The following guide examines the process of collective bargaining from an employer’s perspective, from the different types of collective bargaining and union recognition within the workplace, to how best to approach collective bargaining negotiations with a recognised trade union.
What is collective bargaining?
Collective bargaining is the official process by which representatives of trade unions negotiate with employers on behalf of their members in respect of employees’ terms and conditions of employment. It is based on the premise that more can be achieved through workers coming together collectively than by working alone to better employee benefits and rights at work.
Collective bargaining between employers and trade unions can range from negotiations on specific matters arising daily within the workplace affecting particular sections of the workforce, to extensive periodic negotiations on terms and conditions of employment affecting the whole workforce.
Issues commonly pursued through collective bargaining negotiations include pay increases and improved terms of employment and working conditions, such as working hours, holidays, pensions contributions or any other such matters that may be agreed between the parties.
What is a collective agreement?
All employees have an employment contract with their employer, typically in writing, setting out the respective rights and responsibilities between the parties that govern the working relationship. These are referred to as the ‘terms’ of the contract, where some of these terms may be set out within an employee’s written contract of employment, while others may derive from different sources. These sources can include negotiated agreements between employers and employee representatives, known as collective agreements. In most cases, the representative will be a trade union, but may also be an employee association.
In broad terms, a collective agreement is an agreement between an employer and employee representatives, setting out the agreed contractual terms and conditions following a ‘collective bargaining process’. Collective bargaining is essentially the process by which employee representatives negotiate with an employer in the best interests of those employees that they are appointed to represent. In some cases, the collective agreement could apply across the entire workforce while, in others, the agreement may be applicable to a specific group of employees, referred to in this context as the ‘bargaining unit’.
Where collective bargaining has led to an agreement, for example, a pay increase or improved working conditions, the resulting outcome is called a collective agreement. This agreement should then become a legally enforceable part of each employee’s contract of employment, provided the employee is covered by the agreement in question. A collective agreement is therefore the outcome of a collective bargaining process. This could relate to various issues under negotiation, such as wages or other terms and conditions of employment. This must be in writing, contain the date on which it becomes effective and be signed by the parties.
When an employer agrees that its employees can be represented collectively by a trade union, the contracts of employment for relevant workers should expressly incorporate all collective agreements. In this way, any agreement negotiated by the union will be automatically incorporated into their contractual terms and conditions so that individual workers benefit from the negotiated terms.
Collective agreements within the workplace can cover both union and non-union staff, as trade unions often negotiate on behalf of workers employed in a specific group, for example, all contractors. This group is known as the bargaining unit.
Once the collective agreement forms part of a contract of employment, this cannot be changed without further union negotiations. Failing to apply collectively agreed terms and conditions can be treated as breach of contract.
Collective agreements can be a useful tool for both employers and employees under which important terms and conditions, such as pay and working hours, can be negotiated. Still, it is important that employers understand how these types of agreement work in practice and the process that must be followed to ensure that these agreements are legally binding. The following guide provides advice for employers on collective agreements, from what these are and how they are used to the risks of getting the collective agreement process wrong.
When are collective agreements needed?
Collective agreements can be negotiated for all kinds of workplace issues, from specific matters arising on a daily basis affecting certain sections of the workforce, to extensive negotiations on terms and conditions of employment affecting the workforce as a whole. As such, the remit for negotiations is potentially vast. For example, in the context of pay and benefits, this could include anything from the way in which job roles are evaluated and graded to the nature and extent of contractual benefits to which employees are entitled.
Equally, when it comes to working conditions, in addition to things like hours of work and various types of leave entitlement, this could cover a whole range of workplace policies, including disciplinary and dismissal procedures, or appraisal and performance systems. This could also cover health, safety and welfare at work matters, where collective bargaining can be used to address the physical conditions in which staff are required to do their jobs.
Through the collective bargaining process, employers will have the opportunity to negotiate acceptable terms across their workforce, or at the very least across a single bargaining unit, without the need to address individual concerns or complaints. Such negotiations at a collective level can also often spare employers the aggravation, and any associated cost and conflict, caused through strikes, walkouts or even mass resignations.
Similarly, for employees, any collective staff-complaints can be negotiated on their behalf by trained and experienced employee representatives to help improve their pay and working conditions. The basic premise behind collective bargaining is that workers can achieve more together than they can alone, where by banding together they are far more more likely to get decent wages and to be treated well by their employer when it comes to working conditions. Unions essentially rely on strength in numbers, combined with the ability to back up their negotiating position with the threat of industrial action.
How does the collective agreement process work?
