The Jimmy Reid Foundation says in a new paper that employees should also have the right to "full disclosure" of company accounts and executive pay.
However, the ideas have been attacked by the Tories.
Although the paper does not explicitly link the plan to separating Scotland from the UK, the authors - former SNP MSP Jim Mather, academic Gregor Gall and trade unionist John Duffy - all support independence. It is also framed as an industrial relations policy for Scotland, rather than the UK.
The report states that the UK is near the bottom of a European league table for industrial relations, and has the "worst" record for employment rights.
The authors also argue that the recent dispute at Grangemouth, where union activists protested outside directors' home and employer Ineos enforced reduced terms and conditions for staff, showed the current approach is failing.
"We cannot allow the national failures in industrial relations that we have recently seen in Grangemouth repeated," they note.
The paper backs a "new model" of industrial democracy, based on co-operation and a greater staff role.
As an example, the trio call for "collective bargaining recognition" of all unions in the workplace. This would be in contrast to the status quo, where many large workforces are not unionised.
More radically, the Foundation backs the introduction of "co-operation committees" for firms with more than 35 employees. These committees would help run firms and be made up of an equal number of employer and staff representatives.
These committees would make decisions on issues relating to hours, holidays, contracts and training. At a higher level, there would also be staff representation in the boardroom.
The paper argues: "Making company governance more transparent through industrial democracy enables better and more effective scrutiny of decision-making. And when problem-solving is approached from a mutual perspective, greater efficiency is achieved."
As with much of the Foundation's thinking, Scandinavian countries are held as the gold standard. In Denmark, the authors estimate, 80% of workplaces have collective bargaining agreements and 67% of workers are in a trade union.
They note: "The basis for this trade-union strength is a clearly established framework that ensures trades unions are integrated into industrial relations from top to bottom: built on a tradition of mutuality between workers and employers which has lasted over a century."
Dave Watson, of the Unison trade union, said: "There are many cosmetic attempts by poor employers to pass off their works councils and similar bodies as meaningful staff engagement. Unison would welcome proposals that put collective bargaining at the heart of industrial relations. "
Richard Leonard, of GMB Scotland, said: "Employment contracts are still built on the outdated concept of a master-servant relationship. Steps that start to close this democratic deficit and right this wrong are welcome. But any reforms should be founded on the firm cornerstone of trade union organisation and representation, not some compromised employee representative model.
"And as the Scottish Government's own figures show 34% of all private sector employees work for companies owned outside Scotland, and for larger enterprises this leaps to 64%, the question is bound to be asked whether this could be better done at a UK rather than a Scottish level."
Scottish Tory deputy leader Jackson Carlaw dismissed the plan: "This report represents nothing more than a small, self-regarding cabal flogging some long-expired horses.
"The inevitable consequence of these proposals would be large-scale industrial unrest, international investment fleeing our shores and unrepresentative trade union officials holding elected governments to ransom."
Angela Constance, Scotland's Minister for Youth Employment, said: "Independence creates a real opportunity to build on our strong track record in supporting the union role within Government and workers' rights and to secure the economic benefits for business and society that come from that.
"Last week, we published our guide to independence, Scotland's Future, and set out plans to establish a Fair Work Commission which would guarantee that the minimum wage rises - at the very least - in line with inflation to ensure that work is a route out of poverty.
"We would also establish a larger Convention on Employment and Labour Relations bringing employers and employees together to build a more responsive labour market, and we welcome the interest of the Jimmy Reid Foundation in these ideas.
"While some of the Jimmy Reid Foundation proposals go beyond those we have set out in Scotland's Future, the powers of independence would also allow us to consider the appropriate way to encourage employee representation on company boards and to increase the diversity of board membership, as well as to reverse recent changes introduced at Westminster that could diminish workers' rights."
Volkswagen is the third largest automobile manufacturer in the world. It has over 190,000 employees and is headquartered in Wolfsburg, Lower Saxony, Germany.
Like all German companies of 500 employees or more, staff are entitled to 50% of representation on the management board and a works council, a committee which deals with company-related staff issues and takes these to the management board.
Hans-Peter Fischer is the management representative on the Volkswagen board: "Employees ask the best questions as they have direct knowledge about running the company. How do shareholders know what is going on in the factory? They have to rely on reports from the executive directors."
Hartmutt Meine, staff representative on the board, said: "It's not just about profit, there is a general understanding at VW that we don't shut plants: job security and profitability are the two goals of this company."
In December 2011, Volkswagen agreed to implement a rule passed by the works council aimed at improving work-life balance. Every day from 6.30pm-7.30am, staff would not receive e-mails to their company BlackBerry smartphones.
The works council proposed the change because of evidence of increasingly high stress levels and excessive out-of-work demands on time from management. About 1150 employees were affected by the change.
Staff representatives on the management board also successfully negotiated a significant cut in pay for the chief executive, who had previously been the highest paid executive in Germany.