Mediation: All you need to know

Sylvie Thrush Marsh, Head of Platinum Services
By Sylvie Thrush Marsh, Head of Platinum Services

Most people have heard of mediation. In the context of the employment relationship, mediation is a free and confidential tool to resolve problems. But what does that mean in practice? Who’s involved? What happens when you go? And why would you choose mediation over other ways of resolving employment issues?

In this blog post, we have a close look at mediation, how it happens, what to expect when you attend, when you should use it, and how it can be a powerful way to resolve disputes before they get nasty.

What is mediation?

Generally speaking, mediation is a process where an independent third party intervenes in a dispute, or challenging employment situation, to help resolve it.

Quite often, parties in a dispute will be too close to it or too emotionally invested to be able to see clearly enough to resolve it. So a mediator who is objective and impartial can be very helpful in navigating the problem and finding a constructive solution.

Mediation is a structured, confidential process, but unlike court proceedings, mediation isn’t strictly formal; it’s voluntary and resolutions aren’t binding unless both parties agree.

In NZ, mediation is an unregistered industry (unlike chartered accountants or lawyers), but mediators can register with industry bodies, e.g. the Arbitrators' and Mediators' Institute of New Zealand.

Mediation is written into employment law. The Employment Relations Act 2000 promotes mediation as the primary mechanism for addressing and resolving problems in the employment relationship, and every employment agreement must contain a description of how employment problems will be addressed. This usually includes a reference to mediation.

Under the provisions of the Act, the Ministry of Business, Industry and Enterprise (MBIE) provides free mediation to any employer or employee, though the service is in high demand. 

Private mediation services are also available, which can speed up the process, but this obviously comes at a cost, so you’d have to weigh up whether faster resolution of the problem would warrant the expenditure. 

As we mentioned, mediation is voluntary: either party can decline to attend. The key is the environment: it should be relaxed enough and by default, it’s without prejudice, so people can speak freely as equals and say things they wouldn’t normally or which might otherwise prejudice an outcome.

How does mediation happen?

Mediation can be triggered either by the employer or employee (or ex-employee). 

Typically, meditation is requested from the MBIE (or a private provider) and a mediator is assigned to the case. The mediator will then make contact and arrange a meeting - either in person or remotely - at a time both parties agree to.

If an employee or employer raises a personal grievance, in most cases, you will be directed to mediation to try and resolve the issue, before pursuing the personal grievance with the Employment Relations Authority (ERA).

We recommend that if you’re invited to mediation, as employer or employee, you should attend as it demonstrates your willingness to try and resolve the issue. Choosing not to go can be a black mark against your name, should the problem escalate and require more formal proceedings.

Who’s involved?

Both parties attend mediation sessions. This can be done solely by the people involved, or the parties can bring a professional representative - e.g. employment advocate or lawyer - or a support person, such as a family member, friend, or community leader.

We recommend bringing representation, as employment law is complex and having a professional who knows the nuances, and can advocate for you, can be of great assistance.

What happens in mediation?

Mediation typically follows this process:

  1. The parties show up to the session; everyone will be in one room.
  2. The party who requested mediation gets to say their piece.
  3. The party who agreed to attend says their piece.
  4. Mediator will then put the parties into separate rooms.
  5. Mediator goes back and forth between meeting rooms to talk to the parties about potential solutions.

A mediator is not there to advocate for one party or the other, but they are there to help resolve the situation and ensure the conversation remains constructive. They will provide feedback to both parties about potential outcomes and provide context.

What problems should you use mediation for?

While it might seem like mediation should be reserved for serious employment relations issues, pretty much any problem can be taken to mediation. This might be when:

  • An employee and a manager are clashing.
  • An employee is under-performing.
  • Two employees are repeatedly clashing.
  • A personal grievance has been raised.

More pragmatically, if the employment relationship is still recoverable, then you are unlikely to need to go to mediation as you can probably manage the problem in-house.

However, if the relationship is not recoverable, then mediation can help you get It resolved. At MyHR, we advise employers to go to mediation when:

  1. An employee is not performing and the business doesn’t think that further support or performance improvement plans (PIPs) will resolve the problem.
  2. An employee is a poor fit, and the business doesn’t think that coaching or further support will resolve the matter.
  3. When a personal grievance has been raised, even if it is speculative.

Going to mediation in these circumstances can speed up the resolution process and improve your chances of a positive outcome, such as moving the person out of the business.

The more evidence you can provide that you have upheld your side of the employment relationship - e.g. proof of training, one-on-one guidance, performance reviews or PIPs, disciplinary action - the better your chances of a good (and prompt) outcome.

What are the outcomes of mediation?

There are many potential outcomes of mediation. This could be:

  • A settlement payment to the employee (to leave the business).
  • Reinstating an ex-employee to a role.
  • Performance improvement plans or coaching.
  • Changes to a person’s role, duties, reporting lines etc.
  • Agreed steps to manage the conflict (if the problem is between employees). 

Outcomes or settlements are only binding if both parties agree. The mediator will then create a record of settlement, which is signed by the parties and the mediator. The record is then confidential, final and binding, i.e. both parties must do what they agreed to when they signed, and it is enforceable through the courts.

Sometimes, the parties won’t reach an agreed outcome, in which case they can ask the mediator to make a decision or a recommendation.

A decision is binding and enforceable whereas the parties have a specified time limit to decline a recommendation, after which it becomes binding.

Either party can also apply to the ERA for a determination. There is a fee for this service.  

If you have any questions about mediation or need help resolving employment issues, don't hesitate to contact MyHR.

Find out more about effectively managing employment issues.