The definitive end of mandatory union dues

On June 28 and 29, 2018, on the eve of the beginning of the judicial recess of the Federal Supreme Court (“STF”), this Court, by 6 votes to 3, resolved the controversial issue regarding the constitutionality of the end of the mandatory union contribution, maintaining as valid the changes to articles 578, 579 and 582 (among others) of the Consolidation of Labor Laws (“CLT”), brought by the Labor Reform (Law No. 13.467/2017).

Until the Labor Reform came into effect on November 11, 11, companies were required to deduct from their employees, in March of each year, regardless of their authorization, the amount equivalent to one day's work, for transfer to the unions representing the employees' category. Employers, in turn, were required to pay the employer's union dues to the unions representing the companies, in January of each year, in an amount proportional to their share capital or revenue.

The Labor Reform significantly changed more than 100 articles of the CLT, in addition to other legal provisions, changes that have been the subject of legal discussions in all instances.

Among the most relevant changes are the amendments to articles 578, 579 and 582 of the CLT, through which the union contribution (whether by the employee or the employer) became optional and the discount on workers' payrolls became possible only with their prior and express authorization.

In recent months, especially since March of this year (strategically, in order to justify the urgency of the unions' request for preliminary injunction, even though they had remained silent since the enactment of the Law, on 13/07/2017), numerous companies found themselves involved in lawsuits initiated, for the most part, by unions representing employees from the most diverse economic categories, in which the deduction of union dues from employees was requested in a compulsory manner and regardless of their authorization, under the argument that the change introduced by the Labor Reform would be unconstitutional.

In the same vein, dozens of Direct Actions of Unconstitutionality ("ADINs") were filed before the Supreme Federal Court (STF). The ruling held on the morning of June 29, 06, resulted in the analysis of 2018 ADINs and 19 Declaratory Action of Constitutionality ("ADC") on the same topic: the constitutionality of the amendment introduced by the Labor Reform, which made union dues optional.

The actions discussed both the nature of the union contribution, understood by many (and by some STF ministers) as a tax or public revenue, and also the financial and economic impact of the change on union entities and the legislative process of approving Law No. 13.467/2017 as a whole.

By a majority of 6 votes (ministers Luiz Fux, Alexandre de Moraes, Luís Roberto Barroso, Gilmar Mendes, Marco Aurélio and Cármen Lúcia) against 3 (ministers Edson Fachin, rapporteur of the actions, Rosa Weber and Dias Toffoli), the STF concluded that it is not possible to admit that union dues are imposed on workers and employers when the Federal Constitution itself determines that no one is obliged to join or remain a member of a union entity.

Additionally, it was concluded that the end of mandatory union dues does not violate the Constitution, either because unions can rely on other sources of funding, or because it is not a contribution of a tax nature, which would require a different legislative process, a prior economic-financial impact study and a transition rule.

One of the arguments used by the ministers greatly favors future analyses regarding the constitutionality of other points of the Labor Reform, in the sense that the discussion is eminently political, and it is not up to the STF to make such decisions, but rather to the National Congress, the political arena responsible for the legislative process.

This argument offers a possible direction for the justices when analyzing the legislative process that culminated in the enactment of Law No. 13.467/2017 and the other changes introduced into labor relations by the Labor Reform. Several points have had their constitutionality questioned (apparently, the next issue to be discussed will be intermittent work, in the second half of the year). However, Justice Carmen Lúcia, the current president of the Court, has already signaled that the mere absence of transitional rules is not "sufficient to make the enacted norms incompatible with the Federal Constitution".

In the coming months, we will likely face an increase in the difficulty in the relationship between companies and unions, which has already deteriorated since the beginning of the year with the suppression of contribution transfers and, much more worrying, attempts by the union entity to establish alternative charges to union dues as a way of enabling collective bargaining and/or any necessary assistance.

Several unions have established, through assemblies approved only by a majority of those present, mandatory negotiation contributions for all workers represented in the category or for all beneficiaries of collective bargaining agreements ("CBAs"), as a way to coerce workers into authorizing the deduction of union dues. If refused, they threaten to refuse to participate in collective bargaining and register collective bargaining agreements with the Ministry of Labor (Mediation System), which makes the execution of CBAs and specific negotiations on various issues impossible (especially after the introduction of Article 611-A into the CLT). Furthermore, unfairly, they announce to employees that only those who have agreed to pay union dues will be able to benefit from the CBAs.

With the Supreme Federal Court's decision, we are likely to require individual authorization from each employee to deduct union dues, regardless of the name given to this institution. However, unions will likely continue to create alternative forms of contributions that they consider mandatory for their own survival.

If, on the contrary, unions take advantage of this opportunity to seek to be even more representative, more efficient and, therefore, more interesting, truly possessing representation, employees and employers will voluntarily seek membership in their respective union entities, willingly contributing to those that have become more professional, improved and updated themselves to the reality of new labor relations.

 

By: Drielle Amate, coordinator of the labor team at Montgomery & Associados.

 

Montgomery & Associates is available for any clarifications regarding the topic.

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