Collective agreements between trade unions and employers respectively employers' associations determine most of German working life. This is quite astonishing if you take into account that collective agreements are only binding for the parties to an individual contract if two requirements are met. Firstly, the employee must be a member of the trade union that concluded the collective agreement. Secondly, the employer or employers' association has to be a party to the collective agreement as well. Therefore, the basic thought behind collective bargaining is that the parties to a collective agreement negotiate only for their respective members. However, employers usually grant all their employees the advantages arising out of collective agreements, unwilling to give any incentive trade union membership. Doing this, employers rob trade unions of the possibility to heighten their attractiveness by advertising their collective agreements, and thus make it difficult for trade unions to recruit members. Outsiders, i.e. employees that do not belong to the trade union that concluded the collective agreement, enjoy the benefits of collective agreements on working conditions and collective wage agreements without having to take on the disadvantages that come with trade union membership, especially membership fees. This opportunity of free riding is one of the reasons why German trade unions - as well as trade unions in many other industrial nations - suffer from continuous loss of members. In Germany, less than one in three employees is a trade union member. To counter this dilemma, trade unions have developed different strategies. In the USA and in England, union security clauses comprising a closed shop used to be the predominant instrument to secure trade unions a sufficient amount of members. In Switzerland, trade unions may raise solidarity fees from outsiders and thus commercialise the usage of collective agreements (similar to US-American agency shop). In Germany, legal reasons forbid imitating these constructions. In my dissertation I reach the conclusion, however, that the parties may keep their collective agreements exclusive, whether in part or in total, and have only trade union members benefit from them (differentiation clauses [Differenzierungsklauseln]). In this respect, the opinion held by most courts and scholars must be contradicted. There are three different kinds of differentiation clauses. Simple differentiation clauses (einfache Differenzierungsklauseln) make trade union membership essential for the applicability of certain clauses in the collective agreement. Outsiders are excepted from the effects of those clauses. Nevertheless, in an individual contract employer and outsider may agree on simple differentiation clauses to apply to them, too. Tarifausschlussklauseln prevent the employer transferring certain terms of collective agreements on working conditions or collective wage agreements to contracts with outsiders. Abstandsklauseln determine that regarding certain benefits arising out of collective agreements there must always be a difference between trade union members and outsiders. Consequently, employers are free to grant outsiders the working conditions they like. At the same time, however, they are bound by the collective agreement to increase benefits for trade union members so that there remains a difference. Until a judgment by the Großer Senat (Great Senate) of the Bundesarbeitsgericht (Federal Industrial Tribunal) in 1967, these differentiation clauses were discussed by a broad public and occasionally put into practice. The Großer Senat then declared differentiation clauses to be illegal. From their point of view, differentiation clauses violate the outsiders' right to stay away from trade unions. The Großer Senat stated this negative freedom of association was founded in article 9, paragraph 3 Grundgesetz (Basic Law, German Constitution), in accordance with the majority of courts and scholars. Furthermore, the Großer Senat held differentiation clauses constituted an unlawful form of membership fees. Through differentiation clauses, outsiders were forced to make some sort of contribution to trade unions for using their collective agreements. Employers could not be forced to support the opposing coalition, if this meant endangering industrial peace by treating employees who belonged to a trade union differently from those who did not. Scholars found numerous additional arguments against differentiation clauses. Despite diverse criticism against the ruling by the Großer Senat and despite dissenting decisions by various Land (state) Industrial Tribunals, aforementioned decision still depicts the legal status quo. Since 1967, bonuses for trade union members have been agreed to only very occasionally. It was not until 2004 that trade union IG Metall concluded collective agreements with several companies in North Rhine-Westphalia that contained special bonuses for IG Metall members and were publicly advertised to attract new members. Legal objections against differentiation clauses are unpersuasive. Parties to collective agreements have the legal possibility to include outsiders in collective agreements. Neither simple differentiation clauses nor Abstandsklauseln violate the outsiders' negative freedom of association. Outsiders are free to negotiate individual terms of contract with any content. Simple differentiation clauses and Abstandsklauseln merely make it difficult for the employer to proceed in accordance with certain general criterions, treating every employee the same regardless of personal circumstances. Only Tarifausschlussklauseln may in principle violate the negative freedom of association. This could be the case if it were economically favourable for employees to become trade union members, i.e. if the value of the bonuses for trade union members amounted to more than the membership fees. Differentiation clauses are a means of attracting new members. As such, they constitute an expression of the positive freedom of association protected by article 9, paragraph 3 Grundgesetz. Therefore, there is a collision of basic rights that must be solved with regard to the facts and circumstances of each case. Generally, neither of the colliding basic rights takes priority over the other. Hence, it is decisive to what extent outsiders are restricted in their free will to stay away from trade unions. The higher the differential sum, the stronger will be the pressure on outsiders to join the trade union. In consequence, the difference between the position of an outsider and the position of a trade union member must not be more than one third of the respective benefit for trade union members. A larger difference usually turns working conditions unreasonable and therefore constitutes a violation of moral principles. However, if there are statutory minimum employment standards, as for instance concerning holiday entitlement, there is no upper limit to the difference between benefits for trade union members and outsiders. Ultimately, it is irrelevant whether negative freedom of association is protected by article 9, paragraph 3 or - as would be correct - by article 2, paragraph 1 Grundgesetz. Differentiation clauses do not violate the principle of equal treatment (article 3, paragraph 1 Grundgesetz) or the freedom of contract (article 2, paragraph 1 Grundgesetz), nor any provisions of the TVG, BGB or GWB. Differentiation clauses may also be declared to have universal validity, thus preventing collective agreements to be applicable and binding for all employees according to section 5 TVG. Since differentiation clauses give an incentive to join a trade union, employers will not normally agree to them freely. Particular importance must be given to the question how trade unions force differentiation clauses upon employers. In some companies in North Rhine-Westphalia, the IG Metall only agreed to deviations from local union agreements if t…