Employment LawTrade Unions and Collective Bargaining In India

INTRODUCTION

Trade unions and Collective Bargaining Agreements (CBAs) constitute the bedrock of industrial relations, ensuring that the interests of employees are adequately represented in negotiations with employers. In India, trade unions act as collective representatives of workers, engaging in structured negotiations to establish legally enforceable agreements on wages, working conditions, and other employment-related matters.

The role of trade unions In shaping labour relations has been pivotal in the evolution of employment law in India. As collective entities representing the workforce, trade unions facilitate structured dialogue between employees and employers, ensuring that labour rights are upheld while maintaining industrial harmony. One of the primary tools available to trade unions in achieving these objectives is collective bargaining, a process through which labour conditions, wages, and other employment benefits are negotiated and formalized in agreements that bind both parties .

The necessity of trade unions and collective bargaining is underscored by the inherent power imbalance in employer-employee relationships. While employers have the capacity to dictate terms of employment, collective bargaining enables employees, through trade unions, to negotiate better working conditions and legal protections.

In India, the legal recognition of trade unions and the enforcement of CBAs are governed by multiple statutes, including the Trade Unions Act, 1926, the Industrial Disputes Act, 1947, and the Code on Industrial Relations, 2020 .

Despite being an essential feature of labour law, trade union activity and collective bargaining in India face numerous challenges, including declining membership, legislative restrictions, and the rise of alternative work arrangements such as gig and contract-based employment.

LEGAL FRAMEWORK 

The Trade Unions Act, 1926

The Trade Unions Act, 1926, provides the statutory foundation for the formation, registration, and functioning of trade unions in India. The Act defines a trade union as any combination of workers or employers formed to regulate employment relations. It mandates a minimum of seven members for registration, granting legal recognition and statutory protections.

The Industrial Disputes Act, 1947

The Industrial Disputes Act, 1947, governs the resolution of industrial disputes and recognizes the role of trade unions in collective bargaining.

Code on Industrial Relations, 2020

Though yet to be implemented, the Code on Industrial Relations, 2020, consolidates existing labour laws and introduces key reforms affecting trade unions and CBAs. It introduces the concept of a negotiating union/bargaining agent, requiring employers to engage with the union having at least 51% membership in an establishment. It also standardizes the process for collective bargaining, ensuring clarity in employer-employee negotiations and imposes conditions on legal strikes, including mandatory notice periods and mediation requirements.

INTERDEPENDENCE OF TRADE UNIONS AND COLLECTIVE BARGAINING AGREEMENTS

Trade unions serve as the primary vehicle for collective bargaining, and negotiating CBAs that define employment conditions. Their functions in this regard include :

• Representation in Negotiations

Trade unions aggregate the collective voice of employees, enhancing their bargaining power against employers. Ensures that agreements reflect equitable wage structures, working conditions, and dispute resolution mechanisms .

• Legally Binding Agreements

CBAs negotiated by trade unions can become enforceable under Section 18(1) of the Industrial Disputes Act, protecting workers from arbitrary employer actions. Non-compliance by employers can lead to legal recourse through labour courts and tribunals .

• Dispute Prevention and Industrial Harmony

Well-structured CBAs reduce industrial disputes by providing a pre-determined framework for grievance redressal. It enhances workplace stability, leading to improved productivity and economic efficiency.

CHALLENGES IN TRADE UNION-DRIVEN COLLECTIVE BARGAINING

• Fragmentation of Trade Unions

The presence of multiple unions within an establishment can lead to conflicting demands and weaken bargaining strength. The requirement for a single negotiating union under the Industrial Relations Code 2020 limits smaller unions’ influence .

• Declining Union Membership

The rise of gig work, contract employment, and informal labour has significantly reduced unionized workforce representation. Employers increasingly rely on individual contracts, bypassing collective bargaining mechanisms.

• Regulatory Restrictions on Strikes

The mandatory 14-days’ notice requirement before strikes, as per the Industrial Relations Code 2020 will curtail spontaneous industrial actions. Trade unions may face legal challenges in ensuring compliance while maintaining bargaining power .

• Technological and Structural Shifts in Employment

Automation, outsourcing, and digital employment contracts diminish the traditional employer-employee relationship. Existing labour laws struggle to incorporate non-traditional employment structures, affecting trade unions’ reach.

AMLEGALS REMARKS

Trade unions and collective bargaining remain integral to industrial relations in India, ensuring that employees have a formal mechanism to negotiate favourable employment conditions.

However, evolving economic structures, increase in contract labour, and regulatory constraints necessitate a recalibration of collective bargaining strategies. Strengthening union representation in emerging employment sectors, embracing digital negotiation platforms, and adapting legal frameworks to modern work arrangements will be critical for ensuring sustained trade union relevance in India’s labour ecosystem.

– Team AMLEGALS assisted by Ms. Anushka Mishra (Intern)