The Supreme Court ruled that a union cannot retroactively collect increased agency fees from non-union members if it fails to properly authorize the increase through a written resolution approved by a majority of its members during a duly called general membership meeting. This decision underscores the importance of adhering to procedural requirements when increasing union dues, protecting the rights of both union and non-union employees.

When Can Unions Raise Fees? Protecting Employee Rights in Fee Hikes

This case revolves around the Peninsula Employees Union (PEU) and its attempt to increase union dues after affiliating with the National Union of Workers in Hotel Restaurants and Allied Industries (NUWHRAIN). The PEU sought to raise union dues/agency fees from one percent to two percent of the rank and file employees’ monthly salaries, arguing that its affiliation with NUWHRAIN necessitated the increase. However, non-union members contested this increase, leading to a legal battle that ultimately reached the Supreme Court. At the heart of the matter was whether the PEU followed the legally mandated procedures for increasing union dues, thereby justifying the collection of increased agency fees from non-union members.

The Labor Code outlines specific requirements for a valid levy of increased union dues, as interpreted by case law. These include: (1) a written resolution authorizing the increase, approved by a majority of all members at a general membership meeting; (2) a secretary’s record of the meeting minutes, detailing the members present, votes cast, and the purpose of the assessment; and (3) individual written authorizations for check-off, signed by the employees concerned. The Supreme Court emphasized that all three documentary requirements must be met to justify a valid increase in union dues. The court’s stringent stance protects employees from arbitrary fee hikes and ensures transparency in union financial matters. It reinforces the principle that unions must adhere to democratic processes when managing membership fees.

In this case, the PEU argued that a General Membership Resolution (GMR) confirmed the approval of the deduction of two percent union dues. However, the Supreme Court found that the minutes of the General Membership Meeting did not sufficiently demonstrate that the increase had been duly deliberated and approved. While the minutes mentioned the implementation of the increased dues due to the affiliation with NUWHRAIN, it lacked explicit evidence of a vote or thorough discussion on the matter. The court underscored that the GMR, issued after the fact, could not retroactively validate the increase. Because the initial steps for approval were not demonstrably followed, the subsequent attempt to ratify the increase was deemed insufficient. This highlights the importance of documenting the decision-making process within union meetings meticulously.

The Supreme Court pointed out that the absence of evidence of due deliberation and approval during the initial meeting could not be remedied by a later resolution attempting to confirm or ratify the decision. The Court stated:

It is evident from the foregoing that while the matter of implementing the two percent (2%) union dues was taken up during the PEU-NUWHRAIN’s 8th General Membership Meeting on October 28, 2008, there was no sufficient showing that the same had been duly deliberated and approved.

Building on this principle, the Court emphasized the significance of proper documentation. The Supreme Court decision clarifies that unions must meticulously follow all procedural requirements when increasing dues. Specifically, the minutes of the general membership meeting must explicitly reflect a formal approval process, including deliberation and voting on the proposed increase. Should this process not be duly recorded, any subsequent resolution attempting to retroactively validate the increase will be deemed insufficient. The Court further held that if the members approved the increase in union dues, that detail should have been mentioned in the minutes and the GMR of the same date. These requirements ensure transparency and protect the rights of union members.

This ruling has significant implications for both union members and non-union employees. For union members, it reinforces their right to participate in decisions regarding union dues and ensures that increases are not imposed arbitrarily. For non-union employees who benefit from collective bargaining agreements (CBAs), it clarifies the limits of agency fees and ensures that they are not required to pay more than what is legally justified. By requiring strict compliance with procedural requirements, the Supreme Court has struck a balance between the rights of unions to manage their finances and the rights of employees to be protected from unauthorized deductions. The Court’s decision safeguards the financial interests of employees. By mandating stringent adherence to procedural requirements, it ensures that any increase in dues or fees must be supported by evidence of proper deliberation and approval from the union membership.

Furthermore, the Supreme Court addressed the necessity of individual check-off authorizations. Given that the process of increasing union dues was flawed, the submission of check-off authorizations becomes inconsequential. The Court underscored the necessity of obtaining express consent from employees for any deduction in their compensation. This consent must be obtained by adhering strictly to the steps outlined in the law. The Court’s emphasis on strict compliance with legal procedures highlights the importance of transparency and fairness in union operations. Ensuring that all requirements are meticulously followed not only protects the rights of individual employees but also fosters a more democratic and accountable union environment.

FAQs

What was the key issue in this case?	The key issue was whether the Peninsula Employees Union (PEU) validly increased union dues/agency fees from one percent to two percent of employees’ monthly salaries.
What did the Supreme Court rule?	The Supreme Court ruled that the PEU failed to comply with the legal requirements for a valid increase in union dues, making the collection of increased agency fees unjustified.
What are the requirements for increasing union dues?	The requirements include a written resolution of the majority of all members, a secretary’s record of the meeting minutes, and individual written authorizations for check-off.
Why was the General Membership Resolution (GMR) deemed insufficient?	The GMR was deemed insufficient because the minutes of the General Membership Meeting did not show that the increase had been duly deliberated and approved.
What is an agency fee?	An agency fee is a fee collected by a union from non-union members who benefit from a collective bargaining agreement negotiated by the union.
Can a union retroactively validate an increase in union dues?	No, a union cannot retroactively validate an increase in union dues if the initial approval process was flawed.
What is a check-off authorization?	A check-off authorization is an individual written authorization signed by an employee allowing deductions from their compensation for union dues or other fees.
Who benefits from this Supreme Court ruling?	Both union members and non-union employees benefit, as it protects their rights regarding union dues and agency fees.

In conclusion, this case reinforces the importance of unions adhering to procedural requirements when increasing dues, ensuring that the rights of both union and non-union employees are protected. The ruling serves as a reminder that unions must follow democratic processes and provide transparent documentation to justify any increase in fees.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: PENINSULA EMPLOYEES UNION VS. MICHAEL B. ESQUIVEL, G.R. NO. 218454, December 01, 2016