Collective Bargaining

Business, Legal & Accounting Glossary

Definition: Collective Bargaining




Full Definition of Collective Bargaining


Collective bargaining is the process whereby workers organize collectively and bargain with employers regarding the workplace. In various national labour and employment law contexts collective bargaining takes on a more specific legal meaning. In a broad sense, however, it is the coming together of workers to negotiate their employment.

A Collective agreement is a labour contract between an employer and one or more unions. Collective bargaining consists of the process of negotiation between representatives of a union and employers (represented by management, in some countries by employers’ organization) in respect of the terms and conditions of employment of employees, such as wages, hours of work, working conditions and grievance-procedures, and about the rights and responsibilities of trade unions. The parties often refer to the result of the negotiation as a Collective Bargaining Agreement (CBA) or as a Collective Employment Agreement (CEA).

Theories

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 protection. Article 23 of the Universal Declaration of Human Rights identifies the ability to organise trade unions as a fundamental human right. Item 2(a) of the International Labor 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.

In June 2007 the Supreme Court of Canada extensively reviewed the rationale for considering collective bargaining to be a human right. In the case of Facilities Subsector Bargaining Assn. v. British Columbia, the Court made the following observations:

  • 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 ends…rather [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.

Economic theories also provide a number of models intended to explain some aspects of collective bargaining. The first is the so-called Monopoly Union Model (Dunlop, 1944), according to which the monopoly union has the power to maximise the wage rate; the firm then chooses the level of employment. This model is being abandoned by the recent literature. The second is the Right-to-Manage model, developed by the British school during the 1980s (Nickell). In this model, the labour union and the firm bargain over the wage rate according to a typical Nash Bargaining Maximin (written as Ώ = UβΠ1-β, where U is the utility function of the labour union, Π the profit of the firm and β represents the bargaining power of the labour unions). The third model is called efficient bargaining (McDonald and Solow, 1981), where the union and the firm bargain over both wages and employment (or, more realistically, hours of work).

United Kingdom

The British academic Beatrice Webb reputedly coined the term “collective bargaining” in the late 19th century: the OED quotes her use of it in 1891 in Cooperative Movement. Webb aimed to characterise a process alternative to that of individual bargaining between an employer and individual employees. Other writers have emphasised the conflict-resolution aspects of collective bargaining, but in Britain the most important refinement in usage came from Allan Flanders, who defined collective bargaining as a process of rule-making leading to joint regulation in industry. Most commentators see the process of collective bargaining as necessarily containing an element of negotiation and hence as distinct from processes of consultation, which lack the element of negotiation and where employers determine outcomes unilaterally.

In the United Kingdom, collective bargaining has become, and has received endorsement for many years as, the dominant and most appropriate means of regulating workers’ terms and conditions of employment, in line with ILO Convention No. 84. However, the importance of collective bargaining in the United Kingdom and elsewhere in the industrialised world has declined considerably since the early 1980s. Its decline in the public sector stems in part from the growth of Review-Body arrangements provided through the Office of Manpower Economics for groups of workers, including for the majority of National Health Service staff.

Despite its significance, in the United Kingdom there remains no statutory basis for collective bargaining in the fields of learning and training, a situation that has attracted the attention of both the Trades Union Congress and members of the Royal College of Nursing. A coalition has formed which actively seeks to remedy this situation by expanding the scope of collective bargaining to encompass learning and training.

United States

In the United States, the National Labor Relations Act (1935) covers most collective agreements in the private sector. This act makes it illegal for employers to discriminate against workers because of their union membership or retaliate against them for engaging in organizing campaigns or other “concerted activities” to form “company unions”, or to refuse to engage in collective bargaining with the union that represents their employees.

The industrial revolution brought a swell of labor organizing in the US. The American Federation of Labor was formed in 1886, providing unprecedented bargaining powers for a variety of workers.[4] The Railway Labor Act (1926)required employers to bargain collectively with unions.

In 1930, the Supreme Court, in the case of Texas & N.O.R. Co. v. Brotherhood of Railway Clerks, upheld the act’s prohibition of employer interference in the selection of bargaining representatives.[4] In 1962, President Kennedy signed an executive order giving public employee unions the right to collectively bargain with government agencies.[4]

Several notable collective bargaining agreements (CBAs) in the United States have involved major professional sports leagues, due in part to a history of poor relations and the vast sums of money involved. One half of the 1998-99 NBA season was cancelled due to a lockout, as was half of the 1994-95 NHL season. A breakdown in talks caused a cancellation of the entire 2004-05 NHL season, making it the first major North American sports league to lose an entire season to labour issues. Major League Baseball experienced player strikes in 1972, 1981, and 1994. In 2006 the National Football League (NFL) faced the prospect of an eventual strike, but an agreement was reached in March. The NFL did experience season-shortening strikes in 1982 and 1987, the latter of which involved the inclusion of replacement players for three games.

Europe

Many contintental European countries, like Austria, the Netherlands and Sweden, have a social market economy where collective bargaining over wages, is done on the national level between national federations of labour unions and employers’ organizations. In Finland, a Comprehensive Income Policy Agreement can be reached in some years. It is collective bargaining taken to its logical maximum, setting a single percentage raise for virtually all wage-earners.

For the trade unions, several sectoral federations are in charge of the collective bargaining for their affiliates.

In some countries, such as Finland, collective agreements with enough support are universally applicable, in a particular field, regardless of union membership. Effectively, the universal collective agreement sets the minimum wages and other benefits, under which no employer may go with any employee, union member or not. Personal benefits can be given regardless. Contrast this with the U.S. practise where in non right-to-work states all employees are required to join the union and then cannot earn anything but the negotiated union wage.

In France, collective bargaining became legal with the Matignon agreements passed in 1936 by the Popular Front government.


Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/collective-bargaining/
Modern Language Association (MLA):
Collective Bargaining. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. August 06, 2021 https://payrollheaven.com/define/collective-bargaining/.
Chicago Manual of Style (CMS):
Collective Bargaining. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/collective-bargaining/ (accessed: August 06, 2021).
American Psychological Association (APA):
Collective Bargaining. PayrollHeaven.com. Retrieved August 06, 2021, from PayrollHeaven.com website: https://payrollheaven.com/define/collective-bargaining/

Definition Sources


Definitions for Collective Bargaining are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 18th April, 2020 | 5 Views.