Labor Arbitration

In union-management grievance disputes, binding arbitration is almost always used as the ultimate dispute resolution mechanism after a variety of less formal approaches are tried. "If collective bargaining agreements were written in clear, unambiguous language and grievance procedures allowed the resolution of contractual disputes at the earliest possible stage, then there would be little need for labor arbitrators," writes Terry Leap, an expert on labor-management relations (Leap 1995, 435). However, he observes, this is seldom the case. Contracts are ambiguous, so frequent disputes arise regarding proper interpretation. Although many such disputes are resolved at earlier stages of the grievance process, some are sufficiently difficult to sort out that binding arbitration is necessary for resolution. Feuille and Kolb (1994) estimate this number to be somewhere between 2 and 20 percent.

Typical disputes involve charges of inappropriate promotion, demotion, or discharge or disputes over working conditions, disciplinary measures, or employee compensation. In addition to being used to settle questions of right and wrong, arbitration is commonly used in the labor-management context to resolve impasses in bargaining over new contracts.
Although labor arbitration has a long history, it has risen in prominence since World War II, because arbitrators have been able to address the issues and meet the challenges of an ever-changing labor-management climate. Labor arbitration has been seen as a constant: a trusted means that both labor and management can rely on to render timely, fair, and effective decisions. Although other dispute resolution mechanisms (such as mediation) have also been tried to resolve labor-management disputes, arbitration remains the method most highly utilized and trusted.

The process of labor arbitration is similar to that of other types of arbitration (e.g., commercial arbitration). An arbitrator is chosen, and a hearing is held. The hearing is fairly formal—much like a court hearing—although procedures can be simplified somewhat if both parties and the arbitrator agree. Evidence is presented and witnesses are called and cross-examined; exhibits are presented, all in an effort to persuade the arbitrator that a particular side is right and the other is wrong. The arbitrator listens to the evidence, reads the collective bargaining agreement, then makes a determination. He or she issues an opinion within a specified time (usually 30 days) after the hearing, and this opinion is binding.
Although this finding can conceivably be a compromise, more often it is a determination that one side is right and the other is wrong. Thus the result is usually a win-lose outcome, not an integrative win-win outcome. For this reason, some industries have been trying to use labor mediation as opposed to arbitration, believing that the result is more likely to meet the needs of both sides and to improve the relationship between the sides—which arbitration generally does not do. Despite the fact that labor mediation has worked well in the few places it has been used, it is still a much less popular approach than arbitration in the grievance resolution arena.