The recommended interventions in the guideline are developed according to the Guideline Method. More information and further elaboration on the selected interventions can be found on this page.
Disputes that emerge at the workplace can result from vague top-down guidelines from managers, uncooperative colleagues, diverging interests of team members, lack of clarity on roles and responsibilities, misunderstanding or communication gap among colleagues and so on. As persons responsible for leading teams and meeting goals of the organization, supervisors or line managers are responsible for preventing and resolving such disputes. To do that, supervisors or leaders have to understand the emotions, needs and interests of both disputing parties. Therefore, in this recommendation, we will discuss two leadership styles namely transactional leadership and transformational leadership, that are most helpful in understanding needs, emotions and interests of disputing parties in an employment dispute. Leaders can deploy these leadership styles proactively i.e prior to the occurrence of the dispute as well as while resolving the dispute.
“Bass and Avolio developed a general leadership theory called the Full Range Leadership Model in which they described 3 leadership styles, namely: laissez-faire, transactional and transformational. Laissez-faire leaders avoid making decisions or taking positions, hesitate to take action, abdicate their authority, and are typically absent when they are needed” (as cited in Harms and Crede 2010, p.6). Given the passive nature of this leadership style, scholars and practitioners recommend the other two leadership styles to manage employees. Therefore, in this recommendation, we will examine how transactional and transformational leadership styles affect the well-being of employers and employees.
“Transactional leadership focuses on the exchanges that occur between leaders and followers [or in this context, employees] (Bass 1985; 1990; 2000; 2008; Burns, 1978). These exchanges allow leaders to accomplish their performance objectives, complete required tasks, maintain the current organizational situation, motivate followers through contractual agreement, direct behavior of followers toward achievement of established goals, emphasize extrinsic rewards, avoid unnecessary risks, and focus on improve organizational efficiency” (McClesky 2014, p.122).
“Transactional leaders award rewards and punishments to subordinates based on their performance. They identify goals, assign roles and responsibilities and delegate tasks. They monitor the performance of employees, check for mistakes or errors and conduct two-way discussions on tasks at hand. “They focus on operational efficiency and time management” (Afsar et al. 2017, p.312). “This leadership style aims to maximise operational and individual gains” (McClesky 2014, p.122).
“Bass and Avolio (1997) defined transformational leadership as a leadership style that motivates followers by appealing to their higher order needs and inducing them to transcend self-interest for the sake of the group or the organization. This form of leadership involves creating an emotional attachment between leaders and followers. Jin (2010) noted that transformational leadership integrates “empathy, compassion, sensitivity, relationship building, and innovation” (p. 174)” (Men 2014, p. 267).
“Transformational leaders take a genuine interest in the well-being of employees, foster a climate of trust, nurture confidence in their followers, and encourage individual development. To these ends, transformational leaders often engage in close interactions with their followers to understand and address their needs better. In terms of decision making, transformational leaders seek to empower followers. They are willing to share power and delegate significant authority to followers to make them less dependent on the leader (Aldoory & Toth, 2004; Men & Stacks, 2013). Therefore, transformational leaders are characterized by interactive, visionary, passionate, caring, and empowering communication behaviors” (Hackman & Johnson, 2004)” (as cited in Men 2014, p.267).
For parties looking to prevent or resolve an employment dispute, where the employer and employee want to recognise emotions, needs and interests (understanding), is transactional leadership or transformational leadership more effective for well-being?
The databases used are: Rouletledge, Sage
For this PICO question, keywords used in the search strategy are: transactional leadership, transformational leadership
Taken together, the available research suggests that both transactional and transformational leadership are necessary in uncovering emotions, needs and interests of employees and preventing or resolving disputes.
Transactional leadership is most effective in taking care of day-to-day operations of the organisation. The leaders are aware of everyday challenges that subordinates face. Because such leaders are interested in attaining operational efficiency, they are likely to address emotions that employees attach to each task. They help employees to complete tasks efficiently and give them the opportunity to learn from their mistakes. They ensure that employees adhere to rules and regulations which make the workplace a safe place to work. A few pitfalls of transactional leadership are that it doesn’t demand creativity from employees and that motivated and enterprising employees might find it a stifling environment to work in.
All in all, transactional leadership is instrumental in preventing and resolving disputes at the workplace. For example, if two subordinates are assigned a task with a deadline. But one of them has not been able to make much contribution to it because he or she is inundated with more pressing activities, there might be delay in achieving the previous deadline. Because a transactional leader monitors subordinates, he or she will quickly grasp the problem and can reprioritise certain activities which will free up the time of the employee. Similarly, if the other teammate feels that the coworker is not pulling his weight and it leads to a quarrel among the two, because the transactional leader is involved in everyday operations and is interested in efficiency, he or she will try to resolve the dispute so that the subordinates continue to have a good working relationship and produce good results for the organisation.
Transformational leadership stimulates employees intellectually, helps them align with the goals and objectives of the organisation, and emphasises employee well-being by keeping conversation channels between seniors and subordinates open. There is a risk that transformational leaders manipulate employees or misuse their trust. The bond between the senior and subordinate can cause the latter to work until they burn themselves out.
Altogether, transformational leadership is also instrumental in preventing and resolving disputes at the workplace. Because transformational leaders nurture a good interpersonal relationship with subordinates, if an employee feels that certain tasks are not going well or if there is misalignment of interests with coworkers, he or she is likely to bring it up with the leader, who can then take action to resolve the issue. Similarly, in an ongoing dispute, transactional leaders make an effort to understand the stand of disputing parties, communicate well and try to resolve the underlying needs of the disputing parties.
Therefore, a mix of transactional and transformational approaches is preferred.
Taking into account the balance of outcomes, and the quality and consistency of the evidence, we make the following recommendation: A combination of the two leadership styles, transactional and transformational, is most conducive to the well-being of employees and the organisation. As explained in the technical remarks, the type of work environment can justify the usage of one style to a greater extent than the other, but one should not be used to the complete exclusion of the other. choose a style depending upon the type of organisation they work for and the roles employees they are they work with.
