Many companies who fall within an industry that is regulated by a bargaining council collective agreement may be bound by an agency shop agreement without their knowledge. An agency shop agreement will require the employer to deduct agency fees from their employee’s remuneration and pay the amount to a union controlled account.

Agency shop agreements are regulated by the Labour Relations Act (LRA) and provide as follows:

(25) Agency shop agreements

(1) A representative trade union and an employer or employers’ organisation may conclude a collective agreement, to be known as an agency shop agreement, requiring the employer to deduct an agreed agency fee from the wages of employees identified in the agreement who are not members of the trade union but are eligible for membership thereof.

(2) For the purposes of this section, representative trade union means a registered trade union, or two or more registered trade unions acting jointly, whose members are a majority of the employees employed-

(a)          by an employer in a workplace; or

(b)          by the members of an employers’ organisation in a sector and area in respect of which the agency shop agreement applies.

From the above definition it is clear that the agency fees are deducted from employees who are not members of the union. It may thus be the case that you do not have any employees in your workplace who are members of a union, however, the agreement may apply to all your employees.

The reason for providing for this specific arrangement is that under certain circumstances an employer’s organisation and trade union may conclude a collective agreement and employees who are not members of the union may derive some benefit from the agreement. It is thus only fair that non-union members should contribute to the efforts of the union’s bargaining.

It is also important to note that employees who are not members of the representative trade union are not compelled to become members of that trade union and the employees are not required to authorise the deductions.

The amount agreed to in the agency shop agreement may not exceed the unions monthly membership fee and the money must be used to advance socio-economic interests of all employees.

The nature of all bargaining councils is inter alia the negotiation of employment conditions by employer’s organisations and trade unions who both represent a majority of workers within a specific industry or sector and as such most council parties will be entitled to conclude such agreements in terms of (2)(b) above.

Agency shop agreements will usually be valid for the duration of the council’s main agreement, however, an employer or employers’ organisation that alleges that a trade union is no longer a representative trade union must give the trade union written notice of the allegation, and must allow the trade union 90 days from the date of the notice to establish that it is a representative trade union.

If, within the 90-day period, the trade union falls to establish that it is a representative trade union, the employer must give the trade union and the employees covered by the agency shop agreement 30 days’ notice of termination, after which the agreement will terminate.

If you are uncertain as to whether an agency shop agreement applies to your workplace you may contact your council directly or our offices for further assistance.


Article by: Stephen Kirsten

CEO Regional Manager – Cape Town