Arbitration

Arbitration is a process where a neutral third party hears evidence and issues a decision to resolve a workplace dispute outside of court.

What is Arbitration?

Arbitration is an alternative dispute resolution method used to settle employment disagreements, such as wrongful termination, discrimination claims, or contract disputes. It can be binding or nonbinding depending on the agreement between the parties.

How Does it Work

Parties agree to submit a dispute to one or more arbitrators. The arbitrator reviews documents, hears testimony, and issues an award. The process is typically faster and more private than litigation and may limit appeals.

Note: Binding arbitration means the arbitrator’s decision is final and enforceable.

Practical Use in HR

Organizations use arbitration to manage legal risk, control costs, and preserve confidentiality. HR teams, legal counsel, and recruiters encounter arbitration clauses in employment contracts, separation agreements, and collective bargaining agreements.

• Incorporating arbitration clauses into employment contracts to reduce litigation risk
• Resolving a manager-employee discrimination claim without court involvement
• Settling union grievances under a collective bargaining agreement

Related HR Concepts

Arbitration is closely related to mediation, alternative dispute resolution, grievance procedures, employment contracts, collective bargaining, and litigation. Each has different formality, cost, and enforceability characteristics.