ADR Clauses and Employment Contracts: How to Avoid Costly Litigation

  • August 13, 2019
  • Yasamin Pouragheli, LL.B., LL.M.

Parties drafting employment contracts are increasingly including alternative dispute resolution (ADR) clauses to deal more efficiently with disputes that may arise relating to the contract. Why are ADR clauses worth considering in employment contracts, and in which employment relationships will they be more effective? What gains can be achieved by a clear and flexible ADR clause? How will the Heller v. Uber Technologies Inc., 2019 ONCA 1 ("Heller”) case alter the legal framework related to ADR clauses in employment contracts?

Answers to these questions were discussed at the Ontario Bar Association (OBA) recent panel titled “ADR Clauses and Employment Contracts: How to Avoid Costly Litigation”, hosted by the OBA ADR section on June 13, 2019. Chaired by lawyer and mediator Jennifer Egsgard of Egsgard Mediation, panellists for the session were Sara Parchello of Bennett Jones LLP, Stuart Rudner of Rudner Law, and Alex Van Kralingen of Van Kralingen & Keenberg LLP.

There are many advantages to using ADR clauses in employment contracts, as they provide flexibility for how a dispute will be addressed. An ADR clause may provide for negotiation, and/or mediation prior to commencing litigation of disputes through arbitration or court processes, all of which can allow for party confidentiality, increased efficiency and increased opportunity to avoid litigation. Confidentiality of the dispute resolution process may be particularly important to publicly-traded companies or those with many employees in situations similar to that of the employee engaged in a dispute.