Managing disputes: alternative dispute resolution
Section 6 of the Personnel Today Management Resources one stop guide on managing disputes. Other sections.
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Understand the differences between mediation, arbitration and conciliation Get advice on how to select the most appropriate solution Get advice on how ADR
works in practice |
On average, just under 100,000 aggrieved workers take their dispute to an employment tribunal every year - though only a small percentage actually get as far as a hearing.
The 'industrial tribunal' was designed as a free, informal and quick forum for dealing with unfair dismissal claims. It was born in an era where lawyers did not specialise in employment law. But the explosion in employment legislation, especially that conferring individual rights on employees, has resulted in a system far removed from its original raison-d'etre and often criticised as ill-equipped to deal with legally complex cases under new jurisdictions that it was never designed for.
The result has been a patchy, unpredictable process that is increasingly argued by lawyers skilled in cross-examination and complex legal argument. The fact many more employers than employees are legally represented has led commentators to question whether the system can guarantee a fair hearing for individuals.
Since the mid-1990s, the Government's response has been not to slow the flow of legislation, much of which it has been forced to implement as part of the EU, but to look for ways to stem the rush of cases to tribunal by encouraging employers to deal with disputes more effectively.
As well as improving internal procedures, the Government and its various taskforces have pushed various forms of alternative dispute resolution (ADR), where an independent third party gets involved to help settle a dispute. ADR refers mainly to mediation, conciliation and arbitration, or a combination of these three - each of which offers different ways of dealing with certain kinds of problem.
One of the Government's first changes was to introduce an Acas arbitration scheme for unfair dismissal claims through the Employment Rights (Dispute Resolution) Act 1998. This was based on the thinking that unfair dismissal cases make up the bulk of the tribunal caseload. However, the scheme was slow to take off and in 2002-03 there were only 23 requests for its use among employers.1
However, the Government remains strongly in favour of using ADR principles and schemes in the workplace as an alternative to litigation.
Acas is currently consulting on a new statutory scheme of fixed-period conciliation for all tribunal claims to 'concentrate people's minds' and help to speed up the resolution of problems before they reach a legal hearing.
The Acas arbitration scheme has been extended to deal not just with unfair dismissal, but also disputes arising from the statutory right to request flexible working.
Acas has been piloting a mediation service for business with fewer than 50 employees in the London and Yorkshire & Humber areas, which offers a wide range of dispute resolution possibilities.
The Acas arbitration scheme is available in most parts of the country for both unfair dismissal and requests for flexible working disputes.
The selling points of the Acas arbitration scheme are that it is:
non-legalistic
However, given the low take up of the scheme, clearly many people are still uncomfortable with the idea. This could be because of the very limited opportunities for appeal, which increases the perceived risks. It could be because voluntary agreement between the parties is necessary to go to arbitration, and this is difficult to achieve once the employment relationship has ended.
It could also be that some employers still mistrust the idea of a non-legalistic process. After all, when critics refer to the over-legalistic nature of tribunals they often mean the increasing presence of lawyers and the cross-examination of witnesses, making tribunals feel like courtrooms; the creation of tests such as the range of reasonable responses test, which some say virtually requires the employer's decision to be perverse to be found unfair; the fact they are governed by legal rules and precedents rather than simply basic standards of fairness; and the fact their terms of reference can include many issues other than just the fairness of the dismissal. Most of these factors are more likely to disadvantage individuals than employers, so the latter may not see it as the best use of their resources to submit themselves to a less predictable, less familiar process.
The challenge, according to Rita Donaghy, chair of Acas, is to "help employers, unions and lawyers become more familiar with ADR methods".
This makes up the largest part of the Acas workload - it received 1,353 requests to intervene in employment disputes in this way last year and pay was the single biggest complaint handled.2
In a 2001 survey of employers by IRS,3 more than half of the respondents had accepted at least one offer of Acas conciliation on a tribunal application in the previous five years, mostly in connection with unfair dismissal, followed by sex, race and equal pay.
Conciliation helps the parties reach a solution on agreed terms, rather than imposing one. The Acas role is to talk through the issues with both parties, explain how the law applies to the particular complaint, give a clearer idea of the strengths and weaknesses of each party's case, help each party understand how the other might see the situation, explore any ideas the parties might have for settling the case, and to act as a go-between.
The aim is a conciliated, legally binding settlement, and the research suggests this is reached in most cases - 77 per cent of claims conciliated by Acas were settled or withdrawn last year before reaching tribunal.4
Why settle? The factors influencing employers are the cost of legal advice, of lost management time, or of compensation awards; a belief that the applicant would win a tribunal case, due to a line manager's failure to follow correct procedure; a desire to avoid publicity; and among some, a belief that individual conciliation is fair and equitable.
