportunity to influence the establishment of
workplace rules and thereby gain some control over a major aspect of their lives, namely
their work.
Collective bargaining is not simply an instrument for pursuing external endsrather [it] is
intrinsically valuable as an experience in self-government.
Collective bargaining permits workers to achieve a form of workplace democracy and to
ensure the rule of law in the workplace. Workers gain a voice to influence the
establishment of rules that control a major aspect of their lives.
This paper dwells upon the concept of collective bargaining in general which includes the
discussion of its scope, objectives, types, conditions, environment, theories and different levels.
Besides, the relevant provisions of Industrial Disputes Act, Trade Union Act, Standing Order and
the Constitution, along with some cases of the Apex Court have been dealt with for justifying the
legality of collective bargaining. Finally, recognition of collective bargaining at the State level has
been discussed briefly.
Concept of Collective Bargaining
Sydney and Beatrice were the persons who coined the expression collective bargaining6. There is
divergence of opinions regarding the exact meaning of the term Collective Bargaining. The
Encyclopaedia of Social Sciences defines collective bargaining as a process of discussion and
negotiation between two parties, one or both of whom is a group of persons acting in concert, more
specifically it is the procedure by which an employer or employees and a ground employees agree
upon the conditions of work.7
ILO has defined collective bargaining as the negotiations about working conditions and terms of
employment between an employer, a group of employers or one or more employers organization
on the one hand, and one or more representative workers organizations on the other hand, with a
view to reaching an agreement8 Similarly, according to Ludwing and Teller, collective bargaining
is an agreement between a single employer or an association of employers on the one hand and
labour union on the other hand which regulates terms and conditions of employment9 The Webbs
describe collective bargaining as an economic institution, with trade unionism acting as a labour
cartel by controlling entry into the trade. Prof. Allan Flanders has argued on the other hand, that
collective bargaining is primarily a political rather than an economic process. The Supreme Court of
India in the case of Karnal Leather Karamchari Sanghatan vs. Liberty Footwear Co.10 has held that
collective bargaining is a technique by which dispute between labour and capital are resolved
amicably by agreement rather than by question. The dispute is settled peacefully and voluntarily
although reluctantly between labour and management. Likewise it is said that collective bargaining
as a method by which problems of wages and conditions of employment are resolved amicably,
peacefully and voluntarily between labour and management.11

2007 SCC 27.

Sydney and Beatrice, Industrial Democracy (1987).
7
Encyclopaedia of Social Sciences, Vol. 3, p. 628
8
International Labour Office, Collective Bargaining (A Workers Education Manual) (1960), p.3.
9
Teller, Labour Disputes and Collective Bargaining, Vol. 1, p. 476
10
(1989)4 SCC 448
11
Indian Law Institute, Labour Law and Labour Relations (1968), p. 29
6

