Arbitration | Industrial Relationship

Arbitration is a procedure in which a neutral third party studies the bargaining situation, listens to both the parties and gathers information, and then makes recommendations that are binding on the parties. Arbitration is effective as a means of resolving disputes because it is:

  • Established by the parties themselves and the decision is acceptable to them.
  • Relatively expeditious when compared to courts or tribunals. Delays are cut down and settlements are speeded up.

Arbitration has achieved a certain degree of success in resolving disputes between the labour and the management. However, it is not without its weakness. Some weaknesses are:

  • Arbitration is expensive. The expenditure needs to be shared by the labour and the management.
  • Judgment becomes arbitrary if there is a mistake in selection the arbitrator.
  • Too much arbitration is not a sign of health IR (Industrial Relationship).

The labour union generally takes initiative to go for arbitration. When the union so decides, it notifies the arbitrators, both the management and the labour will study their previous decision in an attempt to detect any biases. Neither party wants to select an arbitrator who might be unfavorable to its position.

After the arbitrator has been selected and he or she has agreed to served, a time and place for hearing will be determined. The issue to be resolved will be presented to the arbitrator in a document that summarizes the question or questions to be decided, and any contract restrictions that prohibit the arbitrator from making an award that would change the terms of the existing contract.

Each side presents its case at the hearing. Arbitration is an adversary proceeding, so a case may be lost because of poor preparation and presentation. The arbitrator may conduct the hearing much like a court-room proceeding. Witness, cross examination, transcripts, and legal counsel may all be used. The parties may also submit or be asked by the arbitrators to submit formal written statements. After the hearing the arbitrator studies the materials submitted and the testimony given, and reaches a decision within 30 to 60 days. The decision is usually accompanied by a written opinion given the reasons supporting the decision.

Arbitration and the Industrial Disputes Act , 1947: Section 10-A provides that where any industrial dispute exits or is apprehended, and the employer and the workmen agree to refer the dispute to arbitration, they may do so by a written agreement. They can however do so at any time before the dispute has been referred to a labour court or industrial tribunal or national tribunal. The arbitrator shall investigate the dispute and submit the report to the appropriate government. Where a dispute has been referred for arbitration, the appropriate government may prohibit the continuance of any strike or lockout which may be in existence at the time of the reference.

HR-Professionals 12 Industrial Relationship 12


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