The third way: alternative dispute resolution at work
With the number of applications to employment tribunals still high and the prohibitive cost of pursuing a case through the courts, interest is growing in alternative dispute resolution.
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As traditional methods of resolving workplace disputes become increasingly complex and expensive, interest is growing in the sort of alternative approaches used more commonly in areas of commercial and family law. One increasingly prominent approach is the use of mediation to settle disputes between individual employees or between and employee and their employer, either through the use of organisations such as Acas or through in-house resources. One key advantage of mediation is that it can produce win-win results, benefiting both sides, rather than the winner-takes-all outcome of an employment tribunal. |
Alternative dispute resolution (ADR) is an
increasingly prominent employment relations issue. The use of an independent
third party to help bring about an agreement is a widespread practice in many
areas of society, ranging from commercial disputes to family breakdown.
Although ADR has been slower to gain currency in the employment field, the
government is keen to promote its use in this area, and its application in
It is easy to appreciate why there is growing interest in ADR, not least because of the costs involved if a dispute ends up in the courts or, in the case of individual workplace fallout, at an employment tribunal. Employers, particularly small businesses, increasingly view the tribunal system as a costly and unsatisfactory way of settling disputes with employees. When the Federation of Small Businesses (FSB) surveyed 1,000 of its members, it found that 44% had settled a dispute out of court rather than go through a system that they regarded as complex and costly1.
According to the chair of FSB's employment affairs committee, Alan Tyrell: "Tribunals are no longer the quick and relatively straightforward method of solving workplace disputes they once were. The huge volume and complexity of legislation means that most employers seek legal advice before attending a tribunal and so face increased costs. For many small employers, these costs have become prohibitively expensive."
By contrast, the various forms of ADR, such as mediation, are less public and have several significant advantages over litigation. "Mediation is neutral, confidential, flexible, cost-effective and much quicker than going to a tribunal," says Karl Davies, chief executive of the City Disputes Panel (CDP), an organisation that provides ADR services for the financial services industry and which set up its own specialist employment support service in 2003. "It can also preserve working relationships, which would almost always be irreparably ruptured by going to court, and reputations."
The Chartered Institute of Personnel and Development (CIPD) is keen on developing mediation as a way of resolving disputes as an alternative to tribunals, says its employee relations adviser Mike Emmott. "Tribunal claims are generally not cost-effective," he says. "They're expensive for employers, particularly in terms of management time, and the compensation involved is often disappointingly low for employees, whose expectations tend to be based on the high payouts awarded in some City cases."
What is ADR?
ADR is an umbrella term used to describe a
range of techniques, always involving a neutral third party, to help resolve a
dispute or difference between two parties. The ADR Group2, one of
the largest private sector providers of alternative dispute resolution in the
"Mediation" is generally understood as being almost synonymous with ADR, and is increasingly used as the generic term to describe most ADR activity, but there is an important distinction between mediation and some other third-party interventions. Essentially, there is no obligation on the parties to accept any recommendations made under mediation. Acas3 advises that, although mediation is "like arbitration", the recommendations are not binding and the parties only agree to consider the proposals. Importantly, both parties retain control over the process.
Neither do all forms of ADR necessarily involve the neutral third party making any recommendation - at the less interventionist end of the spectrum, the facilitator's brief could be merely to highlight areas of commonality to both sides and help them reach their own decision.
ADR in the spotlight
The higher profile that ADR now enjoys can be
traced back to the 1999 Civil Procedure Rules that were based on
recommendations made by Lord Woolf, currently Lord
Chief Justice of
Encouraging alternative means for dispute resolution in employment is a goal of the government. The Department for Trade and Industry (DTI) is carrying this strategy forward. Its response to comments on the 2001 consultation paper, Routes to resolution4, outlines the government's aims for a "modern dispute resolution framework" as part of its vision of high-skill, high-performance workplaces.
As well as making several recommendations to improve dispute mechanisms, the paper also set out specific courses of action to improve alternative methods of resolving disputes. These include changes to the way tribunal claims are handled to encourage those cases that are settled by Acas conciliators to be settled even earlier, within a fixed period.
The DTI also pledged that the government would promote the use of ADR, in recognition of the scope for greater use of mediation services, supported by a possible expansion of the partnership fund and "the possibility of providing additional funding to projects which develop good practice in ADR and mediation". Subsequently Acas has piloted mediation in dismissal or grievance cases that involve a statutory right, such as sex or race discrimination, among businesses with fewer than 50 employees.
Mediation in practice
Although Acas has long carried out its statutory duty to conciliate where there is a collective dispute, the current emphasis is on using mediation to resolve disputes between individual employees, or between an employee and their employer. The focus is also on encouraging its use before relations breakdown. Mediation can be included as a specific stage in an organisation's internal grievance handling procedure. Or an employer can buy in the use of a mediator as and when required, even possibly arranging an "on-call" arrangement with one particular contractor.
