Collective bargaining

Collective bargaining

Collective bargaining is a process of negotiations between employers and the representatives of a unit of employees aimed at reaching agreements that regulate working conditions. Collective agreements usually set out wage scales, working hours, training, health and safety, overtime, grievance mechanisms and rights to participate in workplace or company affairs.[1]

The union may negotiate with a single employer (who is typically representing a company's shareholders) or may negotiate with a group of businesses, depending on the country, to reach an industry wide agreement. A collective agreement functions as a labor contract between an employer and one or more unions. Collective bargaining consists of the process of negotiation between representatives of a union and employers (generally represented by management, in some countries[which?] by an 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).



The term "collective bargaining" was first used in 1891 by economic theorist Sidney Webb.[2] However, collective negotiations and agreements had existed since the rise of trade unions during the nineteenth century.

International protection

...where free unions and collective bargaining are forbidden, freedom is lost.[1]

Ronald Reagan, Labor Day Speech at Liberty State Park, 1980

The right to collectively bargain is recognized through international human rights conventions. Article 23 of the Universal Declaration of Human Rights identifies the ability to organize trade unions as a fundamental human right.[3] 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.[4]

In June 2007 the Supreme Court of Canada extensively reviewed the rationale for regarding collective bargaining as a human right. In the case of Facilities Subsector Bargaining Association 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.[5]

Economic theory

Different economic theories provide a number of models intended to explain some aspects of collective bargaining:

  1. The so-called Monopoly Union Model (Dunlop, 1944) states that the monopoly union has the power to maximize the wage rate; the firm then chooses the level of employment.
  2. The Right-to-Manage model, developed by the British school during the 1980s (Nickell), views the labour union and the firm bargaining 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).
  3. The efficient bargaining model (McDonald and Solow, 1981) sees the union and the firm bargaining over both wages and employment (or, more realistically, hours of work).[citation needed]

Empirical findings

  • Union members and other workers covered by collective agreements get, on average, a wage markup over their nonunionized (or uncovered) counterparts. Such a markup is typically 5 to 10 percent in industrial countries.[6]
  • Unions tend to equalize the income distribution, especially between skilled and unskilled workers.[6]
  • The welfare loss associated with unions is small, and no more than 0.2 to 0.5 of GDP, which is similar to monopolies in product markets.[6] 1



Continuous bargaining is a method of collective bargaining which retains a permanent, rolling negotiation between management and a permanent committee of union representatives.

As applied to public or government employees

The controversy over submitting public governments to collective bargaining agreements dates back to the 1930s.[7] In the United States, President Franklin D. Roosevelt, a supporter of collective bargaining rights for employees in the private sector, indicated his opposition to such agreements for government or public employee unions in a 1937 letter to the National Federation of Federal Employees:

"All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters."[7]

The laws governing local, regional, and national governments may allow government employees to form unions, yet prohibit them from engaging in collective bargaining over one or more rights or benefits such as pay, personnel rights, health insurance, or pension contributions, as well as preventing them from going on strike against the government. Both the federal government and some state and local governments in the United States have such rules.[8][9] Public employee unions are usually prohibited from bargaining collectively with respect to pay or other benefits and/or rights on the grounds that their employer, the general public, is not represented in such collective bargaining agreements but rather by administrative officials who cannot fully represent nor bind the voters to rules or procedures that may conflict with existing or subsequently executed laws and regulations.[7] Thus, a collective agreement providing for fixed rights such as salary rates and pension contributions could not be revised by subsequent legislatures elected by the public at large, even if such measures were required to prevent fiscal insolvency.[7]

Another reason cited for not granting collective bargaining rights to public employees is the advantage held by public employee in rights granted under existing civil service or personnel rules.[10] In countries such as the United States, the courts have repeatedly held that public employees possess a property interest in their jobs, which interest triggers constitutional protections to the employee including due process of law.[10] In fact, public employees without collective bargaining rights frequently have more protection against arbitrary and unjust employer action than do private employees with such rights.[10] The reality of collective bargaining is that it is essentially a bilateral process, whereas public policymaking is a multilateral process accessible to all taxpayers on equal terms.[11] This conflict raises the possibility that over time, public employee unions could wield an insurmountable advantage in political power when negotiating government wage and personnel policies with public administrators and elected officials, to the detriment of taxpayers and other competing groups and interests in the democratic process.[11] This advantage in bargaining power is magnified with respect to certain monopolistic services provided only by the government and which are critical to the welfare and safety of the public at large, such as police and fire protection.[11]

Collective bargaining agreements with public employee unions also affect taxpayer rights to due process of law, that is, the right to contest deprivations of property or rights without the right of individual appeal.[12] In the private sector, constitutional collective bargaining and binding arbitration agreements may deprive shareholders of stock or dividend value.[12] Shareholders, however, always have the option to liquidate their interests in a particular private company if bargaining or arbitration with unions affects the value of their property (stock).[12] In contrast, negotiated increases in the cost of pay, pensions, health insurance and other benefits for public employees deprive both existing and subsequent taxpayers of their property through reduction of their income via increased taxation, without due process and right of redress through administrative or judicial appeal.[12]

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, spy on, harass, or terminate the employment of workers because of their union membership or to 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. It is also illegal to require any employee to join a union as a condition of employment.[13] Unions are also exempt from antitrust law in the hope that members may collectively fix a higher price for their labor.

