21 September 2020 by , and Employment Alert

Bound to pay twice or what – Are minority trade union members obliged to pay agency shop agreement fees in addition to subscription fees?

It is common cause that the collective bargaining process requires time, effort and money from the majority union in order to strike good deals with the employer. However, the benefits of the deals secured through the efforts of the majority trade union are enjoyed by all employees including members of minority union and non-unionised employees.

The question that then follows is whether employees belonging to the minority union should be compelled to contribute to the costs of collective bargaining through agency fees in addition to the subscription fees that they are already paying to their union. The courts have answered this question in the affirmative and held that it would be unfair to permit non-members of the bargaining agent to enjoy benefits without contributing to the costs.

In the recent matter between the Municipal & Allied Trade Union of SA v Central Karoo District Municipality & Others, the Labour Appeal Court (LAC) was required to determine whether employees belonging to minority trade unions were exempted in terms of section 21(8C) of the Labour Relations Act 66 of 1995 (LRA) from paying the agency shop agreement fees arising out of an agency shop agreement between the employer and the majority trade union in terms of section 25 of the LRA.

In this appeal, the Appellant being the trade union did not challenge the constitutionality of section 25 of the LRA but contended that a proper interpretation of section 21(8C), which provides that the CCMA may grant specific rights to registered trade unions not meeting the thresholds of representativeness established by a collective agreement, had the effect of overriding the agencyshop agreement between the employer and majority trade union.

The trade union contends that by virtue of having had stop-order rights extended to it in terms of section 21(8C) of the LRA, its members ought to have been excluded from paying agency shop agreement fees (Agency fee) as they could not afford to pay both fees. Further, that the benefit of stop-order rights would be illusory if its members were required to still pay the agency fee.

In dismissing the appeal, the LAC held that the source of the obligation to pay an agency fee was distinct from that of union subscription membership fees . It was the LAC’s view that agency fees are paid by the employer to the majority trade union pursuit to a section 25 of the LRA agreement. Thus being due by virtue of statue. These fees are paid for work done to advance the interests of workers through collective bargaining without compelling free riders to join the majority trade union. On the contrary, union fees are due in terms of an agreement between the trade union and its member.

Accordingly, since the source of agency fees and union fees are distinct, there is no double payment.

In reaching this conclusion, the LAC affirmed the earlier judgement of the Labour Court, which held that agency shop agreements bind members of minority unions, even if this means they must pay both the union fee of their own union, and the agency fee.

Moreover, the LAC held that section 21(8C) of the LRA empowered the CCMA to only override a collective agreement setting a threshold for minority unions seeking organisational rights. It did not give any power to override a pre-existing agency shop agreement. The LAC concluded that agency shop agreements advance the legitimate legislative policy of majoritarianism in collective bargaining as the preferred option for orderly collective bargaining at sectoral level.

 In light of the trade union not contending that section 25 of the LRA was unconstitutional, it follows that a majoritarian agency shop agreement promotes the spirit and objects of the constitutional rights to organise and collectively bargain.

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