Where employers refuse conciliation this is usually because they are unwilling to agree to an employee's demands, because they believe they will win the case, and to deter other workers from making applications.
The research by IRS found more willingness among smaller firms to involve Acas at an earlier stage. Larger employers often used conciliation only to agree the terms of a settlement or to encourage an employee to accept one. In many cases, however, it found conciliation had positive long-term consequences, by leading employers to make changes to their personnel or management policies and practices, especially in employee communications and training.
However, approaches to conciliation are set to change as a result of new DTI draft regulations on compulsory fixed-period conciliation in employment tribunal claims (find out more at www.dti.gov.uk/er).
The draft regulations set out a standard conciliation period of 13 weeks, and a short conciliation period of seven weeks for claims considered suitable for fast-tracking. Except where such claims are unusually complex, in which case tribunal chairs will have the power to assign the longer period of conciliation, the fast-track service will apply to claims relating to:
Claims of discrimination and unequal pay will not be included in fixed-period conciliation and here, the current role of Acas will continue. In all other claims, Acas will only conciliate outside these fixed periods in exceptional circumstances.
The moves are designed to save tribunal resources, which are often wasted when claims are conciliated right up to the date of the hearing and then settled at the last moment.
"We hope that this will help people focus their efforts on reaching a settlement during the fixed period," says Acas chief executive John Taylor.
As far back as July 2002, the Employment Tribunal System Taskforce recommended greater use of external mediation to give organisations the chance to resolve disputes earlier and learn from the experience.
Providers have been slow to pick up this particular ball, but there have been examples of new schemes starting up in recent years in response to employer need, such as that set up by the City Disputes Panel (www.citydisputespanel.org) and the involvement of some employment law firms, such as Allen & Overy.
Mediation is more suited to some disputes than others. It is particularly useful in instances where the employment relationship is required to continue - or there is a chance that it can - but needs 'repairing', for example, in cases involving harassment, bullying or discrimination. The best examples allow the employer to learn from the event - to realise the impact of particular organisational and personal behaviour - and to feed this back into policies, management and training and development.
Mediation does not follow a rigid format or have a fixed outcome. Even if it does not provide a complete resolution, it can still offer a period of reflection and allow a better eventual outcome than would have been achieved through litigation.
But this lack of structure may also be one of the reasons why employers have a difficult time adapting to it. There is no way of telling how long it could last, what costs may be incurred or what the outcome will be. Indeed, in the current adversarial climate it is often is seen as dangerous, possibly resulting in one side giving away their position or demonstrating a lack of confidence in their argument.
Experts advise employers to be proactive about mediation, introducing a policy that allows it to be offered and discussed as soon as a dispute arises, rather than once an employee has started down the path of litigation. Whether a dispute is suitable for mediation has to be decided on a case-by-case basis.
Mediation, it is increasingly argued, should be built into the business. As a recent article on the City Disputes Panel Bulletin put it: "Proper dispute management occurs when an organisation acknowledges that disputes are a normal corporate by-product capable of being managed."5
Managing disputes properly entails:
The Centre for Effective Dispute Resolution (www.cedr.co.uk) suggests contract clauses which cover mediation and ADR processes more generally. It offers a 'menu' of clauses from which employers can choose according to how they intend to integrate mediation into their processes.
For mediation to work, both sides must want to find a resolution. There must be agreement on issues such as the length of time the mediation will take, what information is disclosed and when. Most importantly, both parties must approve of the proposed mediator, whether he or she is internal or external. Using CEDR's clauses or ones like them ensure these things are agreedbefore mediation begins.
An increasing number of mediation service providers are now offering general mediation training. A recently introduced course by CEDR, for example, gives a broad perspective on conflict management and introduces managers to the use of mediation strategies and approaches.
