Advantages And Disadvantages Of Employment Arbitration

Employment arbitration is a clause usually included in most employment contracts as the preferred method of resolving disputes.

This is in accordance with the Federal Arbitration Act which provides judicial facilitation of employment disputes.

However, both parties (employer and employee) must agree to go through arbitration instead of a judicial court.

If the employment contract contains such clause, and the employee affixed his/her signature, he/she essentially agreed to the employment arbitration clause as well.

This is important because if the employee decides to pursue a dispute in other avenues, even if they win the decision, the employer can ask the Superior Court to nullify the decision and have both parties arbitrate the conflict.

Once an arbitration award has been decided, it must be confirmed in a court of law.

After it is confirmed, it is then reduced to an enforceable amount, which can be enforced by the winning party in court like any other judiciary judgment.

Under the Federal Arbitration Act, employment arbitration awards must be confirmed within one year and objections should be made within three months.

Advantages and Disadvantages

Like any other alternative dispute resolution process, arbitration has its own set of benefits and drawbacks.

Here are some of its advantages and disadvantages:


If the dispute is highly technical, arbitrators with high degree of expertise on the particular field can be appointed

Employment arbitration is usually faster than litigation in court

Employment arbitration is usually cheaper and more flexible

Awards from employment arbitration can be kept confidential and generally non-public

The procedure is much more relaxed compared to litigation

Parties are allowed to exchange documentation that is beneficial to the award

Informal investigations are allowed in arbitration


Arbitration clauses are usually in ancillary agreements (or in small print) so employees are usually not aware that they have agreed to mandatory binding pre-dispute arbitration when they took the job

If the arbitrator depends on the corporation for repeat business, there may be an inherent benefit in ruling against the employee

Although usually faster than litigation, if there are multiple arbitrators on a panel, coordinating their schedules may prove to be a problem

Efforts to confirm the arbitration awards in court may be fiercely fought and may negate the perceived economic incentive of the process

If the arbitration is mandatory and binding, the parties waive the rights to access the courts

There are very limited avenues to appeal an employment arbitration decision, which makes erroneous decisions to be difficult to overturn

Discovery is limited in arbitration

Getting Help

Although not as formal as a judicial hearing, employment arbitration is just as important for an employee.

It could decide whether he could get compensation from a wrongful termination charge, or claim lost overtime wages.

The best move the employee can make is to hire an employment lawyer to represent them in their battle.