Contract Negotiations

<b>What Goes on During Negotiations?</b>

Contract Negotiations Management Vs. Labor

by Ruth Mayhew

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Many elements make up the labor-management space; however, contract negotiations often are the most contentious facet of the relationship between organized labor and management. During contract negotiations, also referred to as the collective bargaining process, the labor union and the employer extend proposals and counteroffers and suggest concessions to arrive at a labor union contract, or a collective bargaining agreement. Achieving a mutually agreeable contract can take several weeks to several months, depending on the ability and steadfastness of both the labor union and management.


National Labor Relations Act

The National Labor Relations Act, or the Wagner Act, to which it is often referred, sets out the obligations of both labor unions and employers in the collective bargaining process. When the National Labor Relations Board certifies the labor union as the employees’ representation, that’s the point at which labor and management have a duty to bargain in good faith. The labor board doesn’t require the parties to reach a mutually agreeable contract, but it does require that the labor union and the employer engage in timely, respectful and productive negotiations.


Good Faith Bargaining

The exercise of bargaining in “good faith” means that both parties are committed to engaging in negotiations with a common goal of achieving a labor union contract. Good faith doesn’t imply that the parties are required to hammer out an agreement, regardless of the proposals, counteroffers and concession that labor and management put on the table. Bargaining in good faith means that neither party will create artificial barriers to negotiations, such as scheduling negotiation sessions and then canceling at the last minute; extending preposterous demands and proposals, knowing full well the other side cannot meet the demands; and refusing to budge on matters where the union and the employer aren’t too far apart to come to an agreement.


Labor Union Position

On the labor union side, the negotiations team generally comprises the labor union local present, a business agent and a union steward. The roles of the local president and business agent are to ensure the union is participating in negotiations to which they can agree. However, the purpose of a union steward is to represent the interests of the company’s employees. A union steward is an employee himself; therefore, he has an on-the-ground perspective of what employees want in their union contract. Based on the labor union’s interaction with its members, it is seeking better wages, benefits, pension contributions and working conditions. In addition, the union’s purpose is to work toward an agreement that conveys the important message to employees that their union dues are at work.


Management Negotiating Team

On the employer’s side, the negotiation team consists of a human resources leader, the company owner, legal counsel and, often, a compensation and benefits specialist whose job is to prepare labor costing scenarios based on the proposals that the union and management extend. For example, a comp and benefits specialist might run the total labor cost for 1,000 employees making $11.25 an hour, averaging 15 hours of overtime each month and 30 percent contribution to employees’ healthcare coverage, producing several scenarios, each using 25-cent hourly increase intervals. For every proposal extended by the labor union or the employer, the comp and benefits specialist runs a scenario that projects the employer’s overall cost.


Final Approval

Just because the labor union and the employer reach a mutually agreeable union contract, the collective bargaining agreement is still is its tentative stage, because the union members must approve the final contract. Therefore, a memorandum of understanding, or MOU, captures the agreements for the union to present to its members. When union members vote to accept the MOU, it’s called ratification. However, if the members reject the agreement, the labor union and the employer must go back to the bargaining table and flush out the details with which the union membership wasn’t entirely satisfied.