Labour arbitration has become one of the chief methods of dispute resolution in the Canadian workplace. Disagreement and disputes over collective agreement issues are common in the workplace, even when there is a collective agreement in place.
Arbitration is a quasi-judicial process through which labour disputes between management and labour, regarding the collective agreement, are resolved.
Here, an impartial third-party (an arbitrator or arbitration board) hears evidence presented by both the union and the employer on the issues in dispute, and hands down a decision which becomes a binding arbitration agreement.
We can define arbitration as:
"Arbitration is the dispute resolution process of having an impartial arbitrator, or arbitration board, pass a decision where the parties in dispute have been unable to negotiate a settlement. This decision of the arbitrator is binding on both parties".
Arbitration enables disputes between employees, trade unions and employers to be resolved by an arbitration board, or an independent arbitrator, chosen by the parties to the dispute.
The arbitration process is the process through which labour disputes over rights and interests are resolved. Therefore, in labour disputes, we identify two main types of arbitration namely:
Rights arbitration, also known as grievance arbitration, deals with disputes involving the interpretation and application of an existing collective agreement, as well as disputes over the discipline or dismissal of an employee. The decision of the impartial arbitrator becomes a binding arbitration clause to both disputing parties.
Interest arbitration, which is also called collective agreement arbitration, deals with disputes in the collective agreement bargaining process, while a new, or renewed, collective agreement is being negotiated. In this situation the impartial arbitrator can render a decision on the content of the collective agreement that will be binding on both the parties.
Labour relations law, enacted in all jurisdictions in Canada, makes requirements for a dispute resolution mechanism to be set in place to resolve disputes, before these disputes lead to work stoppages or strike action.
In situations where an agreement cannot be reached between the parties, the arbitration process kicks in. Here, both parties would agree on the selection of the individual arbitrator (or arbitration board). The decision reached by the arbitrator now becomes a binding arbitration clause to the agreement.