Electronic copy available at: http://ssrn.com/abstract=1968208

Thus, collective bargaining is the process of negotiation between firms and workers
representatives for the purpose of establishing mutually agreeable conditions of employment. The
parties often refer to the result of the negotiation as a collective bargaining agreement or as a
collective employment agreement. It is called collective because both the employer and the
employee act as a group rather as individuals. It is known as bargaining because the method of
reaching an agreement involves proposals and counter proposals, offers and counter offers and other
negotiation. Collective bargaining provides for procedural and substantive rules. While procedural
rules concern mechanism for dealing with interpretation and implementation of agreements as well
as resolving conflicts, substantive rules concern the substance of the agreement, both market (terms
and conditions of employment) and managerial relationship (control on manning, transfers,
promotions etc)12
Aims and Objectives The aims and objectives of collective bargaining includes the following:
1. Balances the Legitimate Expectations Management can legitimately expect that most qualified
labour will be available at a price which permits a reasonable margin for investment. On the other
hand, labours can claim job for each worker and steady increment in the wages. In other words,
managements interest in planning production and in being protected against its interruption is the
exact equivalent to the workers interest in planning his and his familys life and in being protected
against an interruption in his mode of existence, either through a fall of his real income or through
the loss of his job13. Collective Bargaining balances this conflicting interest through the process of
negotiation14.
2. Maintain Equality Collective Bargaining is a means to maintain equality between the worker
and the workmen as the latter is at least advantageous position from the outset. The bargaining
power of an individual worker is, more often than not, quite weak because of factors like illiteracy,
indebtedness and socio-economic backwardness. Therefore, there is no match for the economically
and consequently, political, superior employer. These expose the worker to exploitation,
discrimination and indignities. As Lord Wedderburn rightly argues, the Common Law assumes
that it is dealing with a contract made between equals, but in reality, save in exceptional
circumstances, the individual worker brings no equality of bargaining power to the labour market15
3. Promote Industrial Democracy Trade Union seeks to promote industrial democracy. They have
now come to symbolize: workers right to organize, to put forth their demands collectively16 and to
resort to industrial action, i.e; strike, when their demands are not conceded by their employers. They
seek to impress upon their employers that their collective voice be heard when decisions affecting
their working lives are made. Thus, union assures that individual interest should be subordinated to
the collective well being of its members. Given that joint regulation takes place of authoritarian
decision making, collective bargaining can be a vehicle for the democratization of industrial life17.
The International Confederation of Free Trade Union stated that the objects of the collective
bargaining is to express in practical terms the workers desire to be treated with due respect and to
achieve democratic participation in decision affecting their working conditions18.
4. Rule-making Function Collective bargaining performs rule-making function. Collective
Agreements govern employment relationships in the bargaining unit and thereby create generally
applied standards. This indicates the power of groups to provide for their own internal regulation

12

See Collective Bargaining in Industrialised Market Economics, A Reappraisal, J.P. Windmuller et al, ILO, Geneva,
1987
13
Otto Kahn Freund, Labour and the Law, N.M. Tripathi Pvt. Ltd., Bombay.
14
Power stands against power. It is the conflict of interests which makes their agreements a valid instrument of social
engineering.
15
Lord Wedderburn, The Worker and the Law (1986)
16
V.V. Giri, Labour Problems in Indian Industry (1966)
17
R. Blanpain & C. Engels, Industrial Relations and Labour Laws, 4th Ed. Reprint, 2002, Vikas Publishing House Pvt.
Ltd., New Delhi.
18
Quoted in Mary Sur, Collective Bargaining (1965)

(e.g; by custom and practice) and that there are limits to the sovereign power of an employer.
Collective bargaining can thus be regarded as an expression of pluralism19.
Thus, collective bargaining is not just a means for raising wages and improving conditions of
employment. Nor is it merely democratic government in industry. It is above all a technique
whereby an inferior social class or group exerts a never- slackening pressure for a bigger share in
social sovereignty, as well as for more welfare and greater security and liberty20. In short, collective
bargaining helps in establishment and maintenance of the mutual relations of the workers and the
management 21 . Consequently, it strengthens the union as an organization. Further, it makes
enterprise more responsive to human needs.
Types of Collective Bargaining There are two types of bargaining exercises conjuritive or
distributive bargaining and intergrative or Cooperative bargaining. Though both aim at joint
decision making, their processes are not same. Distributive bargaining deals with issues in which
parties have conflicting interests and each party uses its coercive power to a maximum extent
possible. In such a situation, one partys gain is the others loss. Wages bargaining is an obvious
example of distributive or conjunctive bargaining. In contrast to the win-lose syndrome, integrative
bargaining is concerned with the solution of problems confronting both parties. It is a situation
where neither party can gain unless the other gains as well. It makes a problem solving approach in
which both the parties make a positive joint effort to their mutual satisfaction. Productivity
bargaining is an instance of integrative bargaining. Productivity bargaining may broadly be
described as agreements in which advantages of one kind or another, such as higher wage or
increased leisure, are given to workers in return for agreement on their part accept changes in work
practices, methods work, etc.
Conditions of Collective Bargaining There are certain preconditions without which collective
bargaining cannot exist. These are generally as follows:22
1. Parity of Power Between The Two Parties management and unions should be more or less
equal in the matter of power or strength to achieve genuine bargaining status. A weak union cannot
force management even to bargain, let alone achieve anything of substance for its members.
Similarly, weak management can surrender so many things to powerful unions that the agreement
cannot be rightfully said to represent the results of a bargain. For example, excessive political
interference and supervision by the ministries weakens the management and make union appears
larger than they really are.
2. Bargaining in Good Faith the bona fides of the bargaining parties have to be clear right from
the start and the existence of hidden agendas can only hamper the process. For example, if
bargaining is taken towards deadlock as a pretext to close down the plant.
3. Mechanism to Break a Deadlock bargaining may often result in a stalemate, with neither
managements nor unions budging from their respective offers or demands. The breaking of this
deadlock can be achieved in two ways, either through an ultimatum like strikes or lockouts, or
through third party mediation, like arbitration or conciliation.
Environment of Collective Bargaining Collective bargaining does not depend entirely on the
management and the labour, but certain other factors also play an important role in determining the
scope of collective bargaining. Firstly, the economic environment both at the macro and the micro
19

