Collective Bargaining: Meaning, Types and Characteristics


Collective bargaining is the process through which employees negotiate terms with their employers through their unions to decide their employment conditions including salaries, benefits, hours, number of leave days, workplace health and safety standards, and strategies. In other words, it is the process by which an employer and a group of workers negotiate employment terms and arrangements. 

The International Labor Organization states that collective bargaining is a fundamental right. According to ILO, collective bargaining is a crucial tool for employers, their organizations, and trade unions to apply for achieving equitable working conditions and wages. The goal of these discussions is to reach a collective agreement that governs employment terms and conditions. These agreements usually cover the rights and obligations of the parties involved. It also helps in promoting harmonious and efficient work cultures and industry practices. Practicing collective bargaining and making inclusive agreements can be a crucial strategy for lowering inequality and boosting labor protection.

Subject to Collective Bargaining

As stated above, collective bargaining is a fundamental right. This implies that every worker has the right to discuss their complaints with their superiors and in order to try to reach a resolution. Representatives of company management and labor union leaders, who are chosen by employees to represent them and their interests, negotiate collectively on a regular basis. These negotiations usually occur when employee contracts are about to expire or when employers amend the workplace or contracts. These amendments include, but are not limited to the following points:

  • Workplace conditions
  • The environment at work and other workplace regulations
  • Work shift durations 
  • Base salary and wages 
  • Overtime pay 
  • Number of holidays, sick leave days, and vacation days
  • Benefits pertaining to retirement and healthcare issues

Characteristics of Collective Bargaining

  1. Collective Bargaining involves group relationships.
  2. This bargaining is a continuous and evolutionary process.
  3. It interacts with the socio-economic climate.
  4. It is a democratic system at work.
  5. Collective Bargaining changes from setting to setting.

Types of Collective Bargaining

Concerns related to collective bargaining can usually be divided into three groups: compulsory subjects, voluntary subjects, and unlawful subjects. Compulsory subjects anything that the law demands of the employer including wage, overtime pay, and safe working conditions. Negotiable problems that the law does not mandate, such as decisions about company board members and union matters, are examples of voluntary subjects. Similarly, unlawful subjects can be anything that breaks the law, such as workplace discrimination.

Collective bargaining can be divided into different categories based on its characteristics. They will be discussed further below.

Composite Bargaining

The main topics of composite bargaining consists of things like job security, working conditions, and other business policies; hiring and firing methods as well as company rules may be among them. The main aim of this type of bargaining is to create a reasonable agreement that results in a reliable and amicable relationship among employers and their staff.

Concessionary Bargaining

In concessionary bargaining, union officials usually make concessions in exchange for job security of the employees. This is typical during a recession or downturn in the economy. In order to ensure the survival of the workforce along with the company, they usually agree to give up some of the benefits provided to the staff by the company.

Distributive Bargaining

In distributive bargaining, one party usually benefits at the expense of the other party. The rewards mostly arrive in the form of raised salaries, bonuses, and any other financial incentives. It requires stronger unions in order to be effective. Power increases with membership. Union members may declare a strike if their demands are not met.

Integrative Bargaining

Integrative bargaining can also be referred to as win-win bargaining as each party tries to benefit from it. Considering each other’s position, both parties bring issues to the table and negotiate accordingly with the aim of coming to a common conclusion.

Productivity Bargaining

Productivity bargaining focuses on employee productivity and salary. Union leaders often prioritize better pay and benefits to increase employee productivity, which in turn benefits the business by increasing revenues and sales. Both sides must consent to the financial terms for this type of negotiations to succeed.


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