Another option is for the organisation to develop its own pool of trained mediators (see box 1 ). CEDR - the Centre for Effective Dispute Resolution5 - is one of a growing number of organisations providing specialist mediation services to help resolve employment disputes. As well as training mediators for accreditation, CEDR trains in-house executives in conflict resolution and mediation skills. In the long run, in-house mediators offer a more cost-effective option, but are only a realistic alternative if the organisation is of sufficient size that a big enough panel of employees can be trained to provide a service that is regarded by the workforce as genuinely neutral.
Ideally, an in-house mediator should previously have had a minimal working relationship with both parties. There is then less risk of any subjective element creeping into the process. According to Fiona Colquhoun, director of CEDR's Employment Initiative, the mediator's role is to:
establish a trusted relationship with the parties;
encourage win-win negotiations;
assist the parties to work to acceptable solutions;
manage the mediation, make interventions and keep up momentum;
test assumptions and help to frame negotiations; and
CEDR advocates that the mediator's skill set and behaviours be integrated into the culture of an organisation. It cautions that laying down a sustainable framework is not a quick fix but is best built up over a period of time and moulded to the needs of individual organisation. CEDR's mediation starter plan, which was developed for local authorities but is applicable in most organisations, is set out in the document extract .
A win-win approach
Aside from potentially saving money, the key advantage of mediation over litigation is that it can produce an acceptable outcome for both parties. The CIPD's Mike Emmott says that, whereas one party wins and the other loses at a tribunal hearing, ADR offers the opportunity for them both to gain.
Where mediation is used, the outcome is often successful. According to CEDR's Fiona Colquhoun, over 70% of cases going to mediation are settled within one day, and the success rate rises to 80% once the parties have had time to consider what has been said during the mediation process.
Although much of the current interest in ADR is to help settle individual employment disputes, Fiona Colquhoun believes mediation can help to resolve other business conflicts, including collective disputes. CEDR has recently been approached to mediate in cases where a company wants to make some radical restructuring and organisational changes and where another employer wishes to change its long-standing redundancy policies in cooperation with the workforce.
Disability-based disputes are one area in which the CDP's Karl Davies sees ADR playing a greater role. Many complaints are about whether or not the employer is doing all it can under the Disability Discrimination Act in terms of access, for example, and are not motivated by money, he says. ADR could also help to lessen friction where employers place constraints on former employees that potentially prevent them working effectively in the same field for a period (restrictive covenants).
State of play
CEDR reports that the number of employment cases going to mediation has doubled since the beginning of 2003. Other evidence suggests that the high level of interest in ADR is not being translated into wider use of the process to help resolve employment disputes.
"The feedback from our members was that there would be a growing demand for ADR in employment disputes," says Karl Davies. This view may have been partly fuelled by several high-profile unfair dismissal and discrimination cases involving City firms. But despite a "massive growth in interest", there has been no corresponding "meteoric rise" in demand for the CDP's employment mediation, says Davies. He uses the following analogy to explain current developments: "It's like everyone is lined up on the edge of the swimming pool, but no one wants to be the first to put their toe in the water."
Although the CIPD's Mike Emmott also admits that the use of ADR to resolve workplace disputes is only increasing slowly, he believes the pace will pick up. "In commercial litigation, the courts insist that the parties consider mediation, so I can't believe people won't make greater use of it in the employment field." He cites the lack of qualified mediators as one reason why there is not a faster, uptake despite encouragement from government and growing interest within the HR profession and among employment lawyers.
A survey of 136 members of the Employment Lawyers Association revealed some of the factors holding back the use of mediation7. More than 70% of respondents said ignorance of the process was a deterrent, while 65% admitted to having doubts about its effectiveness. Overall, only one-third of those polled had deployed mediation, mainly in dismissal and contractual disputes.
Ultimately, it may take a couple of big, publicly reported
and successfully resolved cases to encourage more employers, employees, lawyers
and trade unions to see it as a realistic alternative to going to
court.
This article was written by Paul Suff, a freelance journalist
specialising in employment and management issues, paulsuff@dsl.pipex.com.
1."Small employers have little confidence in the employment tribunal system", www.fsb.org.uk/news.asp?REC=P2004/7.
4.Routes to resolution: improving dispute
resolution in
6.Mediation in the workplace - an effective management approach, available from www.cedr.co.uk/index.php?location=library/articles/FC-workplace-mediation.htm.
7."The
mediation survey: a resounding yes, but . . .", ELA Briefing, vol. 11, no.3, April 2004.
