What is an Arbitration?
An arbitration is a process for the resolution of disputes outside the courts. The parties to an agreement (whether an employment agreement or a collective agreement), agree to refer the dispute to one or more persons (either a single Arbitrator or Board of Arbitration) and agree to be bound by the decision or "award" granted. Other business dealings can also be subject to arbitration, for example commercial law disputes.
Arbitration in an Employment Law Context
Arbitration in employment law is quite rare. However, some employment contracts do include arbitration clauses which require the parties to address their disputes before an Arbitrator. When arbitration clauses are used, they are seen most in executive employment contracts (where more complex issues of compensation and entitlement may arise) and, often they are used by religious organizations due to their unique employment relationships.
Sometimes the arbitrator or arbitrators will be chosen in advance by the parties, and names reduced to writing in the employment contract. Sometimes this will include a list of arbitrators. Otherwise, the parties can agree to choose an Arbitrator or Board of Arbitration from those available within the province. The cost of an Arbitrator is usually shared between the parties. In Ontario, employment law arbitrations are governed by the Arbitration Act.
Although arbitrations are outside the courts, and arguably are less adversarial, they are subject to similar kinds of Rules of Evidence, legal doctrines and case law. The parties should be represented by experienced employment lawyers.
What is Labour Arbitration?
Generally, when we think of Arbitration, it is usually in the context of Labour Arbitration; that is, disputes between an employer and a union in the context of a collective bargaining agreement. This is often called Grievance Arbitration.
Some collective agreements provide a list of arbitrators to be chosen with the agreement of the parties. Where the collective agreement does not provide arbitrator names, the parties may agree to choose an arbitrator from a list of accredited arbitrators available within the Province. Many arbitrators offer their services through third-party websites, which also provide schedules as to availability.
In a unionized environment, almost all disputes are subject to arbitration. The parties cannot sue each other in court if the dispute is in any way related to a collective agreement or the administration of a collective agreement. Every collective bargaining agreement includes, or is deemed to include, an arbitration clause requiring the parties to submit disputes to binding arbitration.
Labour Arbitration is a private process. There are only two parties to the dispute: the Company and the Union. An employee or "grievor", although affected by the arbitration, has no independent right to be represented by separate counsel at the arbitration. The dispute or "grievance" belongs to either the Company or the Union; not the employee. This is because it is only the Company and the Union who are parties to the collective agreement. Additionally, because arbitration is a private process, neither an affected employee, the Union or the Company has the independent right to include spectators at the hearing.
What is binding arbitration?
Binding arbitration means that the arbitrator's decision is final. You cannot appeal the decision to the courts, but in very rare cases, if the decision is fundamentally flawed, you can seek judicial review. The test applied for judicial review is whether an arbitrator's decision is "patently unreasonable". Because the courts generally give deference to arbitrators on account of their specialized skill set, the threshold for judicial review is very high. Most applications for judicial review fail, and therefore it is seldomly pursued. Practically speaking, this means that an arbitrator's decision is the final decision and the parties are bound to it. In Ontario, the judicial review of an Arbitrator's decision is to the Divisional Court.
Generally, the arbitrator's powers come from the governing labour legislation: the Labour Relations Act in Ontario, or the Canada Labour Code (if federally regulated). Under the legislation, Arbitrators or Boards of Arbitration are effectively given the same kind of powers as a Labour Board. This includes the right to order parties to appear, give evidence, and disclose documentation. The Arbitrator's powers also come from the collective agreement, and subject to the law, the collective agreement can limit the Arbitrator's powers or jurisdiction. For example, unless a collective agreement provides for a specific penalty with respect to employee discipline, an arbitrator may alter that penalty.
What happens if the parties do not abide by the final decision of the Arbitrator?
Under the law, a party cannot go back to the same Arbitrator once a final decision has been rendered. The final decision cannot be varied, and the Arbitrator has no power to enforce it. However, either party subject to the decision, may file that decision with the courts and have it enforced in the very same manner as if the decision was rendered by the court.
What can Hyde HR Law do for my company?
A lot can be at stake at a Labour Arbitration. Arbitration awards can sometimes cost the losing party hundreds of thousands or even millions of dollars, depending upon the nature of the dispute. Hyde HR Law provides strong and specialized representation to employer clients in labour arbitrations. Although located in Toronto, we do labour arbitrations across Canada. We are specialists in the field. Contact us today.