Union Dues and Agency Fees: When Can Labor Unions Validly Increase Them?

The Supreme Court's 2016 decision in Peninsula Employees Union (PEU) v. Esquivel (G.R. No. 218454) provides important guidance on when a labor union may validly increase union dues and agency fees. The case clarifies the strict documentary requirements under the Labor Code and serves as a warning to unions that fail to follow proper procedure.

The Facts of the Case

The Peninsula Employees Union (PEU) affiliated with the National Union of Workers in Hotel Restaurants and Allied Industries (NUWHRAIN) in 2007. Beginning January 2009, PEU-NUWHRAIN sought to increase union dues and agency fees from one percent (1%) to two percent (2%) of employees' monthly salaries, citing the affiliation requirement.

The non-union employees objected, arguing that the increase was not properly approved. The Department of Labor and Employment (DOLE) initially ruled that PEU-NUWHRAIN could only collect agency fees at the old rate of one percent (1%), finding no proof of proper membership approval. On reconsideration, DOLE allowed the two percent (2%) collection retroactively from July 2010. The Court of Appeals reversed, and the union appealed to the Supreme Court.

The Legal Framework

The Labor Code recognizes a union's right to collect a reasonable agency fee from non-union members who benefit from the collective bargaining agreement (CBA). This right is quasi-contractual in nature, based on the principle that non-union employees should not unjustly enrich themselves from benefits negotiated by the bargaining union.

However, for union dues and fees to be increased, the law requires strict compliance with three documentary requisites:

1. A written resolution by a majority of all members at a general membership meeting duly called for the purpose;
2. The secretary's record of the minutes, including the list of members present, votes cast, the purpose of the assessment, and the recipient; and
3. Individual written authorizations for check-off, duly signed by the employees concerned.

The Court's Ruling

The Supreme Court denied the union's petition, affirming that PEU-NUWHRAIN failed to prove compliance with these requirements. The minutes of the October 28, 2008 meeting merely stated that the two percent (2%) union dues "will have to be implemented," which indicated that the matter still needed deliberation and approval.

The Court found that the July 1, 2010 General Membership Resolution—which purported to "confirm and affirm" the earlier approval—was insufficient. Since there was no prior valid approval to confirm, the later resolution could not cure the defect. The Court emphasized that the assembly was not called to approve the increase but merely to ratify a prior action that was never established.

Practical Takeaways

• Documentation is critical. A union must maintain complete and clear records of membership meetings, including minutes showing deliberation and formal approval of any dues increase.
• A "confirmatory" resolution cannot cure a defective approval. If the original meeting did not properly approve the increase, a later resolution confirming it will not suffice.
• Individual check-off authorizations are mandatory. Even with a valid membership resolution, the union must obtain each employee's individual written authorization for the deduction.
• Agency fees cannot exceed valid union dues. Non-members cannot be charged agency fees higher than the dues that members validly pay.
• Employers should verify compliance. Employers may face liability for making deductions without proper legal basis.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.