Managing Risks in Human Resources: Employment Arbitration

Abstract

In recent years the high cost of litigation of employment disputes has resulted in the many employers adopting alternative dispute resolution mechanisms. Employment arbitration has been the choice of many firms to minimize the risk associated with wrongful dismissal and other employment related issues. Arbitration is faster and simpler than courtroom litigation. However, perhaps the main reason for this move to employment arbitration is that arbitrators are limited to a make whole remedy virtually eliminating the pain and suffering and exemplary damages which may be awarded in court. There are specific issues which must be addressed if employment arbitration is to be enforced in the courts and is going to serve the purposes of minimizing litigation risks, these are reviewed in this paper. There are also questions which should be examined in deciding if employment arbitration will serve a useful purpose in any organization.