Trade Union Agency Fees

Agency fee is a new concept in Kenya having been introduced by the Labour Relations Act, 2007.   The concept of deducting agency fees has not been quite understood, and according to FKE, it is one of those things that appear simple, yet complicated, at the same time.

What is Agency Fees?

This is a sum paid out to a trade union by non union-members, for benefiting from a negotiated Collective Bargaining Agreement.  The Minister has to authorize such deductions.

The money is meant for negotiating a contract, representing employees in grievances and arbitrations, and lobbying activities to foster collective bargaining negotiations or secure advocates.

Under what circumstances should an employer pay agency fees to a trade union? 

Section 49 of The Labour Relations Act, 2007 provides for agency fees payment to a trade union by an employer after effecting deductions from an employee’s salary.

The process of agency fee deductions begins when management is approached by the trade union to submit names of unionisable employees to them in order to identify the employees who have been employed under terms and conditions of a prevailing collective bargaining agreement between the trade union and the employer. Agency fees are paid to a trade union that has a registered recognition agreement with an employer in the industrial court and has requested the minister for labour requiring the employer bound by the collective agreement to deduct agency fees from the wages of unionisable employees who are not members of the trade union but are employed under terms and conditions of the collective bargaining agreement.

The rate of agency fees must not be higher than the normal union subscription fees deducted from union members through a check off system.

Agency fee is provided for under section 49 of the Labour Relations Act 2007.  The Act provides for the deduction of agency fees from employees who are not members of a trade union but are benefiting from terms of employment negotiated by a union with the employer in a collective bargaining agreement.

Right to engage

The right to collective bargaining is derived from the Constitution, which, under Article 41(5) gives every trade union, employers’ organisation, and employer “the right to engage in collective bargaining.”

The terms of a collective bargaining agreement usually apply to unionisable employees, that is any staff entitled to join the union, whether they are members or not.

Thus, if, as an employee, you are a beneficiary of a collective bargaining agreement (CBA) and you are not a member of the trade union that negotiated the CBA, you are required by law to pay agency fees.

The argument is that since you have gained from the activities of the trade union to which you could be a member but you have opted not to, you are obligated by law to contribute towards the activities of the trade union.

Labour minister

The point to emphasise here is that agency fees apply only to unionisable employees who are not trade union members.

It applies also to employees who have pulled out of the union but are still unionisable.

Section 48(1) and (2) of the Labour Relations Act authorises trade unions to request the Labour minister to issue an order directing an employer of more than five employees belonging to the union to deduct trade union dues from the wages of those members and “pay monies so deducted into a specified account of the trade union or in specified proportions into specified accounts of a trade union and a federation of trade unions”.

Section 49 (1) provides that “a trade union that has concluded a collective agreement registered by the Industrial Court with an employer, group of employers, or an employers’ organisation, setting terms and conditions of service for all unionisable employees covered by the agreement, may request the minister to issue an order requiring any employer bound by the collective agreement to deduct an agency fee from the wages of each unionisable employee covered by the collective agreement, who is not a member of the trade union”.

Note that the trade union has to make a request to the minister responsible for labour and get the order of the minister to be gazetted before agency fees can be deducted.

The request has to specify the amount to be deducted from such employees, but it should not exceed the applicable union fees.

Good practice

For the request to be valid, it must be signed by the authorised representatives of the trade union and employer, group of employers, or the employers’ organisation.

Once the order has been gazetted, it is incumbent upon both the officials of the union and the management of the concerned company to inform the affected workers about the agency fees deductions.

This would be considered a good management practice.

According to the Labour Relations Act, an employer who has been asked to submit agency fee payments has to initiate the deductions of the fees within 30 days of receiving the minister’s notice.

These Industrial Court may order that the deductions be implemented retrospectively where the collective agreement in respect of which the order for payment of agency fee is made has been applied so.

There have been concerns as to whether the law providing for payment of agency fees by non-members of a trade union without seeking their consent does not contravene freedom of association of an employee by forcing them to associate with the union.

The other side of the argument is whether an employee should benefit from a CBA by a union he is not a member of and has not paid any fee for the service.

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