An unsigned player under club control who has accrued at least three but less than six years of MLB Service Time is automatically eligible for salary arbitration. Also, any unsigned player with at least two years but less than three years of MLB Service Time who accrued at least 86 days of MLB Service Time the previous season can qualify for salary arbitration as a so-called "Super Two" if the player is among the top 22% in MLB Service Time of players in that group.
CUBS ELIGIBLE FOR SALARY-ARBITRATION POST-2013 (last updated 6-11-2013):
Darwin Barney, INF
Julio Borbon, OF (will very likely qualify as a "Super Two")
Cody Ransom, INF
Henry Rodriguez, RHP
James Russell, LHP
Jeff Samardzija, RHP
Nate Schierholtz, OF
Luis Valbuena, INF
Travis Wood, LHP
If a club and a player eligible for salary arbitration cannot agree on a contract, the player can request the Major League Baseball Players Association (MLBPA) to file for salary arbitration. The MLBPA is responsible for delivering all requests for salary arbitration to the MLB Labor Relations Department (MLB LRD) on the Tuesday immediately prior to the third Friday in January. Once salary arbitration has been requested, the player submits his desired salary to the MLBPA and the club submits its salary offer to the MLB LRD, and the MLBPA and MLB LRD exchange the two figures on the third Friday in January. The MLBPA and MLB LRD then schedule hearings with a three-person arbitration panel, and the hearings are held on various dates during the first three weeks of February.
The club's offer must be at least the MLB minimum salary and, in most cases, must be at least 80% of the player's previous year's salary and at least 70% of the player's salary from two seasons back. However, if the player received a raise in excess of 50% by a salary arbitration panel the previous season, a 20% maximum salary reduction from the previous season and a 30% maximum salary reduction from two seasons back does not apply, and the club only has to offer at least the MLB minimum salary.
After arbitration has been requested, the player and the club can continue to negotiate back & forth, and the player can withdraw from the process any time up until the hearing. And in fact this frequently happens, as the player and the club will often agree to just "split the difference" (something the panel cannot do). If the matter does go to a hearing, the arbitration panel must choose either the club's offer or the player's figure.
Win or lose, the player is awarded a standard one-year MLB contract with no "minor league split" salary or incentive/performance bonuses. Also, the contract is not guaranteed, so if the player is released during Spring Training, the club would only owe the player 30 days or 45 days salary as termination pay, depending on when the player is released. (A player on an MLB 40-man roster receives 100% of what remains of his salary if he is released during the regular season).
NOTE: The Major League Baseball Players Association (MLBPA) is very sensitive about salary arbitration, so if a player who was awarded a contract through the salary arbitration process is released during Spring Training, the MLBPA will almost always file a grievance on behalf of the player, claiming the player was released for economic reasons only (which is not permitted), and asking that the released player receive 100% of his salary as termination pay. In that situation, a club would have to show (by submitting official Spring Training game stats) that the released player was out-performed in Spring Training games by another player (or players) competing for that roster spot.
An unsigned player under club control who does not yet qualify for salary arbitration ultimately has to either accept the club's offer or just not play.
A club (usually the Assistant GM) will negotiate with the player up to a point, but if the club and the player cannot agree on a deal by the first week of March, the club has the right to unilaterally dictate the player's salary and/or renew the player's contract (albeit for an amount not less than the MLB minimum salary, and not less than 80% of the player's previous season's salary and not less than 70% of the player's salary from two season's back). These players are the ones who have a "minor league split" salary in their contract, which the player is paid if he is sent to the minors. The "minor league split" salary must be at least 60% of the player's salary from the previous season.