Speak to our friendly staff directly  +44 (0)20 7242 2523

A leading set specialising in commercial, construction, insurance and property law

This document is from our archive and no action should be taken in reliance on it without specific legal advice.

Employment Law - Mediation in employment: an idea whose time has come?

Christopher Camp considers the future for mediation in employment disputes and the uses the existing rules can be put to in connection with mediation.

Whatever your views on mediation, the government is very keen on it so you might as well embrace it too. Over the last few years it has been strenuously promoted in the High Court and County Courts. For example, the standard directions in the Technology and Construction Court include a provision to the effect that the parties should make a serious attempt to resolve their dispute by mediation and that if it is not so resolved, they should explain themselves to the Court. From April this year, every County Court in the land is required to have a mediation scheme in place.

The reason the government is so keen on mediation is that it works: it promotes early settlement. One does not have to be a cynic to recognise that the government wants things to settle and not to go to trial for financial reasons. Hearings cost money and long hearings – i.e. trials – cost most of all. It is a little known fact that the County Courts collectively make a profit. Fees have to be paid to issue claims and the great majority of claims are resolved without a hearing, by judgment in default being entered.

 

There has not been the same push towards mediation by employment tribunals as by the courts. But it is safe to assume the government is as keen on there not being ET hearings as it is on there not being Court hearings, probably more so as there are no court fees in ETs.

 

In relation to employment disputes, the equivalent to mediation was supposed to be internal resolution using the grievance procedures introduced by the Employment Act 2002. The government has come to recognise what a disaster these have been. In December 2006, the Trade and Industry Secretary appointed Michael Gibbons, a man who is, amongst other things, Chair of the Hertfordshire Family Mediation Service, to lead an examination of all aspects of employment disputes – including in particular (it is understood) the 2002 Act and the 2004 Dispute Resolution Regulations made under it – as part of its “Better Regulation Commission”. I would lay good money on this producing recommendations that ETs use their powers, and that employment legislation be amended, so as actively to promote mediation.

So whether you like it or not, the chances are you will sooner or later be forced to recommend mediation to your clients in their best interests. But until this happens, why not be ahead of the game and use mediation, in conjunction with the existing rules of practice and procedure, to your clients’ advantage?

Why mediate?

The purpose of this article is not to explain what mediation is and how it works or to extol its virtues. There are numerous websites dedicated to doing just this, most of them self-serving sites of mediation providers. Anyone who is looking for a source of “official” information about mediation might like to visit the website of the (government sponsored) National Mediation Helpline: www.nationalmediationhelpline.com

I would, though, tentatively suggest to the sceptical that they give mediation a go in the kind of case where its principle advantage – cost in comparison with the cost of going to trial – is obvious, e.g. one where conventional settlement negotiations have failed, where trial is reasonably distant, where the trial is listed for a week or more and where the legal costs that will have to be expended by both sides to take the case to trial are quite disproportionate to the amount of money at stake. It is worth noting that the great majority of mediations – however complicated and bitter the dispute and however long the trial is listed for – last half a day or a day at most and that mediation has an excellent record of producing settlement in cases deemed “un-settleable”. In my experience, most people who try mediation are converted.

Employment practitioners without experience of mediation might also want to get a few mediations under their belt now, at a time when opponents are likely to be similarly inexperienced, rather than doing their first mediation reluctantly in a year or two when they could well find themselves playing catch-up. 

Costs

Mediation is a voluntary process. People cannot be forced to mediate any more than they can be forced to negotiate. But they can be strongly encouraged.

