Arbitration agreements are often used by employers and employees alike to shield internal disputes from public scrutiny. There are other advantages as well. The parties can agree to the person being selected as the decision-maker. The time period for the hearing is usually much quicker and the timeline may even be defined in the contract. Discoveries may be avoided or shortened.  The contract may also call for “med-arb” which means mediation first and then arbitration before the same person. The decision is intended to be final and hence there is no appeal allowed from the outcome.

All That Said, but…

The intent of the arbitration agreement is to avoid the courtroom. The agreement also may state that the purpose is to avoid any administrative remedies available to the employee. Herein lies the rub.

Statutory Rights

The Ontario Employment Standards Act is full of rights given to employees which cannot be waived, even by informed written consent of the parties. The list of such remedies includes the entitlement to statutory severance and termination pay, vacation pay, overtime pay, benefits on termination, reinstatement of rights after maternity leave, to mention the heavy hitters of the legislation.

Then there remain rights under the Human Rights Code for adverse treatment due to, well a host of protected human rights including age, gender, race, disability, perceived disabilities, the list goes on.

Also, there exist remedies under the Occupational Health and Safety Act and the Labour Relations Act.

The point of the above is that the contract cannot cause the employee to waive these rights. The attempt to do so will put the enforceability of the contract in issue.

Recent Review

This issue was reviewed recently in a decision by an Ontario court. The Ontario Court of Appeal had previously ruled on a similar issue holding that Uber’s contract cannot oust the right of the employee to file a complaint under the Employment Standards Act and was hence unenforceable.

The contract in the recent decision stated that the arbitration agreement was intended to eliminate any administrative remedies under, for example, the statutes set out above. This, the court said, would cause the agreement to be unenforceable. It is important to note that this statement was technically not a binding statement of the law as the case was decided on other grounds. However, the reality is that any such term would likely always cause the contract to be set aside. The agreement should be scrutinized as there may be a “severability clause” which may save the day for the employer.

Employers’ Guide

These agreements are no place for amateurs or for imported American contracts. Employers must get proactive advice on this issue, ahead of time, not when there is a problem.

Employees’ Views

Advice is critical. Know your employment rights before you sign and before you litigate. Get advice from a trusted and skilled lawyer.

Get Advice Before You Act

If you have questions about this issue or any employment question, contact the offices of Toronto employment and labour lawyers Mallins Law. We regularly advise employees and employers on legal workplace issues. Contact us online or by phone at 647-792-0310 to schedule a consultation.