There are certain situations or organisations where either one of two leadership stylesis better suited. Those are:
First literature search: The most plausible interventions that emerged during literature review for documenting rights and responsibilities of the employer and employee are
Legalistic Employment Contracts
‘Contracts contain vital business and relationship information, not just legal provisions: they contain information about roles, responsibilities, and requirements that need to be translated into action. They also contain crucial information about price, payment, product or service characteristics, functionalities, and so on, along with procedures, timelines and milestones that need to be followed. When contracts are seen as business enablers and communication tools it becomes obvious that contracts need to be designed, not just drafted’ (Haapio, Plewe and de Rooy 2016).
To make such documents enforceable and clear, lawyers use several legal expressions that the layperson is not familiar with. As a result, ordinary people often fail to understand legal documents. An interdisciplinary approach has been suggested to address this issue. Experts, especially those belonging to the school of Legal Design suggest the use of visual elements. Some propose to use visuals as contracts. For example, Robert de Rooy has experimented with using comic contracts for workers who have low literacy skills. Others propose using plain and simple language to make contracts more comprehensible to ordinary people. But some scholars believe that the simplification of contracts using plain language has its limitations and for legal documents to be valid, relevant and enforceable, the use of legal expressions is unavoidable. Similarly, using visual elements also has its own limitations.
To examine which method of drafting contracts is most useful, in this recommendation we compare user-centred contracts with contracts containing legal expressions.
For the purpose of this recommendation, we define user-centred contracts as contracts that contain visual elements as well as those that are drafted using plain, simple language. We do not include contracts that are exclusively visual (do not contain any text) because this intervention has not been tested on a large scale and research on it is scant. On the other hand, using visuals together with plain language (to create user-centred contracts) are interventions that have been the subject of a considerable amount of research. .
Proponents of user-centred contracts encourage the use of visualisation to simplify contracts.Visualisation in contracts ‘refers to adding flowcharts, icons, timelines, images, matrices to highlight, clarify and explain the content’ (Haapio, Plewe and de Rooy 2016). ‘Visual language can be utilized to explain a variety of concepts, with different goals, both in contracts and in supporting and explanatory materials about the contracts’ (Passera, Haapio and Barton 2013, p.11). Visual in contracts are being used by businesses when procuring. For example, a Finnish company operating in the metals and engineering sector used visualisation for B2B procurement contracts. It used timelines and icons to summarise and clarify the written text to ensure that the documents communicate the message clearly (Passera, Haapio and Barton 2013, p.14). Another company in the UK, NEC, offers procuring works, services and supply. It uses flowcharts to help the reader in understanding (as cited in Passera, Haapio, Barton 2013, p. 13).”
The use of plain language in the legal sector emerged in the second half of the twentieth century. It was first used in government forms and consumer-related documents and eventually spilled to the broader legal sector. It entails breaking down long sentences into shorter sentences, replacing archaic and Latin words with words that are understood by the public and other such measures. Proponents of the plain English language movement argue that laws are primarily meant to address the needs of ordinary people, and not lawyers and judges. So they should be drafted in a way that they are ‘fully intelligible’ to their primary users, i.e the masses. The UK, USA, Australia, Canada and other English speaking countries have already begun using plain language to draft legislations and government forms (Assy 2011).
Legalistic Employment Contract
‘Contracts outline roles and responsibilities, construct communication structures, provide for change management and contingency planning, and nominate dispute resolution methods in the event of trouble. In addition to legal and technical terms, contracts contain financial terms and project-related timelines and procedures’ (Passera, Haapio and Barton 2013, p.3).
They are meant to minimise risk and maximise rights of the contracting parties. ‘They contain legal rules, principles, and doctrines that help legal professionals in recognizing the relevant facts and classify them into the pertinent legal categories, and to engage in a particular type of interpretation and reasoning’ (Assy 2013, p.378). Given that legal expressions play an important role in enforcing the contract, completely doing away with legal expressions is not in the best interest of the contracting parties or the larger public.
For employers and employees who want to document rights and agreements before entering into an employment relationship, is a user-centred contract or a legalistic contract more effective for well-being?
Key words: plain language drafting, legalese, contracts, legal enforcement, legal language, visual contracts
Database: A general Google search strategy was used without referring to any one database.
The main sources of evidence used for this particular subject are:
Geerlings, M., & van Montfort, A. J. G. M. (2020). What exactly did the judge decide? Clear language and well-arranged structure lead to better comprehensible court judgments. Archives of Business Research, 8(1), 248-260
Haapio, H., Plewe, D. and deRooy, R. (2016). Next generation deal design: comics and visual platforms for contracting. In Networks. Proceedings of the 19th International Legal Informatics Symposium IRIS (pp. 373-380).
Stefania Passera, Helena Haapio, and Thomas D. Barton (2013). Innovating Contract Practices: Merging Contract Design with Information Design, in PROCEEDINGS OF THE 2013 ACADEMIC FORUM ON INTEGRATING LAW AND CONTRACT MANAGEMENT: PROACTIVE, PREVENTIVE AND STRATEGIC APPROACHES.
Siebörger, I., & Adendorff, R. D. (2011). Can contracts be both plain and precise?. Southern African Linguistics and Applied Language Studies, 29(4), 483-504.
Assy, R. (2011). Can the law speak directly to its subjects? The limitation of plain language. Journal of Law and Society, 38(3), 376-404.
Masson, M. E., & Waldron, M. A. (1994). Comprehension of legal contracts by non‐experts: Effectiveness of plain language redrafting. Applied cognitive psychology, 8(1), 67-85.
The paper by Geerlings and Montfort (2020) tests whether a judgement given in a District Court in the Netherlands is more comprehensible to readers after it is improved in terms of linguistic and textual clarity. Linguistic clarity refers to usage of simple and clear language instead of old-fashioned or formal language. Textual clarity refers to flow of the text and placement of important sections within a document. The sample size of the study is 106 respondents. Majority of the respondents (76%) did not have any legal experience but were highly educated (had a bachelor’s or master’s degree). The size of this study is comparable to a small observational study so we grade the quality of the paper to be low, according to the GRADE methodology.
Haapio, Plewe and de Rooy (2016) outline contracting pitfalls and propose new approaches to the use of visualisation to overcome them. This paper is based on literature and expert opinion. Given that visualisation in contracts is a relatively new concept, its usage is very limited. Consequently, the concept’s validity has not been empirically tested which means that large empirical studies or systematic reviews of this topic are lacking. Nonetheless, due to the absence of empirical research on this topic, we grade the quality of this paper to be very low.
