Internal arbitration is a method of conflict resolution used within an organization. Disputes between companies and unions, for instance, or between workers and the company are often resolved through internal arbitration.
How Internal Arbitration Works
Arbitration is the process where the parties who have the dispute come together with the help of a neutral third party This is also the way mediation works. But the difference between mediation and arbitration is that the mediator is merely a guide and a referee, leading the discussing and trying to help. The mediators cannot make decisions. With arbitration, the arbitrator behaves much like the mediator, but once the arguments have been exhausted, the arbitrator makes a decision that’s binding.
Why Use Internal Arbitration
Arbitration is a less costly and time-consuming prospect than time spent in court. And it keep the company out of the court, saves things like lost wages and lost workers, and allows an organization to work things out on mostly their own terms. Almost all employee/management disputes are settled through internal arbitration at some companies.
Is Internal Arbitration Fair?
That has to be judged on a case by case basis. Some claim that in the end it isn’t fair because the employee or person with the conflict essentially has no choice. There’s an arbitration clause in their employee agreement that forces them to this type of conflict resolution. In some more rare cases, employees are asked to sign a contract after the conflict occurs binding them to arbitration only. Those are unfair if the employee didn’t have a clear understanding of what that means, or what could happen.
Is Internal Arbitration the Best Choice?
For most companies it is because they fear that if given the choice, the parties would choose first mediation to resolve their conflicts then skip internal arbitration and go right to litigation.