UF was ordered to reinstate assistant professor Andrea Pham, who was to be laid off in June as part of the College of Liberal Arts and Sciences $6 million budget cut.
The faculty union filed a grievance against UF on behalf of Pham last June, and the case was heard in January.
The arbitrator's decision states that UF violated its contract with the union when it decided to lay off Pham, a tenure-track faculty member hired in 2002.
The decision states UF can only target established organizational units, such as colleges or departments, within the university for layoffs. The two Vietnamese classes taught by Pham do not constitute such a unit, as UF contended, according to the decision.
The union's agreement with UF also states that faculty members in a unit with less than five years at UF will be considered for layoff before those with more than five years. Pham had about six years at UF, while others in her department had less.
UF spokeswoman Janine Sikes said UF respects the decision but said it is still unclear how UF will respond.
"We're still evaluating the decision, so no decision has been made on her reinstatement," Sikes said. She also noted the decision could affect the way UF handles layoffs during the next round of budget cuts.
"We hope that it will be a lesson," said John Biro, president of the United Faculty of Florida.
"The administration has to live up to the agreements it has signed. If it violates them, we will be there to call them on it."