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Unit 24:
Employee
Relations
(L03)
Lecturer: Ahmed Azim
Bachelor's Degree Year 2 - HRM
SPECIALIZED MODULES
Learning Outcome – 3
• Understand collective bargaining and negotiation process
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Collective Bargaining
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Process whereby representatives of
employees & employers negotiate
agreements by which terms and
conditions of employment are
decided for groups of represented
employees.
4
Negotiation1 of wages and other conditions of
employment by an organized body of
employees.
1 A discussion
1 A discussion intendedintended to produce
to produce an agreement.
an agreement
5
Collective bargaining is the use of a collective
body, the Trade Union, to negotiate over certain
terms and conditions.
1 A discussion intended to produce an agreement

1 A discussion intended to produce an agreement.
6
Collective Bargaining: Purpose
1. To determine the terms and conditions of
employment for a particular group of employees
7
Collective Bargaining:
Purpose
2. To determine the ways in which employee

issues such as individual grievances,
collective disputes & disciplinary matters are
resolved at different levels.
8
Importance of Negotiation in
1. Helps to make the relationship between

employees and employers smooth.
2. Resolve labour-management conflicts.
3. It builds better understanding between
employer & employee.
9
Importance of negotiation in Collective
Bargaining
4. It benefits both employer & employee.
5. Facilitates speedy implementation of decision.
10
Terms and Conditions Bargained
• Unions can, for example, bargain or negotiate

about basic pay rates, overtime payments,
hours of work, access to training or holiday
entitlement.
11
Practical Consideration.
1. The first step for the Union is for it to be

recognized by the employer.
2. The Union may apply to the employer

(through the HR department).
12
Practical Consideration.
3. If this request is accepted by the company then

there are no further processes to go through
and the Union can bargain with the employer.
4. If the employer declines to recognize the Union

then it may apply to the Central Arbitration
Committee.
13
The Process of Union
Recognition
14
The Process of Collective
Bargaining
15
Bargaining
1. Preparation – Choosing a negotiation team

and representatives of both the union and
employer.
16
The process of collecting
bargaining
• Both parties should be skilled in negotiation and labor
laws, and both examine available information to
determine whether they have a strong standing for
negotiation.
17
Bargaining
2. Discussion – Both parties meet to set ground
rules for the collective bargaining
negotiation process.
18
Bargaining
3. Proposal – Both representatives make
opening statements, outlining options and
possible solutions to the issue at hand.
19
Bargaining
4. Bargaining – Following proposals, the parties discuss
potential compromises, bargaining to create an
agreement that is acceptable to both parties. This
becomes a “draft” agreement, which is not legally
binding, but a stepping stone to coming to a final
collective bargaining agreement.
20
Bargaining
5. Final Agreement – Once an agreement is

made between the parties, it must be put in
writing, signed by the parties, and put into
effect.
21
Bargaining Power
• Bargaining power is the relative power of
parties in a situation to exert influence over
each other.
22
Bargaining Power
•A structural imbalance of power exists
favouring the employer when employees
barg ain individually over the terms and
conditions of employment.
23
Bargaining Power
• Collective bargaining institutions may alter this
structural imbalance of power, but only if they are
paired with institutions and mechanisms that
force the employer, and/or other parties to the
employment relationship, to bargain in good faith.
24
Bargaining Power
• Thus, institutional actors (i.e. governments) must
be careful to create rules to level the playing field
between employees and employers by
legitimising and encouraging collective
bargaining and its associated mechanisms.
25
Bargaining Unit
• The group of employees that the Union will
negotiate for.
26
Bargaining Unit
• Often there is disagreement between the
employer and the Union concerning the scope
of the bargaining unit
27
Bargaining Unit
• The bargaining unit extends further than just
the Union members, as it may include for
example all the employees in a particular
profession or at a particular grade.
28
Bargaining Unit
• It benefits the Union to have smaller bargaining units,
so that issues are clear.
• Employers prefer larger bargaining units, so that they

can ensure they meet equal pay legislation, can
harmonize terms and conditions and are not endlessly
negotiating with different bargaining units.
29
If More Unions recognized
by company..
• Then, the Unions will need to decide how the
representations to the company will be made.
• It may be that the Unions will negotiate

directly with the company, in which case it is
known as 'Single Table' negotiations
30
Single-table bargaining
• Single-table barg aining describes a situation

