Cutting the cost of employment disputes

The cost of dealing with disputes, especially employee disputes, is considerable. Removing or reducing those costs could be a real ‘money spinner’ when it comes to reducing waste in the public sector, writes Justin Patten.

The problems of employee disputes resulting in court cases are so endemic in the public sector that the Metropolitan Police has been calling for Employment Tribunal costs to be capped. Sir Paul Stephenson, the commissioner of the Metropolitan police, has privately lobbied the Home Secretary to make it harder for people to take legal action against his force.

The Met's chief says money is being wasted on speculative claims, with lawyers gaining large fees that would be better spent fighting crime. Whether it is right for it to be made more difficult for police staff to make Employment Tribunal claims is another issue, but he is right to point out that speculative claims do happen and that such claims mean that public sector workers are spending time on matters other than the job they are paid to do.

The cost of disputes

The price for public sector organisations does not restrict itself to the legal bills however. These other factors all have a role to play:

• Uncertainty: litigation is unpredictable. You can never be certain what the result will be, and uncertainty brings with it fear as well as disruption.
• Delay: it may be six months to a year (or even more) before an employment tribunal hears the claim, in the meantime you’re in limbo. With the rise in claims, the system is clogging up. There was a 56% rise in Employment Tribunal claims between 2008/09 and 2009/10, the Tribunals Service has revealed.
• Stress: any kind of dispute creates a certain amount of stress for the parties involved. An employee dispute that goes all the way to Tribunal puts a real pressure on an organisation and even a victory at the end cannot compensate for the impact a case may have. In my experience there are few winners in litigation.
• Time: the lawyers, managers and in the case of employee disputes the HR Director will need to spend a lot of time reading and commenting on documents and reviewing statements. This is time that would be far better spent delivering the service.
• Publicity: a tribunal case about alleged discrimination can have very negative effects whether the ruling goes the way of the organisation or not. More time is spent trying to minimise the PR impact of any case that goes to court, whether in the wider world or just amongst your own staff.
• Loss of control: once you are in a litigation scenario it is difficult to pullback and rethink, considering all the consequences of the action.

A government-funded study by the Work Foundation reveals, not surprisingly, legal costs rise the highest when the employer fights and wins the case. And because legal costs rise with the duration of the case, this means that victory is seldom a particularly happy experience for employers.

According to a survey conducted by law firm Nabarro, disputes with employees, colleagues, customers and suppliers cost the UK economy £33bn a year, yet fully two-thirds of employers fail to educate staff on how to avoid and manage them, with more than half even leaving senior managers to sink or swim.

So what can be done to reduce the number of Employment Tribunal claims and minimise the costs of disputes?

• Implement a specific mediation scheme: a mediation scheme can have a dramatic impact on improving morale and reducing grievance claims. According to the Chartered Institute of Personnel and Development, employers whose HR specialists are trained in mediation techniques have 50% fewer Employment Tribunal claims than those who do not offer such training.
Employers who fail to make use of the full range of dispute resolution techniques can pay a high price for their lack of investment. Now is the time to look for professional help from an expert in both employment law and mediation
• Buy into the concept: it is critical that buy in of mediation is embedded at all levels of the organization, not just from the Human Resources Department. As a consequence management needs to plan and buy into the concept and have an overall strategy specifically targeted on reducing disputes
• Reformulate grievance and disciplinary policies: get the help of an experienced lawyer to review these to ensure that the scheme is a success. Make sure you construct disciplinary polices to ensure that mediation is worked at the appropriate time
• Provide management with training: it is critical that management are given the tools to back this up and develop and understand some of the basic legal principles involved and what forms of mediation to use as well as being fully aware of other dispute prevention techniques
• Provide on-going analysis and support: most mediation schemes are successful but it is critical to provide analysis of how it is going. There must be a review of the process. For example implement a system of peer review and on-going training to ensure the success of the dispute prevention measures.

Justin Patten is the founder of Human Law Mediation. He can be conducted on 0844 800 3249 or by email at This email address is being protected from spambots. You need JavaScript enabled to view it.. Human Law Mediation has produced a White Paper on Keeping away from Employment Tribunals and Court room battles.