The article by Passera, Haapio and Barton (2013) explores the application of user-centred design, contract visualisation and information design in the drafting of contracts. It gives examples of countries where contracts have been visualised. Given that the article is based on the opinion of experts, the quality of this paper is graded as very low.
The article by Sieborger and Adendorff (2011) tests whether plain language contracts are easier to understand than text written in legal language by redrafting an extract
from a lease agreement into plain English in three stages, producing three versions of
the extract in progressively plainer English. This study is comparable to a small experimental or observational study. According to the GRADE method, we grade the quality of this paper to be low.
Assy (2011) examines the advantages and disadvantages of using plain English in place of legal texts. While doing so, she cites numerous empirical studies and also develops arguments using literature and original analysis. This evidence primarily falls in the category of opinion of international experts, we grade the quality of this paper as very low.
Masson and Waldron (1994) produce empirical evidence on the effectiveness of three kinds of simplification of standard legal contracts to increase understanding of the layperson. They redrafted a set of legal contracts using simple language and tested if usage of simple language contracts improved the understanding of non-experts. This size of this study is comparable to an observational study so we grade the quality of this paper as low.
Quality of evidence and research gap
According to our research method, we grade the evidence comparing user-centred contracts and contracts containing legal expressions as very low.
Literature on the effectiveness of user-centred contracts in enhancing well-being of employers and employees is in its nascent stage. This can be explained by the fact that user-centred contracts are a relatively new development in the field of contracts. Consequently, the use of user-centred contracts to document employment relationships is scant. Therefore, this recommendation uses literature that highlights the advantages and disadvantages of all contracts falling under the umbrella of user-centred contracts and is not specific to employment contracts.
Despite the lack of literature or research done on this issue, we chose to develop a recommendation because we believe user-centred contracts have the potential to positively affect the well-being of employer and employee. Their usage is being currently debated among practitioners, which also makes it an important and relevant intervention that ought to be covered in a guideline for practitioners such as this one.
From the section on desirable and undesirable outcomes, it is clear that including visual elements in contracts complements the text and helps the reader in understanding the contract better. As for using plain language in legal documents and contracts, that has its benefits to the extent that archaic vocabulary and long sentences are replaced with more clear and succinct ways of writing. However, as demonstrated above, it is clear that using plain language does not negate the need for lawyers unlike what some of the proponents of plain language would like to believe. Even if plain language is adopted in contracts, legal experts will be required to interpret various laws and doctrines. Having said that, we can conclude that visual elements and plain language both are beneficial to legal experts and the layperson alike, as they represent and communicate the message in a better manner.
Based on the above arguments, in the absence of empirical research, one can conclude that in the context of employment relationships, a user-centred employment contract that has plain language and visuals has clear benefits for the employee. He or she will be able to understand the role, rights and responsibilities and the terms and conditions of the employment relationship better. It is likely that the employer will incur additional costs and time in drafting an easily comprehensible employment contract. However, such investment on part of the employer is not a recurring event as a template of one employment contract can be used for other employees as well.
So, in the case of an employment contract, we suggest that current employment contracts should embrace plain language and visuals in contracts which will lead to development of contracts that are user-friendly and legally enforceable. Having said that, such a hybrid form of contract is unlikely to negate the need for a lawyer to interpret the contract or to deal with consequences arising out of an escalated employment dispute.
Taking into account the balance of outcomes and the quality and consistency of the evidence, we make the following recommendation: For employees and employers, who want to document rights and agreements before entering into an employment relationship, combining a user-centred contract along is most effective for well-being.
This recommendation is focused on requirements of an employment contract. Therefore, we have selectively chosen the desirable and undesirable outcomes of each intervention such that they are applicable to employment contracts. As a result, a few desirable and undesirable outcomes of the two interventions, that are not relevant to employment contracts, have not been included.
First literature search: During the orientation process of the available literature, we were able to identify two ways of documenting the rights of employers and employees
Single employment contract
Dual contracts: permanent and fixed term contract
The European labour market is characterized by dualism or the simultaneous existence of fixed term contracts, also known as temporary contracts, and permanent contracts. As the name suggests, employees on temporary contracts or fixed term contracts enter into an employment relationship for a relatively short period whereas permanent employees have open-ended contracts i.e there is no termination date specified in their contract.
‘’This segmentation in the labour market can occur for a variety of reasons: related to technology (e.g. assuming that workers under different contracts are different factors in the production function); due to preferences – assuming that workers value being under a permanent contract differently than being under a temporary contract), or that they are subject to different market frictions’’ (Cao, Shao and Silos 2010, p.4). Blanchard and Landier offer another explanation for the segmentation in the labour market. They posit that firms hire employees on a temporary contract for entry level positions. If the employer is satisfied with the performance of the employee, he or she is offered a permanent contract (as cited in Cao, Shao and Silos, p.4).
Meanwhile, the Eichhorst et al. (2018) posit that the absence of permanent employment motivates workers to take up temporary employment. Education does not emerge as a factor that pushes workers into temporary employment, except for countries such as Austria, Germany and Denmark where strong vocational programmes lead workers into fixed-term apprenticeships and contracts (ibid).
The primary difference between fixed term contracts and permanent contracts is that they offer varying degrees of protection to the employee. Permanent contracts offer full protection to employees in terms of employment protection legislation as compared to temporary contracts. The fixed term contracts provide low quality benefits in terms of pay, opportunities for training, health benefits and access to social protection to employees. They are less likely eligible to receive skill enhancing training as employers will prefer to invest in skill enhancement of permanent employees. Fixed term contracts tend to offer none or a small severance payment. Young persons, migrants, low and medium-skilled workers make up the majority of the labour force in temporary/fixed-term employment (Eichhorst et al. 2018).
On the other hand, permanent employees enjoy the security of having a stable job, accompanied by opportunities to develop skill-sets and advance in their career, access to credit and housing in the market, health and other social security benefits (Dolado, Lale and Siassi 2015).
Single employment contract
The single employment contract was introduced by the European Commission’s Green Paper on modernizing labour law in 2006. The idea was then further defined by the report Employment in Europe 2010 (Casale and Perulli 2014).
