services operator Naafi has set up an arbitration scheme with union MSF. Sara
Bean asks HR director Mike Nicholson how the scheme works in practice and
whether meditation really is the key to constructive employee relations
Back in the days of trade union dominance, allegations of unfair dismissal
from a single employee could lead to an entire workforce going on strike. The
power of the trade union has waned over the years and with it the threat of
recurrent industrial action, but perhaps a more insidious trend is emerging,
one which may not be as disruptive as an all out strike but can still be a time
consuming and costly process for employers. Increasing numbers of employees
(often with their union’s backing) are now taking their grievances to
employment tribunals. According to the Department of Trade and Industry,
tribunal caseloads have been rising by 10 to 15 per cent over the last few
years to a high of 104,000 in 1999 to 2000.
In an effort to counter the affects of an increasingly litigious workforce,
the conciliation service Acas has introduced a new individual arbitration
scheme "Alternative Dispute Resolution", which encourages people to
use mediation rather than litigation to resolve workplace difficulties.
Enshrined within the Employment Rights (Dispute Resolution) Act, the purpose of
the arbitration scheme is to steer opposing parties towards mediation rather
than legal confrontation and reach a settlement without recourse to legal
precedents and hefty lawyer’s fees (see box for details on ADR).
Last June, Naafi, the armed services caterer and retailer embraced the
arbitration concept, as part of a groundbreaking partnership agreement signed
with union MSF. Says Mike Nicholson, HR director, "Historically, Naafi had
quite a large number of cases of people going or threatening to go to a
tribunal. Because of the time and cost involved we were throwing money at this
to settle out of court and it was then encouraging more people to claim unfair
dismissal, because they thought ‘let’s try this one then’. It became self
Changes in employee’s rights which have decreased the qualifying period from
two to one year and increased the maximum award to £50,000, had threatened to
make things worse, and Nicholson says he fully expected to see an increase in
the number of tribunal cases.
Another key incentive for Naafi to adopt mediation is the global scale of
the organisation. Naafi (Navy, Army and Air Force Institutes) supplies retail,
leisure, and catering facilities wherever the British armed forces are based.
This means it is a truly international operation, with over 4,000 employees
based at sites all over the world, from the UK and Germany to Belize, Bosnia
and Brunei. Ensuring that its employees have recourse to the same employment
rights, wherever they are based, is a prime consideration for the HR
Explains Nicholson, "One of the concerns we have is that staff are
treated fairly and consistently as far as possible across the whole
organisation. Arbitration gives us the opportunity to see if we all think that
a situation has been handled fairly and consistently, whereas in a normal
disciplinary procedure you’re working to strict timescales and there are
pressures to get the situation resolved one way or another."
Under the terms of the agreement, if a dismissed employee feels they have
not been treated fairly by management, they have the choice to go to
arbitration rather than to an industrial tribunal. If the individual is happy
to opt for arbitration, senior HR managers and MSF representatives will first
sit down and discuss the case. Nicholson is keen to stress that at this stage,
the whole process is very informal.
"We wouldn’t be creating a sort of pseudo tribunal with the employee
coming along with their witnesses. It’s intended to be informal,
non-bureaucratic, speedy and effective."
If after this meeting the union feels the employee has got a case then both
parties will agree to bring in a mediator. However, if the union agrees that
management acted fairly and properly then they will tell the employee that they
cannot support them further. The employee is then free to take legal action
should they so wish, but will have to do so without union backing. At this
stage, Naafi makes it clear that it will fight any case of unfair dismissal
taken into the courts. By taking a tougher line and insisting the company will
not back off or settle out of court, Naafi hopes to discourage individuals from
making frivolous claims. And so far this policy seems to have worked. Since the
scheme was implemented in June 2000, there have been no cases taken to an
Interestingly, of the handful of cases that have been discussed by
management and union, so far, in every instance, MSF has agreed that there was
no further case to answer.
This is not because MSF will no longer back its aggrieved members, but
because the partnership agreement has so enhanced employee relations within the
company that both the union and management work closely together to foster
positive industrial relations. Nicholson stresses that the adoption of the
mediation scheme is just part of a broader partnership agreement, intended to
"eliminate conflict", which includes a no-strike clause and an
anti-bullying and harassment policy. And underpinning the whole agreement is a
code of conduct document outlining 10 key responsibilities that both Naafi
managers its and employees have been asked to sign.
No place for industrial action
Explains Nicholson, "We didn’t feel that in the spirit of working
together, industrial action had any part to play in a successful, progressive
business. MSF said ‘that’s fine’, but by the same token they did not feel that
bullying and harassment of staff by their manager has any part to play, and we
agreed with them."
