Lord Justice Jackson, in his recent report on litigation costs (‘Review of Civil Litigation Costs: Final Report’), lamented the under-utilisation of alternative dispute resolution (ADR) – and especially mediation – in civil litigation. Increasingly, the cost-effectiveness of mediation as a tool for dispute resolution is being recognised by the government. The added benefit of workplace mediation is its unique ability to help parties surmount stress and anxiety to regain control of their identity at work. It really is a win/win situation for employers and their staff.
This article discusses why the use of mediation to resolve workplace disputes has not yet come of age and the benefits to organisations of using mediation to resolve such disputes. It also discusses the meaning of confidentiality in the light of Farm Assist Ltd (in liquidation) v The Secretary of State for the Environment, Food and Rural Affairs (No 2) [2009].
Background
The 2004 statutory disciplinary and grievance processes were inflexible and restrictive, and formalised disputes at too early a stage. The processes did not allow the parties to try to resolve issues on an informal basis. Attitudes became crystallised at the stage where the parties should have been engaging in constructive dialogue.
Gibbon’s Review (‘Better Dispute Resolution: a Review of Employment Dispute Resolution in Great Britain’ (2007)) advocated early informal resolution of disputes in the workplace, and recommended that the government should actively assist employers and employees to resolve disputes in the workplace.
The government’s response was the Employment Act 2008, which revoked the statutory disciplinary and grievance processes and replaced them with the new Advisory, Conciliation and Arbitration Service (ACAS) code and associated guidance. While mediation has not been imposed on employers, in keeping with its key principles of voluntariness and confidentiality, the code and guidance do encourage the use of mediation. This is underpinned by the role of ACAS in offering pre-claim conciliation and the offer of judicial mediation in certain claims proceedings in the Employment Tribunal.
Practitioners expected the floodgates to open to workplace mediation following the introduction of the ACAS code and guidance. While ACAS has seen some increase in its workload as a result, this has not yet been felt on a widespread level by other mediation service providers. Mediation in the workplace is still the exception rather than the norm. There appears to be a real resistance to workplace mediation; although HR professionals articulate support for the process, relatively few employers have used the mediation process. This is despite a success rate for mediation of 70% to 80% of disputes mediated.
Why mediate?
The policies and procedures that employers have in place to deal with workplace disputes generally involve gathering evidence and investigation. These processes can be lengthy and can be seen as aggressive. They involve a detailed consideration of facts, often going back over several months or years. They do not focus on how to move the relationship forward.
The 2008 Chartered Institute of Personnel and Development (CIPD) survey on workplace mediation analysed the reasons employers gave for using workplace mediation. Reasons commonly cited were:
- improving relationships between individuals;
- reducing or eliminating stress;
- reducing the number of formal grievances;
- developing an organisational culture that focuses on managing and developing people;
- avoiding the cost of defending Employment Tribunal claims;
- reducing sickness absence; and
- being able to maintain confidentiality.
The mediation process achieves these outcomes in various ways, but perhaps most importantly it improves communication and addresses unreasonable claims and expectations. People tend to take up rigid positions and avoid communicating with the party with whom they are in conflict or will communicate with them through an intermediary. The face-to-face meeting that occurs in a joint session allows communication directly between the parties. It provides a safe environment in which parties can move slowly towards rebuilding their relationship. An honest conversation in a confidential setting, carefully managed by the mediator, can flush out issues and bring about fundamentally changed behaviour. This, in turn, can lead to more increased staff loyalty and improved productivity than any number of HR processes could have achieved.
Mediators are commonly asked to assist where the relationship between an individual and their line manager has broken down. Often the parties have no understanding of how their behaviour affects the other person. The mediation process allows each party to hear this directly from the other and to find a way to improve the situation. In the absence of mediation, the first occasion when the parties are likely to hear this is at a tribunal hearing, by which time it is usually too late to find a way forward.
Confidentiality
One of the underpinning principles of mediation is confidentiality. This encourages parties to be frank and honest, and helps to ‘unblock’ the dispute.
Confidentiality arises in two contexts:
- Anything said to the mediator by one of the parties in private session must not be disclosed by the mediator to the other party without the express consent of the party who has provided the information.
- Anything said during the mediation cannot be disclosed to the outside world without the consent of both parties and the mediator.
The mediator will emphasise the confidential nature of the mediation when they are first appointed and again in the mediator’s opening statement. The mediator will also obtain the clear consent of a party before providing any information to the other party, and will often keep a note of exactly what a party has agreed can be disclosed to the other party.
In evaluating whether to mediate a dispute, parties often seek assurance about the confidential nature of the process. In Farm Assist, the Technology and Construction Court refused to grant an application by a mediator to set aside a witness summons served on the mediator requiring their attendance at the trial of an action. Does this case make it more difficult to give that assurance?
