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Mediation – a helpful guide for employers

Posted on from Squire Sanders (Hammonds) LLP

Part of any employer’s toolkit in handling employment disputes should be mediation. So how does the mediation process work, what does it entail and how should employers approach mediation when needed?

Resolving workplace disputes

The merciful repeal of the Statutory Dispute Resolution Procedures in 2009, increasing pressure from the judiciary and the common sense knowledge that disputes are better resolved by agreement than by an imposed solution all point in the same direction: part of any employer’s toolkit in handling employment disputes should be mediation.

The ACAS Code of Practice now includes reference to seeking to resolve disputes by mediation, including by internal mediators. Is being an internal mediator a role that you should put your hand up for, or just a leap into a world of recriminations and disappointment?

How does mediation work?

In broad terms, the mediation process recognises that both parties involved in a dispute usually want it resolved. There are exceptions where a party is driven by emotion or principle or the need to establish a precedent, but when reality is allowed to intrude, some solution is generally better than none. 

As a rule also, both parties accept within themselves that there may have to be some degree of compromise and that the solution they would ultimately swallow may be less than their ideal. There is much truth behind the old line that a good settlement is one which makes both parties equally unhappy.

The role of the mediator is to oblige each party to consider more consciously the attractions of a solution as against the alternatives if no solution is reached. The main alternatives in a discrimination case, for example, are obvious. For the employee, possible loss of employment, stress, expense, publicity, fear of losing the claim, being obliged to relive the circumstances under cross-examination, etc. For the individual manager accused, the distraction, adverse publicity, fear of criticism by a tribunal, the disapproval of his employer, legal costs or even an award against him personally. 

For the employer, the effective loss of the two employees and part of the HR function while the proceedings continue, adverse PR, the possibility of vicarious liability, legal costs (win or lose) and the discovery at the end of tribunal proceedings that the employee is still there but is now (dependent on the outcome) either terminally embittered or unmanageably smug.

Mediation agreements

Similar considerations apply almost irrespective of the subject matter of the dispute.
In considering alternatives, the mediator will also encourage the parties to look at remedies or solutions which would not be available to them through formal tribunal proceedings, things which may be emotionally or professionally more valuable to them than mere cash. 

For example, a mediation agreement could include provision for an apology, training, contractual changes, internal transfer, promotion, agreed severance terms, references or announcements etc, none of which are in the gift of the employment tribunal. The parties will be pushed hard to think about what they need, rather than what they want, but it always remains their decision to settle or not in the end.

The mediation process

Meeting the parties initially together and then separately (there is no fixed procedure) the mediator will explore with each what room there is to move towards the other’s position. He or she will also provide an opportunity for the venting of some emotion and some frank exchanges of views. 

Once the parties have had a chance to talk back, uninterrupted and out of the office context, then some of the heat can often be taken out of the dispute and the emotional obstacles to a reasoned discussion of the way forward are to some extent removed. There is usually a series of meetings with each party, the mediator shuttling between the two. Sometimes they may recommend a face-to-face meeting if it's thought helpful to bridge a last gap, but this cannot be compelled.

Of course, this can only work against some very clear ground rules. Otherwise, the parties will be too constrained in what they will think or be advised to say for fear of prejudicing their legal position. Consequently they will usually first sign a mediation agreement which confirms in particular that:

  • any agreement reached is confidential between them
  • nothing said in the mediation can be used outside it, whether or not settlement is reached
  • information provided to the mediator for settlement purposes will not be disclosed to the other party without the giver’s prior consent
  • the parties present have the authority to settle the dispute there and then
  • they will have no claims against the mediator and will be unable to call him or her as a witness if the process does not reach a settlement.

Internal mediators

The ACAS Code floats the possibility of internal mediators, but pays little heed to the practical difficulties attached to this sort of role. As a rule, a mediator should be independent of the parties and therefore not have any personal interest in what outcome is reached. However, any employee is inevitably vulnerable to allegations that in conducting the mediation, he or she has out of pure self-preservation sought to pressurise the other party into the best solution for the employer. 

Since part of the mediation entails both parties opening up to the mediator and entrusting him with potentially very confidential information, there will inevitably be some disquiet on both sides as to the prospect of this information being leaked internally. 

It has generally been the case that internal mediation has worked best in organisations large and geographically spread enough to ensure that the mediator is not known to either party and unlikely to be seen talking to the other in the corridor or canteen queue.  An effective internal mediator will have to be scrupulous as to their actions and words both before and after the mediation in order that the appearance of impartiality is properly maintained. It will not be an easy role.

Putting mediation in context

Mediation is:

  • voluntary – either party can refuse to participate, either at all or beyond a certain point
  • confidential, both as to outcome and anything said or proposed by either party in the course of the mediation process
  • focussed on solutions rather than blame or legal liability
  • unlimited in the range of possible outcomes
  • effective – according to the Centre for Effective Dispute Resolution (CEDR), over 80% of employment mediations lead to an agreement between the parties
  • quick – the availability of commercial mediators more or less on demand through organisations like CEDR, other specialist dispute resolution companies and the mediation practices of barristers and firms of solicitors means that the parties can often side-step the delays inherent in tribunal proceedings. While there is a fee for this (unlike the judicial mediation scheme operated by the employment tribunal), it is often less than the parties would have to pay by way of legal costs over the period of time saved
  • cheap – a relative term, obviously, but since the mediation is focussed on the solution, not the problem, much of the preparatory work associated with formal tribunal proceedings can be avoided. In addition, the vast majority of mediations take place over one day only, while any claim of substance in the employment tribunal will inevitably take longer
  • flexible – the principles behind mediation are applicable equally to almost any sort of employment dispute from a low-level internal personality clash to a full tribunal claim or industrial action. It can therefore provide solutions to disputes which do not otherwise have a natural forum for resolution
  • without much downside – the worst that happens is that a day’s time and costs are lost.

What mediation is not

Mediation is not:- 

  • compulsory, even when built into an employer’s internal grievance rules
  • a finding or remedy imposed by a third party or by arbitration
  • public
  • based on technical legal analysis
  • a cure-all – it will not work in every case, and there could be good grounds for a party declining to participate
  • an admission of liability by the employer or of weakness by the employee
  • easy – to make the most of the process the employer will need to engage fully in it with an open mind and a willingness to be Challenged, and if necessary to look outside traditional positions of right and wrong, vindication and fairness.

Settlement by mediation

If the mediation is successful, then the parties will be asked to reduce their agreement to writing there and then, hence the need for the employer’s representatives to secure in advance the internal authorities necessary to conclude an agreement.

The mediator will not generally assist in the drafting of the agreement. Therefore any errors or omissions in the written agreement will be the responsibility of the parties themselves. For that reason, although lawyers are not required to attend mediations, there are good reasons to have them present, at least towards the end of the day.

What form the written mediation agreement takes is not that important so long as it deals with the issues in dispute. It may be no more than a memorandum of understanding concerning the respective future conduct of manager and employee, or it could constitute a full-blown compromise agreement if the employee has already left or the agreement ends up including terms for his doing so. 

Once the agreement is reached then it becomes open and binding, so far as its terms permit, and may be relied upon and enforced like any other contract.

Squire Sanders (Hammonds) LLP

Squire Sanders (Hammonds) LLP

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