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Review of the Pros and Cons of the Negotiation Process between Employer and Employees

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In light of several highly publicized strikes in the past few years in Dubai and specifically in the construction industry, the Gulf Cooperative Council member nations, including the UAE, are discussing the possible formation of trade unions.

The most important purpose of trade unions is to be able to reach collective agreements between workers and employers after conducting the necessary collective bargaining. In this assignment, we will define Collective Bargaining, how it works and its advantages and disadvantages. Also, we will examine the alternatives or routes that are adopted or followed to conduct collective bargaining in the UAE in the present absence or illegality of trade unions.

What is Collective Bargaining and how does it work?

Hayter defines collective bargaining as a process through which employees negotiate their terms of payment. The demands of the employees are presented to the worker’s unions and they relate to health insurance, retirement benefits, overtime payments, occupational hazard compensation, and payments relating to safety in the workplace. Prior to the bargaining procedures, employees normally hold discussions about the terms of payment that would promote their quality of life. Similarly, Clark, Delaney, and Frost report that the process enhances industrial affairs and the relationships between the workers and the employers. It is noted that the worker’s unions have mutual interests since the negotiations benefit their members. According to Colosi, Thomas, and Berkeley, the unions usually select members to represent them during the negotiation procedures, which are held between the employers and the worker’s union committees. Legally, it is mandatory to have a contract outlining the agreements after the collective bargaining process. In the United States, for example, majority of workers in the public and private sectors have the right to collective bargaining.

A collective agreement is a contract that stipulates the pacts made between the employees, union representatives, and employers, and it outlines the agreed terms of payment. All the parties must participate in compiling the collective agreement, and its major purpose is to renew the terms, conditions, and rates of payment. In summary, collective agreements constitute; coverage clauses, mechanisms to solve future problems, conditions relating to the agreement, and the expiry dates. Collective bargaining procedures occur in both public and private organizations in the United States. Moreover, they give workers an opportunity to settle their disputes in a peaceful manner.

Topics of collective bargaining fall into one of three categories: mandatory, permissive, or illegal. Mandatory topics are issues that have to be discussed if one of the parties requests it. Examples of mandatory subjects include: salaries and wages, sick leave entitlement, working hours, promotions, pension schemes, health insurance, and job duties. Whereas Permissive topics are non-mandatory issues that either party ask to discuss but not required to. Examples of permissive issues are: retirement benefits and terms of employment. And finally, Illegal or prohibited topics are topics that infringe with the law and neither party can bring up. For examples the subject of discrimination against certain groups of people is not allowed.

The employer and union discuss the concerns, present information to show the rationality of their demands, and try to achieve an agreement. If the parties cannot resolve one or more problems, they reach an impasse. At this point the union may possibly call a strike, or on the other hand, the employer may lock out the union workers. There are many ways to deal with impasse, strikes, and lockouts. These include mediation and arbitration.

The employer’s duty to bargain includes an obligation to supply to the union any relevant and necessary information when requested in order to allow union agents to bargain intelligently and effectively.

Advantages and Disadvantages of Collective Bargaining

Collective bargaining, which is a process of bargaining in groups as opposed to bargaining individually, is expected to ultimately lead to an agreement between a group of workers and their employer’s management with regard to conditions of employment; i.e. pay rates, holiday, overtime, bonus, working hours, subsidies, etc. This process has been around ever since industrialization, trade / labour unions, associations of employees and similar bodies have existed. The aim of collective bargaining is to pave the way for a better workplace where the employee’s and the employer’s interests as well as the quality of work are looked after. Collective bargaining has played a significant role in the evolution of industries by protecting financial and other interests of the labourers and establishing communication between management and large groups of people.

There are many different points of view on the advantages or disadvantages of collective bargaining in the workplace. However, some of the possible pros and cons of collective bargaining are universally agreed upon.


The biggest advantage of collective bargaining is that the management and the labourers are brought together in an equitable system where they can engage in discussions to solve problems and to address issues, while both enjoying equal standing which can be used to reach their collective goal for mutual benefits. This can lead to a high-performance workplace.

Collective bargaining is a legally sound platform as it states the rights of management and labourers to enable everyone to know their roles, duties and limitations. It also establishes a clear mode of communication that promotes a workable bilateral relationship between the staff and the management.

Collective bargaining promotes better planning as it allows management to plan for the company’s future based on time-bound agreements that resulted from collective bargaining. It also allows the company to have predictability in its expenses or budgets by controlling salaries and compensations in a pre-planned manner, hence ensuring its financial stability.

Collective bargaining promotes fairness and consistency in employment policies and personnel decisions and allows for the protection of everyone’s rights and welfare; it is not heavily tilted either towards the management or the employees.

Collective bargaining empowers the labourers and a healthy relationship is developed across all departments and hierarchal levels of an organization.

Collective bargaining is essentially a complementary process and not a competitive one as each party needs something that the other one has; i.e. labour can make a greater productive effort and management has the capacity to pay for that effort and to organize and guide it for achieving it objectives.

Collective Bargaining has scope for compromise as it allows for a mutual give and take between the parties before the final agreement is reached.


Collective bargaining curtails the authority of the owners and management in the face of strong and/or influential trade unions. This hence limits the free hand that managements usually like to possess in order to be make swift and sometimes unpopular decisions that are necessary for the ultimate survival of the organization. Hence, this increased bureaucratization, makes collective bargaining time consuming and slows down / complicates the decision making process since there is no authoritarianism.