in which the terms and conditions of all
represented workers employed by an
org anization are decided in a single set of
negotiations.
31
Single-table bargaining
• This could involve a single union representing

different types and grades of employees
themselves prior to negotiating with
management as a single bargaining unit.
32
Single Union negotiation
• Unions may meet together and decide on one Union to

make representations and this is known as 'Single
Union' negotiations.
• Single Union negotiations may be more straightforward

for the parties and often there is agreement not to
resort to industrial action prematurely.
33
Single Table Bargaining- Advantages
1. Less time and resources spent on

negotiations than with multiple bargaining.
2. Takes account of more viewpoints, more

representative: enhances likelihood of
acceptance of decisions.
34
3. Encourages resolution of inter-union

disputes as part of preparation for
negotiation: saves wasted time and energy in
harmonising separate agreements.
35
4. May help avoid demarcations and inflexible

work rules, with overall bargaining
perspective (needs for flexibility, quality
etc).
36
Single Table Bargaining- Disadvantages
1. Agenda may be overcrowded by concerns of

multiple groups.
2. Requires higher levels of negotiating and

relationship management skills.
37
3. Inflexibility: management may be less able

to differentiate and change agreements with
different segments of theworkforce.
38
4. Inter-union disputes may not be resolved

prior to negotiation.
5. M ay hamper individual union attempts to

recruit members.
39
What is meant by Bargaininglevels?
• Various levels at which collective bargaining is

done to resolve the dispute between the
employer and tradeunion.
• At national, company and domestic levels.
• Level of bargaining is chosen by the employer.
40
Collective bargaining at different levels.
National level
• Between representatives of employers for theindustry

& national trade union officials.
41
Company level
• Between representatives of management & the unions
recognized by thecompany.
42
Domestic (or enterprise) level

• Plant or business unit management & local shop
stewards.
43
Bargaining Forms
• Bargaining forms are the ways in which collective

agreements are recorded.
• They may be formal & written or informal and

unwritten.
44
Bargaining Forms
• The tendency in recent years has been towards
greater formality in recording collective agreements.
• This is to avoid arguments about the content and

application of collective agreements & to provide
stability in collective bargaining arrangements.
45
Non-Unionized company
• In a non-unionized company as demand for labour

increases the level of wages increase, especially for
professional skills.
46
Non-Unionized company
• In recessionary times, when there are more available
unemployed workers, whilst it is difficult to reduce
the level of wages there may be less overtime
available, entry level wages may be less.
47
Non-Unionized Company
• This also enables companies to make essential cost

savings but any differences between wages in the
workforce may need to be justified in order to protect
against an equal pay claim.
48
Unionized Company
• In unionized organizations as demand for labour
increases the wages increase.
• However, in recessionary times the fixed wage

agreement makes it more difficult for companies to
reduce their salary costs.
49
Unionized Company
• The company reduces its costs and manages any
reduction in workload by making redundancies.
• However, in the recession of 2007–08 in the UK

redundancies were avoided by reducing working
hours.
50
Unionized Company
• If the company bargains directly with the Union at a
corporate level then any wage increases made may
be passed to the consumer as the employer may not
be able to absorb these extra costs.
51
Unionized Company
• There is a risk that the higher price of products may

reduce the number of consumers as they switch to a
competitor's lower priced product.
• The company may therefore find that they can make

an argument for wage constraint to protect jobs.
52
Preparing for collective bargaining
• The first step for any negotiation commences a long

time before any formal negotiation starts.
• It is imperative to build a good working relationship

with Union representatives at all times.
53
• Listening to them if they have an issue that needs

your assistance, and treating them with respect will
have established a foundation which will help the
negotiation process.
• This will ensure that both sides approach the

negotiation in a more positive manner.
54
• Prior to the negotiation the employer may find it

difficult to determine what the claims of the Union
may be.
• It could be that a pay agreement is coming to an end

in which case it is probable that any negotiations will
have an element of pay claim.
55
• Though the employer may have had less time to

prepare for the negotiation, the Union will have
requested information from the employer which may
well have provided a clue to the argument the Union
may be wishing to make.
56
• The employer will need to have a good idea of the

current practices and procedures and existing
agreements.
• This gives a basis on which negotiations can be

