Third person plural

As the workload for tribunals continues to grow and new, higher compensation
awards tempt even more employees to bring cases, the courts are starting to
encourage employers to look at mediation. David Beswick explains how the
process works

There is no doubt that employees are now willing to exercise their rights
more than ever: annual applications to employment tribunals amount to 92,000
each year and the number of county court and High Court claims made for breach
of contract numbers at least 5,000.

And it is likely that these figures are set to grow with the cap for unfair
dismissal compensation raised to £50,000 and without a pay-out ceiling for
other awards such as discrimination claims and health and safety dismissals.

Employers should consider using Alternative Dispute Resolution (ADR) as a
tool to resolve employment disputes in an attempt to protect themselves from
huge legal costs.

The tribunal was originally set up as an informal method of resolving
employment disputes. But lawyers have slowly taken over the process, with most
employers being represented by expert advocates – and to that extent the system
has failed to achieve its aim.

Employers are frustrated by the inadequacy of the traditional litigation
procedures in dealing with employment disputes. In recent years, the Government
has acknowledged the limitation of the current adversarial system and, through
the Woolf Reforms, has changed the Civil Procedure rules for all cases brought
in the county courts and the High Court. The court can now require both parties
to consider mediation before a case proceeds to trial.

Employment mediation

The function of the employment tribunal is to reach a decision on the issues
before resulting in one party winning and the other party losing. The tribunal
does have the chance of reducing the award for contributory fault on the part
of the employee, but not vice versa. There are no plans by the Government to
introduce similar reforms to the tribunal system, which would allow for

Types of ADR

The two most common types of ADR are arbitration and mediation.

Arbitration The Government embraced arbitration in the Employment Rights
(Dispute Resolution) Act 1998, when it allowed Acas to set up an arbitration
scheme to decide unfair dismissal cases, where the parties agree to this. It
has not chosen, however, to extend this to other types of claim, including

Arbitration is similar to the traditional forms of litigation but in a less
formal context. An arbitrator, who is normally an expert in this area, would be
appointed to decide on the outcome of the case. It is mainly adversarial and,
despite the way the cases are stated and evidence given, is less formal than in
traditional courts. It is run in a similar manner to traditional litigation.

Mediation The Government did not set up a procedure for mediation under its
Employment Rights (Dispute Resolution) Act and this is probably because Acas
has already been empowered to "conciliate" in tribunal cases. Acas,
however, is extremely busy and it usually results in the organisation being a
messaging service rather than mediating.

Does mediation work?

Recent statistics show that about 86 per cent of all mediations result in a
settlement and, as such, do work. Mediation is undoubtedly likely to grow in
popularity and, as a result, it is inevitable that the success rate will
decrease. However, it is believed that the figure will exceed 70 per cent of
all cases referred to mediation.

Does mediation replace negotiation?

Negotiation is the most economical way of resolving disputes. But they can
fail for a number of reasons including:

– Emotional antagonism between parties

– Distrust of the other party

– Failure to communicate common interests

– Poor negotiating skills of one or both parties

– Unrealistic expectations

– Unrealistic assessment of interests

– Gamesmanship or brinkmanship.

Once the negotiation process has failed, or is likely to be ineffective for
one or more of the above reasons, then the parties should consider using

What is mediation?

Mediation is essentially an assisted negotiation by an independent third party
– the "mediator". It is important to understand that the mediator has
no stake in the result other than to achieve a settlement.

What are the advantages of mediation in employment cases?

Mediation has a number of advantages over the traditional adversarial nature
of litigation:

– It is a voluntary process whereby both parties can leave at any time. If a
settlement is achieved it is owned jointly by both parties. The parties will
therefore feel less aggrieved at the outcome. There are no winners or losers in
a mediation.

– It is confidential. This is an essential part of the mediation process and
has a major advantage over public tribunal hearings. Often the publicity
surrounding such a hearing is in neither party’s interest. The tribunal can
only make "restricted reporting orders" in sex discrimination cases.
In mediation, any information disclosed cannot be used by the other party for
their own purposes in the subsequent tribunal hearing.

– It allows the emotions of the parties to be aired. Most employers spend
more time at work than at home. In this way, the emotions tied into this
relationship are similar to marriage. It is therefore not surprising that many
employment claims are driven by the emotions of the parties. Conventional
litigation does not allow this aspect of the dispute to be explored and dealt
with. If a successful settlement is to be achieved, it is very important to
resolve the emotional side of a dispute.

– It is speedy and informal. With tribunals taking six months to list
multi-day actions, this is an important issue, especially where say, a
harassment claim has been raised by an existing employee.

– It is more economical than traditional litigation.