When a collective bargaining process is entered into, having identified aspects of pay or working conditions that the parties would like to negotiate, it is essential that the employer and employee representatives agree as to how this process will operate, including:
- how contractual negotiations will be organised
- how often meetings will take place
- who will represent the employees in negotiations
- which employees are covered by the agreement
- which terms and conditions are covered by the agreement
- how any failures to agree will be resolved.
The collective agreement process will then entail a comprehensive review of contracts and documentation, typically with various requests by union representatives for information from the employer to help facilitate negotiations. Once all the information is to hand, the parties can begin to negotiate, as per the agreed parameters as to how the negotiations will take place. Ideally, agreement can be reached on mutually agreeable terms, although it can often take several months, sometimes longer, to exhaust the collective agreement process.
Collective agreements & disclosure
One of the most important aspects of the collective agreement process is the information given to employee representatives. As such, guidelines are set out within the Advisory, Conciliation and Arbitration Service (ACAS) Code of Practice on disclosure of information to trade unions for collective bargaining purposes. This Code provides employers with statutory guidance on the information to be disclosed to employee representatives when seeking to negotiate terms and conditions of employment within the workplace.
Even though the Code imposes no legal obligation on an employer to disclose any specific item of information, there is a duty to disclose the information requested if to do so would accord with good industrial relations practice. This will therefore include information relating to the employer’s undertaking that without which the representatives would be impeded to a material extent in their bargaining. However, the employer is not required to produce original documents for copying or inspection, nor is the employer required to collate information which would entail either work or expenditure out of reasonable proportion to the value of the information within the collective bargaining process.
Equally, the employer is not obligated to disclose all information requested, including any information that would cause substantial injury to the employer’s undertaking for reasons other than the effect on its ability to negotiate. Substantial injury may occur if, for example, certain customers could be lost to competitors or suppliers could refuse to supply necessary materials as a result of disclosing the information in question. However, where a request is refused, the reasons for the refusal should be adequately explained in writing.
The depth, detail and form in which information should be provided by employers will vary, depending on the nature of the negotiations in hand, such that it is not possible to compile a list of items that ought to be disclosed in all circumstances. However, examples of information which could be relevant in certain collective bargaining situations, such as in the context of a pay claim, could include anything from job evaluation systems and grading criteria to potentially extensive material about an employer’s profits, assets and liabilities.
Making a collective agreement enforceable
When it comes to the collective agreement process, it is important for employers to recognise the difference between the expressions ‘collective bargaining’ and ‘collective agreement’, where the first term identifies the process itself, while the later identifies the desired outcome. Without reaching a final agreement, the whole negotiation has failed. Equally, unless the agreement is legally binding, this will not be enforceable by either party.
To be enforceable, the collective agreement must be in writing ‘and’ contain a provision stating that the parties intend for the agreement to be legally enforceable. Provided these conditions are met, employees will be bound by the collective agreement reached on their behalf. As such, they will be required to follow and abide by the terms of the agreement, even if for them personally the outcome falls short of what they had expected or hoped for.
Collective agreements may be either implied or expressly incorporated into individual contracts of employment. Those that are expressly incorporated will typically reference the collective agreement in the employment contract, together with a clause stating that the term in question may be changed in the event of any variation to the collective agreement.
Errors to avoid
Union recognition, together with the collective bargaining process that goes hand in hand with this, is not necessarily something for employers to shy away from, although there are statutory provisions which can force hostile employers to recognise a union, provided enough workers become union members. This is known as ‘statutory recognition’.
Still, even though collective bargaining is only possible where an employer recognises a trade union and they decide between them on the scope of negotiations, most collective bargaining arrangements are voluntary. This is because many reputable employers recognise the various benefits that come from voluntary union recognition, including being able to collectively negotiate pay and other terms and conditions for large groups of workers at the same time, helping to resolve widespread workplace conflict without having to address such issues with employees individually. This, in turn, can help to increase employee engagement and improve staff retention, in this way improving productivity.
However, despite the benefits of being able to negotiate a collective agreement, there are various risks associated with the overall process that employers should be aware of, not least relating to requests for information from employee representatives. This is because if the representatives form the view that an employer has failed to disclose the requested information as required, a complaint can be made to the Central Arbitration Committee (CAC). The CAC may ask ACAS to conciliate, but if conciliation does not resolve the complaint, the Committee shall proceed to hear the matter. Importantly, any failure to observe the ACAS Code on disclosure will not, of itself, render the employer liable to CAC proceedings, but this can be taken into account by the Committee when making a decision.
If the complaint is upheld, the CAC will go on to specify the information that should have been disclosed and the date the employer should provide that disclosure, where any failure to do so, either at all or in time, could lead to a further complaint. If any further complaint is upheld by the Committee, an award may be made against the employer on the terms and conditions specified in the claim, or any other terms and conditions considered appropriate.