made.
57
• The approach that the Trade Union will make will

depend on the original agreement between
employer and Union.
58
• It may be that a letter informs the employer of the

claim, or that the Trade Union requests a meeting
with Management in which it makes a claim.
• In either circumstance it provides the employer with

the information the employer needs to prepare more
thoroughly for thenegotiation.
59
• Only then can the employer establish their own aims

for the negotiation and anticipate what the aims of the
Union might be.
• One tool that may be useful is the aspiration grid-This

tool can be used to identify the position of both
parties.
60
Aspiration Grid
61
• Eg: The employer has surmised that the Union will

argue strongly for a wage increase, but if necessary
the employer would be prepared to agree.
• This is an integrative bargaining issue – there is the

possibility of common ground.
62
• There is a likelihood of finding common ground with the

holiday increase also.
• However, there is one issue where there is no scope for

any change in position.
• The employer wishes to instigate (initiate) performance-

related pay whateverhappens.
63
• If the employer has interpreted the Union's position correctly then it

clearly shows that there are two very important issues – the wage
increase for the Union and Performance-Related Pay for the
employer.
• Other issues are less important to either party.
• By identifying the issues in which there is little scope for agreement

the employer can try to analyse why these areas are particularly
important to each party.
64
• By identifying the issues in which there is little scope

for agreement the employer can try to analyse why
these areas are particularly important to each party.
65
• In doing this the employer might find that there may,

in fact, be some room for manoeuvre on these issues
or that there is a different way to manage the same
issue so that both parties are content. It enables the
employer to be flexible before positions have been
set and any change being seen as defeat.
66
Negotiating Team
• A LeadNegotiator
• A Record Keeper: A member of the team will record

what has been agreed and take notes during the
meetings with the Union.
67
Negotiating Team
• An Observer: The Observer takes a dispassionate

viewpoint, will quietly examine the negotiation and
so will be able to give feedback and advice to the
Lead Negotiator.
68
Negotiating Team
• A Specialist- The Specialist has technical expertise

which can be used to advise the Lead Negotiator on, for
example, financial or legal matters
• An Analyst -Who will review Union offers and analyse the

effect of these on the business
69
Collective Agreements
• Collective Agreements are the outcome of

collective barg aining & are jointly determined
employment rules.
70
Types of Agreement
1. Substantive Agreement
2. Procedural Agreement
71
1-Substantive Agreement
Substantive agreement, which determines

terms and conditions of employment.
• Rates of pay for various categories
• Premium rates of pay ( equal to rate of basic pay)
• Working hours
• Breaks and holidays
• Employee Benefits
• Access to training programmes
72
2-Procedural Agreement
Procedural agreement which determine the

methods and procedures for:
1. Arriving at substantive agreements &settling
disputes.
2. Settling any disagreements or disputes
which cannot resolve by normal negotiation.
73
74
2-Procedural Agreement
Procedural arrangements and agreements

1. Employee grievances
2. Disciplinary action
3. Redundancy (layoffs)
4. Health and safety
5. Staff development
6. Pay grading
7. Union recognition
75
Disclosure of information
• The AC A S Code of Practice recommends to disclose the

following information:
• Pay and benefits
• Conditions of service
• HR
• Performance (eg productivity, sales/order forecasts)
• Financial matters.
76
Attitudes to collective bargaining
• Chamberlain and Kuhn (1965) traced a historical

development in attitudes towards collective
bargaining.
1. Marketing Theory
2. Government (or control) theory

3. Managerial theory
77
1-Marketing Theory
• Collective barg aining was seen as pay

bargaining for the supply of labor.
• Rates of pay would be settled on the basis of

supply and demand.
78
2-Government Theory
• Collective bargaining was seen as a way of

making rules of conduct and enforcing those
rules in addition to pay bargaining.
79
3-Managerial Theory
• Decisions about matters in which both
management and employees have a vital
• interest should be discussed and decided by collective

negotiation.
80
A ctivity
1. What is meant by collective bargaining?
2. What are the 2 types of agreements in collective

bargaining? Explain.
3. Who is a shop steward?
4. What is meant by single table bargaining?
81
NEGOTIATION PROCESSES
81
Negotiation
• Process whereby two parties come together to

confer (discuss) with a view to concluding a
jointly acceptable agreement.
83
Purpose of Negotiation
• For interest groups to attempt to resolve