In the courts, encouragement has been provided by penalising in costs those who refuse to mediate. The leading case is Halsey v Milton Keynes Central NHS Trust [2004] 1 WLR 3002, in which the Court of Appeal indicated that the party which had won at trial could be deprived of its costs if it had previously acted unreasonably by refusing to mediate. In Burchell v Bullard [2005] BLR 330, the Court of Appeal, in one of its most “pro-mediation” decisions to date, reinforced Halsey, stating that:

Halsey has made plain not only the high rate of successful outcome being achieved by mediation but also its established importance as the track to a just result running in parallel with that of the court system … The court has given its stamp of approval to mediation and it is now the legal profession which must become fully aware of and acknowledge its value. The profession can no longer with impunity shrug aside reasonable requests to mediate. … The court is entitled to take an unreasonable refusal [to mediate] into account [in relation to costs], even where it occurs before the start of formal proceedings.”

 

In the same case, Ward LJ described as “plain nonsense” the idea that a dispute was too complex for mediation. The Court of Appeal has also sought to promote mediation of employment disputes – for stress at work claims at least: in Vahidi v Fairstead House School Trust Ltd [2005] EWCA Civ 765, Longmore LJ stated that “litigants really should mediate” such cases.

The focus of the Court of Appeal on the reasonableness of action allows a party before an ET to argue that it should be awarded some or all of its costs, whatever the outcome at trial, where the other party has previously refused to mediate. The argument is made on the basis that the refusal constituted unreasonable conduct. Such an argument could be particularly useful as a make-weight to a party who has defeated a weak claim or response and who might anyway contemplate seeking its costs on the basis that the losing party’s case was misconceived.

One lesson from practice in the High Court and County Courts is that to make a convincing costs argument it is best for the offer of mediation to be as clear as possible, with a specific timetable proposed, a choice of mediators provided (emphasising their neutrality and independence) and a costs warning given. One often sees letters that merely say something like: “We think mediation would be a good idea.” It is difficult to persuade a judge to depart from normal costs practice on the basis of that kind of letter.

Anecdotal evidence suggests that some County Court District Judges have been willing to exercise their costs discretion in cases allocated to the small claims track, which has costs rules are akin to those operating in ETs, where a party has refused to mediate. I should be interested to hear from anyone who has persuaded an ET to award costs on a similar basis.

Grievance procedures

The average employer would presumably want to be rid of any ET claim against it as quickly and as cheaply as possible and mediation can help achieve this. But it would be even better if any dispute with an employee were nipped in the bud and an ET claim never brought.

To reduce the number of ET claims, a forward thinking employer might wish to include mediation as part of its internal dispute resolution procedures. Mediation is not in any way incompatible with the grievance procedures set out in the Employment Act 2002 and there is no reason why a mediation cannot take place along side those procedures. It is even conceivable that the mediation could take the place of the step 2 meeting or, more likely, step 3 appeal meeting. This could, though, produce difficulties and anomalies because mediations are confidential and without prejudice and the mediator may not give evidence as to what happened at mediation. To make it workable there would have to be two phases to the meeting: a mediation phase and (if the mediation was unsuccessful) a decision phase.

Offering mediation as early as possible – during the grievance stage of a dispute – would at least, if the offer were rejected and the dispute produces a claim, maximise potential costs recovery if the ET accepts that the refusal constituted unreasonable conduct.

To help get any kind of workplace mediation accepted by employees, it would be helpful for them to be given training and education about mediation and for employees’ representatives and trades unions to be brought “on-side” so far as practicable. There are marketing opportunities aplenty here for the canny employment lawyer.
 

Conclusion

Expect ETs to push mediation more and more and be alive to the risk of an adverse costs order if your client refuses the other side’s offer of mediation. Mediation will probably become as routine a part of ET practice as it is currently of commercial litigation, and the ET procedural rules, the Employment Act 2002 and the 2004 Dispute Resolution Regulations may be amended with the promotion of mediation in mind. If this were to happen, the volume of ET business would probably decrease significantly.

Mediation and the potential threat it presents to those dependent for their living on ET hearings are not, though, going to go away. Employment lawyers who have not already done so might want to start thinking now about mediation of employment disputes and the opportunities it presents, rather than waiting to see what happens, running the risk of being left behind.