Arbitration Clauses in Employment Contracts

Written on behalf of Peter McSherry
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Some employers attempt to “contract-out” of common law civil remedies by mandating that the employee submit all issues arising on termination to an arbitration process. The advantage to the employer is that this process is not open to public scrutiny, as is the case in a civil claim. All “pleadings” in a civil case are open to public review as are the contents of the trial.

The same contract usually denies the right of pre-trial discovery to either party.

The arbitration process can provide advantages, however, to both parties. One is that both employees and employers usually must agree on the selection of the arbitrator. Also, the date for the hearing is generally faster than a court case.

The same contract also usually denies any right of appeal from the arbitrator’s decision. Once a decision is reached and signed by the parties, it will be enforced with the same veracity as a court order.

Is This Legal?

The agreement cannot, however, deny the right of the employee to file a human rights complaint. This is a statutorily-protected right and cannot be contracted out. The same theory applies to the minimum benefits of the Employment Standards Act such as minimum termination and severance pay.

Why Challenge the Arbitration Contract?

The chances are high that if the employer has thought hard about this type of term, it likely also has terms such as a modest severance term and a non-compete term as well.

If the contract is not enforceable, these terms will likely fail and the employee will be allowed a common law remedy with more attractive terms.

Get Advice and Know Your Rights

This issue is clearly complex. Depending on how the contract itself was presented, it may fail for lack of proper consideration or value given in exchange. Get advice. Know your rights. Contact the offices of Guelph employment lawyer Peter McSherry. We can guide you through the issues, help you understand your rights, and defend your position. Contact us online or by phone at 519-821-5465 to schedule a consultation