3.3 Collective bargaining process
5 min read•august 20, 2024
Collective bargaining is a crucial process where unions and employers negotiate employment terms. It involves preparation, negotiation, ratification, and administration of agreements. The process aims to balance the interests of workers and management.
Bargaining strategies can be distributive or integrative, positional or interest-based. Power dynamics, tactics, and legal frameworks shape negotiations. Outcomes include economic and non-economic terms, with public sector bargaining having unique characteristics.
Collective bargaining overview
- Collective bargaining is a process of negotiation between unions and employers regarding the terms and conditions of employment of employees
- The result of collective bargaining procedures is called a collective bargaining agreement (CBA)
- Collective agreements may cover wages, working time, training, health and safety, overtime, grievance mechanisms, and rights to participate in workplace or company affairs
Bargaining process steps
Preparation for bargaining
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- Preparation involves composition of a negotiation team
- Both union and management gather and analyze information to support their bargaining positions
- Involves setting the groundrules for negotiations
Negotiation of agreement
- Negotiation is the core of the bargaining process where the parties discuss their positions and proposals
- Typically proceeds through a series of bargaining sessions until an agreement is reached or an impasse occurs
- Effective negotiations involve both presenting one's own demands and listening and responding to the other side
Ratification of agreement
- Once a tentative agreement is reached, it must usually be ratified by the union membership and/or approved by senior management
- The ratification process is spelled out in the union's constitution and bylaws
- If the agreement is not ratified, the parties return to the bargaining table
Administration of agreement
- After the agreement is finalized, it must be implemented and administered
- This includes interpreting the agreement to resolve disputes that arise during the contract term
- Both union and management have a shared responsibility to ensure the agreement is followed
Bargaining strategies
Distributive vs integrative bargaining
- assumes a "fixed pie" that has to be divided between the parties
- Leads to a focus on claiming value for one's own side
- looks for "win-win" solutions that can benefit both parties
- Focuses on creating value and finding mutual gains
Positional vs interest-based bargaining
- In positional bargaining, each side takes a definite stance and argues for their positions
- Can lead to an adversarial "us vs. them" approach
- Interest-based bargaining focuses on the underlying concerns of each party
- Encourages joint problem-solving to find a solution that satisfies each side's interests
Bargaining power dynamics
Sources of union power
- The ability to disrupt production through strikes or slowdowns
- Control of the supply of labor with scarce skills
- Political influence and public support
Sources of management power
- Control over capital resources and investment decisions
- Ability to withstand a strike by using strikebreakers or moving production
- Leverage provided by high unemployment in the external labor market
Relative bargaining power
- The balance of power between union and management depends on their relative strengths and weaknesses
- Power often varies with the business cycle, shifting in management's favor during economic downturns
- Government policy can also affect the balance of power (labor law, regulations, etc.)
Bargaining tactics
Common union tactics
- Threatening or conducting a strike
- Organizing public protests or boycotts to pressure the employer
- Partnering with other unions in solidarity
Common management tactics
- Threatening to close a facility or move production elsewhere
- Communicating directly with workers to discourage support for the union
- Hiring replacement workers to operate during a strike
Impasse resolution methods
- : A neutral third party facilitates discussions and offers suggestions
- Fact-finding: A neutral party investigates and issues a non-binding report
- : A neutral third party makes a final, binding decision to resolve a dispute
Collective bargaining outcomes
Economic contract terms
- Wages and salaries
- Bonuses and incentive pay
- Benefits (health insurance, retirement plans, paid leave, etc.)
Non-economic contract terms
- Job security provisions
- Seniority rights (for layoffs, promotions, shift assignments, etc.)