Other legal risks in the context of collective agreements can also arise later down the line, for example, where an employer seeks to makes cuts or changes by substituting existing collectively agreed terms with individual contracts. By law, employers are prohibited from inducing employees, who are members of a recognised trade union, to bypass collective bargaining arrangements if the sole or main purpose is to achieve a ‘prohibited result’. The prohibited result is that the employees’ terms of employment, or any of those terms, will no longer be determined by collective agreement negotiated by or on behalf of the union.
Importantly, employers who seek to negotiate directly with employees to encourage them to abandon their collectively agreed terms, either temporarily or permanently, may be liable to pay damages to each employee who was offered an inducement in breach of the statutory prohibition. As such, employers must respect collective bargaining arrangements where these exist, otherwise risk being exposed to multiple claims for compensation. It is only in circumstances where an employer has completely exhausted the collective bargaining procedure, as agreed with the recognised trade union, that they can then, and only then, approach employees with a direct offer without being in breach of the relevant provisions.
Managing the risks of collective agreements
By understanding the potential risks involved when it comes to collective bargaining and the resulting agreements, this can help employers to navigate the pitfalls of the collective agreement process and reach a satisfactory conclusion, both for their own benefit and that of their workforce. By getting the process right, and by not falling foul of the law, employers can use collective agreements to their advantage, saving time and expense on unnecessary individual grievances, and reducing conflict across their workforce.
What are the different types of collective bargaining?
There are various different types of collective bargaining. The type of collective bargaining being utilised by the parties does not necessarily impact on any decision-making in practice, but it is still useful to understand the context in which workplace negotiations typically take place.
The main four types of collective bargaining, classified on the basis of their nature and objective, are as follows:
- Conjunctive: where both parties seek to maximise their gains from the other’s loss, typically involving wages, bonuses and other employee benefits, where one party essentially wins over the other.
- Co-operative: where both parties seek to resolve a problem with a common interest and reach an amicable solution, typically involving working terms and conditions, for example, during an economic crisis.
- Productivity: where the employer seeks to increase productivity through employee incentives or bonuses, where both parties benefit equally, for example, from increased production and increased pay/benefits.
- Composite: where the union raises concerns regarding various matters, typically relating to an employee’s job security or welfare – such as working conditions or disciplinary processes – and demands equity in such matters to safeguard their long-term interests.
Does an employer have to agree to collective bargaining?
Most collective bargaining arrangements in the UK are voluntary, where collective bargaining is only possible where an employer recognises a trade union and agrees that its members can be represented collectively.
Union recognition essentially refers to an acknowledgement by the employer that a union has the right to represent and negotiate on behalf of its members in a variety of different situations within the workplace.
Reputable employers recognise the benefits that come from voluntary union recognition, such as being able to negotiate wages and other contractual terms and conditions collectively for large groups of workers at the same time. Most employers are also readily prepared to recognise the existence of a trade union where there is significant support among the workforce.
Where an employer refuses to recognise a trade union voluntarily, the union may instead ask the CAC – the Central Arbitration Committee – to investigate the matter with a view to requiring the employer to officially recognise it. The CAC is the body that implements the law on statutory trade union recognition.
When is the process of statutory recognition applicable?
The process of “statutory recognition” can only be used to force an employer to recognise a trade union where the union has made a valid written request for recognition to the employer. The law provides a detailed statutory procedure, with time limits, for claiming recognition on application to the CAC.
In many cases, voluntary recognition will be reached without formal intervention following a valid request for voluntary recognition. Where an employer refuses to accept the request but indicates a willingness to negotiate, the parties may ask ACAS – the Advisory, Conciliation and Arbitration Service – to assist in conducting the negotiations via a formal conciliatory process.
In cases where either the employer fails to respond to the request within the specified statutory timeframe, informs the union that it does not accept the request without a willingness to negotiate or where ACAS negotiations fail, the union may apply to the CAC to decide the question of statutory recognition.
An application for statutory recognition will only usually be successful where the employer employs more than 20 workers and the union has the support of the majority of workers. This means that the CAC will require evidence of at least 10% membership in the relevant bargaining unit and be satisfied that a majority of workers are likely to favour recognition.
How should collective bargaining be run?
Once the employer agrees to recognise a trade union, either voluntarily or statutorily, an agreement will need to be put in place to determine how the collective bargaining process will operate and the scope of any negotiations.
Agreement will need to be reached to address various issues including:
- The categories or grades of worker covered
- The way in which union representatives will be elected
- The matters to be discussed, such as pay, hours or holidays
- The way in which any failures to agree these matters will be resolved
- The timing and frequency of meetings
- The availability of union facilities, such as office space or IT equipment
- The time off to be taken by union representatives for union activities
- The way in which discussions will work if more than one trade union is recognised by the employer
In circumstances where the CAC has declared that a trade union should be recognised, the parties will have a period of 30 days, or longer if they agree, to negotiate how collective bargaining will be run.