Single open-ended contracts or single employment contracts is one of the solutions proposed by many to end dualism in the labour market in Europe. There are two types of single employment contracts:
Single employment contract that replaces all existing contracts by one single contract. This is called the pure single employment contract.
Single employment contract that lies between permanent contract and temporary contract. It allows other types of contracts such as interim contract and agency contract to operate. It’s called the extended single employment contract.
The latter one has a lot of supporters, especially among lawyers and economists. This contract would essentially replace fixed term contracts and permanent contracts allowing interim and agency contracts to operate. It calls for increasing the probation period, termed as contracts with long probationary periods (CLPP), increasing the criteria based on which employees can be dismissed and contracts offering more rights to the employees his/her tenure increases – termed as contracts with progressive seniority rights (CPSR). To offset the impact of these measures on the well-being of the employee, the single labour contract provides a severance pay to the employee so that incase of termination of the contract, the employee will be paid a certain amount. The size of this pay will depend on the seniority of the employee (Lepage-Saucier, Schleich, and Wasmer 2013).
To reduce unemployment and tackle the duality of the market, several countries have introduced degrees of flexibility in their permanent contracts to give more leeway to employers. This initiative has achieved mixed results. For example:
1. Example of long probation periods and severance pay: Contract Nouvelle Embauche (CNE)
CNE was implemented by French government in 2005. It allowed employers/employees to terminate a contract within two years of employment without justification. In case of termination of contract, employees had to be paid 8% of the salary earned since the beginning of the contract. This initiative did not work for legal reasons. Its successor, CPE (first employment contract) was also repealed due to protests and opposition from unions.
2. Italy in 2012 tackled the duality of the labour market replacing permanent contracts with open ended contracts. The open-ended contracts permitted employers to terminate the contract of an employee within 3 years of being employed. If an employee works for a firm for more than three years, then he or she has to be made permanent. However, this reform was eventually replaced with a reform that capped the duration for which a fixed term contract could be used, gives incentives to firms to convert apprentices into permanent workers and gives large and medium sized firms more leeway in firing workers.
For employers and employees who want to document rights and agreements before entering into an employment relationship, is using dual contracts (permanent and fixed term) or the single employment contract more effective for wellbeing?
Key Words: fixed term contract, temporary work, single labour contract, single employment contract, dual contracts
Data Base: Since most of the literature used on single-employment contracts has been published by think tanks and centres of labour economics, a simple Google search strategy was used to locate it.
The main sources of evidence for this particular subject are:
The OECD (2019) report provides a comprehensive review of empirical and conceptual research addressing the issue of non-standard forms of work. It describes and analyses a few recommendations that address the dichotomy between fixed term contracts and permanent contracts. It presents trends in employment in the Netherlands using empirical data combined with the opinion of international experts. The empirical data used in the report is comparable to an observational study, we grade the evidence as low.
The paper by Lepage-Saucier, Schleich and Wasmer (2013) analytically deconstructs single-employment contracts and demonstrates how the intervention will not eliminate dualism in the labour market. Examples of reforms undertaken in France and Italy are used as evidence to support this argument. The authors suggest undertaking partial reforms instead of the single employment contract. This paper contains literature review and empirical and policy research. In doing so, it develops a model that is comparable to a small observational study. So we grade the quality of this paper as low.
The article by Eichhorst et al. (2018) compares the single-employment contract with partial reforms. The analysis of single employment contract is not thorough, as compared to the research undertaken by Lepage-Saucier, Schleich and Wasmer. On the other hand, the article provides a rather comprehensive review of employment reforms undertaken by several countries in Europe. It uses literature review, case studies, policy review and some empirical data to substantiate its claims. So we grade this paper as low.
Doldo, Lale, Siassi (2015) in their paper, develop a theoretical model calibrated to the Spanish labour market prior to the Great Recession to examine the effects of introducing a single labour contract in an economy where employment protection afforded to permanent workers is very high and employment benefits given to temporary workers is low. This study is comparable to a small observational study. So we grade this evidence as low.
This paper by Bentolila, Dolado and Jimeno (2019) provides an overview of recent research on dual labour markets. It has a literature review on theoretical and empirical contributions on the labour-market effects of dual employment protection legislation. It analyses the impact of dual contracts on employment, productivity, growth, wages and labour market inflows and outflows. The analysis presented is backed by literature review, some empirical research and policy discussions. So we grade this paper graded as low.
The paper by Garcia Perez and Osuna (2014) evaluates Spain’s 2012 labour market reform of reducing severance pay from 45 to 33 days of wages per year of seniority and the introduction of a new subsidised permanent contract. They compare this policy with the introduction of a single open-ended labour contract with increasing severance payments for all new hires. To do this, they develop a theoretical model. This study is comparable to a small observational study so we grade the quality of this paper as low.
Quality of evidence and research gap
There have been reforms made to labour contracts in Spain, Italy and France that inch close to what a single-employment contract might look like but single-employment contract has not been implemented in its full form in any country. So empirical research on that subject is lacking. Scholars have examined the effect of implementing a single employment contract by developing theoretical models and simulations, which is a standard practice in the field of economics as many interventions are tested in this manner because implementing them requires national and political buy-in. In that sense, we are yet to understand the true effects of the single employment contract. Therefore, despite the evidence being of sound research design, keeping in line with our methodology of grading evidence, we grade the overall quality of evidence as low.
Note: Both interventions, dualism in the labour market and single-employment contract, have macro-economic ramifications such as productivity and growth. It is beyond the scope of this recommendation to explore these ramifications because they are not directly related to the well-being of the employer and employee. By limiting the analysis to the perspective of the employer and employee, we also intend on clearly identifying and highlighting the immediate impact of both interventions on the well-being of the employer and employee.
Dualism in the labour market has obvious and large disadvantages for employees. Employees on fixed term contracts or temporary contracts receive low wages and fewer employment related benefits such as pension and severance pay as compared to employees on permanent contracts.They are also subject to recurring spells of unemployment as they move from one employer to the other. They might face discrimination in the housing and loan market as financial institutions perceive them to have insecure and underpaid jobs. Given that the tenure of fixed term employees in the company is short, firms don’t provide them skill-enhancement training as a result, employees lose out on career advancement opportunities.