Id.
Selig Pearlman, The Principles of Collective Bargaining Annals of the American Academy of Political and Social
Science (March 1936) quoted in Mamorias, Dynamics of Industrial Relations (1983)
21
According to the International Confederation of Free Trade Union, the object of the Union in collective bargaining is
to establish and build up union recognition as an authority in the work place (Referred in Mary Sur, Collective
Bargaining (1965)
22
Ratna Sen, Industrial Relation in India, Shifting paradigm, Macmillan, 2003
20

level influenced collective bargaining like in the former, inflation may act as a boon for the union to
demand more whereas; micro economic factors include cost facts and trends, rate of profits etc.
Secondly, industrial environment like size of plant and technological growth affect collective
bargaining. Thus, larger plants are better able to absorb increases in wages but seasonal production
units face a number of constraints in allowing wage increases. Besides, social and political factors
also determine collective bargaining such as the percentage of women in the workforce and rivalry
among the unions. Finally, collective bargaining is also dependent on the time and era. Collective
bargaining has developed more rapidly in the period when government intervention weakened.23
Theories of Collective Bargaining Chamberlain and Kuhn have described the theories of
collective bargaining on the basis of the marketing, the governmental and the industrial relations
concepts. The Marketing concept grew in the early days of industrialisation which viewed collective
bargaining as the process for determining the terms of which the labour will be supplied to the
market and union were regarded primarily as an agency for regulating the labour market and the
price of labour or wage. Under governmental concept, the collective agreement is considered as the
constitution for the workplace on the basis of which a system of industrial governance for the plant
or the industry was established. Thus unions and management acted much as a government do on
the basis of checks and balances. The third concept or the industrial relations view collective
bargaining as a method for the representation of the union in the decision making and allowed
workers to participate in determining policies, which guided and ruled their work lives24.
Levels of Collective Bargaining Collective bargaining takes place in varied ways. The forms vary
from those where the government plays a negligible role to those where the government intervenes
substantially, or to those where it is out and out tripartism. Technically speaking, collective
bargaining varies in levels from national to craft.
1. National-Level Bargaining This type of bargaining takes place between employers
organisations and the dominant union centre over issues which are rudimentary and basic to
industrial working. These could be basic wage rates or the basic formula for cost of living
adjustment and may take place annually or after gaps of two or three years. The implication would
be that these basic issues are uniformly accepted by all industries and all industrial workers. This
type of bargaining is relatively easier to follow in small homogeneous industrial structure 25 .
Therefore it is not possible in India because of its large size and heterogeneity26. However, in India,
since the early 1970s, sectoral bargaining at the national level is occurring27 in industries in which
the government is a dominant player 28 . The advantage of this type of bargaining is its
standardisation of wage and avoidance of disputes on the plea of disparity. But, there is little room
for flexibility and therefore does not allow variations on the issues29.
2. Industry-Level Bargaining In this type, employers organisations or bodies in one industry
jointly bargain with unions in that industry. These Unions are organised either as industry
federations or registered on the industry basis, with branches in different plants of that industry. The
issues in this type of bargaining is not limited to basic wages and allowances but also includes basic

