NHL salary arbitration is a tool available to settle some contract disputes. The player and team each propose a salary for the coming season and if a negotiation ensues they agree to make their case. The arbitrator, a neutral third party, then sets the player’s salary based off of factors listed below.
Most players must have four years of NHL experience before they are eligible for salary arbitration (the term is reduced for those who signed their first NHL contract after the age of 20).
The process is used by restricted free agents, because it is one of the few bargaining options available to them.
The deadline for players to request salary arbitration is July 5, with cases heard in late July and early August. A player and team can continue to negotiate up until the date of the hearing, in hopes of agreeing on a contract and avoiding the arbitration process.
Teams can also ask for salary arbitration. But a player can be taken to arbitration only once in his career, and can never receive less than 85 per-cent of his previous year’s salary. There are no such restrictions on the number of times a player can ask for arbitration, or the size of the salary awarded.
A decision must be made within 48 hours of the hearing. When the decision is announced, the team has the right to decline, or “walk away” from the award. If the team exercises this right, the player can declare himself an unrestricted free agent.
If we look over the last few years, typically less than 5% of players who file for arbitration actually reach a hearing. The majority of the pre-hearing settlements occur in the last 24-48 hours before such a hearing.
The evidence that can be used in arbitration cases:
- The player’s “overall performance” including statistics in all previous seasons.
- Injuries, illnesses and the number of games played.
- The player’s length of service with the team and in the NHL.
- The player’s “overall contribution” to the team’s success or failure.
- The player’s “special qualities of leadership or public appeal.”
- The performance and salary of any player alleged to be “comparable” to the player in the dispute.
Evidence that is not admissible:
- The salary and performance of a “comparable” player who signed a contract as an unrestricted free agent. Essentially, another teams decisions do not impact the arbitration.
- Testimonials, video and media reports. As there is location bias and hype generation.
- The financial state of the team.
- The salary cap and the state of the team’s payroll.