A closed shop is a form of union security agreement under which the employer agrees to hire union members only, and employees must remain members of the union at all times in order to remain employed.[1]
International Labour Organization covenants do not address the legality of closed shop provisions, leaving the question up to each individual nation.[2] The legal status of closed shop agreements varies widely from country to country, ranging from bans on the agreement to extensive regulation of the agreement to not mentioning it at all.
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The Taft-Hartley Act outlawed the closed shop in the United States in 1947. The union shop, where employees must join the union after being hired, has also been deemed a violation of the U.S. Constitution.[3] An employer may not lawfully agree with a union to hire only union members; it may, on the other hand, agree to require employees to join the union or pay the equivalent of union dues to it after a set period of time. Similarly, while a union could require an employer that had agreed to a closed shop contract prior to 1947 to fire an employee who had been expelled from the union for any reason, it cannot demand that an employer fire an employee under a union shop contract for any reason other than failure to pay those dues that are uniformly required of all employees.
Construction unions and unions in other industries with similar employment patterns have coped with that prohibition by using exclusive hiring halls as a means of controlling the supply of labor. While such exclusive hiring halls do not, in a strictly formal sense, require union membership as a condition of employment, they do so in practical terms, in that an employee seeking to be dispatched to work through the union's hiring hall must either pay union dues or pay a roughly equivalent hiring hall fee. So long as the hiring hall is run on a non-discriminatory basis and adheres to clearly stated eligibility and dispatch standards it is lawful. The Taft-Hartley Act also bars unions from requiring unreasonably high initiation fees as a condition of membership in order to prevent unions from using initiation fees as a device to keep non-union employees out of a particular industry.
For the entertainment industry, unions representing performers have as their first rule one banning any represented performer from working on any non-union production. Penalties are imposed on the union member, not on the employer, and can lead to loss of union membership. Most major productions are union productions, and non-members join the Screen Actors Guild through performing as extras and earning three union vouchers, or by being given a speaking line and entering that way. The other performance unions do not have minimum membership standards, but joining the union bars one from working on non-union productions.
Also, the National Labor Relations Act permits construction employers to enter into pre-hire agreements, in which they agree to draw their workforces from a pool of employees dispatched by the union. The NLRA prohibits pre-hire agreements outside the construction industry.[4]
The status of closed shops varies from province to province within Canada. The 1946 Supreme Court ruling Rand formula determined largely that, while Section Two of the Charter of Rights and Freedoms guaranteed both the freedom to associate and the freedom not to associate, employees in a work-environment largely dominated by a union were beneficiaries of union policies, and as such should pay union fees, regardless of membership status. However, religious and conscientious objectors were allowed the option of paying the amount to a registered charity instead.
All forms of closed shops in the UK are strictly illegal under section 137(1)(a) of the Trade Union and Labour Relations (Consolidation) Act 1992 (c. 52).[5]
All forms of closed shops in the Commonwealth are illegal under the Workplace Relations Act 1996.