- Grievance and arbitration procedures
- Health and safety protections
Contract duration
- CBAs typically last for a defined period (e.g., three years)
- Gives both parties a period of stability
- May include provisions for reopening negotiations if specific issues arise
Legal framework for bargaining
Duty to bargain in good faith
- Under U.S. labor law, unions and employers must bargain "in good faith"
- Requires meeting at reasonable times and places and exchanging relevant information
- Does not require reaching an agreement or making
Mandatory vs permissive subjects
- Mandatory subjects (wages, hours, working conditions) must be bargained if raised
- Permissive subjects (most business decisions) may be bargained but are not required
- Parties cannot take unilateral action on mandatory subjects without bargaining
Prohibited bargaining conduct
- Certain practices ("unfair labor practices") are prohibited
- Refusal to bargain, discrimination against union supporters, bargaining in bad faith
- Violations can lead to legal sanctions through the National Labor Relations Board (NLRB)
Bargaining in the public sector
Differences from private sector
- Public sector unions often have more limited bargaining rights
- Subjects of bargaining may be restricted by law
- Right to strike is often prohibited
- Political factors play a larger role (budgets, elected officials, public opinion)
Limitations on bargaining rights
- State laws vary widely in the scope of public sector bargaining
- Some states prohibit it entirely; others allow broad negotiations
- Federal employees have more limited bargaining rights than private sector
- Wages are set by Congress, not negotiated
International perspectives on bargaining
Bargaining systems in other countries
- Collective bargaining institutions vary across countries
- Centralized bargaining (Sweden): National agreements set standards for whole industries
- Sectoral bargaining (Germany): Negotiations at industry level, with local flexibility
- Decentralized bargaining (Canada): Negotiations at company or workplace level
- Level of bargaining has implications for wage inequality, macro flexibility
Impact of globalization on bargaining
- Increased capital mobility and trade put pressure on bargaining systems
- Threat of production shifts weakens union
- Pressure for decentralization and flexibility
- Rise of multinational companies poses challenges
- Mismatch between globalized firms and national unions/laws
- Some unions seeking to coordinate across borders to boost leverage
Key Terms to Review (19)
AFL-CIO: The AFL-CIO, or the American Federation of Labor and Congress of Industrial Organizations, is a federation of labor unions in the United States that was formed in 1955 through the merger of two major union groups. This organization plays a vital role in advocating for workers' rights and labor issues, influencing labor relations and collective bargaining across various industries. Its establishment marked a significant moment in labor history, as it aimed to unify different labor movements and strengthen their political power.
Arbitration: Arbitration is a method of resolving disputes outside the courts where an impartial third party, known as an arbitrator, makes a binding decision on the matter. This process is often used in labor relations to resolve disagreements that arise during negotiations or after grievances have been filed. It serves as an alternative to strikes or prolonged negotiations, providing a quicker resolution and reducing conflict in the workplace.
Bargaining Power: Bargaining power refers to the relative ability of parties in a negotiation to influence the terms and outcomes in their favor. This concept is crucial during negotiations, as it shapes the dynamics between employers and employees or their representatives, determining how much leverage each side has when seeking favorable conditions. Higher bargaining power often leads to more advantageous agreements for the party that holds it.
Collective Agreement: A collective agreement is a written contract between an employer and a union representing employees, outlining the terms and conditions of employment. This agreement typically covers wages, working hours, benefits, and workplace policies, aiming to promote fair labor practices and protect workers' rights. It is a crucial outcome of the collective bargaining process and reflects the negotiated compromises made by both parties to maintain a harmonious workplace relationship.
Concessions: Concessions refer to compromises or adjustments made by either party during the collective bargaining process, often involving the negotiation of terms and conditions of employment. These adjustments can occur when one side offers something in exchange for a favorable agreement from the other, showcasing the give-and-take nature of negotiations. Understanding concessions is vital because they can significantly influence the final outcomes of bargaining and help in reaching agreements that satisfy both employers and employees.
Distributive Bargaining: Distributive bargaining is a negotiation strategy in which parties compete to divide a fixed amount of resources, often referred to as a 'win-lose' situation. This approach usually involves one party seeking to maximize their share of the resources at the expense of the other party. In the context of collective bargaining, it is crucial to understand how it shapes the negotiation dynamics between employers and employees, influencing their strategies and outcomes during contract negotiations.
Good faith bargaining: Good faith bargaining refers to the obligation of both parties in a negotiation to engage sincerely and honestly, aiming for a fair resolution of conflicts and agreements. This principle is crucial in labor relations, as it ensures that employers and unions negotiate terms with the intent to reach a mutually beneficial agreement, promoting cooperation and reducing hostility. Adhering to good faith bargaining can enhance workplace relationships and contribute to a more stable industrial environment.
