More often than not, most employees do not object to having an arbitration clause in their contracts at the time of contracting. After all, who thinks they will have a dispute with their employer?
Who would risk losing a job opportunity over an obscure procedural provision? And if a dispute should arise, who wants to go to court to resolve a row over nonpayment of overtime or leave days?
Courts are slow, excessively technical, and intimidating to most people; therefore, arbitration is a default option.
So, what is an arbitration clause in an agreement? An arbitration clause is a standard clause usually inserted into a written employment agreement specifying the disputes between the parties arising out of employment, including the interpretation and application of the employment agreement, that is to be decided by an arbitrator.
This clause generally prevents the parties from lodging claims in court in the first instance without attempting an out-of-court settlement by way of arbitration.
However, the clause does not prevent an aggrieved employee from proceeding to court should the process fail.
Yet, despite the seeming benefits, there are serious pitfalls.
First, mandatory arbitration in employment relationships undermines the decade-long achievements made toward protecting employee rights, especially their ability to bring claims for determination in court.
Going by the latest jurisprudence, courts have adopted such sweeping pro-arbitration doctrines that arbitration clauses are almost always upheld when challenged in the courts, even when employees can demonstrate that an arbitration clause was buried in fine print or incorporated by reference to an obscure and inaccessible source.
In addition, an employment contract is a standard form contract and so most employees have little to no input in its drafting.
To them, the focus may be on securing employment, and it comes as a surprise to when the courts construe such clauses to be binding upon them.
Although an employee can challenge enforcement of the clause in court, the perimeters are substantially diminished as such avenues are majorly procedural rather than substantive.
Moreover, in some circumstances, the confidential nature of arbitration raises legitimate concerns about its suitability as an alternative to litigation for the resolution of employment-related disputes.
Furthermore, arbitrators are often reluctant to award generous damages to prevailing parties. On average, employees win less often and receive much lower damages in arbitral awards than would be the case in court.
And in new developments, some arbitration agreements require the losing party to pay all the arbitration fees, including that of opposing counsel.
This is a powerful deterrent to employees lodging any claims and essentially undermines an employee’s right to access justice.
However, all is not lost for employees who may not wish to go through mandatory arbitration as the courts have continuously laid the parameters under which such contracts may be enforced.
When determining whether mandatory arbitration agreements are enforceable, courts look at the agreement's substance and the procedures followed when the employee signed the agreement.
Proper procedures must also be followed when entering mandatory arbitration agreements with employees.
Mr Onyango is an advocate of the High Court of Kenya | [email protected]