A settlement agreement had been entered into as a result of mediation. The claimant company applied to set aside the settlement agreement on the grounds that it had been entered into under economic duress. The mediator was served with a witness summons by the defendant, seeking their attendance at the trial to give evidence about the mediation, including private conversations. The mediator applied to set aside the witness summons. The claimant company did not object in principle to calling the mediator to give evidence but stated that the need to call the mediator had not been demonstrated.
The mediator informed the parties that they had little documentation for, or recollection of, the mediation and reminded the parties of the mediation agreement in which they had agreed not to call them as a witness. In addition there was a mediation procedure document that provided that none of the parties to the agreement would call the mediator as a witness in any litigation or arbitration ‘in relation to the dispute’, and that the mediator would not voluntarily act as a witness without the written agreement of all the parties. The mediator submitted that their evidence was subject to express provisions of confidentiality and non-attendance pursuant to the mediation agreement, and that, in any event, the evidence was confidential and/or legally privileged and/or irrelevant.
The court accepted that the proceedings were confidential, both as between the parties, and as between either party and the mediator, and that, even if the parties agreed that matters could be referred outside the mediation, the mediator could enforce the confidentiality provision. The court would generally uphold that confidentiality but where it was necessary in the interest of justice for evidence to be given of confidential matters, the court would order or permit that evidence to be given or produced. The court held that, balancing the various considerations, it was in the interest of justice, exceptionally, for the mediator to give evidence as to what was said and done in the mediation. The parties’ agreement not to call the mediator as a witness ‘in relation to the dispute’ was limited to litigation or arbitration in relation to the underlying dispute, as defined in the preamble to the mediation procedure document.
The court also held that mediation proceedings were covered by without prejudice privilege between the parties, who could waive that privilege. If another privilege is attached to documents that are produced by a party and shown to the mediator, that party retained the privilege and it was not waived by disclosure to the mediator or by waiver of the without prejudice privilege.
While the confidentiality of the mediation proceedings was compromised in Farm Assist, the circumstances were exceptional and it is unlikely that there will be many instances where the interests of justice demand that a mediator disclose confidential matters. This is certainly true in relation to workplace mediations, where there are few circumstances in which it can be envisaged that a party could rely on confidential information in a subsequent grievance or disciplinary hearing, or in subsequent Employment Tribunal proceedings.
Resistance to mediation
So why, given the compelling reasons to mediate, is mediation so under-used as a tool to resolve workplace disputes?
Undoubtedly resistance by employers is a key reason. There is still a feeling that mediation is a ‘last resort’ before litigation. This is based on the experience of commercial mediation, where mediation is increasingly embedded in the post-proceedings stage of litigation. Workplace disputes are different and mediation can bring benefits from the moment conflict sets in. Some employers also feel that mediation is in some way a soft option, allowing an employee to string out grievances further. Employers are used to HR ‘thinking for them’ when they encounter difficulties with their staff and it takes a leap of faith to trust a mediator (whether internal or external) to provide a ‘safe’ setting to explore a different way of tackling their problems. Once employers have used mediation and understand how it can reduce the cost of workplace disputes, they go on to use it more (CIPD survey 2008).
There is also resistance by employees. Most neither understand that mediation is outside the HR process nor that it is available to them. For many employees the prospect of going into a workplace mediation, usually unrepresented and having to bare and confront highly emotional and personal matters, is frightening and stressful.
There are no financial penalties to encourage parties to give proper consideration to mediation. Unlike in commercial disputes, where there can be costs implications for unreasonably refusing to consider ADR, unreasonable refusal to consider mediating a workplace dispute (including refusing an offer of judicial mediation) does not attract the 25% adjustment of a tribunal award (up or down). Costs can only be awarded in the Employment Tribunal in limited circumstances and to date there have not been any awards of costs for refusing to consider mediation or an offer of judicial mediation.
There is also undoubtedly reluctance by some legal representatives. There is a role for lawyers advising employees facing a grievance to encourage mediation. However, some lawyers may favour rights-based outcomes to informal processes intended to restore relationships.
Moving forward
Enlightened organisations are starting to realise the benefits of workplace mediation and to look at ways in which they can maximise the benefits. When deciding how to introduce mediation into the workplace, the following should be considered:
- Agree a common vision that incorporates mediation values and embed it into the culture of the organisation.
- Carry out a conflict audit to assess the cost of conflict (essential to later analyse the cost and benefit value of introducing mediation).
- Train managers in mediation skills.
- Carry out mediation awareness training for staff.
- Incorporate mediation in HR policies and employment contracts.
- Source experienced mediators, either externally or by building up an internal function. It is essential to use specialist workplace mediators as this area differs from commercial mediation in many respects, not least as restoring self-esteem and relationships are at least as important as reaching settlement in workplace mediations.
- Promote mediation effectively internally.
- Set conflict reduction targets and review outcomes on a regular basis.