As a result, Naafi and MSF have agreed a binding arbitration scheme that
means that management will not countenance any form of strike action on behalf
of the staff. Instead, both parties agree to go through an external arbitrator
if they can not resolve their differences internally. Both parties must then
accept the decision of the external arbitrator as binding on both sides. Also
as part of the agreement, and to reassure the union that industrial relations
are a management priority, Naafi has undertaken a major training programme to
ensure all its managers treat employees fairly and consistently. Managers are
not only trained in grievance and disciplinary matters, but are versed in the
company’s new anti-bullying and harassment policy.
This policy played a key role in persuading MSF representatives that the
partnership scheme would be beneficial for its members, and convinced 97 per
cent of Naafi’s MSF union members to vote in favour of the agreement.
But it is clear that the continued success of the scheme does not simply
depend on the willingness of management and union to work together. A lot of
its success hinges on the efforts made by Naafi to ensure individual managers,
wherever they are based, are adhering to the organisation’s strict guidelines
on handling disciplinary matters. For example, cites Nicholson, in the past an
employee may have been dismissed after committing a series of offences, but
because their manager did not follow strictly laid down procedures and spell it
out to the individual that any further misbehaviour would result in dismissal,
the union had no choice but to contest the dismissal, citing the fact that the
employee did not know that their job was on the line. If a manager had not
ensured the employee knew what constituted a sacking offence, then they would
have a strong case to answer. Naafi’s clear management policy now helps to
ensure that local managers, wherever they are based, can deal with difficult
man-management issues effectively. The management-training programme includes
the use of case studies and role-playing and explains Nicholson, all local
managers have access to the HR team for advice and guidance.
"Whether you’re employed within a particular site in Andover or
Germany, then we have values and a culture as an organisation. For generality
of staff we would expect that the procedures agreed with the union would be
applied fairly, reasonably and as far as possible consistently."
While Naafi does not describe its arbitration scheme as ADR, at the heart of
the partnership agreement is the willingness of management, union and employees
to eliminate disputes through joint arbitration. And so far the organisation’s
readiness to opt for mediation in individual unfair dismissal cases, and,
should it be necessary, to go through a mediator to resolve a union and management
conflict, already seems to be paying off. With a host of new European
employment directives on the way and the growing trend of employees to seek
legal redress for their grievances, Naafi’s solution is a positive way of
approaching future management, union and employee relations.
Says Nicholson, "Companies can easily be burdened with so much
bureaucracy and red tape and your eyes are on these issues rather than having
satisfied customers. We believe that companies have to be a lot smarter, which
is why we signed up to this partnership agreement. If we are trying to fight
against unions as well as all the legal stuff coming through then we would
never get anywhere, so we are working with the unions and our staff to make the
business more successful."
Naafi’s tips for a meditation scheme
– Management, union and employees must clearly understand and agree on how a
joint arbitration policy would work in practice.
– Binding arbitration should only be applied to collective disputes.
Individual cases of unfair dismissal must go to arbitration by voluntary
– Any procedures agreed with the union must be applied consistently
throughout the organisation
– Ensure that union and management fully agree on what sort of mediation
will take place in the event of a dispute
– Create a firm management policy to ensure that all managers deal with
employee’s concerns effectively.
– Make sure that managers are properly trained to apply management policies
– HR must always be on hand to give line managers advice and guidance.
Features of the Acas arbitration scheme
– The scheme will be made available as an alternative to going to an
employment tribunal, but only for unfair dismissal complaints.
– The main purpose of the scheme is to make sure that all the cases dealt
with are free of legalism.
– The arbitrator will rule on his or her own jurisdiction and on procedural
and evidential matters.
– Appeals against a decision of the arbitrator will be limited to alleged
serious irregularity only.
– Because the intention is to give the arbitration finality, there will be
no appeal on a point of law. By giving arbitration finality, it is hoped that
the costs and delays that accompany appeals will be avoided.
– The arbitrator will not have the same powers as an employment tribunal
chairman to make witness orders or order discovery or production of documents.
However, the arbitrator will have the right to draw conclusions from any
withholding of information.
– Hearings will be held in an inquisitorial rather than adversarial manner.
– Parties can state their own case and comment on the case of the other
– There will be no cross-examination, though the arbitrator may ask for
clarification and can carry out questioning.
– Hearings will be in private and decisions and awards kept confidential.
– Arbitration must be undertaken voluntarily, with both parties willing to