What is good faith bargaining?

Good faith bargaining refers to a negotiation process between employers and employees (or their representatives) conducted in a fair and honest manner. It ensures both parties work together with a genuine effort to reach an agreement. This approach often aligns with laws and regulations to prevent bad faith practices, such as lying or making unreasonable demands.

Summarise this post with:

Key elements of good faith bargaining include openly sharing other relevant information, meeting regularly, and respecting contractual terms. By encouraging transparency and mutual respect, this process helps create a positive and work environment, ultimately benefiting both employees and the organization.

Why is good faith bargaining essential?

Good faith bargaining is crucial because it ensures that both parties genuinely work toward reaching an agreement. Without it, negotiations can quickly turn into conflicts, with one side making unreasonable demands or acting in bad faith. Such behavior often leads to breakdowns in discussions and makes it nearly impossible to achieve a fair and mutually beneficial agreement. HBR’s labor research shows that good faith bargaining that results in ratified agreements produces 15-20% better long-term labor relations outcomes than adversarial approaches, even when initial positions are far apart.

Protecting rights and interests

Good faith bargaining safeguards the rights and interests of all parties involved. By requiring both sides to share relevant information, it ensures the process is transparent and based on accurate data. This helps avoid disputes over misunderstandings or hidden facts, fostering trust and better decision-making.

Promoting harmony and stability

When negotiations are fair and reasonable, they contribute to a positive and inclusive work environment. This promotes industrial harmony and stability, reducing the likelihood of strikes, lockouts, or other disruptions. Stable negotiations not only encourage employees to participate but also help organizations retain employees, boosting employee satisfaction.

Aligning with labor laws

Engaging in good faith bargaining is also a legal obligation in many countries, such as the United States, under labor laws and regulations. Failure to comply may result in legal penalties, including fines, and could harm the organizational culture. For instance, unreasonable delays, bad faith practices, or refusal to pay under agreed terms can lead to breach-of-contract claims and legal action.

Impact on employee retention and productivity

Good faith bargaining reflects a duty of care and fairness, which supports employees and encourages them to stay. Employees who feel valued and respected are less likely to leave their job, improving employee retention and reducing employee turnover. This approach also boosts employees’ morale, leading to increased productivity and better customer service.

What is the process of good faith bargaining?

Good faith bargaining is a negotiation approach where both parties work together honestly and fairly to reach a mutually beneficial agreement. Here’s how the process typically unfolds:

1. Preparation

Both sides start by preparing thoroughly.
They gather relevant information, including financial data, applicable laws and regulations, and organizational needs.
Clearly outline goals and priorities to stay focused during negotiations.

2. Opening statements

Each party shares their opening statements.
This is where they express their objectives, concerns, and desired outcomes.
It’s an important step to set the tone for productive discussions.

3. Information exchange

Both parties exchange other relevant information that impacts negotiations.
This could include financial data, workplace policies, or external factors like laws and regulations.
Transparency is key to avoid bad faith practices like withholding critical data.

4. Discussion and negotiation

Engage in open discussions to find common ground.
Honest communication fosters employee participation and encourages a positive atmosphere.
A genuine effort is made to explore solutions beneficial to both sides.

5. Proposals and counter-proposals

Both parties make proposals and review counter-proposals.
Flexibility is critical here. Listening and adapting to each other’s suggestions avoids unreasonable delays and ensures smoother negotiation.

6. Agreement in good faith

Strive to reach an agreement that satisfies both parties.
This step often involves finalizing terms of the agreement based on the discussions.
Mutual respect and trust prevent disputes and ensure compliance.

7. Implementation

Once an agreement is reached, both sides must implement the terms in good faith.
Acting in good faith prevents breach of contract or the need for dispute resolution later.

Key principles of good faith bargaining

Be fair, honest, and open. Avoid bad faith practices like stonewalling or deceit.
Encourage employees involved in the negotiation process to participate. This enhances trust and contributes to a positive and inclusive work environment.
Prioritize long-term benefits like employee engagement and employee retention to avoid issues like high turnover rates.

Why good faith bargaining matters?

Helps create a culture of mutual respect and accountability.
Prevents conflicts such as unreasonable delays, breach of contract, or acted in bad faith claims.
Supports employees by fostering an organizational culture that values fairness and collaboration.

Incorporating these principles not only improves negotiation outcomes but also builds a foundation of trust that boosts employee satisfaction, retaining top talent, and increased productivity. SHRM’s collective bargaining guidance provides detailed frameworks for management negotiating teams to prepare for and conduct good faith bargaining sessions while protecting legitimate business interests.

Frequently asked questions

Good faith bargaining is the legal obligation under the National Labor Relations Act for employers and unions to negotiate with a genuine intent to reach agreement. Neither side is required to make concessions or accept the other’s proposals, but both must approach negotiations seriously, exchange proposals and counter-proposals, provide relevant information, and not take unilateral action on mandatory subjects during active bargaining.

Under the NLRA, good faith bargaining requires: meeting at reasonable times with representatives authorized to make decisions; exchanging proposals and counterproposals on mandatory subjects; providing relevant information requested by the other party; explaining the rationale for positions; not engaging in ‘surface bargaining’ (going through the motions without genuine intent to reach agreement); not taking unilateral action on mandatory subjects during bargaining; and signing a collective bargaining agreement once one is reached.

Mandatory subjects are those the employer and union must bargain over in good faith — wages, hours, and terms and conditions of employment. Neither party can refuse to bargain over mandatory subjects. Permissive subjects (e.g., size of the supervisory workforce, management organizational structure) may be bargained over but cannot be insisted upon to impasse. Illegal subjects (e.g., racial discrimination in hiring) cannot be included in any collective bargaining agreement.

Surface bargaining occurs when a party goes through the motions of negotiating without genuinely intending to reach agreement. NLRB-recognized indicators: presenting ‘take it or leave it’ proposals with no explanation or justification; refusing to provide relevant information; changing positions repeatedly without reason; sending representatives without authority to make commitments; scheduling meetings infrequently or at inconvenient times; and combining surface bargaining with unilateral changes — signaling that the employer does not view the union as a legitimate negotiating partner.

Preparation elements: conduct thorough financial and operational analysis to define the zone of acceptable agreement; gather comparative wage and benefit data for analogous industries and regions; identify must-have provisions vs. tradeable items; brief management negotiating team on legal obligations and prohibited practices; establish internal decision-making authority and escalation protocols; prepare information exchange protocols for likely union information requests; and develop communication strategies for both the bargaining process and ultimate agreement ratification.

Failure to bargain in good faith is an unfair labor practice (ULP) under the NLRA. Consequences: NLRB investigation and complaint; remedial orders requiring good faith bargaining; back-pay awards if unlawful refusal to bargain led to wage losses; bargaining order extension beyond contract term; negative publicity and damaged labor relations; increased organizing activity in non-union facilities; and in extreme cases, judicial injunction requiring specific bargaining actions.