Arbitration and Mediation as Employment Claim Solutions

Employment issues may sometimes result to disputes that could lead to litigation or lawsuits. However, not all issues can be resolved by litigation, which is often a long and costly process. As an option to this, both employer and employees resort to other means of addressing conflicts, which is through alternative dispute resolution (ADR). There are several types of ADR methods available to both parties.

One of these is arbitration; another is mediation. Though both are alternative methods in resolving disputes, they have some differences in some ways.

Arbitration as an Employment Dispute Solution

Arbitration is a formal mechanism where hearings are conducted by arbitrators. Unlike litigation where hearings are conducted by judges, presentation of evidence in arbitration is not limited by strict rules of evidence.  In some cases, arbitrators can consider all relevant testimony when making an award or some forms of evidence which may not be admissible in a regular court, such as hearsay or dubious documents.

Binding vs. Non-Binding Arbitration

Arbitration may be either binding or nonbinding. Binding arbitration means that the parties waive their right to a trial and agree to accept the arbitrator's decision as final, while nonbinding arbitration means that both parties can ask for a trial if they do not accept the arbitrator's decision. However, the arbitrators’ decision is usually final and unappealable.

Arbitration Agreements and Employment Contracts

To seek arbitration in a dispute, the law requires that both parties must agree to the process beforehand and it must be done in writing. Typically, most employment contracts or agreements contain or state the provisions on arbitration in employment claims or controversy.

Mediation of Employment Disputes

On the other hand, mediation is another formal mechanism in employment dispute resolution where a neutral intermediary called the mediator states the conflicts and interests of both parties, explains the legal implications, and help the parties arrive at a fair settlement.

As a method commonly used in employment cases, mediation may be helpful in the following situations:

• In a breach of contract or wrongful termination case
• In a sexual harassment issue where a worker threatens to file a case
• In cases where an employer justifies  firing an employee before the expiration of contract
• In a dispute with provisions of the employment contract

Generally, a mediator may be a lawyer, a retired judge, or a businessperson, who is tasked merely to assist the parties to make a fair and reasonable decision but not to make judgments or decisions.

Similar to arbitration, mediation requires that both parties must agree to the process as the method requires that parties must exercise good faith and determination to resolve the conflict.

In sum, arbitration and mediation differ in the following aspects: the results of arbitration are final and the binding award is enforceable in court and subject to limited court review. On the other hand, mediation is non-binding and the goal of the method is for both parties to reach a voluntary agreement to settle with the help of neutral third-party mediator.