The single employment contract gives employees the opportunity to become permanent employees of the firm, an advantage not given under dualism. So a single-employment contract provides employees job security. Given that it provides a baseline/minimum level of advantages to employees at the time of entry, there is continuity in job-related benefits. As the level of benefits that employees will receive will increase as their tenure increases, employees the level of protection provided increases. The theoretical model developed by Garcia Perez and Osuna (2014) by calibrating the 2012 Spanish labour market shows that job tenure of workers will increase, unemployment will fall and rate of job destruction will fall.
However, this was a theoretical simulation where the authors controlled all parameters of the hypothetical reform of single employment contract. In practice, there is no clear indication of the level of baseline or floor of social protection benefits that single employment contracts offer. If the level of benefits provided is too low, then employees will face disadvantages similar to those that come with fixed-term contracts. In other words, the workers who are under a long probationary period and receive low protection while starting off will be stigmatised, just as workers who are under a temporary or fixed term contract. They will encounter challenges in accessing housing credit from banks as banks are likely to give preference to workers who are senior and are past the probationary period.
To address this problem, the design of the single-employment contract should be such that employees under probationary period should be able to climb up the ladder of the payscale and become permanent employees at a relatively swift pace. Similarly, new employees should also have a basic floor of rights (receive a minimum salary and other financial benefits) so that they don’t start at the very bottom. Employees under low seniority should also have the right to receive skill-enhancing training.
Tying the level of benefits to tenure also brings with it its own set of problems. It reduces mobility of the employee and encourages him or her to hold on to the job even when they are dissatisfied with it and would find it more beneficial to switch to a different company. On the other hand, it prevents employers from bringing in younger or more suitable persons. This issue can be resolved if the level of benefits is tied to the years of work experience that the employee has, instead of the completed tenure. Here, an employee can change jobs without the fear of losing out on the accrued benefits and the employer will also be able to maintain efficiency.
Another aspect of dualism is the concentration of unskilled persons, youngsters and women in temporary jobs or fixed term contracts. It is not yet clear how the single-employment contract would address this problem.
There is very little literature on costs and benefits to firms of the single-employment contract. So we cannot fully assess the impact of the single-employment contract on firms. Below is what we know.
For firms, the single-employment contract can act as a screening tool to retain high performing employees and let go of under-performing employees while they are on a probationary period. But for employees, that will lead to stigmatisation of workers who were laid off, as the common understanding in society would be that an employee on a single-employee contract should ideally progress to becoming a permanent employee.
Temporary contracts allow firms to adjust the size of the labour force to economic conditions (p.25). Single-employment contracts do not address this need of firms. If employees with low seniority rights or under probationary period are terminated, it breaks the implicit contract of long-term employment affecting the morale of other employees in the firm and can also lead to litigation. This leads us to conclude that perhaps the single-employment contract is more suitable for firms who intend on offering employees long term employment and is not suitable for firms whose requirements fluctuate tremendously along with changes in market conditions.
To conclude, dualism in the labour market is costly for both employers and employees. Having said that, scholars reason that the costs of dualism are still not well documented (Lepage-Saucier, Schleich and Wasmer 2013). The best way to tackle dualism in the labour market is an ongoing debate. The single-employment contract is a recent instrument suggested by economists and lawyers, the discussion of which is just taking off. It has not been implemented in its full form in any country. Researchers have arrived at advantages and disadvantages of the intervention by analysing them theoretically, by using simulations and by analysing reforms that come close to a single employment contract. So we don’t have a clear outline, design or conceptual and empirical understanding of this intervention either. Additionally, the literature on the single-employment contract has focused on evaluating its impact on employees. Very little is known about what costs and benefits it entails for employers.
Furthermore, dualism in the labour market and single-employment contracts are inter-linked with labour laws, social security benefits and macro-economy of a country. To understand the full impact of both these interventions, it is necessary to understand how both these interventions interact with them. This leads us to conclude that the desirable and undesirable outcomes of both are not completely understood by scholars and policy-makers alike. This limits the strength of our analysis.
Based on the evidence that we have, we conclude that the single-employment contract is preferable to dual contracts for employees. Given that little information exists of its impact on employers, we refrain from recommending it over dual contracts. However, to err on the side of caution, we believe that the effectiveness of the single-employment contract on the well-being of the employee is predicated on the design of the specific measure (level of protection in terms of notice period, severance pay and other employment related benefits provided to the employee) , interaction with labour markets, social security instruments and the socio-economic context.
The discussion in the balance of outcomes suggests that the single-employment contract has the potential to be more effective for the well-being of the employee as compared to having dual contracts. More research needs to be done on the costs and benefits for the employer of the single employment contract. Until then, it cannot be ascertained if one is preferred over the other.
Dual contracts and the single employment contract are topical topics in the field of economics and labour market legislation. To bring about changes in the contractual relationships between employees and employers, rules, regulations and laws in those countries also need to change. Therefore, this recommendation needs support from policy makers for it to materialise. But in the absence of support from policy makers, employers and practitioners can work towards crafting contracts that give all employees the chance to benefit from employment related benefits.
First literature search: most plausible interventions
Disputes that arise at the workplace are often related to tasks or activities that are related to projects. Team members have to work together to find solutions to the disputes. In such circumstances, if a team member is too dominating or is not concerned about the needs of his or her teammates, or behaves in the opposite way, by giving in to the wishes of the other person, it can lead to suboptimal outcomes for the organisation or strained relationships among team members. Therefore, in this recommendation, we will compare two interventions that can shape interpersonal or task related activities at the workplace.
“Research on conflict management styles reveals that there exist 5 conflict management styles based on how cooperative (concerned for others) and assertive (concerned for self) an individual is in a conflict situation Those are:
Of the five conflict management styles, we have chosen to compare compromising and collaborative/integrating as literature indicates that these two are the most effective and recommended strategies in resolving task related conflicts (Rahim 2002 as cited in Chung-Yan and Moeller 2010, p. 382).