Integrative Bargaining: Integrative bargaining is a negotiation strategy that seeks to create win-win outcomes for all parties involved by focusing on mutual interests and collaborative problem-solving. This approach encourages open communication, where both sides share information and work together to find solutions that satisfy the needs and desires of each party, rather than competing for limited resources. This method contrasts with distributive bargaining, which is more about dividing a fixed pie of resources.
Management negotiators: Management negotiators are individuals or teams representing an organization in collective bargaining processes, aiming to reach agreements with labor unions or employee representatives. Their primary role is to negotiate terms of employment, such as wages, benefits, and working conditions, while balancing the organization's interests with those of the employees. Effective management negotiators possess strong communication skills, an understanding of labor laws, and the ability to analyze complex issues to facilitate successful negotiations.
Mediation: Mediation is a conflict resolution process where a neutral third party helps disputing parties reach a mutually acceptable agreement. This process is often used to facilitate discussions during collective bargaining and grievance procedures, allowing both sides to express their views and work towards a compromise without resorting to more formal legal disputes or strikes. Mediators do not impose solutions but rather guide the conversation to help parties find common ground.
Memorandum of Understanding: A memorandum of understanding (MOU) is a formal agreement between two or more parties that outlines their intentions, roles, and responsibilities regarding a particular project or relationship. It serves as a preliminary document that indicates the willingness of the parties to collaborate, and while it is not legally binding, it provides a framework for future negotiations and agreements. MOUs are often used in the collective bargaining process to establish mutual expectations and to clarify the terms under which negotiations will proceed.
National Labor Relations Act: The National Labor Relations Act (NLRA), also known as the Wagner Act, is a foundational piece of labor legislation in the United States, enacted in 1935 to protect the rights of workers to organize, engage in collective bargaining, and take part in concerted activities for their mutual aid or protection. This act set the stage for the modern labor movement by ensuring that workers had the legal backing to form labor unions and engage in negotiations with employers. Its implications extend across various aspects of labor relations, from union organizing to grievance procedures and strike management.
Negotiation Phase: The negotiation phase is a crucial part of the collective bargaining process where representatives from both management and the labor union engage in discussions to reach an agreement on various employment terms. This phase involves the presentation of demands, counteroffers, and concessions, all aimed at finding common ground to create a mutually beneficial contract. Effective communication and strategic planning are essential in this phase to facilitate productive discussions and avoid conflicts.
Pre-bargaining phase: The pre-bargaining phase is the initial stage in the collective bargaining process, where parties prepare for negotiations before formal talks begin. During this phase, both management and unions gather information, define their priorities, and develop strategies to approach the upcoming negotiations. This groundwork is essential to establish a clear understanding of each party's goals and to create a framework for successful discussions.
Ratification Phase: The ratification phase is a critical step in the collective bargaining process where the proposed agreement between the union and management is presented to union members for approval. This phase typically involves voting on the terms negotiated during bargaining, and the outcome determines whether the agreement is accepted or rejected. It acts as a bridge between negotiations and implementation, ensuring that members have a say in the final contract that governs their employment conditions.
Strike threat: A strike threat is a warning or indication from workers or their representatives that they may engage in a strike if their demands are not met during negotiations. This tactic is often used as leverage in the collective bargaining process, signaling to employers that employees are willing to take significant action to achieve their objectives. The effectiveness of a strike threat often hinges on the perceived unity among workers and the potential impact on the organization’s operations.
Taylorism: Taylorism, also known as scientific management, is a theory of management that analyzes workflows to improve efficiency and productivity. Developed by Frederick Winslow Taylor in the early 20th century, it emphasizes standardization, division of labor, and systematic studies of tasks to optimize performance. This management approach influences labor relations, including how collective bargaining processes are structured and the dynamics between employers and employees.
Union Representatives: Union representatives are individuals elected or appointed to act on behalf of union members during collective bargaining and other negotiations with employers. They play a crucial role in advocating for workers' rights, negotiating terms of employment, and ensuring that the interests of the union members are effectively communicated and represented.
Unite Here: Unite Here is a prominent labor union that represents workers in the hospitality, gaming, and food service industries across North America. The organization focuses on advocating for better working conditions, fair wages, and the overall rights of workers within these sectors. Through collective bargaining and activism, Unite Here seeks to empower its members and improve their quality of life while promoting social justice and economic equality.