SCC Spotlight talk: Resolving employment disputes through SCC Arbitration
The SCC Arbitration Institute may be best known for administering major commercial arbitrations. However, the SCC arbitration clause is often included in some employment contracts. Over the last five years, the SCC has administered 7 to 15 employment contract related disputes annually. As part of our interview series SCC Spotlight Talk, we spoke with Annika Elmér about these types of arbitrations.
Annika Elmér is a partner at Gro Advokatbyrå, where she specialises in employment law. She has extensive experience as both counsel and arbitrator in employment contract related arbitrations.
Annika, what types of employment disputes do you usually see resolved through arbitration?
Arbitration clauses are normally included in employment contracts at the higher management level, typically in contracts for CEOs and managing directors. They are seldom seen in employment contracts at the lower management or employee level, as they can be poorly suited for those types of contracts.
I would say that the two most common types of employment disputes, at the higher management level, concern either termination of employment or claims for remuneration, such as bonus or other variable pay, vacation pay in lieu of vacation etc.
From counsel’s perspective, what do you see as the main differences between the administration of employment disputes in court as opposed to arbitration?
The time perspective! A dispute in court tends to take at least one to one and a half years in the first instance (the district court). Then, there is the risk of a possible appeal to the Labour Court before it is finally resolved. Court proceedings can take years. In arbitration, however, the dispute is generally finally resolved in less than a year – making arbitration much faster. This time saving usually benefits both the employer and the employee.
What are your top three tips to bear in mind (whether as an employer or employee) when negotiating dispute resolution clauses in employment contracts?
First, think about the position the employee will have within the company and make sure you know the reasons for including an arbitration clause in the contract. One common reason is that both parties prefer arbitration’s confidentiality. Another is that the parties are keen to resolve a potential dispute as quickly as possible.
Second, think about the possible stakes and stakeholders in a dispute. Is the company listed or public? Does the company have a complicated incentive plan or patents that should not be made public? The answers to these kinds of questions will influence which dispute resolution method is the most suitable and, to a certain extent, available.
Third, I recommend that the parties agree on the arbitration’s costs in a clear manner. It is quite common, in some situations, for the employer to cover all the arbitration’s costs notwithstanding the outcome of the dispute.