Labour Arbitration Sucks. Users Beware.
June 11, 2025
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Arbitration sucks or at least can suck if you are not wary of its pitfalls. What are the best alternatives?
In labour relations ‘’rights’’ disputes are complaints by employees (in groups or as individuals) or by the union itself alleging that the employer has violated the collective agreement or some other relevant aspect of employment regulations. Employers conceivably can also complain when a union has allegedly violated the agreement, but employer grievances are relatively rare as the employer can act unilaterally and force the union to grieve it’s actions. These rights disputes are subject to an internal grievance process that follows specific escalating steps that allow the parties, i.e. the employer and the union, to make reasonable efforts to resolve their differences. When that process fails to settle or resolve the matter in dispute, either party can refer the matter to a third party “neutral” arbitrator who can make a binding decision on settlement.
That process, arbitration, in a nutshell, sucks. We say that for several reasons, however, also note that it is better than the alternatives1.
Why does it suck?
In current times, a matter referred to arbitration can take many months or even years before it is heard. This is the result of a perceived lack of available arbitrators. We say ‘perceived’ lack of availability because the propensity is to refer most matters to well-known seasoned arbitrators who are very busy, few and far between and are an aging group becoming in shorter supply. Younger, less experienced arbitrators are available but are not given referrals because of their lack of a significant track record that can establish them as known entities. As a result, grievances are not heard at arbitration as originally intended by law-makers. The process was intended to be expeditious and cost effective.
Because of long time delays, often arbitrated cases are lost because of the loss of evidence, the unavailability of key witnesses, or other causes that happen with the passage of too much time between the events that triggered the dispute and the hearing of the issues by a third party.
Cost effectiveness is another critical issue. The process was intended to be accessible, particularly to unions who in the past may not have had the resources to engage legal counsel. It was supposed to be simple but has devolved into an overly legalistic process involving lawyers on both sides and expensive arbitrators who demand significant sums for the work they perform. Overall, it costs many thousands of dollars that quite frankly seem excessive.
The over reliance on lawyers and jurisprudence and legal arguments to argue cases is alien to the intent of the original law-makers, which was to establish a simple process that enabled the parties themselves to argue their cases in front of an arbitrator and resolve differences and avoid disruptive conflicts. That alienation (due to the legalization of the process, which management initiated) translates into divorcing the parties, i.e. union and management, from the results. Arbitrators, and often the external legal counsel hired to argue a case, regardless of their experiences and abilities, are not a party to the collective agreement and therefore cannot be as effective at arriving at solutions that will enable the establishment of a workable solution and a productive working relationship. Hence, it has been said by many participants that '“all parties lose at arbitration”.
So those are a some of the key reasons arbitration as a resolution process, sucks. We can see evidence that many of us agree on this general sentiment….
In Ontario, where the arbitration process can be said to have matured and evolved. We see the mere existence and prospect of going down an external dispute resolution process (arbitration) has a real and profound impact on the settlement of disputes. Both parties realize that regardless of the evidence and merits of their cases there is a very real possibility that they may lose at arbitration or at the very least arrive at a suboptimal result. This reality compels them to work towards a negotiated settlement which has the benefit of certainty; however this is only certainty in the instance and case only. This benefit must be weighed against an arbitrated award that can have the benefit of confirming the meaning of the collective agreement wording for clarity and use going forward in all cases.
What we do see is is a predominance of cases going to arbitration related to disciplinary matters. However, in these cases it can also be argued that the process sucks. In discipline cases, it is within the powers of any arbitrator, regardless of the presented merits of the arguments, to substitute their opinion on the quantum of discipline without having to provide much if any justification. Hence there is a very real possibility that the arbitrator will provide some relief to the grievor (the union), even if it is not particularly warranted, simply because they can. Cynically it has been suggested that labour arbitrators (for business reasons) will favour unions in disciplinary cases because unions have the greater volume of cases to refer on to the arbitration stage.
Regardless, when an arbitrator substitutes their opinion for that arrived at by the employer, damage is done to both parties. Let’s imagine a case of progressive discipline in which the employer is on “all fours” having followed the process with precision, having all the relevant evidence to support its position and having a wealth of credible witnesses to sustain their arguments. Let’s also imagine that the case revolves around whether or not termination was warranted. In this example, an objective analysis suggests that the termination is sound. However, in our scenario the arbitrator does not like “terminating” people and substitutes the termination with a six-month suspension. The employee then gets reinstated and receives some back pay because the termination occurred more than six-months prior.
Even though some studies have shown the rate of recidivism is low amongst terminated employees who are reinstated, the impact of this type of (common) arbitrator decision can be quite adverse for the employer. It creates cynicism amongst front-line supervisors and has a chilling effect on their future actions in dealing with problematic employees. Reduced discipline in the workforce can lead to eroded organizational performance and contributes to the emergence of a culture of entitlement. Given the potential for arbitrators to substitute lesser penalties this encourages employer to offer monetary settlements to buy off the terminated employees rather than risk reinstatement at arbitration and substantiates the belief that employers cannot terminate unionized employees for cause.
This type of outcome is not a “win” for the union either. Rather it perpetuates a culture that encourages bad actors to use the system for their personal benefit and hinders the union from establishing a healthy working relationship with the employer and by the way with other employees who are also their members. It is in the union’s interests that employees who are actually guilty are held to account for their actions. The union’s chief concerns ought to be that due process was followed and to establish that the employer did not act in a capricious or arbitrary manner. It is not in their interest for bad employees to get undeserved relief as it forces the union to devolve to standards that harm the employer and place all members at risk.
To be honest it is unlikely we will find a better process than arbitration as a last step in the settlement process. Its devolution into being a highly legalistic process is simply not reversible and even in this form may be the best approach in some cases. So, while the arbitration process is flawed, we must use the process knowing its benefits and pitfalls and manage accordingly.
So, what must we do differently within the grievance process to avoid arbitration?
Our advice to employers is to try to ignore the realities of arbitration and its risky results and stick to solid management practices. We can make dramatic improvements in the overall dispute resolution process by concentrating on the internal grievance resolution processes. It is a given that solutions/settlements arrived at by the two parties will be superior to any appeal to a neutral third party.
How can we improve our internal management practices?
We need to develop better tools for the preparation for and analysis of disputes that are easy for Supervisors and Management to use;
We also need to find ways to bring union and management together to discuss and agree to desired macro-level outcomes (i.e. an improved employee-employer relationship that contributes to organizational strength);
We need to find ways to encourage the two parties to work on common training initiatives to develop skills internally that foster joint settlement of grievances and;
Along with the establishment of common macro-objectives we need to figure out what “good” outcomes look like, including establishment of LR metrics.
The grievance-arbitration process is unique to unionized environments and arguably is potentially beneficial to both parties. However, it is not seen that way by many. Particularly amongst management participants. That paradigm has to change in order to realize the actual benefits to an inexpensive and expedient internal dispute resolution process.
Many have tried to find the utopia that will lead to significant improvements in the grievance-arbitration process. For example, in the broader legal world there have been many initiatives to develop Alternative Dispute Resolution Processes (ADR) but these have had minimal impact in the labour relations world where a certain contentment has settled in that suggests the current system, while flawed, is still the only and best available.
In Part Two of this article (to be published June 25, 2025) we are going to expand on these ideas for improving the internal resolution processes and present a workable alternative. Meanwhile we welcome subscribers to give us feedback as to whether they think there is a better way forward.
Paraphrasing Winston Churchill who said: ‘Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.…’