Labour arbitration in Canada entails both interest arbitration (setting the terms of a collective agreement) and grievance arbitration (interpreting a collective agreement). Interest arbitration is generally restricted to essential services such as police and firefighters. However, there are some exceptions, such as for first contracts in certain instances, where parties mutually agree to interest arbitration or where a government may impose interest arbitration.
The framework for grievance arbitration is prescribed by law. Certain industries such as aviation and telecommunications are covered by federal legislation, while the vast majority of workplaces are covered by applicable provincial legislation. Common to this legislation is a prohibition on strikes or lockouts during the term of the collective agreements, with disputes arising during the term of a collective agreement to be resolved through grievance arbitration.
Arbitration in Canada takes various forms, with expedited processes and med-arb commonly prescribed by collective agreements. By statute, in certain instances, and on the basis of a number of judicial decisions, arbitrators in Canada generally have the ability to interpret and apply statutes in determining grievances. The result is a full and final resolution of any dispute arising under a collective agreement. Courts retain supervisory jurisdiction over the labour arbitration process; however, there is considerable deference given by the courts to the arbitrator in the judicial review process.