Guide: Mediation and Risk Management

Recent survey statistics by the Federation for Small Businesses show 70% of small firms experience commercial disputes involving amounts over £35,000. 30% of payments are typically overdue, and just 12% of SME customers paying on time. £12.5 billion is tied up annually in UK commercial disputes with only 19% resolved through the courts.

In the case of employment tribunals 234,000 cases were outstanding for hearing in the last year. Tribunal times for individual cases ranged from 24 to 91 weeks before hearings, and from 46 to 390 weeks (7 years) for multiple claims. The highest single discrimination award was £1.7 million.

commercial disputesOf those proceeding to a hearing, 46% of unfair dismissal claims were successful.  The median award was £7332. The highest award was £470,865. The highest compensation award came by way of a sex discrimination case in which £1,762,130 was awarded.  The number of religious or belief discrimination cases has increased with the largest compensation award coming in at £45,490. Disability discrimination was successfully pled in 72 cases with the largest award totalling at £257,127. 658 costs awards were made in total which were split into 393 in favour of claimant and 265 for the respondent. The largest costs award reached £102,967.

CIPD reports that nationwide employer staff absence range from 6 to 10 days per person per year with stress being a primary cause.  These rates of absence for an employer mean a 5% loss on the bottom line, or a direct cost of £600-£900 for every employee every year. Spending reviews by all employers are contributing to employee stress and uncertainty, exacerbating disputes at work. Claims for redundancy and age discrimination are increasing and lead to prolonged and costly legal wrangles, in many cases causing serious impacts on management time, employee motivation and performance. It is a significant and growing risk which can be mitigated or prevented by bringing mediation into the business continuity planning process. Figures from industry show that of the various alternative dispute resolution methods there is a higher success rate for mediation than arbitration, conciliation or tribunals.

 

There are several reasons for the greater success of mediation:

COMMITMENT TO SUCCESSFUL OUTCOMES

Mediation creates greater commitment by both parties as it is voluntary with no adversarial process, and the parties can choose their own offers and solution. This ensures ownership by both parties to the process and the outcomes. In turn this facilitates the restoration of good relationships after parties have agreed resolutions.

CONFIDENTIALITY TO PROTECT ALL PARTIES

Offers, admissions or concessions made with a view to reaching a settlement may not be admitted or be disclosed to a court or tribunal. This allows both parties to explore more options to resolve a dispute without risk of compromising future potential legal positions. It also guarantees privacy to avoid the damage to personal and corporate reputations which inevitably result from public tribunals and news media reporting.  The Mediation process is often completed within two weeks, sometimes requiring just a day or two. This avoids long-term discomfort or distress for parties concerned, and reduces risk of public reputation loss for both parties.

COST-EFFECTIVE

Mediation meetings can be set up at short notice and delivered quickly without the high direct costs of arbitration and employment tribunals which are usually a minimum £4000 and often over £10000. The indirect costs of arbitration and employment tribunals include absence and lost productivity for managers and staff in court preparation and attendance, negative impacts on operations and customer service, and public damage to employer brand reputation. These indirect costs can be an additional five or ten times the direct fees.

CONVENIENCE OF TIME AND PLACE

Both sides can meet at locations and times to suit both parties without having to wait for court diary time and facilities which may be distant. Suitable locations can be organised without the formality of the open courtroom to allow discussions in a less adversarial and more comfortable environment.

CHOICE OF ACCOMPANYING COLLEAGUE AND EXPERT If desired by the parties a work colleague or legal representative can join the meeting to provide specific background or technical knowledge, alongside the client. If an expert is required they can be brought in briefly at the right time to increase the opportunities to reach an agreed outcome.

CONSTRUCTIVE SUSTAINABLE PROCESSES

Accredited Mediators are professionally trained to pro-actively and impartially explore common interests between parties so disputants can reach their own solutions in short steps with structured and constructive facilitation. Successful outcomes often include a short agreement written by the mediator in plain English for parties to commit to specific actions to prevent re-occurrence, ensure clarity and fairness. If parties wish the agreement may be shared with an impartial senior manager to allow a follow up review to ensure that actions agreed are carried out in keeping with commitments. This post event support can keep both parties on track to restore relations, prevent further disagreement and provides a safety net to catch future issues before they become problems.

 

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MEDIATION VS ARBITRATION, CONCILIATION and TRIBUNALS

Key differences between mediation and other alternative dispute resolution methods are below:

ARBITRATION uses outsiders to speak and make decisions for the both parties. However, this high degree of delegation to an external authority can result in parties feeling disaffected and less committed. It can take up to 6 months to book arbitrators and the outcomes are legally binding even if one party disagrees.

CONCILIATION involves a third party putting forward settlement offers, often by phone. This can result in parties having less engagement with each other to understand the other party viewpoint, and outcomes may therefore have less sustainability.

TRIBUNALS are purely legal processes resulting in win or lose. This can become adversarial between claimants and outcomes are based on points of law which may not be judged fair by the parties. Statutory legal processes leave little room for negotiation and agreement by compromise.

 

arrows-1574173_960_7202MEDIATION LINKS TO BUSINESS CONTINUITY PLANNING and Risk Management Standards

Using Mediation as a Risk Management tool is now becoming accepted as a vital employment practice. It can be integrated with Business Continuity Planning and ISO risk management standards. Internationally recognised standards benchmark the steps for organisations to identify, prioritise, mitigate and prevent organisational risks. Business Continuity Planning is an internationally recognised risk management tool which enhances organisation resilience. It enables organisations to improve operational resilience against unexpected issues, it reduce insurance costs and it enables accreditation to a recognised Quality Management System allowing the organisation to bid and win more work and widen its supply chain. Public funded bodies are now statutorily obliged to ensure that their suppliers have an effective Business Continuity Plan which sets out how specific actions to mitigate or prevent operational risks. The continued growth in stress and conflict at work leading to Tribunals demonstrates Mediation as a cost-effective solution.

HOW TO START USING MEDIATION TO PREVENT RISK AT WORK

The introduction of mediation into employment contracts accelerates dispute resolution and is proven good employment practice. Contract adjustments are easy to introduce when the benefits are highlighted to all parties involved. Additional contracts covering shareholder agreements, Directors, customer and supplier terms can be reviewed quickly and easily so that contract adjustments can be implemented at low cost explicitly showing the cost-effective benefits for all concerned. Such simple steps can prevent serious damage to employer reputation and save significant costs and time by avoiding employment tribunals.

 


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The most successful uses of mediation reported by employers are to:

✓ Repair Employment Relations between staff and managers

✓ Remedy Bullying and Harassment

✓ Reduce Discrimination and Diversity

✓ Manage Grievance and Discipline cases

(Source CIPD Employer Survey Report on Mediation)

For example amendment terms and recognised forms of agreement contact us today.

 

Posted in Mediation