Presidential Guidance (Employment tribunals: Alternative dispute resolution)

1 Rule 7 of the Employment Tribunals Rules of Procedure (the “ET Rules”), as set out at Schedule 1 to the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 (SI 2013/1237), allows the President to publish guidance as to matters of practice and as to how the powers conferred by the ET Rules may be exercised. Such guidance must be published in an appropriate manner to bring it to the attention of claimants, respondents and their advisers.

2 This guidance concerns the way in which the employment tribunals in England and Wales give effect to their duty under rule 3 of the ET Rules in respect of alternative dispute resolution (“ADR”). It supersedes the presidential guidance on ADR that was issued on 22 January 2018. It has been influenced by the experience of mediation on telephone and video during the Covid-19 pandemic.

3 Employment tribunals must have regard to this guidance, but they are not bound by it.

4 Employment tribunals are the judicial bodies with responsibility for workplace justice, being the main forum for deciding disputes between workers and employers. They support the operation of the rule of law in the workplace.

5 However, employment tribunal proceedings carry a cost. That cost might be a financial one, like legal fees. In the employment tribunals, each side generally bears their own costs; orders to pay the other side’s costs are rare. Even if the parties do not engage a professional representative (and the employment tribunals are well used to dealing with parties who are not professionally represented), there may be a cost resulting from the time that they and their witnesses spend away from work in preparing for and attending a hearing.

6 There is also a cost borne by the public purse, as there is in any system of justice. Each employment tribunal hearing needs a judge (and sometimes non-legal members as well), a hearing room (physical or virtual), and a clerk, and it requires a range of associated administrative and technical functions performed by HM Courts and Tribunals Service.

7 Like much litigation, employment tribunal hearings carry an emotional cost: preparing for and attending a hearing, and dealing with the aftermath, can be stressful. The more complex the case, the more disruptive it may be to the lives of those involved in it or affected by its outcome. It may be especially disruptive where the parties are in an ongoing employment relationship, or where the employment relationship involves familial connections.

8 In reaching its judgment, a tribunal must identify the issues, decide the relevant facts, apply the law to those facts, and then tell the parties who has won or lost in respect of each part of a claim. Even if the issues the tribunal must consider are agreed, and the law the tribunal must apply is clear, the evidence must still be heard and tested so that the relevant facts can be decided. In nearly all cases, the outcome cannot be predicted with certainty before the tribunal has evaluated the evidence. It follows that nearly all cases heard by the employment tribunals involve risk for the parties. That risk can be financial, emotional and reputational.

9 Even when the outcome is known, the tribunal’s approach to remedy (usually in the form of compensation) also cannot be predicted with certainty before the tribunal has evaluated the evidence. Sooner rather than later, opposing parties to a dispute must address their minds to the value of a case. The question “will this claim succeed?” must be accompanied by “what is this claim worth?”

10 Each employment tribunal case resolved through agreement allows parties to minimise these different types of cost and risk. Some cases may ultimately need to be fought all the way to a hearing, but many cases can and should be resolved quickly and allow the parties and their witnesses to move on with their lives. The resolution of a case also frees resources to be used on other cases, whether in the employment tribunals or the wider justice system. Indeed, more cases are listed by the employment tribunals for hearing than there are resources available to hear them, because of an assumption that a high proportion will be resolved, whether through a private settlement, a compromise agreement or conciliation by Acas.

11 The employment tribunals must of course decide a case where the parties cannot reach agreement. But they can and should encourage them to resolve their cases by agreement. The focus of this guidance is on how that is done.

12 By rule 2, the overriding objective of the ET Rules is to enable employment tribunals to deal with cases fairly and justly. Dealing with a case fairly and justly includes, so far as practicable— (a) ensuring that the parties are on an equal footing; (b) dealing with cases in ways which are proportionate to the complexity and importance of the issues; (c) avoiding unnecessary formality and seeking flexibility in the proceedings; (d) avoiding delay, so far as compatible with proper consideration of the issues; and (e) saving expense.

13 By rule 3, employment tribunals shall, wherever practicable and appropriate, encourage the use by the parties of the services of Acas, judicial or other mediation, or other means of resolving their disputes by agreement.

14 By rule 53(1)(e), a tribunal may arrange a preliminary hearing at which, among other matters, it may explore the possibility of settlement or ADR, including judicial mediation. Further, by rule 54, a hearing arranged for ADR purposes may be directed by the tribunal on its own initiative at any time, and the tribunal must give the parties reasonable notice of such a hearing; and, by rule 56, a hearing arranged for ADR purposes is held in private.

15 There are four approaches by which, in exercising their duty under rule 3, the employment tribunals may encourage the parties to resolve their dispute by agreement: using the services of Acas; judicial mediation; judicial assessment; and a dispute resolution appointment.

16 Judicial mediations, judicial assessments and dispute resolution appointments are all forms of preliminary hearings held under rule 53(1)(e). They are conducted by employment judges who have received appropriate training. They will only take place where a regional employment judge (or any employment judge nominated by a regional employment judge) considers that it would give effect to rules 2 and 3 to do so, having taken into account the views of the parties. This guidance serves to explain them and to distribute protocols (as appended) about their operation.

17 Parties are encouraged to use the conciliation services of Acas. Acas is independent of the judiciary.

18 Such encouragement is given in this guidance, and regularly repeated at preliminary hearings for case management purposes. It may be repeated at the end of a hearing, when the tribunal has decided the outcome of a claim but (if they arise for consideration) not dealt with matters of remedy. There are standard references to the conciliation services of Acas on correspondence issued by HMCTS and on judicial case management orders. This approach will continue.

19 Judicial mediation is a consensual, confidential and facilitative process.

20 The focus is on cases listed for three days or more. These cases are usually claims of discrimination and whistleblowing detriment, as well as more complex claims of unfair dismissal.

21 “Consensual” means that both parties have agreed to the process, and that they may withdraw from it at any time without explanation or sanction.

22 “Confidential” means that the parties can speak freely (on a “without prejudice” basis) during the mediation without worrying that any concessions made will be used against them at a final hearing if the mediation fails.

23 “Facilitative” is used in contrast to “evaluative”; it means that, unless the parties have agreed to such a course, the employment judge conducting the mediation will generally not give any party in the case an indication of their prospects of success. The aim often is to hold the mediation before the parties have incurred significant cost, to maximise the savings that an agreement can deliver.

24 A judicial mediation usually occupies a day of tribunal time. It usually takes place by video or telephone, but may be held in person.

25 A successful mediation usually results in a settlement that is formally conciliated by an officer of Acas or, less often, by use of a compromise agreement. Even if the parties do not agree to resolve their dispute following judicial mediation, the process may still give effect to rule 2 because it can assist the parties in understanding what the case is really about and what is at stake; and it may clarify and narrow the issues requiring adjudication, resulting in a shorter and more focused final hearing.

26 An employment judge who has conducted an unsuccessful mediation will not decide the claim on its merits at a final hearing.

27 Judicial mediation began in 2009 and, between then and the date this guidance is published, employment judges in England and Wales have conducted about 8,000 mediations, with a “success rate” of about 65–70%, resulting in a net saving of nearly 22,000 sitting days1^F1.

28 Further details are in the protocol for use by parties at Appendix 1.

29 Judicial assessment is a consensual, confidential and evaluative process.

30 It can be used in any case, regardless of the type of claim and duration of the hearing.

31 An employment judge will use their skills and experience, based on the information available at the time, which...