Trade Unions and Collective Bargaining

Forty workers in a packaging unit near Pune each ask the owner for a raise. He can refuse each one, or replace whoever keeps asking. If all forty act together, he cannot wave them away so easily. A trade union is the way workers act together.

One worker has little power against an employer who controls jobs and pay. A union gives workers a shared voice, information about their rights, and protection in employment matters. It also stands between workers and management and carries messages both ways.

Objectives. Unions pursue four kinds of aim.

Types of union. Two different questions sort unions. The first asks who may join. The second asks what kind of job members do.

Some books also list a "labour union", open to all workers whatever their skill or industry, on the idea that all workers share a common status and need to help each other. Treat it as a general union.

Central organisations. Unions in a workplace often join national federations. Well-known Indian ones are the Indian National Trade Union Congress (INTUC), the All India Trade Union Congress (AITUC), the Hind Mazdoor Sabha (HMS) and the Centre of Indian Trade Unions (CITU). Several have traditionally been linked to political parties, which is the political objective at work.

The law. The Trade Unions Act, 1926 was India's main law on unions. It let a union register and gain a legal identity, and it protected registered unions from some criminal and civil liability for acts done in a trade dispute. The Industrial Relations Code, 2020 now consolidates that Act with the Industrial Disputes Act, 1947 and the Industrial Employment (Standing Orders) Act, 1946. The four labour codes took effect on 21 November 2025, and the formal repeal of the three older Acts awaited a separate notification when last checked. Older exam questions still use the 1926 and 1947 Acts' terms.

Don't confuse a craft union with an industrial union. A craft union groups people by skill across industries. An industrial union groups people by industry across skills. Likewise, "blue-collar" and "white-collar" describe the job, not the membership rule.

Where it breaks. Several unions in one workplace can compete for members, and rivalry weakens the workers' common position. Links to political parties can pull a union towards goals that are not the members' own. Many workers are in the unorganised sector, where unions are rare, so a union speaks for far fewer workers than the whole workforce.

For exams. Learn the four objectives (economic, protective, political, social), the types and the difference between craft and industrial unions. Expect a question on the Trade Unions Act, 1926.

Economic, protective, political, social: craft by skill, industrial by industry, general for all.

The forty workers now have a union, and the owner has agreed to meet it. Who sits at the table, what do they discuss, and what makes the outcome last? That meeting is collective bargaining.

Four features mark it. It is collective: a group bargains, not an individual. It has two sides, the employer and the workers' representatives. It is a continuing process, because agreements expire and are renewed. And it rests on give and take: each side wants an agreement more than a breakdown. Its purpose is to reach terms both sides can accept, and so to prevent conflict before it starts.

Five stages. A bargaining round moves through these steps and then starts again.

• Preparation. Both sides collect facts, such as wages elsewhere in the industry, productivity and what the firm can afford, and decide their goals and limits.
• Negotiation. The sides exchange offers and counter-offers and look for terms both accept.
• Agreement. Once there is consensus, the terms are written down and signed as the collective bargaining agreement (CBA).
• Implementation. The employer applies the terms and the union watches that it does. If the employer does not, grievances and strikes follow.
• Follow-up and renegotiation. Both sides review how the agreement worked. As it nears its end, new demands are prepared.

The agreement. A CBA runs for a fixed period, often a few years. Whether a court will enforce it depends on the country's law. In India, under the 1947 Act, a settlement reached with a conciliation officer's help binds all workers of the establishment, while a direct agreement outside conciliation binds only the parties who signed it. Bank wages are an example of industry-wide bargaining: the Indian Banks' Association and the bank unions negotiate settlements for the whole sector.

Levels. Bargaining can happen at the plant (one firm or factory), at the industry (many firms together, through an employers' association and unions) or at the national level. Plant bargaining fits local conditions. Industry bargaining gives one rule to all firms, so no firm can undercut the rest on pay.

