Employment Agreement Dispute Resolution: What You Need to Know

Employment agreements are a crucial part of the hiring process, as they lay out the terms and conditions of employment between an employer and an employee. However, issues can arise where the parties do not see eye to eye, leading to disagreements that can impact the working relationship. In such cases, it is important to have a dispute resolution mechanism in place.

Dispute resolution refers to the process by which conflicts between parties are resolved through negotiation, mediation, or arbitration. Employment agreements typically include a dispute resolution clause which outlines the process for resolving disputes that may arise between the employer and employee.

There are several types of dispute resolution mechanisms, depending on the nature and severity of the dispute. Here is a rundown of some common types of dispute resolution:


Negotiation is the process of discussing the issue in dispute in order to reach a mutually acceptable solution. This process typically takes place between the employer and employee, and can be done directly or with the assistance of a mediator.


Mediation involves the intervention of a neutral third party to help the employer and employee come to an agreement. The mediator’s role is to facilitate communication between the parties and help them find a solution that works for both sides. Mediation is typically a quicker and less expensive process than arbitration.


Arbitration involves the appointment of an arbitrator who acts as a judge and makes a binding decision on the dispute. The arbitrator’s decision is final and binding on both parties. It is important to note that the decision of the arbitrator cannot be appealed.

Employment agreements may include a combination of these dispute resolution mechanisms, or may specify one mechanism for resolving disputes. It is important for both the employer and employee to understand the dispute resolution clause and to seek legal advice if necessary.

When disputes arise, it is important to remember that the aim of dispute resolution is to find a mutually acceptable solution. It is in the best interest of both parties to work together to resolve the issue, rather than letting it escalate into a full-blown conflict.

In conclusion, dispute resolution is an important aspect of employment agreements that can help prevent conflicts between employers and employees. Understanding the mechanisms available for resolving disputes can help both parties work together to find a mutually acceptable solution. If you are an employer or an employee, it is important to seek legal advice when drafting or interpreting an employment agreement and dispute resolution clause.