Although collective bargaining is expected to bridge the communication gap between employers and employees, it has the potential to create significant rift between employees and managers through face to face confrontation.

Collective bargaining reduces individuality as it restricts management’s ability to deal effectively with an employee on a one-to-one basis, if and when necessary. All employees must pay union dues even if they do not support unionization and all union members and management must conform to terms of a union contract without exception; hence, ultimately not every employee’s interest might be represented.

Collective bargaining might be a solution for labour disputes but lacks public interest representation at the bargaining table: Increased wages and improved facilities for workers can indirectly result in high prices of goods and services. The critics of collective bargaining claim that it can hamper economic growth and periodically endanger a nation’s health and safety due to damages that may be inflicted by strikes. Although much attention has been given to the problem of how to maintain collective bargaining while preventing damage that might be caused by strikes, no effective solution has been found yet.

Collective Bargaining Alternatives in UAE in the Absence of Trade Unions

The UAE labour law provides an alternative mechanism to resolve collective labour disputes, as the formation of trade unions is not allowed under the UAE laws.

The UAE labour law has established a mechanism to resolve collective disputes, which claims are made by all or some of the employees working in the same organization against their employer supervised by the labour department in the UAE. According to Article 155 of the UAE labour law, if the employer (First party) and the employees (second party) fail to settle their dispute amicably they shall follow a certain procedure.

First the employees shall submit a written complaint, a copy to the employer and anther copy to the labour department, then the employer shall submit a written reply to the complaint within 7 working days from the date he received the complaint with a copy also sent to the labour department, but in case the employer doesn’t submit a reply with the period of time or his reply didn’t resolve the dispute, the competent labour department shall on its own or at the request of either parties take over the mediation process to resolve the dispute amicably. However, as provided by Article 155, if the complaint was from employee then he/she has to submit the complaint directly to the labour department to start the mediation.

However, if the mediation doesn’t result in a settlement agreement within 10 days from the date of its issue, then the dispute shall be referred to a competent conciliation committee, as Articles 157 and 158 state. Article 158 states that “the committee shall issue its decision by majority vote within two weeks from the date the dispute was referred to it. Such decisions shall be binding on both parties if they have agreed in before the committee to be bound by its decisions. In the absence of such agreement, either the party or both of them may appeal against the committee’s decision to the supreme arbitration board within 30 days of the date on which the decision was given; otherwise, the decision shall become final and enforceable”

In the UAE, trade unions and the right of worker to organize and form them is not recognized by the UAE law. Strikes are forbidden by law, employers are in fact allowed to temporarily suspend workers without pay in case a strike was formed thanks to the 1980 labor law. In case of “an illegal strike or its instigation”, migrant workers are banned from employment in the country for a minimum of one year by the federal government.

In most countries, the way workers communicate their grievances and negotiate with employers and / or relevant government bodies is by having unions. International human rights law guarantees workers’ right to freedom of association and collective bargaining, including the right to organize unions for the protection of their interests.

The UAE is a member of the International Labour Organization (ILO), so it is obligated to permit workers to organize for the purpose of collective bargaining. All member states must promote and protect freedom of association and the right to bargain collectively as a “fundamental” labour principle, stating specifically that all members are obligated to allow freedom of association and the right to collective bargaining, even if, like the UAE, the key ILO conventions governing those rights have not been ratified.

An urgent need exists for labour unions in the UAE to engage with employers on behalf of workers. In the course of research, it became evident that not having organized representation is a major obstacle to addressing the exploitation of construction workers documented in this report. In order to improve the situation of migrant workers in the UAE, it is a must that the government recognize their right to form trade unions, strike, and bargain collectively.

In the labour law Under Article 112, where is physically highlighted, is the criminal nature of strikes. In the past workers have been temporarily suspended from work without pay since it is permitted by labour law, some have even been deported for taking strike action. Seventy one Bangladeshi construction workers were arrested by police and deported for starting a week-long strike of around 5000 workers at the Arabtec construction company in 2011.


Since the UAE labour law does not recognize the right of employees to organize and form trade unions, disputes between employer and employee can be referred to the Ministry of Labour and Social Affairs, which endeavors to resolve issues by acting as the adjudicator.

In 2006, the UAE Labour Minister, Ali Al Kaabi, has announced that a new law was being drafted to allow labourers to form unions, but to date the formation of labour unions remains illegal. According to the news agency Al Jazeera, supporters of Dubai’s economic model believe that a lack of collective bargaining rights is good for workers, as it leads to more growth and job creation. Supporters say that “part of the reason why countries such as France are in economic distress is because their labour market is overly regulated and employees spend more time protesting than actually working”.

A two-day strike by thousands of construction workers was formed last year over pay; it concluded with most of the involved workers returning to work and since there was no damage done to the property during the strike, there were no salary deductions made. The Ministry of Labour sent a team to discuss the dispute with both sides; also there was some police involvement. This is an indication that there is some change in the way matters are being handled compared to the 2011 strike, where arrests were made and workers were deported.

However, the financial free zone located in Dubai, known as Dubai International Financial Centre (DIFC), is unique amongst UAE free zones in that it has its own legal system and laws, including labour laws (Employment law, DIFC law No. 4 of 2005), which do not place a ban on strikes.

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