Don't confuse collective bargaining with worker participation. In bargaining, two sides negotiate the terms of work, and each protects its own interest. In participation, workers share in decisions about running the work, through works committees or joint councils. The industrial relations chapter treats participation and industrial democracy. Also note that some textbooks give six or more steps, adding items such as ratification by union members. The five stages above are the standard set.

Where it breaks. The result depends on each side's strength. A split union, or one that cannot back its demands with a strike threat, bargains from weakness. An employer who refuses to talk, or talks without data, stalls the process.

For exams. Know the definition, the five stages in order and the CBA. When a dispute arises, the neighbouring chapter on industrial relations covers strikes, lockouts and settlement.

Prepare, negotiate, agree, implement, review.

A textile mill in trouble asks its workers for a wage freeze. A growing plant offers a bonus tied to output. A union asks for pay, safer machines and job security in one package. All three are collective bargaining, yet the talks are very different.

Don't confuse the types with each other. Distributive and integrative describe the style of talks. Concessionary, productivity and composite describe what the deal is about. A productivity deal can be reached in an integrative spirit, because both sides gain from higher output. A concessionary deal is usually distributive in feel, because the union gives and the firm keeps.

Benefits. Workers can win better pay and benefits than they would alone. They gain a say in decisions that affect them, which is a form of workplace democracy. Talking early prevents disputes, so there are fewer strikes and legal fights. Trust and cooperation improve, and so does morale.

Challenges.

• Multiplicity of unions. When several unions work in one firm, each claims to speak for the workers. The employer does not know whom to deal with, and bargaining power is weakened. The Industrial Relations Code, 2020 tackles this by providing for a sole negotiating union, or a council of unions where none has enough support.
• Lack of unity. Rival unions compete for members, and workers' demands are split.
• Employer resistance. Some employers avoid or delay talks.
• Legal limits. Unions must meet registration and recognition rules, and delays in enforcing agreements weaken their value.
• Globalisation. Outsourcing, contract labour and automation move work away from the shop floor and make it harder to keep members.

Where it breaks. The five labels overlap, so a real negotiation often mixes them. Distributive bargaining also leaves a bad mood behind, which can hurt the next round.

In practice. A manager preparing for talks should list the interests behind each demand, not only the demand. A worker asking for pay may really want security, and security may cost the firm less than pay.

Go deeper for practitioners

A decision. A pump maker in Coimbatore (an illustration) has lost two large orders. Management proposes a one-year wage freeze or 60 job cuts. The union fears the freeze will quietly become permanent.

This begins as concessionary bargaining. The union can turn it into an integrative bargain by asking for something back: a written promise of no layoffs, a date on which pay is restored, and a bonus linked to profit when orders recover. Management gains cost relief and a calmer shop floor, and the workers gain security. What would you ask for if you were the union, and what would you refuse to give?

Distributive wins and loses; integrative wins together.

A new factory hires 200 workers. Must they join the union? Can the owner hire someone who refuses? And when talks fail, who decides? Each answer is a term in the language of bargaining.

Strikes and lockouts are the weapons of last resort. The industrial relations chapter covers them and how disputes are settled. Here the question is only what each kind of strike means.

These four names come from the classification used in labour-relations textbooks. Indian law sorts strikes differently, for example as legal or illegal, so use these terms as the exam's vocabulary.

Don't confuse an economic strike with an unfair labour practice strike. An economic strike is about what the workers will be paid or given. An unfair labour practice strike is about whether the employer broke the law. Also, a wildcat strike lacks union approval, while a sympathy strike is for another union's cause and may well be approved.

Where it breaks. A closed shop forces workers to join a union to get a job, so many countries restrict or ban it. Arbitration ends a stalemate, but it hands the outcome to a stranger, and neither side may like the award.

For exams. Matching questions pair a strike name with its meaning. Learn each in a few words: terms (economic), employer's illegal act (unfair labour practice), no union approval (wildcat), another union's cause (sympathy).

Economic: terms. Unfair practice: employer's wrong. Wildcat: no approval. Sympathy: for another.