Closed Shop Agreement

Home » Agreement Articles » Closed Shop Agreement

Closed Shop Agreement

A Brief Introduction About the Closed Shop Agreement

The final agreement, also known as a pre-closed shop agreement is developed, to protect the union workers. Under such agreements, an organization may require their employees to be a part of a specific trade union, or it can also be a labor union. The closed shop agreement is found under the terms of conditions specified under the union contract (Spielman’s, 1943). To remain employed in an organization that is under the contract, the candidate must be a standing member of the specific union. This means that the organization is required to fire any employee that considers to leave the union or lose their status in the union. In some cases, the trade unions have a monopoly over the industry and the organization connected to those industries. So, in such cases, the organizations connected to the industry have to hire union workers, and it was called a closed shop (Hoagland, 1918).

Who Takes the Closed Shop Agreement – People Involved

The people involved in the closed shop union is the employer of a company, the workers who have been hired in that organization along with other union members (Despres, 1939).

Purpose of the Closed Shop Agreement – Why Do You Need It

The primary purpose of this closed shop union agreement is to protect the union workers and gives them some security in the company where they are working currently. The closed shop is an agreement wherein the individuals are required to join a particular union with a condition to the employment term so that they remain the union members for their complete employment duration. The agreement is different from a union shop agreement wherein all the workers once employed should become a part of union members within the mentioned period. This agreement specifies the condition related to their employment period. In the case of closed shop agreement, the union members who are bound by the internal rules include enforcing worker’s solidarity during strikes can be hired. But in open shop lease, the rental agreement obliges the lessee who is the person making lease payments.

Contents of the Closed Shop Agreement – Inclusions

  • The date of the agreement, along with its expiry date.
  • The names of the people who belong to the trade union (Despres, 1939)
  • It includes the details of the contract.
  • It will include the requirement regarding the members who need to become the trade union after being employed in the organization (McCarthy, 1964)
  • The clause that specifies that the workers should be the members of the union before being hired (Newman, 1943)
  • Details related to the termination of a closed shop is mentioned that the union must hold to determine what should happen in case of agreement violation or cancellation.

How to Draft the Closed Shop Agreement

  • Applicants – To draft the closed shop agreement firstly it’s important to mention that the labor relation act applies to who all, like the employers, workers, trade unions, employees, organization, etc.
  • Dismissal – Details related to Dismissal should be included like, under the agreement the non-union workers may face expulsion “(Despres, 1939)
  • Conscientious objectors – The conscientious objectors like the workers who refuse to belong to a specific trade union may not be dismissed for refusing to join the union.
  • The legal force – The closed shop agreement will be legally bound if (the conditions have to mentioned here)
  • Acceptance – I Agree “button is there at the end the agreement which the applicant or the member has to sign to show that he/she accepts the terms and conditions of the agreement (Dunn & Gennard, 1984).

Negotiation Strategy

Closed union shop agreement is an agreement to manage the union-management relations where the employer agrees to hire and retain the employment for those people only who are good standing members of the trade union. The aim is to guarantee that the workers will observe the union rules, they will pay the monthly dues, take part in necessary strikes, accept wage-related terms.

[Also Read: Labor Agreement]

Benefits & Drawbacks of the Closed Shop Agreement


The process of closed shop lease authorizes the unions to negotiate for higher wages, enhanced working conditions, and benefits. The union employees attain guaranteed to voice and vote in the workplace matters and decision making, which is only possible because of contract. The union and its leader represent the voice of the members for the right disciplinary actions like termination and recruitment.


Higher the wages, the higher the benefits that can be won in union collective negotiating. But along with the benefits attained by the employees, the company has to bear huge costs at a dangerous level, if in case the union members demand is not fulfilled, and strike takes place (Despres, 1939).

What Happens in Case of Violation

An employee who comes together to work in an organization in a particular industry is considered as trade unions or labor unions. When these groups of workers abide by the rules mentioned in the agreement, they are all unionized. The members of the trade union have contractual rights and certain obligations to the union. (Zappala, 1992). In various cases, the closed shop agreements have been seen as violating the negative rights, which is freedom of association. This means that the member does not have the right to be a part of a specific trade union.

A closed shop agreement is a collective agreement that requires the members of a specific group to become a member of the trade union. As per the labor relations act 1992, all the employees are free to join the trade union or not. Failure to be a part of a trade union is considered unfair practice, and in such cases the compensation is payable.