23

Id.
N.W. Chamberlain and J.W. Kuhn, Collective Bargaining, 2nd Ed., Mcgraw Hill (1951)
25
National level is fairly common in countries like Sweden, Norway as they are essentially small and homogeneous in
their industrial structure.
26
Supra Note 13.
27
C.S. Venkata Ratnam and D.P.A. Naidu, Industrial Relation & Collective Bargaining in South Asia, ILO, 1999
28
These include banks, coal, steel and docks. Private, public and multinational banks are members of the Indian Banks
Associations. They negotiate long-term settlements with the all-India federations of bank employees. There is one
national agreement for the entire coal industry. In steel there is a permanent bipartite committee for integrated steel
mills in the public and private sectors. (Ibid).
29
Supra Note 13.
24

production norms and working conditions, peculiar to that industry30. This type of bargaining is
common in cotton and jute textiles, engineering and tea, which are dominated by the private sector31.
3. Corporate-Level Bargaining This occurs when the corporate management of a multi-plant
enterprise negotiates one agreement with various unions for all its plants. The bargaining is usually
conducted by corporate management with representation from its different plants. It is practised in
most large public sector undertakings, which have several establishments in various regions of the
country 32 . The main advantage of this system is wage uniformity between the various
establishments and avoidance of disputes on grounds of disparity. But at the same time, the system
is rigid to take into account the differences between plants, products, or technologies, which may be
due to age, size or employment patterns, and the resultant performance33.
4. Plant-Level Bargaining In this type of bargaining, the management of a particular plant or
factory or establishment bargains with the unions of that establishment or unit. The issues obviously
can be as comprehensive and detailed as possible, and relate entirely to the performance of that
establishment. Most private sectors in India practise this system of bargaining34.
5. Craft-Level Bargaining In this type of bargaining, the employer bargains separate agreements
with different craft unions within the same enterprise. This system is not common in India with
airlines as an exception35.
Collective Bargaining in India
Origin & Development Since Collective Bargaining is the off-shoot of Trade Union activity, it is
worthwhile to trace the origin of Trade Union first. The credit for organised labour movement in
India goes to N.M. Lokhande, who was a factory worker himself. In 1884, he organised an agitation
in Bombay and prepared a memorandum demanding limitation of working hours, a weekly rest day,
compensation for injuries etc. and in response of these demands a weekly holidays was actually
granted by the mill owners of Bombay. In fact, in 1890, the Bombay Mill hands Association was
organised with Lokhande as chairman and workers newspaper Deenabandhu was started36. The
trade union movement got its momentum at the close of the World War I and the period of 1918-21
was an epoch-making period in the history of Indian labour movement. The Madras Labour Union
(1918) founded by P.P. Wadia was the first Indias Trade Union37. By the year 1920 the Trade
Union had emerged on the Indian Scene in almost all the sector to protect the legitimate interests of
the working classes. Collective Bargaining formally started in 1920s in the textile industry in
Ahmedabad at the time when Mahatma Gandhi was introducing the concept of arbitration.
Collective Bargaining started because of failure of arbitration 38 . Thereafter, lots of collective
bargaining agreements were executed especially after Independence39. But there was little support
30

Id.
Supra Note 18
32
In Indian context, the relevant establishments for corporate level bargaining are BHEL, HMT, ONGC, IPCL, and Oil
India. (Id).
33
Id.
34
Id.
35
Id.
36
During this period, other associations were established which were not Trade Unions in the real sense of the term but
the establishment of such organizations germinated the seed of consciousness among the working class to fight for their
legitimate rights by constitutional method and leaders were either philanthropists or intellectuals. These organizations
were Amalgamated Society of Railway Servants of India and Burma (1897), Printers Union (1904), The Bombay Postal
Union (1907), The Kamgar Hitwardhak Sabha (1909), The Social Service League (1910) and The Press Employees
Union.
37
S.K. Puri, Labour & Industrial Law, 8th Ed. 2004 (Reprint), Allahabad Law Agency
38
The Royal Commission observed in 1931 that the Ahmedabad experiment was the only instance of collective
bargaining in India.
39
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.
31