differences between and within themselves, in
order to maintain co-operation in the pursuit of
shared goals.
84
Negotiation Applied in Different Situation
• Collective ( & Individual) Bargaining
• Conflict Resolution
• Group Decision Making
85
Negotiation
• Referred to as a Problem-solving technique,

enabling parties to meet their own needs (as
far as possible) without breaking the
relationship or co-operation between them.
86
Negotiation
• Negotiation is obviously essential where

management and workers are concerned!
87
Negotiation Process
• Gennard & Judge (2003) suggest that this process

requires:
• Purposeful persuasion: whereby each party

attempts to persuade the other to accept its case
by marshalling arguments, backed by factual
information and analysis.
88
Negotiation Process
• Gennard & Judge (2003) suggest that this process requires:
• Constructive compromise: whereby both parties accept the

need to move closer towards each other's position,
identifying the parameters of common ground within and
between their positions, where there is room for
concessions to be made while still meeting the needs of
both parties.
89
3 Effective Criteria for Effective Negotiation
Process (Fisher et al (1999) )
• It should produce a wise agreement: 'one which meets the
legitimate interests of each side to the extent possible,
resolves conflicting interests fairly, is durable and takes
community interests into account'.
• It should be efficient.
• It should improve (or at least not damage) the relationship

between the parties.
90
Approaches to Negotiation
1. Distributive Bargaining
2. Integrative Bargaining.
91
1.Distributive Bargaining
• Where negotiation is about the distribution of limited

resources.
• One party's gain is another's loss: a 'win-lose’.
• Eg: Pay increase by 10%, management budget is 5 % ,

extra needs to be funded from investments, profits,
increased price, cut in training, increased productivity.
92
• In other words, your goal is to negotiate in

such a way that when you reach an agreement,
you have given up less than the other party.
93
• Your goal is to win as much as you can during

the negotiation, and, typically, that means that
the other party has to give up something.
94
• There is not enough for everyone to get what

they want, so when one side gets something,
the other side loses something.
• For example, let’s say a employee price for a

service is $5,000, but your price is $4,800.
96
• Your goal is to get the employee as close to your

price as possible without blowing the deal. If you
get that employee to agree to $4750, that
employee loses $250 and employer lose $50,
which means you gave up less than the other
party.
97
2-Integrative Bargaining
• Where negotiations aim to find a mutually

satisfying solution toproblems.
• Based on jointproblem-solving.
• This has emerged in recent years in a technique
called the 'win-win' approach, and this process
will make it possible though a ‘win-win’ solution
may not be possible.
98
• The best way to think about this strategy is that it’s
a “win-win” for both parties.
• Instead of simply worrying about losing less
than the other party, you are looking for a
solution in which both parties have to give up
something to finalize thedeal.
99
• For example, let’s say a employee price for a

service is $5,000, but your price is $4,800.
• you would agree to a price of $4,900, which
means that the employee loses $100 in the
negotiation, and employer also lose $100.
100
• You would both leave the negotiation table, with

both of you feeling that you compromised but
took each other’s wants and needs into
consideration.
101
Integrative Bargaining
Eg: Sales-Credit Negotiation.

1 . A sales rep for women clothes manufacturer
takes MRF 15000 order from a small clothing
retailer.
2. Since, the retailer has a slow pay record, credit
department tells sales rep that order cannot be
approved.
3. Sales rep meets with credit manager.
102

4. The sales rep wants the business so do the
credit manager does not want to get stuck with
uncollectable debts.
5. After several considerable discussion, they

come to agreement that meets both their needs.
103

6. Credit manager approve sale but the retailer
must provide a bank guarantee that will
ensure payment if the bill isn’t paid within 60
days (2 months).
104
Distributive Vs.Integrative Bargaining
In distributive bargaining, you don’t take the other

party’s needs into consideration when making a
deal.
You are simply concerned with losing less than the

other party, and all your focus is on getting a better
deal than the other side
105
integrative bargaining begins with the

assumption that both parties need to feel as if
they gave up an equal amount or that they
compromised equally to complete a deal.
106
• intractable position in their attempt to lose less than the other

side.
Distributive bargaining is often filled with
conflict, because both parties maintain an
intractable position in their attempt to lose
less than the other side.
107
Integrative bargaining is typically less fraught

with tension, as both sides enter the negotiation
with the willingness to compromise to achieve a
consensus.
108
Pendulum Bargaining
Is a system whereby a third party will arbitrate on

behalf of the two principals in collective
bargaining, should they fail to reach agreement, by
awarding the final position of one side or the other:
either the employer's final offer or the employees'
final claim.
109
NEGOTIATION
PROCESS
110
Negotiation Strategy
(a) Set objectives, parameters and priorities