At a workplace where a majority of workers have voted for union representation, a committee of employees and union representatives negotiate a contract with the management regarding wages, hours, benefits, and other terms and conditions of employment, such as protection from termination of employment without just cause. Individual negotiation is prohibited. Once the workers' committee and management have agreed on a contract, it is then put to a vote of all workers at the workplace. If approved, the contract is usually in force for a fixed term of years, and when that term is up, it is then renegotiated between employees and management. Sometimes there are disputes over the union contract; this particularly occurs in cases of workers fired without just cause in a union workplace. These then go to arbitration, which is similar to an informal court hearing; a neutral arbitrator then rules whether the termination or other contract breach is extant, and if it is, orders that it be corrected.

In 28 U.S. states,[14] employees who are working in a unionized shop may be required to contribute towards the cost of representation (such as at disciplinary hearings) if their fellow employees have negotiated a union security clause in their contract with management. Dues usually vary, but are generally 1-2% of pay. Some states, especially in the south-central and south-eastern region of the U.S., have outlawed union security clauses; this can cause controversy, as it allows individuals who benefit from the protection of union contracts to avoid paying their portion of the costs of contract negotiation. Regardless of state, the Supreme Court has held that the Act prevents a person's union dues from being used without consent to fund political causes that may be opposed to the individual's personal politics. Instead, in states where union security clauses are permitted, such dissenters may elect to pay only the proportion of dues which go directly toward representation of workers. [15]

The industrial revolution brought a swell of labor organizing in the US.[citation needed] The American Federation of Labor was formed in 1886, providing unprecedented bargaining powers for a variety of workers.[16] 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.[16] In 1962, President Kennedy signed an executive order giving public-employee unions the right to collectively bargain with federal government agencies.[16]

See also


  1. ^ "BLS Information". Glossary. U.S. Bureau of Labor Statistics Division of Information Services. February 28, 2008. Retrieved 2009-05-05. 
  2. ^ "A Timeline of Events in Modern American Labor Relations". Federal Mediation and Conciliation Service (United States). Retrieved 2010-08-18. "1891: The term “collective bargaining” is first used by Mrs. Sidney Webb, a British labor historian." 
  3. ^ United Nations General Assembly (1948). "Article 23". Universal Declaration of Human Rights. Paris. Retrieved August 29, 2007.
  4. ^ International Labour Organization (1998). Declaration on Fundamental Principles and Rights at Work. 86th Session: Geneva. Retrieved August 29, 2007.
  5. ^ Health Services and Support – Facilities Subsector Bargaining Assn. v. British Columbia [2007] SCC 27.
  6. ^ a b c Toke Aidt and Zafiris Tzannatos (2002). "Unions and Collective Bargaining". 
  7. ^ a b c d Roosevelt, Franklin D., Letter on the Resolution of Federation of Federal Employees Against Strikes in Federal Service, 16 August 1937, The American Presidency Project, retrieved 10 August 2011
  8. ^ Federal Service Labor-Management Relations Statute, Pub.L. No. 95-454, § 701, 92 Stat. 1191-1216 (1978) (codified as amended at 5 U.S.C. §§ 7101-7135 (1994 & Supp. II 1996))
  9. ^ Ohio Senate Bill 5, Ohio 129th General Assembly, retrieved 10 August 2011
  10. ^ a b c Rabin, Jack, and Dodd, Don, State and Local Government Administration, New York: Marcel Dekker Inc., ISBN 0824773551 (1985), p. 390
  11. ^ a b c Rabin, Jack, and Dodd, Don, State and Local Government Administration, New York: Marcel Dekker Inc., ISBN 0824773551 (1985) p. 399
  12. ^ a b c d Schmitt, Harrison, Public Employee Unions and the Constitution, 1 March 2011
  13. ^ "Can I be required to be a union member or pay dues to a union?". National Right To Work. Retrieved 08-27-2011. 
  14. ^
  15. ^ "Communications Workers of America v. Beck". Retrieved 08-27-2011. , 487 U.S. 735.
  16. ^ a b c Illinois Labor History Society. A Curriculum of United States Labor History for Teachers. Online at the Illinois Labor History Society. Retrieved on August 29, 2007.


  • Buidens, Wayne, and others. "Collective Gaining: A Bargaining Alternative." Phi Delta Kappan 63 (1981): 244-245.
  • DeGennaro, William, and Kay Michelfeld. "Joint Committees Take the Rancor out of Bargaining with Our Teachers." The American School Board Journal 173 (1986): 38-39.
  • Herman, Jerry J. "With Collaborative Bargaining, You Work with the Union--Not Against It." The American School Board Journal 172 (1985): 41-42, 47.
  • Huber, Joe; and Jay Hennies. "Fix on These Five Guiding Lights, and Emerge from the Bargaining Fog." The American School Board Journal 174 (1987): 31.
  • Liontos, Demetri. Collaborative Bargaining: Case Studies and Recommendations. Eugene: Oregon School Study Council, University of Oregon, September 1987. OSSC Bulletin Series. 27 pages. ED number not yet assigned.
  • McMahon, Dennis O. "Getting to Yes." Paper presented at the annual conference of the American Association of School Administrators, New Orleans, LA, February 20–23, 1987. ED 280 188.
  • Namit, Chuck; and Larry Swift. "Prescription for Labor Pains: Combine Bargaining with Problem Solving." The American School Board Journal 174 (1987): 24.
  • Nyland, Larry. "Win/Win Bargaining Takes Perseverance." The Executive Educator 9 (1987): 24.
  • O'Sullivan, Arthur; Sheffrin, Steven M. (2003) [January 2002]. Economics: Principles in Action. The Wall Street Journal:Classroom Edition (2nd ed.). Upper Saddle River, New Jersey 07458: Pearson Prentice Hall: Addison Wesley Longman. p. 223. ISBN 0130630853. Retrieved May 3, 2009. 
  • Smith, Patricia; and Russell Baker. "An Alternative Form of Collective Bargaining." Phi Delta Kappan 67 (1986): 605-607.

External links

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