Crucially, it focuses not just on mediation in a crisis but on how people can use mediation skills as 'everyday skills' within their own roles to deal with challenging and difficult people issues more effectively. Topics include
References
1 Acas annual report 2002-03
2 Acas annual report 2002-03
4 Acas annual report 2002-03
5 Don't Brush Disputes Under the Carpet, Miryana Nesic, www.cedrsolve.com
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A dispute arose between the deputy head of department and the head of department of a further education institution. The deputy head complained of bullying, harassment and discrimination by the head. Internal investigations found that the deputy head had been harassed but that the behaviour did not warrant disciplinary action against the head of department, who was to continue as the line manager for the deputy. Subsequently the deputy head took a number of periods of sick leave, and submitted a series of applications to the employment tribunal for sex discrimination, victimisation and disability discrimination. A 25 day hearing was due to take place. Settlement discussions had taken place, involving return-to-work packages, compensation and severance agreements, but the parties had been unable to reach an agreement. At this point they decided to go to CEDR Solve to try and resolve their dispute by mediation. The mediator contacted the parties' legal representatives prior to the mediation session. After discussions the parties agreed not to spend the day rehearsing the merits of their cases and to look instead for 'a practical agreement that would work'. The mediator persuaded the parties, despite strained relationships, that a controlled joint opening session could be beneficial. In practice this was the case. During mediation the deputy head accepted that the internal investigations had been fair. The breakthrough came when the deputy, in private discussions with the mediator, felt able to admit that she did not wish to return to work. Although the mediator was not able to disclose this confidential discussion, it was helpful to know that both parties were on common ground. Several hours later, however, it became clear that neither party was willing to be seen to move from their pre-mediation offers. The mediator decided to suspend the mediation. This served to force a period of reality testing and reflection for each side, after which negotiations progressed and an agreement was reached on a severance package. Source CEDRSolve - www.cedrsolve.com |
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A dispute between an Iranian businessman and a large UK construction company, already subject to litigation, involved:
The total amount in dispute was more than £200,000. The parties agreed that an early neutral evaluation was the preferred route. Both parties were adamant that they were right, that the other side's argument had no merit whatsoever and they were not prepared to negotiate. They did, however, wish to gauge the likely success of their case before costs had escalated significantly. The evaluation process enabled the parties to clarify the issues in dispute and formulate questions. CEDR Solve provided the parties with assistance and advice on the most appropriate evaluator for the dispute. The parties agreed on a QC with considerable expertise in the field. The adviser worked with the parties and the evaluator to establish a suitable timetable and format for the evaluation, managing the process throughout. The parties wanted a written recommendation with reasons on liability and possible settlement options. They would then attempt to agree a settlement within 14 days of the recommendation. The
agreed format was a series of written submissions accompanied by relevant
documents. The parties felt that face-to-face meetings were not necessary for
this dispute. The process from signature of the early neutral evaluation
agreement to receipt of the evaluation took one month. |
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The role of third parties |
Who makes the decision |
The role of disputing parties |
Potential outcome |
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Mediation |
Help the parties to the dispute discuss their positions and identify a series of options and alternatives. May offer guidance |
The parties in the dispute with the help of the mediator. The final agreement is not legal binding |
Discuss differences, identify alternatives, generate options and agree a way forward |
Determined by the parties and may include: · an action plan · a memorandum of understanding · an agreement None is legally binding - ie, it does not remove employee's right to go to tribunal. Outcomes are often 'tested' to ensure they have a good chance of success |
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Arbitration |
Hear all sides then decide on a course of action |
The arbitrator |
Present evidence directly or through an advocate in private. Propose solutions and potential outcomes |
A legally binding decision by the arbitrator based on the merits of the case, rather than on legal arguments. Decision is final |
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Conciliation |
Facilitate and to some extent control the negotiations, but do not impose or suggest solutions. Are often experts in their field and help resolve complex and technical disputes |
The parties |
The parties control the resolution while the conciliator controls the process |
An agreement signed by the parties which is legally binding |
Source: Dave Liddell, Managing Conflict in the Workplace, IRS, 2003
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Tribunal |
Arbitration |
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Held at tribunal venue |
Held privately at hotel or Acas premises |
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Normally takes a day |
Normally takes half a day |
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Heard by legally qualified chair and two lay panel members |
Heard by single Acas arbitrator experienced in industrial relations |
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Witnesses cross-examined under oath |
Asked informal questions through arbitrator - cross-examination forbidden |
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Decision based on legal argument and precedent as well as principles of fairness |
Decision on general principles of fairness and good employment relations practice, though must take account of EC law and human rights |
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Parties often represented by lawyers who dominate proceedings and questioning |
Legal representation 'afforded no special status' |
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Remedies of reinstatement, re-engagement, compensation |
Same |
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Hearing and decision public |
Hearing private and outcome confidential |
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Right of appeal on points of law |
Limited power of appeal - only for serious irregularity or lack of jurisdiction |
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Timetable of a mediation |
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Preparation phase Both sides agree to mediation with the aim of resolving the issue They agree on a mediator Decide issues such as timetable, venue and dates of mediation The mediator may ask both parties to carry out a risk assessment concerning the issue under discussion |
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Opening phase Agreements to mediate are confirmed The mediator sets out and agrees the way forward Opening statements or presentations are made |
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exploration phase The mediator identifies key issues, clarifies and prioritises. This may be done in separate meetings or in joint session |
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NEGOTIATING PHASE Possible solutions are aired (jointly or privately) Decisions are tested to ensure they have a chance of succeeding |
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CONCLUDING PHASE Agreement is reached and recorded including proposals for action by management and recommendations for the organisation Terms of confidentiality are agreed - what can and cannot be reported outside the mediation process A joint press statement may be agreed. If there is no settlement, the mediator may make offers of further assistance |
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Section 1: Introduction
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