Employment Lawyer, Nicholas Reinkeluers, of Devry Smith Frank LLP discusses the Arbitration Clauses in Employment Contracts at the HR/Employment seminar hosted in-house. Nicholas has been involved in a broad range of commercial litigation matters, including contract disputes, shareholder and partnership disputes, professional negligence claims and disciplinary proceedings, mortgage enforcement litigation, employment disputes, injunctions, claims against directors and officers, appeals, construction litigation, and commercial arbitrations.
- What is the arbitration clause
- Pros and Cons of arbitration
- The Arbitration Act
- Enforceability of arbitration clauses in the employment contract
- Suggestions for drafting enforceable arbitration clause
Recently, a decision from the Ontario Court of Appeal involving Uber has put the enforceability of certain arbitration clauses in employment contracts under doubt. The court concluded that the arbitration clause at issue was invalid due to statutory non-compliance and unconscionability because it required Uber drivers to arbitrate even small claims in the Netherlands.
In Heller v. Uber Technologies Inc., 2019 ONCA 1, an Uber driver, Mr. Heller, commenced a proposed class action on behalf of all Uber drivers who have worked on the Uber platform in Ontario since 2012. Mr. Heller sought a declaration that drivers in Ontario are employees of Uber and therefore entitled to the benefits under the Employment Standards Act, 2000 (the ESA).
- The Court of Appeal held that the arbitration clause was an illegal contracting out of the ESA
- The Arbitration Clause was also found to be unconscionable
Suggestions for Drafting an Enforceable Arbitration Clause:
No guarantees, particularly as Heller v. Uber is being appealed to the Supreme Court of Canada, however some suggestions include:
- Ensure the arbitration clause is fair
to the employee
- If the employee works in Ontario, Ontario law should apply and arbitration should take place in Ontario
- May be more likely to be enforceable in employment contracts with more senior, higher-earning employees, where up-front costs associated with arbitration will not be prohibitive
- Ensure the arbitration clause is
consistent with the rights granted by the ESA
- If an employee is contracting out of or waiving a right provided by the ESA, the clause will be unenforceable
- Consider providing the employee with the option of resolving the dispute by arbitration or bringing a complaint to the Ministry of Labour
- the Ministry of Labour complaints process cannot award the same remedies as a Court, so precluding court proceedings but not Ministry of Labour complaints will still provide a benefit to the employer