Integrating/Collaborative Conflict Management Style
“The integrating style (also described as problem solving, collaboration, cooperation, solution-orientation, and win-win or positive-sum style) focuses on problem solving in a collaborative fashion. It involves collaboration between the parties through open exchange of information, information seeking and sharing, and examination of differences for the diagnosis of and solution to a problem acceptable to both parties. Individuals with this style face conflicts directly and try to find new and creative solutions to the problems by focusing on their own needs as well as on those of others. Hocker and Wilmot (1998) maintain that this style is both direct and cooperative” (Yu, Sardessai and Lu 2006, p.21). “People using an integrating style have concerns for themselves and for others… (Rahim, 2000)” (as cited in Saeed et al. 2014, p.217).
Compromising Conflict Management Style
“The compromising style involves give and take, whereby both parties give up
something to make a mutually acceptable decision, characterized by moderate levels of
both cooperation and assertiveness” (Saeed et al. 2014, p.217). “The objective is to find an expedient, mutually acceptable solution that partially satisfies both parties. Compromise might mean splitting the difference, exchanging concessions, or seeking a quick middle-ground position”(Sportsman and Hamilton 2007, p.158). “Both parties have moderate concern for self and others” (Vokic and Sontor 2009, p.7).
For parties to an employment dispute looking to find solutions on contentious issues (shaping solutions), is collaborative conflict management style or compromising conflict management style more effective for well-being?
The databases used are: Elsevier, Routledge, Emerald Insight
For this PICO question, keywords used in the search strategy are: conflict management styles, collaborative conflict management style, compromising conflict management style
The main sources of evidence used for this particular subject are:
The study by Saeed et al. (2014) examine the relationship between leadership styles and
conflict management styles among managers, while handling interpersonal conflict (managers and subordinates). A survey was conducted with 150 middle-level managers from various industries in the private sector. The data was analyzed using regression analysis. A plus point of this study is that it has received 123 citations while a minus point is that majority (115) of the participants in this study are men, so the sample is skewed. Taking into consideration all these factors, we assess the quality of this study to be moderate, as per the GRADE approach.
The study by Chen, Zao and Liu (2012) examines how conflict management behavior impacts job satisfaction and innovation performance. For this purpose, the authors conducted a survey with 333 employees in China. The sample composition appears gender and education level balanced. The paper has received 133 citations. Taking into account all these factors, we assess the quality of the study to be moderate, according to the GRADE approach.
The paper by Huan and Yazdanifard (2012) is a review of conflict management styles and conflict resolution from the managers and supervisors’ point of view. It is largely based on expert opinion and literature review. Therefore, we assess the quality of this paper to be very low, according to the GRADE approach.
The paper by Chung-Yan and Moeller (2010) examines the interactive effect of interpersonal conflict at work and adopting an integrating/compromising conflict style on workers’ psychosocial wellbeing. Data was drawn from an online survey of 311 young employees living in Canada. Authors of the study have not indicated the sample composition of participants in terms of income level, ethnicity but have reported on age and gender. The study has received a moderate number of citations(50). Taking into account all these factors, we assess the quality of the study to be moderate, according to the GRADE approach.
The study by Paul et al. (2004) explores the relationships that might exist among the heterogeneity of the virtual teams, their collaborative conflict management style, and their performance outcomes. The authors conducted a laboratory experiment in which homogeneous and heterogeneous virtual teams, consisting of students from the USA and India, worked independently on a decision task involving the adoption of a computer use fee by an online university. In total, there were 63 participants in the study. This study is comparable to a small experimental study. So according to the GRADE methodology, we assess the quality of this study to be low.
The study by Jordan and Troth (2004) examines how emotional intelligence predicts individual performance, team performance, and conflict resolution styles. A regression analysis was conducted using data of 350 student respondents. The study has been cited widely (737). Given the sample size used in the study and its citations, we assess the quality of this study to be moderate, according to the GRADE approach.
The study by Weider-Hatfield and Hatfield (1995) examines the relationship between conflict management style, level of conflict and outcomes experienced by employees in the USA. Data was collected from 125 full-time managers (59 women) from state, regional, and local volunteer organizations. The study has received 174 citations until now. Taking into consideration all these factors, we assess the quality of this study to be low according to the GRADE approach.
The study by Wall, Galanes and Love (1987) examines the relationship between the amount of conflict experienced, the style of its management, individual satisfaction, and decision quality of small, task-oriented groups. Data was collected from 129 students studying in an American university. The study has received 123 citations until now. Taking into consideration all these factors, we assess the quality of this study to be moderate according to the GRADE approach.
The paper by Tand and Kirkbride (1986) reports the results of an empirical study into the orientations towards conflict and preferred conflict management styles of Chinese managers in Hong Kong. The paper examines how traditional values of the Chinese affect their conflict management styles. A survey was conducted with 150 Chinese and British executives working in government and private sector. In all, it has received 158 citations. Taking into account all these factors, we assess the quality of the study to be moderate, according to the GRADE approach.
Quality of evidence and research gap
Research on collaborative and compromising conflict management styles is supported by empirical studies as well as expert opinion. However, more empirical research is needed on compromising conflict management style. According to the Actionable Recommendations document and GRADE methodology, the overall strength of evidence is very low.
Note: Literature indicates that some of the desirable and undesirable outcomes of collaborative and compromising conflict management styles are the same. So readers will find the same outcome under both interventions.
Compared to compromising conflict management style, collaboration is preferred to resolve task related conflicts at the workplace because the former leads to suboptimal decisions and main issues are not completely resolved. Collaboration between colleagues, on the other hand, results in innovative solutions which are beneficial for the employer in the long run. However, as indicated in the above section when collaboration fails or when time and resources are few, compromising conflict management style is most effective as it speeds up the decision-making process as well the time required to achieve intended outcomes.
To illustrate the outcomes, let us take an example of a task-related dispute that arises at the workplace. Suppose, in an organisation there is an employee who is facing a computer related issue. She requests help from the IT department in resolving the issue. But the IT department is not able to provide her a satisfactory solution. So the employee wants to contact an external agency for help but the IT department wants to avoid doing that because the external agency in question in the past has not been efficient at resolving IT problems. So they believe that contacting the agency will be unproductive and will result in unnecessary expenditure. Here, the IT department and the employee are having a disagreement.
In a collaborative style, the IT department would spend more time in finding a solution to the problem in a way that’s acceptable to the employee and will resort to contacting the external agency only if they have exhausted all means. That will take more time and effort but will save the organisation money. On the other hand, in a compromising style, the employee will accept the solution that the IT department provided, even if its not the best solution, so that the organisation will save money. Here, the employee accepts a suboptimal solution to prevent the organisation from spending time, effort and money.