for the growth of this practice, since neither British India nor Independent India made legal
provisions for collective bargaining 40 . Nevertheless, like many other countries, collective
bargaining in India got some impetus from various statutory provisions. The Trade Union Act, 1929,
the Bombay Industrial Relations Act, 1946, the Industrial Disputes Act, 1947, and the Madhya
Pradesh Industrial Relations Act, 1960 provided a machinery for consultation and paved the way for
Collective bargaining.
Validity & Recognition The analysis of the following documents along with the decisions of the
Court justifies the legality and recognition of collective bargaining in India.
1. Industrial Disputes Act, 1947 The Act is basically enacted for providing the mechanism for the
settlement of disputes41. According to Section 18 of the Act, A settlement arrived at by agreement
between the employer and workman otherwise than in the course of conciliation proceeding shall be
binding on the parties to the agreement . Thus, settlement other than conciliation which may
take place by a binding agreement between the employer and the employee is nothing but an
implication of the collective bargaining agreement. In other words, Section 18 recognises collective
bargaining. In fact, the definition of settlement under the Act itself contains the element of
collective bargaining42.
In the case of Workmen of Dimakuchi Tea Estate vs. The Management of Dimakuchi Tea Estate43,
the examination of the salient provisions of the Act shows that the principal 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
representation by a registered trade union or federation of trade unions or association of employers
or a federation of associations of employers;.and (5) collective bargaining.
Further, in Karnal Leather Karamchari Sanghatan (Regd.) vs. Respondent:Liberty Footwear
Company (Regd.) and Ors44, the Court laid down that the Act (Industrial Disputes Act, 1947) seeks
to achieve social justice on the basis of collective bargaining. The voluntary arbitration is a part of
infrastructure of dispensation of justice in the industrial adjudication. The arbitrator thus falls within
the rainbow of statutory tribunals. When a dispute is referred to arbitration, it is therefore, necessary
that the workers must be made aware of the dispute as well as the arbitrator whose award ultimately
would bind them. They must know what is referred to arbitration, who is their arbitrator and what is
in store for them. They must have an opportunity to share their views with each other and if
necessary to place the same before the arbitrator. This is the need for collective bargaining and there
cannot be collective bargaining without involving the workers. The Union only helps the workers in
resolving their disputes with management but ultimately it would be for the workers to take
Similar such agreement also exists for the coal mining industry.
40
Supra Note 13 (The National Commission on Labour (1969) remarked in 1969 that in the absence of arrangements
for statutory recognition of unions, except in some states, and provisions which require employers and workers to
bargain in good faith, it is no surprise that reaching of collective bargaining agreements has not made much headway in
our country).
41
The Preamble of the Act state as follows : An Act to make provisions for the investigation and settlement of
industrial disputes and for certain other purposes.
42
"settlement" means a settlement arrived at in the course of conciliation proceeding and includes a written agreement
between the employer and workmen arrived at otherwise than in the course of conciliation proceeding where such
agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent
to an officer authorised in this behalf by the appropriate Government and the conciliation officer (Section 2(p))
43
AIR 1958 SC 353
44

