Negotiations and collective bargaining
Negotiation is a bargaining process between two or more parties (each with its own aims, needs, and viewpoints) seeking to discover a common ground and reach an agreement to settle a matter of mutual concern or resolve a conflict.
To negotiate separate agreements between each employer and each employee would be hugely time-consuming and inefficient and possibly result in some unfair outcomes. Agreements made on a collective basis are usually preferred by both sides. Individuals may be in a very weak position negotiating alone, so may seek to act together with others and be represented collectively by intermediaries such as trade unions or agents. Employers are likely to be represented by specialists from the HR department or may band together to negotiate at an industry level.
Collective Bargaining is the process by which wages and conditions of employment are settled by negotiations between employers, or associations of employers and workers' organisations.
There are many subjects for collective bargaining, but the question of pay and conditions is the most central. Negotiations are likely to centre on remuneration including basic pay and other financial rewards, hours of work, working conditions and security of employment.
Trade unions are a form of employee association. They are organisations of employees that are set up to protect and represent their members in their day-to-day work. Their roles may include:
- Giving legal advice and representation for their members
- Ensuring a safe and secure working environment for their members
- Negotiating pay and other employment rights on behalf of their members
- Participating in the decision-making process (perhaps through worker representation, Works Councils or other means)
Other possible employee associations include:
- Staff associations - these may fulfil some of the roles of trade unions, but are generally internal to the firm. They may therefore represent the employees in negotiations with the firm.
- Professional associations - these are also employee associations and are very similar to trade unions, but may represent a particular 'profession'. They may also act a regulatory body for the profession and may perhaps set entry standards for the 'profession'. Professions like accountancy and doctors are often organised in this way.
The nature and structure of trade unions has had to adapt to modern markets, dynamic external environments and social attitudes and changing aspirations of members. Like all corporations, trade unions have grown in recent years through mergers and amalgamations with the purpose of improving their efficiency and increasing their bargaining strength when negotiating with huge conglomerates and multinational companies. However, at the same time negotiations have become more localised and flexible to account for specific local conditions (such as the supply and demand for labour) and for differing costs of living.
In the same way that there are organisations that represent employee's interests, there are collective groups representing employers. These may exist to support employers in lobbying government; they may offer technical support and advice to firms and a range of other services. As with employee associations they exist to further their members' interests.
Employer-employee relations - industrial relations
Employer-employee relations refer to how well employers and employees are getting on and the ways in which they are communicating and inter-relating with each other. Relations tend to be influenced by:
- Pay negotiations
- Negotiations about other terms and conditions
- Involvement of employees in decisions that affect them
- The degree of trust that exists between the two parties
- How each is represented
- The general atmosphere within the organisation
The term 'industrial relations' describes the relationship between employers and employers and industrial disputes occur between trade unions and employer representatives. Neither have anything directly to do with Industry! Do not be confused by these terms.
Trade union membership
Why might an employee join a trades union?
Why have factory or plant-based negotiations increased in recent years?