Workplace disputes are not only an emotive issue for companies, they are a costly one as well, with millions spent fighting claims every year. Now the new Employment Bill is coming to shake up current dispute resolution and grievance procedures, Verity Gough investigates whether it’s time for HR to mediate.

We’re all used to the odd spat with work colleagues but statistics show things are getting more serious, with the number of employment disputes resulting in tribunal rising to over 132,000 last year.

Furthermore, according to research by the Chartered Institute for Personnel and Development (CIPD), the average employer now spends 350 days a year managing employment tribunal applications and formal disciplinary and grievance cases. So how can the situation be resolved?

Following widespread criticism of the over-formalised, three-step procedure currently in practice, the government is finally ready to consider the alternatives.

The Gibbons Report has been the first move towards advancing the changes. Commissioned by the Department of Trade and Industry (DTI), the overwhelming message of the study is mediation is a cost-effective solution to resolving disputes in the workplace. Proof it works can be found in the phenomenal success it has had in both the USA and New Zealand.

Mediation in UK employment law is not a new concept, however – Acas has been offering its conciliation services since 1984. But in comparison to countries such as South Africa, where a workplace grievance cannot go to a tribunal unless it has gone through the mediation process first, it seems there is still a long way to go before it becomes common practice for all UK companies.

Along with the other Alternative Dispute Resolution (ADR) methods of arbitration and conciliation, there is widespread optimism that mediation will mean an end to costly court cases, unnecessary dismissals and damaged reputations. But how are these methods going to be integrated into the current Employment Bill and what will it signify for HR professionals?

Dr Frank Hanna, the first doctor of mediation, has worked extensively with the US government in adopting mediation training courses in several US states, and has trained over 600 mediators since establishing The Mediation Agency in 2000, along with acclaimed US mediation specialist Nancy Peterson. He is understandably enthused at the prospect of mediation being incorporated into the current HR portfolio.

“The Gibbons Report said out loud what we have actually been doing in the USA for the last eight to 10 years,” says Hanna. “In the US, we don’t ‘investigate’ the problem in the HR department. If both parties are willing, it goes straight to mediation and gets resolved. In the last six years, working with the Equal Employment and Equal Opportunities Commission (EEOC) in the US, we have had a 92 per cent success rate. As I say to businesses, mediation is cheap, it’s quick and it works.”

Training, training and more training

However, one of the issues in rolling out such a scheme is assigning responsibility for the coordination and implementation of a mediation programme. Should it be dealt with by the HR department, often seen as part of ‘the management’, or be taken outside the business via an independent mediator?

“It really depends on the complexity of the individual case,” says Fiona Colquhoun, director of the Conflict Consultancy and a ‘solve mediator’ at the Centre for Effective Dispute Resolution (CEDR). “CEDR has been working for years with many large firms that realise that mediation can solve their problems and while nearly all of the cases result in a settlement, it is always going to be more cost-effective than going to a tribunal.”

Having worked previously as an HR director for a number of large corporations in both the public and private sectors, Colquhoun is uniquely placed to be able to evaluate the situation from both perspectives. She now focuses on teaching the mediation ‘skill set’ to others through CEDR’s intensive training courses.

“We would like to see every HR person in a company have the skills to recognise when a conflict is going to arise and have the confidence to deal with it; to have that ‘difficult conversation’ and facilitate between the different departments,” she says.

However, there may well be times when a neutral party is brought in to bring about a resolution. “Had I possessed the skills that I now train others to develop, I think I would have been a lot more confident as an HR director.”

According to Hanna, the key to a successful programme of mediation is the ability for HR professionals to remain neutral. “It’s the big distinction that many people fail to grasp. People always want someone to blame but mediation is not about assessment of blame,” he explains.

“Implementing a system where disputes are dealt with immediately, either via specially trained staff from the HR department or a separate mediation specialist based within the organisation, will see vast improvements in the working environment and can often enhance employee relationships. Remember, you can’t look at the balance sheet at the end of the year and see how much money has been wasted on disputes. The hidden costs include re-training, recruitment, loss of working hours and of course expensive settlements.”

He believes a peer mediation scheme, similar to the ones in operation in the US, will be integral in helping mediation become the first port of call when workplace disputes arise. “Training is imperative,” Hanna continues. “We teach our mediators a range of skills from psychology to developing listening skills and understanding body language. However, not all HR people are good mediators. It could be that employees from other departments would be better placed to take on mediation roles.”

He adds: “Over the years, we have gathered statistics from our work and found that in excess of 80 per cent of cases that come before us for mediation could have been avoided had they not gone through HR. We see it as a separate issue and one that is not necessarily best dealt with by HR.”

It’s clear the general consensus from both government and employment organisations is that integrating ADR is the best way to move forward in reducing the huge amounts of money hemorrhaging from many UK companies under the current system, as well as improving the working environment for employers and employees alike. But how is it likely to be implemented into current employment law?

Putting the theory to the test

If the first step towards a more appropriate dispute resolution process was the Gibbons Report, the second phase has been the recent announcement that the government intends to award £37 million to Acas in order to expand its current mediation services. A series of pilot programmes to conciliate disputes which look set to become a claim are being planned over the next year before the service is rolled out across the UK in 2009.

According to Colquhoun, the additional funding is great news, providing it is channelled properly. For example, she would like to see Acas linked in with the National Mediation Helpline and develop other dispute resolution services, plus the creation of a national directory of mediation services, similar to the one that exists in Scotland.

“This will give businesses a choice of provider and could even eventually develop into services offered across the different employment sectors, depending on an organisation’s speciality,” she says.

Guy Guinan, an employment partner in the London office of national law firm Halliwells, believes the future legal landscape for employment disputes will be very different: “It looks likely the scrapping of the statutory dismissal and grievance procedures will take place next year,” he says. “However, parties will still be discouraged from rushing to tribunal as it also looks likely there will be a power for tribunals to increase compensation by up to 25 per cent if an employer ‘unreasonably fails’ to follow a statutory code of practice.

“In practical terms, the change across to mediation is likely to be first seen by more employers, including mediation clauses within their contracts of employment and arranging for staff training in order to encourage maximum management use of mediation services.”

When you consider CEDR statistics showing 90 per cent of people who pursued a claim through to tribunal stage would not have bothered had they realised the full implications, employers and employees can at least agree on something – that mediation is the best, if not the only solution to resolving disputes.