The Legality of Union Dues Deductions From Non-Union Employees in the Philippines (Everything you need to know, updated to July 2025)
1. Key Concepts at a Glance
| Term | Core Idea | Governing Rule |
|---|---|---|
| Union dues | Regular contributions of members to their union. | Deducted only with individual written check-off authorization (Labor Code art. 259 [f]; art. 276). |
| Agency fee / solidarity fee | Amount collected from non-members who benefit from the CBA negotiated by the certified bargaining agent (CBA-CBA). | Allowed only if: (1) expressly provided in the CBA and (2) the union is the duly certified exclusive bargaining agent. No individual authorization is needed, but deductions must stop when an employee objects on valid religious grounds (RA 3350). |
| Special assessments | One-off or extraordinary impositions (e.g., strike fund). | Require (a) majority vote by secret ballot at a special meeting and (b) written notice to DOLE (Labor Code art. 276). Never chargeable to non-members. |
| Union security clauses | Contractual provisions requiring union membership or dues payment as a condition of continued employment (closed shop, union shop, maintenance of membership, agency shop). | Constitutional so long as exceptions (religious objectors, already-affiliated employees, true confidentials, etc.) are observed (Victoriano v. Elizalde Rope, 1974; art. 259 [e]). |
2. Constitutional Bedrock
- Art. III §8, 1987 Constitution – protects freedom of association and non-association.
- Art. XIII §3 – directs the State to “guarantee the rights of all workers to self-organization, collective bargaining and negotiations.”
- Freedom not to join a union is not absolute; it yields to a valid union-security clause that passes strict scrutiny, provided statutory safeguards (e.g., religious exemptions) are satisfied.
3. Statutory Framework (Private Sector)
| Provision | Current Renumbering (RA 10395, 2013) | Substance |
|---|---|---|
| Check-off rule | Art. 259 (f) (old Art. 248 [e]) | No deduction of “union dues or any other fees” from wages without the employee’s written individual authorization unless it is an agency fee/union-dues clause in a CBA. |
| Agency-fee authority | Art. 259 (e) | An employer may be required by CBA to deduct agency fees from non-members who accept CBA benefits. |
| Duty to furnish financial reports | Art. 276 (old 241-n) | Unions must account for all collections; any employee (member or non-member) may examine union books upon written request. |
| Religious objectors | RA 3350 (1950) | Employees with bona fide religious beliefs opposing union membership/fees cannot be compelled to pay dues or agency fees. |
| Criminal penalty | Art. 303 | Violations (illegal deductions, refusal to account) may constitute unfair labor practice (ULP) with corresponding criminal liability. |
4. Public-Sector Variant
Executive Order 180 (1987) – covers government employees.
- Sec. 5(4) permits agency-fee deduction from non-members only after a majority of all employees in the appropriate unit authorize it through secret-ballot referendum supervised by the Civil Service Commission (CSC).
- The Department of Budget and Management (DBM) and CSC Joint Circular 1-2021 harmonises payroll procedures: automatic remittance once certified, stoppage upon resignation/transfer/retirement.
5. Supreme Court Jurisprudence
| Case | G.R. No. / Date | Doctrinal Lesson |
|---|---|---|
| Victoriano v. Elizalde Rope Workers’ Union | L-25246, Sept 12 1974 | Upheld union-security clauses but carved out RA 3350 religious exemption. |
| Lapanday Workers’ Union-SPL v. NLRC | 96434, Mar 3 1992 | Agency-fee clause in the CBA binds non-members; written individual authorisation not needed. |
| Progressive Dev’t Corp. v. Sec. of Labor | 114421, Jul 22 1999 | Re-affirmed automatic agency fee deduction; employer’s refusal is ULP. |
| Kawashima Textile Mfg. v. Miranda | 160352, Dec 4 2007 | Non-union employees outside the bargaining unit cannot be charged agency fees. |
| BPI Employees Union-Metro Manila v. BPI | 164301 & 164302, Mar 21 2017 | Agency fee may be set at a rate different from union dues if stipulated in CBA and not oppressively excessive. |
| Del Monte Phils. v. Bukluran ng mga Manggagawa | 222080, Apr 26 2022 | Solidarity fees from non-members are valid only if the union first obtains a separate written consent whenever the CBA is silent. |
Trend: The Court consistently protects the union’s right to collect agency fees only where the procedural and substantive limits imposed by the Labor Code and CBA are faithfully observed.