Supra Note 10

decision and suggest remedies. It seems to us therefore, that the arbitration agreement must be
published before the arbitrator considers the merits of the dispute. Non-compliance of this
requirement would be fatal to the arbitral award.
In the case of Amalgamated Coffee Estates Ltd. vs. Workmen 45 , the Apex Court held that the
process of negotiated settlements is at the heart of the solution of the collective disputes. Unlike a
settlement in the course of conciliation proceedings, a bipartite settlement with a majority union is
equally binding if it is held to be fair and reasonable. Likewise, Central Provinces Transport
Services vs. Patwardhan46, the Court held that the Industrial Disputes Act essentially deals with
collective disputes.
2. Trade Union Act, 1926 The Act provides for the registration of trade union and determines the
rights, liabilities and immunities of the union47. The primary purpose for the formation of the trade
union is to regulate the relations between the employer and employee or among themselves48 and it
is well established that collective bargaining is one of the means of regulating such a relation. In the
case of D.N. Banerjee vs. P.R. Mukherjee 49 , the court recognises collective bargaining. Justice
Chandra Shekhar Aiyer observed that having regard to the modern condition of society where
capital and labour have organised themselves into groups for the purpose of fighting their disputes
and settling them on the basis of the theory that Union is Strength, collective bargaining has come
to stay.
Further, in Tamil Nadu Electricity Workers Federation vs. Madras State Electricity Board50, the
Madras High Court observed that the whole theory of organised labour and its statutory recognition
in industrial legislation, is based upon the unequal bargaining power that prevails as between the
capital employer and in individual workman, or disunited workman. Collective bargaining is the
foundation of this movement, and it is in the interest of labour that statutory recognition has been
accorded to Trade Unions and their capacity to represent workmen, who are members of such
bodies.
3. The Industrial Employment (Standing Orders) Act, 1946 Standing Order is drafted by the
employer which contains the conditions of employment51. As per Section 3 of the Act, initially, the
employer needs to submit the draft standing order to the Certifying Officer which should be in
conformity to the model standing order as far as possible52. Thereafter, the said Officer forward the
45

1965 II LLJ 110 SC.

(1956) SCR 956.
47
The Preamble of the Act state as follows : An Act to provide for the registration of Trade Unions and in certain
respects to define the law relating to registered Trade Unions
48
Trade Union means for the combination, whether temporary or permanent, formed primarily for the purpose of
regulating the relations between workmen and employers or between workmen and workmen and or between employers
and employers, or for imposing restrictive conditions on the conduct of any trade or business, and includes any
federation of two or more Trade Unions. {Section 2(h)}
49
1 L.L.J. 1951 (SC)
50
AIR, 1965 Mad. 111
51
The Preamble of the Act state as follows : An Act to require employers in industrial establishments formally to
define conditions of employment under them
52
Submission of draft standing orders
(1) Within six months from the date on which this Act becomes applicable to an industrial establishment, the employer
shall submit to the Certifying Officer five copies of the draft standing orders proposed by him for adoption in his
industrial establishment.
(2) Provision shall be made in such draft for every matter set out in the Schedule which may be applicable to the
industrial establishment, and where model standing orders have been prescribed, shall be, so far as is practicable, in
conformity with such model.
(3) The draft standing orders submitted under this section shall be accompanied by a statement giving prescribed
particulars of the workmen employed in the industrial establishment including the name of the trade union, if any, to
which they belong.
46

copy of the draft to the trade union or to the workmen, if there is no trade union for seeking
objections (if any) and after giving both the parties an opportunity of being heard, the Officer shall
certify the standing order with necessary modifications (if required) and shall send it copies to both
the parties53.
Thus, the process of framing of standing order clearly suggest that both the employer and the
employee takes part in it rather than it being in the hands and whims of either of them, though with
the help of the Certifying Officer who acts as a negotiator. In other words, framing of standing
order is a kind of negotiation with the help of the third person (Certifying Officer) which implies
the process of collective bargaining. In the case of Glaxo Laboratories vs. Labour Court54, Justice
Desai assesses the imminent need for the Act in his inimitable style: In the days of Laissez-faire
when industrial relation was governed by the harsh and weighted law of hire and fire the
management was the supreme master, the relationship being referable to contract between unequals
and the action of the management treated almost sacrosanct. The Act, as its long title shows,
required the employers in industrial establishments to define with sufficient precision the conditions
of employment under them and to make the said conditions known to the workmen employed by
them. The contract was not left to be negotiated by two unequal persons but statutorily imposed
4. The Constitution of India The Constitution of India in the Chapters on Fundamental Rights and
Directive Principles of State Policy justify the legality of collective bargaining. In this context,
Article 19 permits to form association 55 which implicates the validity of trade union and as
mentioned above that one of the main purposes of trade union is collective bargaining. Further,
several Directives Principles 56 also justifies the provisions for improving the conditions of the
labour in general and Article 43-A in particular provides that State shall ensure the participation of
workers in the management57. Although the said Directives are not directly enforceable in the court
of law, still its binding nature can by established with the help of some decisions of the Apex Court
of India. In Re Kerala Education Bill case58, the Supreme Court observed that though the directives
principles cannot override the fundamental rights, nevertheless, in determining the scope and ambit
of fundamental rights the court may not entirely ignore the directive principles but should adopt

