For some it's a path backwards, for others a plot twist by the Supreme Court. The many scenes in the movie about union dues have prompted reflections - in our view necessary - about trade union funding in Brazil. Pressing the "stop" button, what does the new position of the Federal Supreme Court (STF) reveal about the current "frame" of union dues?

At the beginning of September this year, Justice Alexandre de Moraes voted in a virtual judgment of the STF (in the context of a motion for clarification in ARE 1018459 - topic of general repercussion 935) reinforced the very new position of the majority of the Court's justices regarding the possibility of unions charging all those represented, regardless of membership or association with the organization, union dues provided for in a collective bargaining agreement, provided that:

  • it is approved by a general meeting of affiliated and non-affiliated workers; and
  • it gives those who do not wish to pay dues the right to object.

In the not so distant past, in November of 2017, the Labor Reform (Law 13,467/17) made impactful changes to the main sources of funding for trade union activities and ended the obligation to pay union dues (collected in March of each year in an amount equivalent to one day's salary).

The end of this compulsory contribution dried up the source of funding for many unions in Brazil, leading to the closure of various organizations at the time. The most committed organizations survived, adapting to the end of the dues and, especially through negotiations, engaging members or voluntary contributions.

Shortly before the Reform, the STF had already indicated the scenes that were to come: prohibition on compulsory collection of the numerous dues instituted by a collective bargaining agreement, including the compulsory union dues.[1]

In general terms, contributions to trade unions became optional, and were only obligatory for employees and companies that were members or for non-union members who voluntarily wanted to contribute - as long as they authorized any payment to the unions individually, and not collectively.

In the post-reform period, although under strong criticism from experts and organizations, this logic of voluntary contribution continued to be supported by the majority of STF justices - as seen by all in the judgment of ADI 5.794 -, guiding the dynamics of union funding in Brazil over the last six years.[2]

As the STF pointed out in the judgment of ADI 5.794, the compulsory union dues in Brazil (nicknamed by some as a "negotiation fee") is similar to the so-called agency fee, charged by US unions to workers to fund collective bargaining, with the exception of the employee's right to object when it becomes clear that these funds are being used inappropriately, such as for political funding.

The move towards compulsory union funding only for some and not for others has intensified the controversy over the lack of funding for employees and companies that benefit from collective bargaining but choose not to contribute to the unions that negotiated these rules.

Some have called the non-paying beneficiaries "hitchhikers"[3] - a term cited by the US Supreme Court in the grounds of the emblematic precedent Janus v. AFSCME (2018), also dealing with agency fee contributions from non-unionized (public) workers to unions.

There are those who say that, in practice, the change in the STF's position on issue 935 on compulsory union dues flirts with the concept of the now defunct union tax, based on the practical need to resolve the financial issue of unions in the post-Labor Reform period.

On the other hand, in what seems to us to be a reasonable balance, there are those who argue that the costs of union representation in collective bargaining can be shared among those represented who benefit from the collective bargaining agreements, regardless of their union membership, with the exception of the right to object to the payment of these fees for those who prefer to do so.

After all, how could the members of a category benefit from the "lunches", even if they don't bring the best menu, but insist on it being free?

Raising awareness about financing among all those who benefit from collective bargaining agreements, regardless of union membership, inevitably involves a debate that brings together both companies and labor lawyers.

The STF's case law also deserves attention, especially in view of the questions that may arise regarding the liability of companies that fail to deduct the union dues from their employees or, by omission, fail to pass on the amounts arising from this fee to the unions.

For now, we await the publication of the STF's decision, which will certainly bring more scenes to this feature film.


[1] ARE 1018459 RG / PR, decision published on March 10, 2017.

[2] STF/ADI 5.794, decision published on June 29, 2018.

[3] free translation of the expression "free rider", a term mentioned by the U.S. Supreme Court in the judgment of the case Janus v. AFSCME, 585 U.S. __ (2018).