Collective Bargaining: Process and Types | PDF


What is Collective Bargaining?

Collective Bargaining is defined as a mechanism which is used for reaching out mutual agreement in between employer and employees. It is simply the process in which peoples working within an organization, via their unions do negotiations with employers for deciding the terms of employment. Terms of employment include workplace health and safety, work hours, pay rate, overtime pay, retirement benefits, sick leaves, vacation time and means for balancing work and family life. Collective bargaining process serve is an effective mean for solving all work-related problems of organization. Workers present their interest in front of company by representatives of trade union which is mutually formed by all employees. Trade union will either negotiate with single employer or a group of managers depending upon the situation for reaching out a collective agreement.

Collective bargaining is a fundamental right of workers and is rooted in constitution of international labor organization (ILO). It enables workers for establishing fair terms of employment with employers and helps companies in maintaining sound labor relations. Employers also recognize the benefit of negotiating with trade recognitions regarding pay rates and employment conditions collectively for large group of peoples at same time.

Process of Collective Bargaining

Collective bargaining process is composed of 5 main steps which both employees as well as employer follows in order to reach a friendly solution. These steps are as discussed below: –


In first step of collective bargaining process, representatives from both parties i.e., employer and employees decide on the factors on which negotiations to be done in a meeting. It is must that all members should be well-aware with issues to be discussed and should carry proper knowledge of relevant labor laws. Management team should have well-prepared change proposal to be brought in employment contract and also state the statistical figures for supporting their view. 

In the same manner, union must carry out a proper analysis of company’s financial position for determining its ability to pay. Also, a detailed and systematic report should be prepared defining all issues and desires of workers.


It is a stage where ground rules for carrying out negotiations in between both the parties are decided. The prime negotiator of meeting is from management side who leads the entire discussion. This stage recognizes the issues which form basis for holding meeting.

The issues may be administrative issues (workplace health and safety, work conditions, technological changes, security of job), institutional issues (ESOP plan, rights and duties), wages and salaries and other various economic benefits (health insurance, paid holidays, paid leaves etc.).


Propose stage is where conversation initiates in between both the parties. The chief negotiator with an opening statement starts the conversation and then both parties present their initial demands. This session is also termed as brainstorming where both the parties give their opinions which leads to arguments and counter arguments.  


Negotiation in between union representatives and employer begin here where each party tries to win over the other. The negotiation continues for long till the time of reaching a final agreement. Many times the amicable solution is reached soon by both the parties but in many cases, even third party had to intervene in the form of arbitration for reaching solution and settling down dispute.


Settlement is defined as the final stage in process of collective bargaining. It is the point where both of the parties finally agree to common solution for issues they have discussed so far. Therefore, these parties form and sign the mutual agreement for giving the decision a universal acceptance.

These all steps are necessary steps to be followed by every management in order to settle the dispute systematically and maintain health relations with workers. It gives employees an equal chance to speak freely and keep their points inform of management without any fear.

Types of Collective Bargaining

Collective bargaining is of four types which differ from one another on the basis of their nature and objectives. These distinct types are practiced in accordance with situational requirements.

Conjunctive or Distributive Bargaining

Conjunctive bargaining is form of collective bargaining in which both employer and employees tries their best to maximize their respective gains. This type of bargaining is based on principle which says “my gain is your loss and your gain is my loss”.
Main issues discussed here are concerned with wages and salaries, bonus and other economic benefits. Employees in their negotiations wish to have increased salaries, wages and bonuses for the work done whereas employers focus on increasing the work load and reducing pay rate.

Productivity Bargaining

Productivity bargaining is carried out by management team in which in order to raise the overall productivity, workers are given incentives or bonuses. Employees get motivated with extra pay offer and make efforts to move their productivity beyond standard level for earning additional benefits.

Productivity bargaining benefits both employees as well as employers where employees enjoy extra pay and employers get the benefit of increased production level.

Composite Bargaining

Composite bargaining is one where workers along with the demand of raising pay rate also show their concern for other key employment conditions. These conditions are related to workplace safety, recruitment method, training polices, environmental issues, pricing policies and mergers/amalgamations with other firms. Employees express concern for all these for the protection of their power dilution and safeguarding their interest.

Integrative or Co-operative Bargaining

Co-operative bargaining is a type where both parties i.e., employer and employees tries to resolve their issues in co-operative manner. Employer and employees sit together and discuss their issue in order to reach an amicable solution. In case of economic crisis which is not in control of both the parties, a mutual agreement is entered into regarding the working conditions.

Like suppose workers agreeing to perform the task at lower pay or management getting agree to adopt modernized methods in order to have an increased production level.


Therefore, the ultimate goal of collective bargaining is to reach the common agreement in between employees and employer with regard to employment term and conditions. This will enable management to develop long-term as well as friendly relations with their staff. Also, the type of collective bargaining to be used is completely dependent upon the situation which arouse in between employer and employees. 

Collective Bargaining: Process and Types PDF