Trade Union

Updated on April 25, 2024
Article byKhalid Ahmed
Reviewed byDheeraj Vaidya, CFA, FRM

Trade Union Definition

A trade union meaning defines an association of the workers related to the same trade, organization, or industry to protect their rights, improve working conditions, wage revisions, and communicate with management in one voice. It aims to give bargaining power to the workers vis-a-vis management of the firms or the government in their favor.

Trade Union Definition

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A trade union is a tool to thwart the management from implementing any anti-worker policy. It also acts as a bridge between the worker and the management. It conveys the policy decisions and objections to and from workers. Although every union is autonomous, management could not implement worker-related policy without their collective bargaining agreement with the management.

Key Takeaways

  • A trade union is an organization of professionals, craftsmen, and employees formed to safeguard their interests, working conditions, and wages and thwart anti-worker policies of management and government.
  • Trade union not only protect workers’ rights but also prevent any unruly behavior by workers and acts as the communication channel between management and workers through CBAs.
  • A trade union has four major functions related to members’ welfare, strengthening the union, conducting union activities, and contributing to society.
  • Trade unions are of three types, namely craft unions, industrial unions, and general unions.

Trade Union Explained

A trade union is a group formed by employees of the same trade, firm, company, or industry to safeguard their rights, salaries, and working conditions from the exploitation of their employer. Nearly every profession, industry, and organization have its unions. Examples include nurses’ unions, teachers’ unions, drivers’, labor unions, and lawyers’ unions. They don’t work under management, but unions have the power to accept or reject any terms and conditions on behalf of workers.

Labor unions have been accorded legal status in many countries like the the United States and the United Kingdom. It means employers must make a legally binding union agreement, namely collective bargaining agreement (CBA), for a fixed duration. These agreements are related to welfare measures, perks, and working conditions of the employees.

Unions are also responsible for the ethical and disciplined workers in an organization. Therefore, the union may take any disciplinary action if found violating the union or organization’s code of conduct.

Trade unions are governed differently under different laws of various nations. All labor unions function according to the power given to them under the labor laws of the place. The power conferred by the law to unions gives them enough bargaining power to negotiate pro-worker agreements and oppose anti-worker actions of the management.

Every new employee has to pay a certain fee to get a trade union membership. The union also charges annual contributions from its members to conduct elections, social works, and activities to strengthen the union. It has many other similar functions.

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Functions of Trade Union

The trade union roles are related to main types related to their members, organization of union, union activities, and contribution to society.

1. Members

  • Safeguard the workers’ rights and privileges from management encroachment.
  • Ensure a healthy and sound working environment.
  • Fight for the performance-linked bonus for workers.
  • Negotiate for insurance, housing, healthcare, education, and cooperative societies for the workers from the management.
  • To help workers financially in times of emergency through union funds and management corpus.

2. Organization

  • To improve the production and worker efficiency as per the requirement of the firm through discussions with the management.
  • To act as a bridge between the worker and the management for all types of communication.
  • To convince management to act as a motivator and not as punitive toward workers.
  • To guide management in formulating and implementing employees’ welfare schemes and activities.
  • Impress the management with pressure tactics to avoid illegal termination and punishment, and treat every worker justly.
  • To conduct elections for various posts of the union.

3. Union Activities

  • To maintain records of all the worker members of the union
  • To organize various events to promote unity amongst members
  • Act as a mediator between the aggrieved worker and the member superior.
  • To collect funds for strengthening the union.
  • To bring a culture of leadership amongst the members
  • To help new members of the organization and the union to settle down easily.

4. Society

  • To undertake social upliftment works for the poor like free books, rations, and scholarships to needy students.
  • To raise voices against anti-social policies of the government and management of the related sector by the trade unionist.
  • To be a role model for society in terms of social work.

Types Of Trade Union

Three types of labor unions are:

# 1 – Craft-Based Union

Daily wage earners of different occupations form this union to safeguard their interests, bring uniformity, hike their labor charges, and stand united against exploitation by businesses or individuals. Making a labor union gives them immense bargaining power and strength of unity in the eyes of society, businesses, and individuals like all the people who are engaged in the profession of plumbing come together and form a plumber’s union or electrical trade union. However, the union is weak and cannot fulfill trade union objectives more often than not.

# 2 – Industrial Union

This type of union is formed by manual labor, semi-skilled labor, and skilled and highly skilled workers in one single industry like the iron & steel industry at the plant level, regional level, or industry level. In America, industrial unions like the International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW) exist at the national level, having more than 0.4 million active members.

It gives great adaptability to new technology, better-negotiating salary and working conditions with the employer, and advocacy of better labor policies from the industrial body and the government. It also prevents the unauthorized and mass layoffs of workers from their jobs illegally.

# 3 – General Union

It is a union body created by all the types of unions like craft unions and industrial unions to have one central body in the shape of the national trade union congress. The central body has much more power to negotiate with the industries, management, and government so that the members of the union get good treatment, better salaries, healthy working conditions, and call a nationwide strike in case of any injustice or laying off of the employees without due legal course. Many times general union is formed to take the voices of discontent over economic policies to the government.


Let us look at some trade union examples to understand the concept more comprehensively.

Example # 1

Here is an example related to the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW), founded in 1935. It consists of members from Automobile, equipment manufacturing, and farm equipment workers. It has more than 0.4 million active members and 0.58 million retired members from the U.S., Puerto Rico, and Canada. UAW has 600 local unions in which 1150 employee contracts were formed with 1600 employers across the U.S., Puerto Rico, and Canada.

Till now, it has used CBA to achieve-

  • Employer-sponsored health insurance to pan industrial workers
  • First allowances for the cost of living
  • A milestone in provisions for the job and income security

Example # 2

The second example is Service Employees International Union (SEIU), formed in 1921 in Chicago as Building Service Employees Union (BSEIU). It comprises public employees- security and janitorial employees, non-professional health care professionals, technical workers, and RNs.

It has about 2 million members from the sectors mentioned earlier. Their main aim is to have a just and equal society for all workers so their families and communities may thrive. It is the only union in the U.S. to grow despite many challenges. For example, they played an important role in the low-wage worker movement and raised the operational standards of security personnel.

Frequently Asked Questions (FAQs)

Why were trade unions formed?

Workers formed labor unions in the nineteenth century to protect the workers’ rights in the wake of the industrial revolution when the working class realized that the factory owners were exploiting them. Later, the government registered them to negotiate for better pay, working conditions, and uniform working hours on behalf of the labor class.

When did trade unions start?

The earliest instance of a labor union was the labor strike of printers’ workers in the U.S. in 1786. Hence, the labor unions have their origins in the eighteenth century when the industries employed a huge labor force that called for the safety of workers through unionization.

How do trade unions increase wages?

Labor unions have conferred the power to negotiate wages and other working conditions with the management. Labor unions make the management realize that if they do not pay increased salaries to their workers, production may get affected.

Are trade unions good or bad?

Labor unions have both the aspect of being good as well as bad. In terms of labor welfare, it is beneficial. Still, when it comes to an increase in productivity or efficiency of labor, it becomes an obstacle as unions are only concerned with e benefits of the workers without caring for the betterment of the factory and production or management.

This has been a guide to Trade Union and its definition. Here, we explain its functions and types with examples. You may learn more from the following articles –

Reader Interactions


  1. Aaliyaan says

    Very good

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