(4) Subject to such conditions as may be prescribed, a group of employers in similar industrial establishments may
submit a joint draft of standing orders under this section (Sec. 3)
53
Certification of standing orders
(1) On receipt of the draft under section 3, the Certifying Officer shall forward a copy thereof to the trade union, if any,
of the workmen, or where there is no such trade union, to the workmen in such manner as may be prescribed, together
with a notice in the prescribed form requiring objections, if any, which the workmen may desire to make to the draft
standing orders to be submitted to him within fifteen days from the receipt of the notice.
(2) After giving the employer and the trade union or such other representatives of the workmen as may be prescribed an
opportunity of being heard, the Certifying Officer shall decide whether or not any modification of or addition to the
draft submitted by the employer is necessary to render the draft standing orders certifiable under this Act, and shall
make an order in writing accordingly.
(3) The Certifying Officer shall thereupon certify the draft standing orders, after making any modifications therein
which his order under sub-section (2) may require, and shall within seven days thereafter send copies of the certified
standing orders authenticated in the prescribed manner and of his order under sub-section (2) to the employer and to the
trade union or other prescribed representatives of the workmen (Sec. 5)
54
1984 1 LLJ 16.
55
All persons shall have the right..to form associations and unions.{Article 19(1)(c)}
56
See Articles 39, 41, 42 and 43 of the Constitution
57
Article 43-A inserted by 42nd Amendment to the Constitution provides that the State shall take steps by suitable
legislation or in any other way, to secure the participation of workers in the management of undertakings,
establishments or other organisations
engaged in any industry.
58
AIR 1957 SC 956.

the principles of harmonious construction and should attempt to give effect to both as much as
possible59.
Recognition The willingness of an employer or of an employers association to bargain with a
particular union is known as the recognition of the union 60 . Thus, recognition is the process
through which management acknowledge and accept a trade union as representative of some or all
of the workers in an establishment or industry and with which it is willing to conduct discussions on
all issues concerning those workers. When this acceptance also includes the willingness of the
management to bargain with that union or unions, they may be termed as bargaining agent or
agents61. The National Commission on Labour attached considerable importance to the matter of
recognition of unions. The Commission stated that the provision for union recognition has been
realised is evident from theBombay Industrial Relations Act, 1946 and certain other state Acts
(Madhya Pradesh and Rajasthan), the amendments incorporated (but not enforced) in the Trade
Union Act62 and the Code of Discipline63, as also the fact that it was included in the Second Plan.
The Commission suggested a compulsory recognition of the union under a Central Law in all
undertaking employing 100 or more workers or where the capital invested is above a stipulated
size64 . The Commission also recommended the rights of the recognised unions65 . Nevertheless,
there is no law at the national level for recognition of trade unions. However, some States such as
Maharashtra66, Andhra Pradesh67, Madhya Pradesh68, West Bengal69 and Orissa have enacted the
legal provisions for the recognition. Thus, it is evident that in spite of absence of expressly centrally
enacted provisions on collective bargaining in India, there are enough protections for the relevance
of collective bargaining in India.

