It is not uncommon to find dispute resolution clauses inserted in employment contracts, owing to the fact that it is a standard clause that prescribes the mode in which disputes arising between parties to the contract are to be resolved.
It is important for any contractual relationship to have an agreed approach to resolving disputes. Dispute resolution clauses in a contract are an important expression of the parties’ intention about how they’re going to work together. Dispute resolution clauses generally provide lower cost and timely approaches to resolving disputes, and may help preserve relationships as they can prevent the parties from resorting to litigation.
There is no single dispute resolution clause that can be used for all employment contracts or agreements, rather there are several dispute resolution mechanisms, ranging from mediation, negotiation, conciliation, arbitration and litigation, and a number of factors that should be considered in identifying which would be best applicable to the employment contract.
The content of the dispute resolution clause(s) should be deliberately and carefully considered and drafted to meet the particular context and needs of the nature of the employment.
This article is aimed at understanding the various dispute resolution mechanisms in employment contracts, and the Jurisdiction of the National Industrial Court in interpreting the clauses in employment contracts.
Mediation is a mode of dispute resolution, where an amicable decision arises with the help of a third party known as a ‘mediator’ (who only acts as a facilitator and does not interfere in the decision of the dispute) without recourse to the Court of law. It is a voluntary and flexible process; therefore, the parties to the dispute are under no obligation to agree to the settlement. Thus, an agreement taken via mediation shall be binding upon the parties, only as long as they agree to it. There may be instances where parties are advised to adhere to Mediation, however, under such circumstances, the result is up to the parties. Therefore, Mediation is a process where the parties are in total control over their final settlement.
Conciliation is a method of dispute resolution wherein the parties to a dispute come to a settlement with the help of a conciliator. The conciliator meets with the parties both together and separately to enter into an amicable agreement. Here, the final decision may be taken by reducing tensions, improving communications, and adopting other methods. It is a flexible process, therefore allowing the parties to define the content and purpose of the proceeding. It is risk-free and is not binding upon the parties unless they sign it.
Arbitration generally regulated by the provisions of the Nigerian Arbitration and Conciliation Act, is a mode of ADR wherein the dispute between the parties goes through a process to achieve an amicable resolution by an impartial third party known as an ‘arbitrator,’ without recourse to litigation. More importantly, it is flexible, time-saving and confidential.
In the case of arbitration, the arbitrator, after reviewing the dispute between the parties comes to a settlement. Such a decision taken by an arbitrator shall be binding on both parties. Unlike other methods of dispute resolution, once the parties have submitted a matter to arbitration, neither can withdraw from the procedure. An arbitral award can only be brought before and set aside by the Court where it can be proven that decision was biased or tainted with illegality.
The arbitration clause must specify the choice of arbitrator, disclosure of information, cost of arbitration, and location for the arbitration proceedings.
Order 24 Rule 1 of the National Industrial Court Civil Procedure Rules 2017 provides “The President of the Court or a Judge of the Court may refer for amicable settlement through conciliation or mediation any matter filed in any of the Registries of the Court to the Alternative Dispute Resolution Centre…”