What Is the Difference between a Closed Shop Agreement and an Agency Shop Agreement

After a trade union has acquired organisational rights, employers or employers` associations and trade unions may conclude either an agency contract or an employment contract concluded as a form of recognition agreement. In states where „right to work“ laws apply, such union agreements are unenforceable. Agency stores are common in many places in the school environment. A union and a school board can enter into agency agreements if workers refuse to join a union but are still part of collective bargaining units. These workers often have to pay service fees, although the legal issues associated with these fees have given rise to significant litigation in the area of collective bargaining. Under these agreements, workers have the choice of joining the union and paying all dues, or paying only a service fee to cover the direct costs associated with collective bargaining. In the LAC case between the members of Solidarity obo employed in the Organization of Employers of the Automotive Industry and Motor Vehicle Manufacturers, Nissan SA (PTY) Ltd, Toyota SA (PTY) Ltd, Volkswagen of SA (PTY) LTD, Ford Motor Company of SA (PTY) Ltd, BMW SA (PTY) LTD, General Motors SA (PTY) LTD, Mercedes-Benz SA, National Bargaining Forum (Automobile Industry), NUMSA Case nr: JA11/17 dealt with the legality of the agency shop contract. The union argued that the conclusion of the agency store contract was null and void from the outset because it was incompatible with Article 25(3) of the LRA and that any deduction of fees was unlawful. The parties to the agency store contract amended the collective agreement in § 25 (3). The union also argued that a workshop agency contract that did not comply with the LRA was void from the outset and could not be amended to remedy the unlawful deductions against it. The court held that the original collective agreement was incompatible with Article 25(3) of the LRA and that it was null and void from the outset and could not be corrected. However, this agency contract is a collective agreement that can be modified and not corrected.

Rectification is a remedy to correct the failure to conclude a written contract that reflects the true agreement between the parties that was not the dispute but enforceability. The National Bargaining Forum did not attempt to correct a clause in the collective agreement because it did not reflect the true intent of the parties. It amended the collective agreement to ensure applicability by repealing the original version and subsequently replacing it with a compliant version. The court eventually dismissed the case at a cost, and the labour court`s decision was upheld. In some cases, trade unions have exercised a monopoly on a particular sector and on companies in that sector. When this happens, every company in an industry has to hire unionized workers, and they call it a „closed store.“ Collective agreements apply to a specific period of time, as described in the agreement. Unlike a regular contract, the parameters of the conditions do not end when the agreement expires. As long as the majority of workers still support the union, union representatives and management must negotiate a new collective agreement in good faith. The terms of the expired CBA will continue until a new date is reached. Union agreements allow an employer to hire non-unionized members, but require the employee to join the union within a certain period of time (usually after 30 days).

In practice, however, employers are not allowed to dismiss workers who refuse to join the union, provided that employees pay dues and fees to the union. Agency agreements require workers who do not join the union to pay dues and fees. In addition, the LRA states that it is not unfair to dismiss an employee because he or she refuses to join a union that is involved in a closed workshop agreement and is denied membership in a union that is involved in a closed workshop agreement, in accordance with the LRA. Workers at the time of entry into force of a workshop agreement may also not be dismissed because they refuse to join a trade union that is a party to the agreement; and workers may not be dismissed because they refuse, for reasons of conscience, to join a trade union party to the agreement […].