(b) Research the background of issues
(c) Recognize potential for conflict.
(d) Identify tradable items and bargaining power
(e) Determine negotiating strategy.
(f) Determine the agenda of the meeting
(g) Issue prior information.
(h) Select participants. 110
Conduct of Negotiation
(a) Opening presentation

(b) Fact-finding
(c) Identifying common ground
(d) Use of the negotiating strategy and bargaining
power
(e) Making concessions
112
Settlement and Follow-up
• At the conclusion of negotiations, both parties must be

satisfied that all issues have been discussed and that they
understand exactly what has been agreed.
• There is any misunderstanding then they should

recommence the negotiation.
113
Draft Agreement
Once there is oral agreement, the points should be written up as a signed 'draft agreement',
stating:
(a)Who made the agreement and on what date
(b)Who is to be covered by the agreement
(c)When the agreement is to take effect, how long it is to run, and whether and how it
may be amended or terminated prior to this date
(d) The contents (or 'clauses') of the agreement and any exceptions that may apply
(e) How disagreements and appeals will be dealt with once the negotiated settlement is
implemented.
114
115
116
Meaning of the Key Terms
• Coercing – forcing a person to do something
through the use of manipulation or threats
117
• Dues – the cost of membership when a person

joins a union or club. Dues many be required
weekly, or annually.
118
• Grievance – a formal complaint filed by an

employee or agent. Some employers or agencies
have specific procedures that must be followed.
119
• Layoff – a permanent or temporary discharge of
employees.
120
Thank you.
You may now start working on your Task 2– Report.
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Unit 24:

1 A discussion intended to produce an agreement

1. To determine the terms and conditions of

employment for a particular group of employees

2. To determine the ways in which employee

1. Helps to make the relationship between

4. It benefits both employer & employee.

5. Facilitates speedy implementation of decision.

• Unions can, for example, bargain or negotiate

1. The first step for the Union is for it to be

2. The Union may apply to the employer

3. If this request is accepted by the company then

4. If the employer declines to recognize the Union

1. Preparation – Choosing a negotiation team

5. Final Agreement – Once an agreement is

bargaining and its associated mechanisms.

• Employers prefer larger bargaining units, so that they

• It may be that the Unions will negotiate

• Single-table barg aining describes a situation

• This could involve a single union representing

• Unions may meet together and decide on one Union to

• Single Union negotiations may be more straightforward

1. Less time and resources spent on

2. Takes account of more viewpoints, more

3. Encourages resolution of inter-union

4. May help avoid demarcations and inflexible

1. Agenda may be overcrowded by concerns of

2. Requires higher levels of negotiating and

3. Inflexibility: management may be less able

4. Inter-union disputes may not be resolved

5. M ay hamper individual union attempts to

• Various levels at which collective bargaining is

• At national, company and domestic levels.

• Level of bargaining is chosen by the employer.

• Between representatives of employers for theindustry

Domestic (or enterprise) level

• Bargaining forms are the ways in which collective

• They may be formal & written or informal and

• This is to avoid arguments about the content and

• In a non-unionized company as demand for labour

• This also enables companies to make essential cost

• However, in recessionary times the fixed wage

• However, in the recession of 2007–08 in the UK

• There is a risk that the higher price of products may

• The company may therefore find that they can make

• The first step for any negotiation commences a long

• It is imperative to build a good working relationship

• Listening to them if they have an issue that needs

• This will ensure that both sides approach the

• Prior to the negotiation the employer may find it

• It could be that a pay agreement is coming to an end

• Though the employer may have had less time to

• The employer will need to have a good idea of the

• This gives a basis on which negotiations can be

• The approach that the Trade Union will make will

• It may be that a letter informs the employer of the

• In either circumstance it provides the employer with

• Only then can the employer establish their own aims

• One tool that may be useful is the aspiration grid-This

• Eg: The employer has surmised that the Union will

• This is an integrative bargaining issue – there is the

• There is a likelihood of finding common ground with the