– It changes the dynamics of the negotiations, from the parties stating
their positions and relaying their wants, to considering each party’s needs. In
many employment disputes it is highly unlikely that the fault lies only with
one party and in mediation this can be dealt with more effectively than in a

– It allows for creative solutions and not just monetary awards. The obvious
examples include the provision of an apology from a member of staff,
re-training staff or moving the antagonists to different positions in the

The mediation process

Once it has been decided to use mediation, it is necessary to appoint a
specially trained mediator. Lists of such mediators can be obtained through
your lawyer and/or organisations such as Centre for Dispute Resolution (CEDR).

Depending on the nature of the dispute and the personalities involved, every
mediation will have its own character. Nonetheless, there are some basic
features that are present in most mediations.

Typically, once the parties have selected the mediator, they deliver
statements prepared by their lawyer that set out their positions as to the
relevant facts, the legal issues involved and the merits of the claims and
defences. Key documents such as the contract of employment, employee handbook,
relevant correspondence and witness statements usually are attached as
exhibits. These statements are normally provided to the mediator and to the
other side.

Confidential matters are sometimes communicated to the mediator in a private
side letter.

The actual mediation usually begins with a joint or plenary session at which
all parties are present. The mediator presides over introductions and then
makes some preliminary remarks explaining the process. This is usually followed
by opening statements from each side presented by the lawyer – although clients
are free to speak at this time as well. It is important that the employer is
represented by somebody who has the power to make decisions on its behalf.

At some point, the mediator concludes the joint session and meets privately
with each side in what is called private caucuses. In these meetings the
parties are encouraged to speak candidly with the mediator about their
expectations and objectives. Anything that is communicated to the mediator in
confidence during these sessions will not be communicated to the other side. In
these sessions, the mediator may privately share their impressions regarding
the relative strengths and weaknesses of each side’s position and will attempt
to identify the key issues driving the dispute and the true interests – as
opposed to the positions – of the parties.

Eventually a bargaining process begins and the mediator will act as a
go-between to communicate proposals. Sometimes the mediator may bring the
parties back together for a further plenary session to review the status of the

Every mediation is different depending on the mediator’s particular style
and judgement as to how the mediation should proceed. Some mediators are
influential in that they tend to use stature or force of personality to urge
parties to make concessions.

Others are more facilitative, allowing the parties to negotiate freely, only
occasionally intervening with a well-timed, guiding hand to keep the
negotiations on track. In fact, most experienced mediators will use aspects of
both approaches at various times depending upon the particular circumstances of
the case. The majority of mediations are completed in a day but, like tribunal
cases, they can take longer.

The goal of every mediation is a binding settlement agreement. Unless there
is absolutely no hope of a settlement, most mediators will not adjourn a
mediation until the parties have at least signed a binding memorandum outlining
the essential terms of settlement. A good mediator will continue to follow up
with the parties in the occasional case that has not been settled during the
mediation session.

When is mediation appropriate?

Mediation is a flexible tool and can be used in many situations, even where
formal tribunal proceedings and/or court proceedings have not yet been issued.

In the US, the many benefits of mediating employment disputes have gained
considerable momentum. Employers have also become frustrated with their
traditional litigation system, especially on the West Coast where new
technology industries are based. As a result, a number of large US employers
have mediation clauses built into their staff handbooks and contracts of
employment which force their employees to mediate before issuing court
proceedings. In the UK, such a clause would not be effective as it would
contravene Section 203 Employment Rights Act and its equivalent provisions in
the discrimination statutes.

US employers find that mediation is working and delivering the benefits
which traditional litigation cannot provide. Momentum is building for UK
employers to have mediation clauses in their grievance and disciplinary
procedures, allowing for mediation to take place either before or after
tribunal and/or court proceedings are issued, where the parties agree to it.

Initially, mediation is more likely to be used once proceedings have been
issued, as this is the time parties focus on the issues. In the long term,
however, as employers and employees become more comfortable with the concept of
mediation, it will be used before proceedings start.

Mediation can be used in all employment dispute contexts. But the following
situations may be most suited to it, once negotiation has broken down:

– Harassment

– Bullying

– Discrimination (other than harassment)

– Performance dismissals

– Senior executive severance.

The future

While new to many employers, mediation is a concept set to become part of
employers’ tool kits in dealing with employee disputes in the future. All
employers should consider the possibility of inserting mediation clauses into
their contracts of employment and/or staff handbooks and train their human
resources teams on mediation procedures. Mediation is also likely to be used as
a tool for employee retention when, in the information age, it will become an
even greater issue than it is today.

David Beswick is a partner at Eversheds

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