59

See Ranjan Dwivedi vs. Union of India (AIR 1983, SC 624), Kesavananda Bharti vs. State of Kerala (AIR 1978 SC
1461), Unni Krishnan vs. State of A.P. (1993) 1 SCC 645.
60
Supra Note 13
61
Supra Note 22
62
The Amendment Bill of 1947 provided that if a union was registered, held executive meetings at least once in six
months, had members from one establishment, then the employer would have to recognise through a registered
agreement. (Ibid).
63
See Annexure A of 16th Indian Labour Conference, (1958)
64
National Commission on Labour (NCL), Report of 1969, Ministry of Labour, Govt. of India. The Commission also
recommended that a trade union seeking recognition should have at least 30% membership of the workers of an
establishment or 25% for an industry in a local area.
65
The rights in the Commissions opinion includes the following :
1) The right to raise issues with the management,
2) Right to collect membership fees within the premises of the organisation,
3) Ability to demand check-off facility,
4) Ability to put up a notice board on the premises for union announcements,
5) Ability to hold discussions with employees at a suitable place within the premises,
6) Right to discuss members grievances with employer,
7) Ability to inspect beforehand a place of employment or work of its members and
8) Nomination of its representatives on committees formed by the management for industrial relations purposes as well
as in statutory bipartite committees.
66
The Bombay Industrial Relations Act, 1946 was the first Act for recognition of unions in specified industries like
textiles, sugar, transport, silk, banking. The Maharashtra Recognition of Trade Union and Prevention of Unfair Labour
Practices Act, 1972 provides for recognition in other industries if a union has 25% of the employees as members. (Supra
Note 22)
67
Andhra Pradesh was one of the first states to introduce secret ballot as a method of determining union membership,
through rules to Industrial Disputes Act. (Ibid)
68
Madhya Pradesh Industrial Relations Act, 1960, provides that a union should have 25% membership in an industry in
a local area for recognition, provided the union fulfils certain basic conditions.
69
The West Bengal (Trade Unions) Amendment Act, 1993, provides for the determination of bargaining agents and
their status through secret ballot to be conducted by the Registrar of Trade Unions

Conclusion
Collective Bargaining is the process of joint decision making and basically represents a democratic
way of life in industry. For the success of collective bargaining the process must begin with
proposals rather than demands and the parties should be ready and willing to compromise otherwise
the whole idea of collective bargaining would be frustrated70. In Indian context, the problem lies in
the fact that in the absence of any statutory provisions at Central Level for the recognition of a
representative trade union by an employer affects the bargaining power of the trade union. In
addition, besides, unorganised labour being a hurdle, the unions are generally weak. Rivalry on the
basis of caste, creed, and religion is another characteristic of Indian Trade Unions which come in
the way of successful collective bargaining. Further, division of union on the basis of political
ideologies and weak financial position retards the growth of Trade Unions71.
Therefore, it is recommended that India should provides for a recognition of the Trade Union at the
central level, so that peace and harmony with the management and workers can be maintained,
which in turn can provide better service to the community and hence lead to the growth and
development of the economy. In fact, India is under international obligations to provide effective
mechanism for collective bargaining72. In this regard, it is also recommended that India can ratify
ILO Conventions No. 87 of 1948 and No. 98 of 1949 both of these conventions assure the right to
effective collective bargaining. In short, we may say that the time has come for repeating the history.
As per Sir Henry Maine, the progressive society move from status to contract. However, given the
necessity of collective bargaining as an effective tool for the settlement of industrial dispute, the
progressive society has to move otherwise i.e; from contract to status rather than from status to
contract.

70

Steps to improve the process of collective bargaining are:

1. Begin the process of negotiations with proposals, not demands.
2. Avoid taking public positions for or against certain proposals in advance of negotiations.
3. Avoid taking strike votes before the process of negotiation begins.
4. Give negotiation proper authority to bargain.
5. Avoid unnecessary delays in beginning negotiations and in conducting them.
6. Insist on offering facts and arguments.
7. Make plenty of proposals to enhance the opportunities to find compromises.
8. Be prepared to compromise.
9. Be prepared to get results gradually.
10. Preserve good manners and keep discussion focused on relevant issues.
11. Be prepared to stand for a long and hard strike or lock out (as the case may be) in order to force a settlement
justified by facts and arguments.
71
S.C. Srivastava, Industrial Relations and Labour Laws, 4th Ed., Reprint, 2002, Vikas Publishing House Pvt. Ltd., New
Delhi.
72
Article 8 of the International Covenant on Economic, Social and Cultural Rights (which India has ratified) laid down
that the State Parties to the Covenant undertake to ensure the right of everyone to form trade unions and join the trade
union of his choice, subject only to the rules of the organization concerned, for the promotion and protection of his
economic and social interest. No restrictions may be placed on the exercise of this right other than those prescribed by
law and which are necessary in a democratic society in the interests of national security or public order or for protection
of the rights and freedoms of others