From the above example, there is a trade-off between the most effective solution and time and money in both conflict management styles. But because in the long run, most effective solutions are better for the well-being of the organisation and employee, we recommend collaborative management style
Taking into account the balance of outcomes for parties to an employment dispute, and the quality and consistency of the evidence, we make the following recommendation: For employees having disputes over specific tasks, collaborative conflict management style is more conducive to well-being than compromising conflict management style.
Literature indicates that different cultures have preferences for different conflict management styles. For example, in China, which is a collectivist society, avoiding conflict is also an acceptable in the face of a conflict, whereas in the West which is characterised by an individualistic society, collaborative conflict management style is preferred (as cited in Chen, Zao and Liu 2012, p.158). So we advise justice practitioners to take into account the culture and values of a society when recommending a specific conflict management style to resolve conflicts.
First literature search: most plausible interventions
During the orientation process of the available literature, we were able to identify the following interventions for containing employment disputes:
Interactional justice occurs in informal interactions between employees and an organisation’s management. This includes the interpersonal treatment employees receive. Employees expect fair, honest, courteous, and truthful treatment by the organisation that employs them and/or its agents. Interactional justice is also about the extent to which the management of the organization treats its employees with respect, courtesy, sensitivity, and attentiveness (Rahmawhati et al, p. 42).
Interactional justice is determined by the interpersonal behavior of management’s representatives (Cohen-Charash and Spector, p. 281). Interactional justice is most likely to occur when decision makers (a) treat individuals with interpersonal dignity [sometimes also referred to as interpersonal justice] and (b) provide subordinates with justifications or explanations. Employees may hold supervisors responsible for interactional justice [outcomes, such as respect, courtesy, sensitivity and attentiveness] (Lavelle, et al, p. 843).
Authoritarian leadership places emphasis on the asymmetric power between leaders and followers, which allows leaders to dominate and control followers (Jian, Chen, Sun & Yang, Introduction). Authoritarian managers believe they know more than others in their organisations and have the right to get things done in their own way. As a result, they stress ‘‘personal dominance’’ over employees, unify the authority in themselves, and make unilateral decisions. In authoritarian management, leaders exhibit strong control and authority over employees and in turn the group is forced to obey the leader (Jian, Chen, Sun & Yang, Introduction). Authoritarian managers are likely to exercise control by initiating structure, issuing rules, promising rewards for compliance, and threatening punishment for disobedience (Kiazad et al, p. 514).
We compare these two interventions because they both touch on interpersonal treatment between supervisor/employer and subordinate/employee. They are distinct in the following three ways:
For employers and employees looking to contain conflict in the workspace, is applying interactional justice or applying an authoritarian leadership style within the organisation more effective for well-being?
The databases used are: HeinOnline, Westlaw, Wiley Online Library, JSTOR, Taylor & Francis, and ResearchGate.
For this PICO question, keywords used in the search strategy are: employment, disputes, mediation, prevention, justice, organizational, leadership
The main sources of evidence used for this particular subject are:
Cohen-Charash and Spector conducted a meta-analysis, where they researched the correlation of distributive, procedural, and interactional justice. They examined 190 studies samples, totaling 64,757 participants. This article can be regarded as high quality evidence.
The Oxford Handbook of Justice in Work Organizations provides a comprehensive review of empirical and conceptual research addressing the vital topic of workplace justice. It is a meta-analysis and can therefore be regarded as high quality evidence.
The article by Lavelle, Rupp and Brockner reviews and organizes multifoci research and theory in justice, social exchange, and citizenship behavior, develops a “target similarity” model to provide a theoretical framework for conceptualising and integrating multifoci research, and offers suggestions for future multifoci research. This literature review is graded as moderate quality evidence.
The study conducted by Son, Kim and Kim examines the linkage between employees’ perceptions of the interpersonal justice demonstrated by their leaders and consequent job burnout resulting in turnover intention. Data were obtained from 158 MBA students attending a large university in South Korea. The study can be graded as moderate.
The article by Posthuma, Dworkin and Swift uses measures of distributive, procedural and interactional justice to explain the acceptability of arbitrators in disputes. This empirical study collected data at two different points in time to reduce threats from common method variance. This article can be graded as moderate.
The paper by Meyer, Ohana and Stinglhamber aims to examine the impact of supervisor interpersonal justice on supervisor- directed citizenship behaviors by developing a moderated mediation model. Survey data were collected from 196 supervisor-subordinate dyads employed in diverse French social enterprises. This study is graded as moderate.
The paper by Kiazad, Restubog, Zagenczyk, Kiewitz, and Tang considered both supervisor (personality and leadership behavior) and victim characteristics (organisation-based self-esteem) in predicting perceptions of abusive supervision. They tested their model in two studies consisting of supervisor–subordinate dyads from Australia and the Philippines. Evidence is graded as moderate.
The article by Rahmawati Rahmawati, Rispantyo Rispantyo, and Subekti Djamaluddin is a medium sized observational study, examining the antecedents and consequences of organizational justice. According to the HiiL Guideline Approach this article is graded as low.
The study conducted by Le Roy, Bastounis and Minibas-Poussard draws on the cognitive theory of emotions and extended work published on the mediating role in this relationship, by conducting a survey with insurance company employees (N = 187). This empirical study is graded as moderate.
The paper by Ladebo, Awotunde and AbdulSalaam-Saghir examined the effects of coworkers and supervisors’ interactional fairness on employees’ job satisfaction, distress, and aggressive behavior. Surveys were employed to elicit data from 270 extension personnel from two Agricultural Development Programs in Nigeria. This article can be graded as low.
The article by Bouckenooghe and De Clercq draws from the Conservation of Resources theory. The study examines the mediating role of relational conflict in the link between interpersonal justice and commitment to change, as well as how social interaction might moderate this mediating effect. Data were captured from employees directly affected by a large-scale restructuring in a European-based organisation. Evidence can be classified as being low, according to the HiiL Guideline Approach.
