The Role of Arbitration in Employment Disputes: Ensuring Fair Resolutions

Posted On : July 20, 2023
The Role of Arbitration in Employment Disputes: Ensuring Fair Resolutions
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The role of arbitration in employment disputes is crucial in ensuring fair resolutions for both employers and employees. Arbitration is an alternative dispute resolution method where parties involved in a conflict present their case before a neutral third party, known as an arbitrator or a panel of arbitrators. The decision reached through arbitration is binding, offering a final resolution to the dispute. It is regarded as one of the usual, fair, efficient and cost-effective method to resolve disputes.

What are employment Disputes?

Employment disputes can arise in various forms, including wrongful termination, discrimination, harassment, wage and hour violations, or breach of contract. When conflicts arise, it is essential to have a fair and efficient mechanism in place to resolve them. Arbitration serves as a valuable tool in this regard, offering several advantages over traditional litigation in courts.

What is Arbitration?

Arbitration is a method of alternative dispute resolution (ADR) used to resolve conflicts and disputes outside of the traditional court system. In arbitration, the parties involved in the dispute agree to submit their disagreement to one or more impartial third parties, known as arbitrators or an arbitration panel. These arbitrators act as private judges and have the authority to make a binding decision on the dispute, which is known as an arbitral award.

Laws Related to Employment Disputes and Arbitration

Section 10A of the Industrial Disputes Act, 1947 ("ID Act") allows employers and employees to voluntarily refer their disagreements to arbitration by entering into a written agreement. In the case of employees who do not fit under the category of workers, arbitration can be requested voluntarily by a written agreement signed by the employees and the employer.  Employers are increasingly including such arbitration clauses in employment agreements to address future employment problems.

Role of Arbitration in Employment Disputes

The role of Arbitration in employment disputes are discussed below;


One of the primary benefits of arbitration in employment disputes is its flexibility. Unlike court proceedings, arbitration allows the parties involved to choose the arbitrator, establish procedural rules, and determine the timeline for resolving the dispute. This flexibility enables the parties to tailor the process to their specific needs, ensuring a more efficient and customized resolution.


It is another crucial aspect of arbitration. Employment disputes often involve sensitive information and personal matters that both employers and employees prefer to keep private. In arbitration, the proceedings are confidential, which means that the details of the dispute and the outcome do not become public record. This confidentiality protects the reputation and privacy of the parties involved, making arbitration an attractive option for resolving employment conflicts.

Speed and efficiency

Both speed and efficiency are essential in employment disputes, as they can often have a significant impact on both parties' lives and careers. Court proceedings can be lengthy and burdensome, leading to increased costs and delays. Arbitration, on the other hand, offers a faster resolution. The streamlined nature of arbitration proceedings allows for a more expedited timeline, ensuring that the dispute is resolved promptly and efficiently.


Moreover, the arbitrator's expertise and experience play a vital role in ensuring fair resolutions. In arbitration, the parties can choose an arbitrator with specific knowledge and expertise in employment law or the industry in which the dispute arises. This ensures that the decision-maker understands the complexities of the case and can make an informed judgment based on the relevant laws and regulations. The arbitrator's expertise helps guarantee that the outcome is fair and just, promoting confidence in the arbitration process.

Cost Saving

Another advantage of arbitration in employment disputes is the potential for cost savings. While there are costs associated with arbitration, they are often lower compared to litigation in courts. Court proceedings can involve extensive legal fees, discovery processes, and other expenses, which can quickly escalate. In arbitration, the parties have more control over the process, leading to more cost-effective proceedings.

Criticism against Arbitration

It is essential to recognize that arbitration is not without its criticisms. Some argue that the process may be biased in favor of employers, as they often have more resources and bargaining power. Critics also claim that arbitration can limit employees' rights to pursue certain legal claims or participate in class-action lawsuits.  However, Arbitration in workplace is common these days. Also, there is a debate going on about litigation vs. arbitration.

To address these concerns and ensure fairness in arbitration, it is crucial to have transparency in the process. Clear rules and guidelines should be established to govern the arbitration proceedings, and parties should have equal access to legal representation. It is also essential to ensure that arbitration agreements are entered into voluntarily and without coercion.

In recent years, there has been a growing emphasis on improving the fairness of arbitration in employment disputes. Some organizations and arbitration providers have implemented measures to promote transparency and neutrality in the process. For example, there are now efforts to increase diversity among arbitrators, ensuring a broader range of perspectives and experiences and provide a fair resolution in employment disputes.


Arbitration plays a vital role in resolving employment disputes and ensuring fair outcomes. Its flexibility, confidentiality, speed, expertise, and potential cost savings make it an attractive alternative to traditional litigation. By addressing concerns and implementing measures to promote transparency and neutrality, arbitration can continue to evolve as an effective mechanism for resolving employment conflicts while upholding fairness and justice. If you are stuck in any employment issues and requires employment arbitration services, it is advisable to consult a corporate law firm or a corporate lawyer in your area having expertise in Employment dispute resolution method. Please note if you are a resident of Kolkata, then better contact one of the best corporate law firms in Kolkata.


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Dear Sir, Remedies against harassment by Recovery Agents February 18, 2021 Written By : Kishan Dutt Kalaskar Retired Judge Leave a Comment There are numerous cases of the oppressive and illegal conduct of recovery agents attempting to recover pending dues for the banks' benefit. In the past few years there have been many such instances, to showcase an example, an 81-year-old woman was seriously threatened by recovery agents, she got 375 threatening calls concerning her child's unpaid bank dues. After that, she moved to the police, and a case was filed against these agents. Another incident quoted as per media reports stated that a private bus was halted, and 42 travellers were held hostage for three hours by recovery agents, who needed to recover money from the travel company that owned the bus. These cases affirm that recovery agents/offices are feared in India. A recovery agent seeks clients and organizations that owe instalments to banks. Many of these recovery agents collect the banks'clientspayment dues for a charge or a percentage of the total amount owed. These agents are generally a third-party You may get issue a strong legal notice from my office or file a Suit for Permanent Injunction against Recovery Agents and Bankers. ICCI Bank Limited vs. Prakash Kaur case, The Supreme Court in a landmark judgement reiterated its earlier stand that banks cannot deploy musclemen for recovery of loans from defaulters thus forcing them to end their lives. "We deem it appropriate to remind the banks and other financial institutions that we live in a civilised country and are governed by the rule of law," a bench comprising Justices Tarun Chatterjee and Dalveer Bhandari said. 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