Mediation: the key method of problem-solving in the workplace

Since the Employment Relations Act 2000 (the ERA) came into force, mediation has been the primary problem-solving mechanism for all employment relationship issues. This reflects the philosophy of the ERA that employment relationships are more likely to be successful if problems in those relationships are resolved promptly by the parties themselves. Below, we briefly outline the main features of the mediation services under the ERA, how you may be affected, and how you can best take advantage of the mediation services.

The emphasis on mediation accords with one of the objectives of the ERA, which is to reduce the need for judicial intervention in employment relationship problems.

In effect, mediation has become a compulsory first step for most employment relationship problems.

Mediation services available under the Employment Relations Act

Mediation services are available for both collective and individual employment relationships, and are administered by the Department of Labour.

The most important function of the mediation service is to provide specialised mediators to assist parties to resolve employment relationship problems. These mediators are employed directly by the Department of Labour. This was a departure from the position under the Employment Contracts Act 1991 where mediators tended to have a dual role as mediator/adjudicators, and were members of the Employment Tribunal – an independent body.

Mediators now have more flexibility

Any person who wants to access mediation services can simply contact the local office of the Department of Labour and the Department will try to arrange a mediation. Mediations can generally be accommodated within one to three months of the request for mediation assistance. Where an urgent mediation is required, timeframes can be shorter.

Mediators are given wide discretion to adopt whatever processes they feel are best to resolve the particular problems before them promptly and effectively. This includes receiving any information or other material that the mediator thinks fit, whether or not it would be admissible in judicial proceedings. Mediations may take place at the workplace or other convenient venue, as well as at the rooms provided by the Department of Labour, or may be conducted by telephone, facsimile or email. However these are not common, and “face-to-face” mediations are generally most effective for resolving any given dispute.

Notwithstanding this greater flexibility, most mediators have adopted the steps followed by the Employment Tribunal mediators. Generally, both parties will begin by outlining their view of the problem. Next, the parties, assisted by the mediator, and their representatives (if the parties choose to be represented), will attempt to negotiate a solution, which may or may not strictly reflect the legal rights of the parties. This part of the mediation may happen with all parties present, or with the parties in separate rooms, depending on circumstances.

If the problem is resolved, a settlement agreement will be drafted. The terms of a settlement agreement signed by the mediator in accordance with the steps prescribed in the Act will be final, binding, and enforceable.

Parties can agree to allow the mediator to impose a decision

There is provision in the Act for parties to a problem to allow the mediator to impose a decision. Where the parties choose this option, the decision made by the mediator will be final, binding, and enforceable and cannot be appealed or reviewed by the Employment Relations Authority or Employment Court.

This is relatively uncommon, but in certain circumstances it can be a useful way to end the matter.

Confidentiality of mediations confirmed

The confidentiality of mediations conducted by the mediation service has been specifically addressed under the ERA, which confirms that:

  • everything said at a mediation is confidential and “without prejudice” to the parties involved, and
  • nothing said and no document created for the purpose of mediation will be admissible in later proceedings.

Private mediation available

The parties can opt for a private mediator, rather than a Department of Labour mediator and parties may wish to choose this option where a private mediator has specialist industry knowledge which may be useful. However, the parties will have to bear the cost of the mediation.

The parties will also have to agree on confidentiality terms as the Act provisions do not extend to private mediations.

Mediation almost always required before case proceeds further

A case will not be investigated by the Employment Relations Authority until the parties have at least attempted, in good faith, to resolve the problem by mediation, unless:

  • mediation will undermine the urgent or interim nature of the proceedings (however even urgent matters are usually sent to mediation)
  • mediation will not contribute to the resolution of the problem
  • mediation is not, in all the circumstances, in the public interest.

However there is no obligation on any party to reach agreement during mediation.

If a mediation fails to achieve a resolution, the problem may then be referred to the Authority, which will conduct an investigation of the problem and make a determination according to the substantive merits of the case (without regard to technicalities). The Authority must consider from time to time during the investigation whether to direct the parties to further mediation. Accordingly, parties may find that they attend mediation several times, both before and during an investigation by the Authority.

Either party may take advantage of the mediation services available

Any party involved in an employment relationship problem is entitled to request mediation assistance to attempt to resolve the problem and we recommend that employers are proactive in initiating mediation.

Mediation services are free, and may be accessed relatively quickly. The early use of mediation may ward off a more serious dispute, or may bring a simmering problem to a head quickly, before the parties become entrenched in their positions. Also, by initiating the mediation process, an employer can retain some control over the time, place, method, and the terms of reference of the mediation assistance. In this way an employer can contain some of the costs of down-time which are commonly associated with resolving disputes in the workplace.

Initiating mediation also demonstrates good faith towards the other party or parties to the problem.

Where mediation is requested by an employee or a union, the employer should be proactive in suggesting venues, times and other arrangements which may reduce the impact of the problem on its operations or which may assist the parties in resolving the issues in contention.

Some situations where employers may wish to go to mediation

  • working through a restructuring process which may result in redundancies – the mediator can assist you to outline the restructuring process, the impact that may have on some employees, options available to the employee(s) affected, and help to forge an agreement about the process
  • working through performance issues with an under-performing employee
  • interviewing an employee regarding suspected misconduct
  • dealing with relationship breakdowns between employer and employee
  • negotiating with unions about issues arising under existing agreements, disputes which have arisen, or resolving problems regarding fixing new terms and conditions of employment
  • attempting to resolve issues that have arisen between two or more employees
  • dealing with a complaint of sexual harassment.

Conduct at the mediation

In most successful mediations the parties:

  • listen to the other party’s concerns, including on underlying issues
  • recognise the other party’s feelings
  • actively participate in the process (rather than solely speaking through their advocates, for example)
  • are represented by decision-makers, and
  • are prepared to be flexible and think laterally to find solutions.

Mediations are not adversarial in the same way that a court hearing is and are not the place to debate fine legal points. Often, in order to settle at mediation, the parties will have to agree to disagree on some issues.

In summary

Mediation is a key element of the new Act and accords with the general “good faith” obligations which now exist in all employment relationships.

Mediations can be organised quickly with mediators having a great deal of flexibility with respect to the form of the mediation.

Employers should consider initiating mediation themselves to avert a much larger (and more costly) problem at a later stage and be proactive in suggesting appropriate arrangements for mediation.

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Related topics: Employment; Mediation


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