Collective Bargaining

DEFINITION of 'Collective Bargaining'

The process of negotiating the terms of employment between an employer and a group of workers. The terms of employment are likely to include items such as conditions of employment, working conditions and other workplace rules, base pay, overtime pay, work hours, shift length, work holidays, sick leave, vacation time, retirement benefits and health care benefits.

In the United States, collective bargaining takes place between labor union leaders and the management of the company that employs that union's workers. The result of collective bargaining is called a collective bargaining agreement, and it establishes rules of employment for a set number of years. The cost of this employee representation is paid by union members in the form of dues. The collective bargaining process may involve antagonistic labor strikes or employee lockouts if the two sides are having trouble reaching an agreement.

BREAKING DOWN 'Collective Bargaining'

In the United States, there are unions in both the private sector and the public sector. As of 2009, about 7.2% of private sector employees and 37% of public sector employees were unionized. Categories of workers that belong to unions include grocery store employees, airline employees, professional athletes, teachers, auto workers, postal workers, actors, farm workers, steel workers and many more.

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