6. Practical Compliance Checklist for Employers & Unions
- Confirm certification status – Only the exclusive bargaining agent may invoke agency-fee authority.
- Review CBA text – It must contain a clear agency-fee or union-security clause; absent this, deductions from non-members are illegal.
- Verify bargaining-unit coverage – Employees outside the unit (managerial, confidential, supervisory groups in different levels) are off-limits.
- Observe religious exemptions – Require a notarised written statement of objection; then cease deductions and, if a closed shop, segregate them into the “religious objector” category.
- Keep the books open – File annual financial statements with DOLE and give members/non-members access within 30 days of request.
- Remit on time – Under DO 18-A §12, remittance must be made within 10 days after deduction, or the employer risks ULP charges.
7. Remedies for Aggrieved Non-Union Workers
- ULP charge – File with the NLRC Regional Arbitration Branch against both union and employer for illegal deductions.
- Refund action – Seek restitution of wrongly deducted amounts; interest at legal rate applies.
- Criminal complaint – After a final NLRC judgment, initiate criminal prosecution under Art. 303.
- Administrative redress (public sector) – Bring the matter before the CSC or the Office of the Ombudsman for misuse of deductions.
8. Tax Treatment & Accounting
- Union dues and agency fees are not subject to income tax in the hands of rank-and-file employees (NIRC §32[B][7][f]).
- For unions, dues form part of mutual benefits; income is tax-exempt provided no portion inures to any officer’s personal benefit (NIRC §30[E]).
9. Emerging Issues (2023–2025)
- Digital payroll platforms – DOLE Labor Advisory 05-2023 clarifies that electronic check-off authorisations bearing verified digital signatures are acceptable.
- Gig-economy workers – Bills filed in the 19th Congress propose extending collective-bargaining rights (and agency-fee mechanics) to app-based platform workers; as of July 2025 none has become law.
- Data-privacy overlay – NPC Advisory Opinion 2024-013 reminds employers that transmitting payroll deduction lists to unions is a “legitimate interest” ground under the Data Privacy Act, but personal data must be limited to what is necessary (name, period, amount).
10. Frequently Asked Questions
Can the amount of the agency fee equal more than union dues? Yes, provided the CBA states the rate, it is not unconscionable, and the union duly accounts for its use (BPI case, 2017).
May a non-union employee refuse to accept CBA benefits to avoid the fee? Yes in theory, but he must expressly waive all economic improvements bargained for by the union—an almost impossible stance.
Are deductions permissible during a wage-freeze due to financial distress? Yes; the agency fee is not a wage increase but a lawful charge. However, parties may mutually suspend it under an MOA duly reported to DOLE.
What if the CBA has lapsed but parties are in renegotiation? The “automatic renewal clause” (art. 264) keeps economic provisions—including agency-fee clauses—effective until a new CBA is signed.
11. Conclusion
Under Philippine law, the line is clear: union dues are for members, agency fees for non-members—and both are valid only when the strict procedural and substantive checkpoints laid down by the Constitution, the Labor Code, and Supreme Court jurisprudence are observed. For employers, meticulous payroll compliance and respect for exemptions shield against ULP liability. For unions, transparent governance and faithful adherence to CBA terms preserve both funding and credibility. For workers, knowing these rules empowers them to assert their rights—whether to contribute, to object, or to demand accountability—ensuring that collective bargaining remains truly collective and never coercive.