An agency shop is an entity in which a union represents all employees in a bargaining unit, irrespective of employee membership in the union. In this situation, the union can collect dues and assessments from all employees in the bargaining unit. These payments may be considered a condition of employment, so an employee can be discharged for not agreeing to the payments.
The theory behind an agency shop is that non-union members are participating in the benefits generated by the union, and so should share in the associated costs. Agency shops are not legal in all jurisdictions.