How Collective Bargaining Agreements Work

By: Dave Roos

The Collective Bargaining Process

The 1935 National Labor Relations Act defines collective bargaining as the obligation on the part of both unions and management to bargain in good faith over the initial terms of employment and any disputes that later arise. What does it mean to bargain in good faith? According to the National Labor Relations Board (NLRB), the federal agency that enforces collective bargaining laws, to negotiate in good faith is to "participate actively in deliberations" with the "intention to find a basis for agreement" [source: NLRB]. What does bargaining in good faith look like?

  • Being willing to meet at reasonable times and intervals
  • Sending representatives that have the power to make real decisions
  • Cooperating fully with federal arbitrators and other third-party mediators
  • Refraining from any activity that would constitute an unfair labor practice, such as threatening unionized workers with demotions or making the same threats to non-union coworkers

Once the initial collective bargaining agreement is signed, both parties must adhere to its terms until it expires. If either party wants to renegotiate or dispute one of the terms (to lobby for higher or lower wages, for example), it has to file a formal notice with the Federal Mediation and Conciliation Service (FMCS) at least 60 days before the agreement expires.


Interestingly, the NLRA doesn't require the two parties to come to a resolution over labor disputes, but only to bargain in good faith. If arbitration fails to resolve the conflict, the employees may choose to strike, or stop working, to pressure management to accept their terms. Management could also decide to lock out workers until an agreement is reached. Occasionally, the collective bargaining process fails completely and contract disputes must be settled by the courts.

Next, we'll take a detailed look at the contents of a collective bargaining agreement.