Union is a representative body who vocal the issues and grievances of employees to the management. It collectively promotes and protects the mutual interest of employees. So union play vital role in determining the compensation program in an organization. The union influences compensation programs in the following ways:

  1. Pressure to increase salary following some changes in the consumer price index (CPI): CPI give idea about the increasing or decreasing of product. So, when CPI is increased union may give pressure to management to increase the salary or other benefits to meet the cost of living.
  2. Securing Jobs: Unions always advocate on securing the jobs of the employees. They vocal on employees’ improvement through training and development program instead of little increment in incentive.
  3. Work to develop trust between union- management: Union work closely with They take part in major HR related decisions such as on compensation, safety, training and development etc., which not only enhance the relation between them but also foster participate management in an organization.