What Is Collective Bargaining and How Does It Work?

By Indeed Editorial Team

Published April 20, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

As an expert, it's critical that you obtain a competitive salary, suitable benefits, and job security to accomplish high-level objectives. Through collective bargaining, also known as contract negotiations, groups of employees can advocate for themselves and collaborate with their employers to define the terms of their employment. Learning about contract negotiations can help you negotiate with your employer if you're part of a union. In this article, we define collective bargaining, discuss its importance, highlight essential negotiation skills, and see how union bargaining works.

What is collective bargaining?

Collective bargaining is the process through which employers and a group of employees reach an agreement. Employees can negotiate their work terms through contract negotiations, which include employment conditions, hours, rules, salary, overtime procedures, holidays, sick leave, family leave, paid time off, retirement plans, and health care. Individuals can negotiate a collective agreement, or written contract, that defines and governs their work terms.

Unions often represent employees during contract negotiations. Employees can advocate for themselves through their unions, address a variety of workplace issues, and introduce solutions. These involve higher pay, more benefits, and safer working conditions that enable them to work comfortably, find meaning in their jobs, and succeed in their respective roles.

Read more: What Is a Union? (How They Work and Benefits They Provide)

Why is union bargaining important?

Union bargaining is critical because it enables unionized employees to fight for their own interests and establish their job conditions. Employees may get access to a variety of perks because of this procedure and the ensuing bargaining agreement, allowing them to cultivate greater professional happiness and focus on creating high-quality work long term. To help you appreciate the significance of contract negotiations, the following are a few of those benefits explained:

  • Standardized negotiation process: Contract negotiations provide employees with access to a regulated negotiating process that enables them to solve workplace difficulties efficiently and develop ideas that benefit the organization's workforce.

  • Resulting contractual agreement: Contract negotiations often culminate in a contract known as a collective negotiation agreement that outlines the terms and conditions of employment for stakeholders. Because this agreement is normally binding, both parties may abide by its provisions until renegotiation occurs.

  • Workplace safeguards: Employees can negotiate their working conditions and get safeguards regulating the number of hours they can work daily, weekly, or monthly. They can also negotiate safety requirements and the sort of job they can perform, which can assist employees in establishing a more secure workplace.

  • Comprehensive benefits packages: Contract negotiations and the subsequent agreements frequently result in more extensive benefit packages for employees. Employer-sponsored health care, dental insurance, life insurance, paid time off (PTO), sick leave, and family leave are frequently part of these packages.

  • Mediation provisions: Via contract negotiations, employees and employers might agree on arbitration as a way of resolving internal disputes that is an alternative to traditional litigation. Arbitration provides a simplified mechanism for resolving employment disputes for both employees and employers.

Negotiation skills necessary for union bargaining

Here are some negotiation abilities required for union bargaining:


Essential communication skills include the ability to recognize nonverbal signs and the verbal ability to communicate oneself effectively. Skilled negotiators can adapt their communication techniques to the listener's demands. By creating clear communication, you may avoid misconceptions that may restrict your ability to reach an agreement.

Read more: What Is a Unionized Job? (Definition and Examples)

Active listening

Active listening is the capacity to maintain an undivided focus on a speaker, comprehend their message, absorb the information, and answer appropriately. Unlike passive listening, which is the act of hearing a speaker but failing to retain their message, this ability ensures that you can interact with and subsequently recall precise details. A highly valued interpersonal communication skill can avoid repeated information and potential misinterpretations. Active listening abilities are key to understand your counterpart's thinking and position.

Emotional intelligence

Emotional intelligence is the capacity to regulate one's own emotions and to identify the emotions of others. Being aware of your emotional dynamics during a negotiation might help you maintain your composure and focus on the fundamental concerns. If you don't like the present negotiation process, explain your need for a break so that both you and the other side may return refreshed.

Expectation management

Just as you may approach a negotiation with a well-defined objective, the opposing party can almost certainly have its own. If you suspect you and the other person may not agree on conditions, you may choose to change your expectations. Skilled expectation management entails striking a balance between being an assertive and constructive negotiator.


Adaptability is a necessary characteristic of a good negotiator. Each negotiation is unique, and the circumstances of a single negotiation might vary. For instance, an engaged party may quickly alter their demands according to their interests. While it may be impossible to prepare for every eventuality, a skilled negotiator can react quickly and devise a new strategy if necessary.


Persuasion involves encouraging, motivating, or changing your audience's way of thinking. By using excellent persuasion skills, a negotiator can include their audience's interests and motivations in their speech. A good negotiator may know what types of arguments their audience may like and the correct moment to communicate their message. By doing this, the negotiator can change the audience's beliefs and behaviours, and open opportunities to share their objectives.


Negotiation takes strategy to ascertain your objectives. Consider the best-case scenario, the least-favourable offer, and what you may do if you don't reach an agreement. A successful negotiation requires the capacity to prepare and plan for a future event. Planning skills are necessary for the negotiating process, but also for determining how you may implement the terms.


Integrity, or adhering to strong ethical and moral beliefs, is a necessary negotiating skill. Being kind and truthful enables the other side to believe what you say. The other side can expect from you to keep your obligations as a negotiator and to avoid over-promising to establish credibility.

Decision making

Effective negotiators can make decisive decisions during a negotiation. During a negotiation agreement, it may be essential to reach a compromise. It's necessary for you to respond swiftly. As a negotiator, your choices may have long-term consequences for you or the business. It's critical to consider your alternatives thoroughly, as going back and forth between your alternatives in the absence of a definitive solution may cause needless tension.

Read more: Top Negotiation Skills You Should Possess

How does union bargaining work?

There is a typical method that most unions follow when bargaining collectively with management. Typically, union members pick a delegate who negotiates as their representatives in terms and conditions. A union representative is responsible for bargaining on behalf of employee interests. After choosing their delegate, the following sequence of events occurs:

Stakeholders identify the need for negotiation

To start union bargaining, a stakeholder, either an employee or a member of the management team, is to recognize the need for discussion. This need may develop because of a labour dispute, such as dangerous working conditions, or because of the renewal of an expired contract negotiations agreement. Once stakeholders see the need for negotiation, both sides begin negotiating.

Representatives improve their negotiation skills

Both parties to the negotiating process, including management, typically choose representatives to represent their interests throughout the bargaining process. These representatives prepare for negotiations by analyzing the current agreement and recognizing areas of weakness that show the need for discussion. Union leaders frequently conduct surveys of employed members to ascertain their priorities to campaign for their interests.

Parties establish bargaining rules

Employers and union employees can define guidelines for bargaining during the preparation phase, including where they want to hold negotiating sessions and the bargaining style that they can use. Parties may agree to engage in either proposal or interest-based bargaining. Proposal negotiation entails both parties developing suggestions for contract amendments. Interest-based negotiating entails both sides bringing up difficulties and addressing them mutually.

The parties reach an understanding

Both sides often reach a preliminary agreement after many rounds of bargaining. This first agreement is usually provisional, as union representation enables employee members to evaluate and approve the deal before they can completely ratify it. If both parties cannot agree on conditions, management may declare a stalemate and adopt the final proposal.

Union members approve the agreement

Employed members may vote to approve the preliminary agreement if they accept its conditions. Usually, union members vote via secret ballot, but this may vary according to the organization's policies. After the union and management have ratified the agreement, both sides may comply with its terms and conditions.

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