If agreement cannot be reached within the specified timeframe, either party may apply to the CAC to assist, where the CAC can impose a legally enforceable procedure on the parties specifying the method of collective bargaining.
In these circumstances, the law limits the scope of statutory recognition to bargaining over only ‘pay, hours and holidays’, although there is nothing to prevent the parties from voluntarily agreeing a wider range of workplace issues as the subject of collective bargaining. If an employer refuses to negotiate pay, hours and holidays, despite having an enforceable contract imposed by the CAC, an application can be made to the courts for an order of specific performance.
How should collective bargaining negotiations be approached?
Collective bargaining negotiations should always be approached with a clear understanding of the law and expert legal guidance, especially as the rules relating to an employer’s disclosure of information to a trade union to help with the collective bargaining process can be difficult to interpret.
The law provides that where an independent trade union is recognised by the employer, the union is entitled to be given certain information that is relevant to the issue under negotiation. The relevant information, and the detail and form in which it should be provided, will vary depending on the issue to be negotiated. The level at which the negotiations are to take place, for example, department, division or company level, the size of the company and the type of business in question will also play an important part in determining what is relevant.
Examples of relevant information can include material about an employer’s financial position in the context of a pay or employee benefits claim, or information about its profits, assets and liabilities within a redundancy situation.
What risks can arise from collective bargaining negotiations?
Failing to reach agreement through union negotiations can result in strikes, sit-ins and resignations, all of which can cause significant damage to a business and the reputation of the employer. Being able to effectively negotiate a collective agreement, and find a middle ground, can often be in the interests of everyone.
In an ideal world, collective bargaining negotiations will involve a simple meeting, or series of meetings, between the employer and trade union to discuss the terms and conditions of employment for the bargaining unit. The end goal is a collective agreement where both parties are happy with the agreed change.
In practice, however, collective bargaining negotiations can often present a series of problems, especially where an employer fails to disclose the relevant information to facilitate the bargaining process. Any union complaints alleging failure by an employer to disclose relevant information may be made to the CAC.
In some cases this may result in ACAS intervention and a process of conciliation. However, where conciliation does not lead to a resolution, the CAC will proceed to hear and determine the matter, making an order for disclosure. Any breach of this order could even result in an award of compensation against the employer.
Given the complexity of the law in this area, it is advisable for employers preparing to engage in a collective bargaining negotiation to seek expert legal advice from an employment law specialist.
Negotiating with a union can be a daunting and difficult process to navigate, so having a legal representative to guide you through this process can help to protect the interests of your business and ensure that you comply with your statutory duties to disclose the relevant information.
DavidsonMorris’ employment lawyers can help with all aspects of union relations and engagement, including collective bargaining and agreements. Working closely with our specialists in HR, we provide comprehensive guidance on how to navigate the negotiation process, while ensuring employee relations remain positive. For help and advice, speak to our experts.
Collective bargaining & agreements FAQs
What is an example of collective bargaining?
Collective bargaining refers to the official process by which trade unions negotiate with employers on behalf of their members in respect of employees’ terms and conditions of employment. An example of collective bargaining could be about a pay increase or change in working hours.
What is the role of collective bargaining?
The role of collective bargaining is to achieve agreement between an employer and a group of workers, or even the entire workforce, in relation to wages or others terms and conditions of the employment relationship.
What is trade union and collective bargaining?
A trade union will collectively represent a group of workers to negotiate improved terms and conditions on behalf of its members. The use of collective bargaining is based on the premise that more can be achieved working together.
What are the three models of collective bargaining?
There are various different models of collective bargaining, including the monopoly union model, the right to manage model and the efficient bargaining model. These models can be used to analyse the economic and other benefits from the use of collective bargaining between employers and trade unions.
What is an example of a collective agreement?
An example of a collective agreement could be where a trade union has negotiated with an employer that the entire workforce be eligible to make a flexible working request from day one of employment, rather than waiting 26 weeks.
What are the types of collective agreement?
Collective agreements can be reached for specific matters arising on a daily basis but that affect only particular sections of the workforce, to extensive negotiations on terms and conditions of employment affecting the workforce as a whole.
Are collective agreements legally binding UK?
So as to be legally binding, collective agreements must meet two key criteria. First, the agreement must be in writing and, secondly, the agreement itself must include a clause stating that the parties intend for it to be legally enforceable.
What is the effect of a collective agreement?
Where a collective agreement has been reached, such as over a pay increase or improved working conditions, this agreement becomes a legally enforceable part of each employee’s contract of employment, provided the employee is covered by the agreement in question.
Last updated: 10 December 2022