Employment Law Update: The cost of conflict to employers – Top tips for conflict management

The effective management of workplace disputes is an essential skill for employers and internal HR teams to grapple with for a host of legal, ethical, and practical reasons. The risk of negative publicity for one, particularly in today’s ‘digital’ age, where social media has become a powerful vehicle in embellishing the reputational risk on employers faced with contentious employee conflicts.

Costs are also a key consideration for employers to keep in mind when deciding whether to tackle such conflicts early on, more so as employers try to adapt to new changes post COVID-19 amidst the sway of increased claims brought against employers in the last year.

The Advisory, Conciliatory and Arbitration Service (“Acas”) has, last month, published a new report, “Estimating the Costs of Workplace Conflict”. Acas have estimated workplace conflict costs UK employers £28.5 billion every year, an average of just over £1,000 for every employee.

The report indicates that nearly half a million employees resign each year because of workplace conflict. The costs involved in actively recruiting replacements for those employees amounts to £2.6 billion per year, with losses involved in training new employees amounting to £12.2 billion.

Most workplace conflicts can and often do lead to a knock-on effect on employees’ mental health, with many suffering from stress, anxiety, and in some cases this can lead to depression. Workplace presenteeism has a detrimental blow on productivity within the workplace, with the cost to employers estimated to be between a hefty £590 million and £2.3 billion annually. Sickness absences as a result of workplace stress, meanwhile, are estimated to cost employers £2.2 billion each year.

Management time spent dealing with workplace conflicts, potential, and actual litigation is estimated to be at least £282 million per year.

The long and short of it is, workplace conflict costs employers staggering sums of money each year – with costs forming one of many negative consequences of workplace disputes. Workplace disputes are somewhat inevitable but knowing how to effectively manage them is key to reducing the costs risk to businesses. What are some of the ways in which employers can circumvent such costs risks when disputes arise?

A ‘new normal’ – tips to effectively manage workplace disputes

As workplaces across the nation adapt to a ‘new normal’ following an ease on restrictions, with many workforces gradually returning to the office, now is a better time than any to consider implementing measures to manage workplace disputes effectively and try to keep prospective costs from prospective litigation low.

1. Early intervention before conflicts are formalised – one of the ways for employers to effectively manage a workplace dispute (and try to circumvent the costs risk of dealing with a grievance and/or claim) is to spot the conflict early and intervene before a formal grievance is raised. In practice, it can be difficult to spot when a potential dispute is rearing its head, however, through staff training and other means, businesses can ensure that those in employee relations and managerial positions are alive to the signs of a dispute and/or are well-equipped with the means to regularly check in on employees. Managers could, for instance, take the employee to a safe place to discuss their concerns openly and fairly. Workplace procedures themselves could have a greater focus on repairing and fostering employment relationships rather than placing blame on either the employer or individual, as many workplaces do when following own procedure. Employers could also consider staging their grievance procedures or treating an informal grievance with the same level of seriousness as a formal grievance. Advice should always be sought if in doubt, but either way making an employee feel supported could have a substantial impact on their mental health, morale generally, and lessen the employees’ motivation to escalate their complaint. 
2. Training initiatives and policy overhauls – robust workplace policies and procedures and the effective implementation of the same are a vital tool in assisting employers manage such conflicts and reduce the costs (and other) risk in such disputes escalating. Ensuring procedures are in place to create fairer and more inclusive workplaces is important, as is training the workforce on building positive relationships; people are at the heart of such conflicts.
3. Invest in mental health – one of the biggest personal casualties of workplace conflict is mental health. Acas’ report indicates almost 5 million employees reported stress, anxiety and/or depression. Employees, line managers and senior staff, should all be given the relevant tools at work to seek support for their mental health, and systems should be in place which go beyond simply signposting employees to relevant organisations. Employers who take an active approach in investing in mental health initiatives and in understanding and tackling mental health issues head on, arguably promote better wellbeing for employees.
4. Improved communication – many conflicts arise from misunderstandings, poor communication, wrong information or off-the-cuff decision making. Employers should look to enhance procedures to foster and encourage two-way communications in appraisals, organise team building exercises and consider the best way of communicating to certain employees who, say, may be disabled.
5. Treating staff fairly and consistently – this is imperative to try to reduce incidents of conflict and sits hand in hand with the active implementation of equality and diversity initiatives within the workplace, especially in light of increased social and political movements such as the Black Lives Matter movement. Emotions form the basis of many workplace disputes and can be form the catalyst for formalised complaints. Ensuring employees feel included can go a long way in potentially avoiding formalised complaints or grievances.

Concluding thoughts

 Effective conflict management is essential to maximise productivity and reduce risks to employers within the workplace.

It is advisable to seek early legal advice whenever there is potential for a workplace dispute to arise and our employment team at Curzon Green are highly experienced in effectively managing such disputes and protecting employers.

Handling disagreements and complaints early and before employment relationships are irreparably damaged can help save businesses money and can help avoid any  reputational risks, should formal claims be issued at the Tribunal.

The report confirms conflict is more likely following the COVID-19 pandemic and we expect problems stemming from remote working may rear when workplaces open their door. It is essential that businesses have the know how to respond effectively and are taking steps now, to avoid increasing those statistics next year.