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A pre-entry closed shop (or simply closed shop) is a form of union security agreement under which the employer agrees to hire union members only, and employees must remain members of the union at all times in order to remain employed. This is different from a post-entry closed shop (US: union shop), which is an agreement requiring all employees to join the union if they are not already members. In a union shop, the union must accept as a member any person hired by the employer.
International Labour Organization covenants do not address the legality of closed shop provisions, leaving the question up to each individual nation. The legal status of closed shop agreements varies widely from country to country, ranging from bans on the agreement, to extensive regulation of the agreement to not mentioning it at all.
The Taft–Hartley Act outlawed the closed shop in the United States in 1947. The union shop was ruled illegal by the Supreme Court. States that have passed right-to-work laws go further by not allowing employers to require employees to pay a form of union dues called an agency fee. An employer may not lawfully agree with a union to hire only union members, but it may agree to require employees to join the union or pay the equivalent of union dues to it, within a set period after starting employment. Similarly, while a union could require an employer that had agreed to a closed shop contract prior to 1947 to fire an employee who had been expelled from the union for any reason, it cannot demand that an employer fire an employee under a union shop contract for any reason other than failure to pay those dues that are uniformly required of all employees.
The United States Government does not permit the union shop in any federal agency regardless of state law allowing for such.
Construction unions and unions in other industries with similar employment patterns have coped with the prohibition of closed shops by using exclusive hiring halls as a means of controlling the supply of labor. While such exclusive hiring halls do not, in a strictly formal sense, require union membership as a condition of employment, they do so in practical terms, in that an employee seeking to be dispatched to work through the union's hiring hall must either pay union dues or pay a roughly equivalent hiring hall fee. So long as the hiring hall is run on a non-discriminatory basis and adheres to clearly stated eligibility and dispatch standards, it is lawful. The Taft–Hartley Act also bars unions from requiring unreasonably high initiation fees as a condition of membership in order to prevent unions from using initiation fees as a device to keep non-union employees out of a particular industry. Also, the National Labor Relations Act permits construction employers to enter into pre-hire agreements, in which they agree to draw their workforces from a pool of employees dispatched by the union. The NLRA prohibits pre-hire agreements outside the construction industry.
For the entertainment industry, unions representing performers have as their first rule one banning any represented performer from working on any non-union production. Penalties are imposed on the union member, not on the employer, and can lead to loss of union membership. Most major productions are union productions, and non-members join the Screen Actors Guild through performing as extras and earning three union vouchers, or by being given a speaking line and entering that way. The other performance unions do not have minimum membership standards, but joining the union bars one from working on non-union productions.
All four major sports leagues are union shops, even though a franchise may be located in a state that has a right-to-work law or constitutional provision.
The status of closed shops varies from province to province within Canada. The Supreme Court has ruled that, while Section Two of the Charter of Rights and Freedoms guaranteed both the freedom to associate and the freedom not to associate, employees in a work-environment largely dominated by a union were beneficiaries of union policies, and as such should pay union fees, regardless of membership status. However, religious and conscientious objectors were allowed the option of paying the amount to a registered charity instead.
Dunn and Gennard found 111 United Kingdom cases of dismissals on the introduction of a closed shop, involving 325 individuals.:125 They state "While proponents of the closed shop may argue that an estimated minimum 325 dismissals is a relatively small number compared with the total population covered by closed shops, critics would see the figure as substantial arguing that one dismissal is one too many.":126 In relation to the pre-entry closed shop, they state "Its raison d'être is to exclude people from jobs by denying them union membership".:132
All forms of closed shops in the UK are illegal following the introduction of the Employment Act 1990. They were further curtailed under section 137(1)(a) of the Trade Union and Labour Relations (Consolidation) Act 1992 (c. 52) passed by the Conservative government at the time. The Labour Party, then in opposition, had supported closed shops until December 1989, when it abandoned the policy in accordance with European legislation. However, Labour shadow arts minister Thangam Debbonaire announced to an Equity conference in May 2016 that she favoured the introduction of a "limited" closed shop for actors, as part of Jeremy Corbyn's pledge to strengthen and introduce a new package of employment rights beneficial to employees. Equity was one of the last trade unions in the United Kingdom to offer a pre-entry closed shop until the 1990 act.
All forms of closed shops in the Commonwealth are illegal under Workplace Relations Act 1996. There was an attempt by the Howard Government to change the definition of what constituted a closed shop under the Workplace Relations Legislation Amendment (More Jobs, More Pay) Bill 1999. However the bill was subsequently defeated.