Philippine Labor Law Glossary
Definition: Voluntary arbitration is a labor-dispute process in which the parties select an impartial voluntary arbitrator or panel to decide the submitted issues, with an award that is final, executory and binding subject to limited judicial review.
What Voluntary Arbitration Means
Voluntary arbitration is the terminal step for unresolved grievances arising from CBA interpretation or implementation and from the interpretation or enforcement of company personnel policies within the statutory scope.
The parties may name an arbitrator in the CBA, agree on a selection procedure or obtain NCMB assistance. By agreement, they may also submit other labor disputes to voluntary arbitration where allowed by law.
Core Legal Rules
- The grievance machinery should ordinarily be exhausted for disputes that must pass through the CBA process.
- The submission agreement or CBA determines the issues and the arbitrator’s authority.
- Voluntary arbitrators have original and exclusive jurisdiction over unresolved grievances assigned by the Labor Code.
- The award is final, executory and binding, although courts may review it on limited legal grounds through the proper remedy.
- The parties should preserve the CBA, grievance records, submission agreement and evidence presented.
Evidence That May Matter
| Evidence | Why it matters |
|---|---|
| CBA arbitration clause | Shows the agreed arbitrator-selection method and covered disputes. |
| Grievance records | Establish exhaustion of the agreed internal process. |
| Submission agreement | Defines the precise issues submitted for decision. |
| Position papers and exhibits | Contain the factual and legal evidence considered by the arbitrator. |
| Arbitral award and proof of receipt | Establish the ruling, service date and compliance deadlines. |
Why the Term Matters
Filing in the wrong forum can delay resolution. Parties should identify whether the dispute belongs to a labor arbiter, DOLE office, grievance machinery or voluntary arbitrator before filing.
Practical Example
Hypothetical example: A union and employer cannot resolve a dispute over the interpretation of a CBA retirement provision. After completing the grievance steps, they submit the issue to the designated voluntary arbitrator for a binding award.
Common Misunderstanding
Misunderstanding: Voluntary arbitration means the decision is merely advisory because the parties voluntarily selected the process.
Correct approach: Once properly submitted, the arbitrator has authority to decide the issue and the award is final and binding, subject to limited legal review.
Sources and Legal Citations
- Book V — Labor Relations, Labor Code of the Philippines — Official source.
- NCMB Voluntary Arbitration Program — Official source.
- DOLE Department Order No. 40-03, as amended — Official source.
Editorial Review and Legal-Review Status
Prepared by: LaborCode.ph Editorial Team
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Source verification: Official legal sources checked on August 6, 2026
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Disclaimer
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