Agency shop agreements and the principle of fairness
Agency shop agreements and the principle of fairness
In the recent case of Association of Mineworkers and Construction Union v UASA (Formerly named the United Association of South Africa) and Others  11 BLLR 1134 (LAC) the Labour Appeal Court (LAC) considered whether members of a minority union that is a bargaining agent recognised within a bargaining council should be liable for the payment of agency fees and whether an agreement to this effect (known as an agency fee agreement) is valid.
At a glance
- The Association of Mineworkers and Construction Union (AMCU) started recruiting within the sugar industry. AMCU's membership grew to the extent that it was able to achieve representation in the National Bargaining Council for the Sugar Manufacturing and Refining Industry (NBCS). AMCU was eventually admitted as a member of the NBCS.
- Days prior to AMCU's admission, the three other majority unions entered into an agency shop agreement in which they agreed that the employer would deduct an agency fee constituting a percentage of the basic wages of employees in the bargaining unit.
- Aggrieved with the situation, AMCU referred an interpretation dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA). Both the CCMA and the Labour Court dismissed the application, but it was upheld by the Labour Appeal Court.
The facts briefly are that on 18 November 2004, the Sugar Manufacturers and Refiners Employer’s Association (SMREA) and the Food and Allied Workers Union (FAWU), UASA (formerly known as the United Association of South Africa) and the National Sugar and Refining and Allied Industries Employees Union (NASARAIEU) entered into an agency shop agreement in terms of section 25 of the Labour Relations Act 66 of 1995 (LRA).
The deregistration of NASARAIEU in 2017 triggered a notice from SMREA to its members stating that all former NASARAIEU members had automatically defaulted to the agency shop fee in terms of the agency fee agreement and would be required to pay the monthly agency fee. The alternative to this was to take up membership with one of the other unions affiliated to the National Bargaining Council for the Sugar Manufacturing and Refining Industry (NBCS) that were signatories to the agency shop agreement. The notice also warned employees that choosing any non-signatory union would mean that the employees would have to pay the prescribed agency fee in addition to any subscription fees of a minority union. Furthermore, that this was to be the position “until the ‘other’ union has recruited enough members to join the bargaining council, at which stage the agency fee will fall away”. The Association of Mineworkers and Construction Union (AMCU) seized the opportunity to fill the void left by NASARAIEU and started recruiting within the sugar industry. AMCU’s membership grew to the extent that it was able to achieve representation in the NBCS. AMCU was eventually admitted as a member of the NBCS.
Days prior to AMCU’s admission, SMREA, FAWU and UASA entered into an agency shop agreement wherein they agreed that the employer would deduct an agency fee constituting a percentage of the basic wages of employees in the bargaining unit.
They further agreed that the agency fee would be a monthly deduction paid in to an account administered by the unions. Despite AMCU’s admission, the agency shop fee agreement remained the same, resulting in AMCU’s members still being compelled to pay the agency shop fee agreement on top of their union subscription. Aggrieved with the situation, AMCU referred an interpretation dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA). Ultimately, the dispute arbitrated was based on AMCU seeking a cessation of agency fee deductions from its members and that it be part of the NBCS’s members who were excluded from paying agency fees.
The Commissioner dismissed the application and found that nowhere in section 25 of the LRA is there mention of unions that become bargaining agents having a “special dispensation”, and that the CCMA did not have the “ability to make binding orders relating to the legislator’s intention”. Dissatisfied with the conclusion, AMCU approached the Labour Court to review and set aside the Commissioner’s findings or, in the alternative, to declare the agency fee agreement null and void. AMCU contended that the Commissioner misconstrued the nature of the enquiry as its case was about the interpretation of the agency shop agreement and not section 25 of the LRA.
The Labour Court
In arriving at its decision, the Labour Court posed the question: “Where a majority union (or alliance of unions) is present in a bargaining council, how effective is the service provided by a minority union?”
The Labour Court was not convinced that the plain meaning of section 25 created an absurdity which could tempt it to rewrite the provisions of the law under the guise of a purposive interpretation. It agreed with the Commissioner’s conclusion and found that the agreement complied with section 25. Accordingly, AMCU’s application was dismissed.
The Labour Appeal Court
The Labour Appeal Court held that section 25 of the LRA is rooted in the principle of fairness and that AMCU had not sought to benefit without carrying a concomitant burden that comes with a union’s duty to bargain on behalf of its members. Agency fee agreements aim to cure the situation of free riders; where non-union or minority union members benefit from the services of the majority union without being members of the union.
AMCU achieved the status of a bargaining agent and was further prepared to fulfil its concomitant duty in this regard. It sat with the majority unions and the employers’ representatives around the same bargaining table. It incurred the same expenses as majority unions to enable it to efficaciously represent its members. Its members were therefore not free riders.
The Labour Court’s question about effectiveness of the service provided by a minority union where a majority union (or alliance of unions) is present in a bargaining council was, in the court’s view, irrelevant. It found that this was an inappropriate yardstick. At the negotiating table, the minority union presents a different perspective which is advantageous to employees.
In addressing the appeal, the court clearly held that “generally, in agency shop agreements, it must be implied that when a minority union becomes a bargaining agent, its members should not pay an agency fee unless there are express terms to the contrary.”
Ultimately, the appeal court found that by finding that AMCU wanted words read into section 25 of the LRA, both the commissioner and the Labour court misconstrued AMCU’s case. AMCU’s appeal therefore succeeded.
This judgment confirms that agency shop agreements are based on fairness. The reason an agency fee is paid is because the minority union members receive a benefit from the service of the majority union. In the case where the minority union is rendering this service, there is no justification for the majority unions to continue to receive agency fees.
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