The study by Jiang, Chen, Sun and Yang investigated the relationship between authoritarian leadership and employees’ deviant workplace behaviors (DWB), as well as the mediating effects of psychological contract violation and organizational cynicism. A cross-sectional survey was conducted among 391 manufacturing workers in a northern city of China. This is a large observational study. According to the HiiL Guideline Approach, this source can be regarded as low.
Research that touches on interaction between supervisor and subordinates focuses mostly on different leadership styles and procedural/distributive justice. Research about leadership is predominantly from the perspective of the employer/supervisor. It would be interesting to discover findings from the perspective of the employee/subordinates (in particular how the different leadership styles affect the wellbeing of subordinates). Furthermore, it would be interesting if research could be focused on how the interaction between supervisor and subordinate affects procedural and distributive justice outcomes.
Taking all individual assessments of sources into consideration, according to the HiiL Guideline Approach, the evidence can be graded as low to moderate.
Taking into account the balance of outcomes, it is clear that Interactional justice has significant benefits to the well-being of the employee. Employers focusing on interactional justice can make a positive difference for employees. Employees will feel a better sense of commitment towards the employer and increased job satisfaction. However, when interactional justice is being perceived wrongly, employees can develop resentment towards employers. Applying an authoritarian leadership approach can potentially be detrimental to employees’ well-being, as it leaves employees feeling angry and excluded. Therefore, the balance is towards applying interactional justice.
Taking into account the balance of outcomes and the quality and consistency of the evidence, we make the following recommendation: For employers and employees looking to contain conflict in the workplace, applying interactional justice is more conducive to well-being than applying an authoritarian leadership style.
First literature search: most plausible interventions
During the orientation process of the available literature, we identified the following approach to preventing the escalation of (containing) an employment dispute creating a high psychosocial safety climate, which is discussed in the literature and can be compared to a low psychosocial safety climate.
PSC refers to an organizational climate for employee psychological safety and health (a high level of psychological safety). The content domain of PSC comprises: (1) senior management support and commitment for stress prevention through involvement and commitment; (2) management priority to psychological health and safety versus productivity goals; (3) organizational communication, that is, the organization listens to contributions from employees; and (4) organizational participation and involvement, for example, participation and consultation occurs with unions, and occupational health and safety representatives (Dollard et al. p. 355).
The psychosocial safety climate (PSC) of a workplace influences employees’ coping strategies and ultimately the extent to which bullying escalates (Kwan et al.). PSC concerns the values and attitudes of senior management toward care and practices in relation to employee psychosocial well being.
High and low PSC environments
In a high PSC environment, managers are expected to show commitment for the prevention of work stress and for the promotion of psychological health among employees. In a low PSC environment, they are not. In contrast to low PSC environments, in high PSC environments communication systems are established so that stressful work conditions become known and action is taken to prevent or control psychosocial hazards. In high PSC environments there is involvement and participation of all levels of the organization in stress prevention. Furthermore, psychological health is a priority at least on equal footing with production goals. In a low psychosocial environment, production goals are more important (Dollard et al.).
The PSC construct has four main aspects that connect to best practice principles in the stress prevention, intervention, and safety climate literatures.
For employees and employers looking to prevent the escalation of (contain) an employment dispute, is keeping a high psychosocial safety climate more effective for well-being than maintaining a low psychosocial safety climate?
The databases used are: HeinOnline, Westlaw, Wiley Online Library, JSTOR, Taylor & Francis, and ResearchGate.
For this PICO question, keywords used in the search strategy are: employment dispute, dispute settlement, containing, good HR-practices, keeping a safe climate.
The main sources of evidence used for this particular subject are:
The study by Dollard, Dormann, Tuckey and Escartin theorizes that the PSC enactment mechanism works via psychosocial processes such as bullying mistreatment climate (anti-bullying procedures), work design (procedures reduce stress through work redesign), and conflict resolution (procedures to resolve conflict). The study used two-wave national longitudinal interview data from 1,062 Australian employees (Australian Workplace Barometer project) and structural equation modelling to explore relationships over 4 years. This is a large empirical study. We identified a risk for bias, as Dollard is the Director of the PSC Observatory. We therefore lowered the strength of evidence by one level. According to our research method, the strength of evidence can be regarded as low.
The study by Kwan and others is a qualitative study, where they examined the role of psychosocial safety climate (PSC) in influencing employees’ coping strategies and ultimately the escalation of bullying. Interviews were conducted with 20 Malaysian workers. This is a small observational study. Again, there is a risk of bias as Dollard is one of the co-authors. For this reason we lowered the strength of evidence by one level. According to our research method, the strength of evidence can be regarded as low.
Dollard and Bakker hypothesized that PSC as an upstream organizational resource influenced largely by senior management, would precede the work context (i.e., job demands and resources) and would in turn predict psychological health and work engagement via mediation and moderation pathways. They operationalized PSC at the school level and tested meso-mediational models using two-level (longitudinal) hierarchical linear modelling in a sample of Australian education workers (N = 209–288). Their results show that the PSC construct is a key upstream component of work stress theory and a logical intervention site for work stress intervention. This is a large empirical study with the risk of bias, as mentioned in the other sources of evidence by Dollard. We lowered the strength of evidence by one level. According to our research method, the strength of evidence can be regarded as low.
The study by Bradley and others looks at how psychological safety can increase team performance. The study is using evidence from 117 project teams. Their research found that psychological safety moderates the relationship between task conflict and performance. Specifically, task conflict and team performance were positively associated under conditions of high psychological safety. The results support the conclusion that psychological safety facilitates the performance benefits of task conflict in teams. According to the research method, the evidence from this large observational study can be regarded as moderate.
The paper by Pletzers examines knowledge hiding and aims to explain it by looking at perceptions of a psychological safety climate, self-efficacy and proactive personality. A theoretical framework was presented. To test the proposed model, data was gathered from Dutch organizations and via the researcher’s social network using convenience sampling (N=134). According to the research method, the evidence from this empirical study can be classified as moderate.
The study by Birdi and others investigates the relative merits of human resource practices through a study of the productivity of 308 companies over 22 years. This large empirical study can be graded as strong quality.
According to our research method, we grade the evidence on a high PSC environment as low.
More studies with lower risks of bias are needed in order to close the research gap on how to contain a dispute in the workplace. More different kinds of interventions (other than a high PSC environment) need empirical testing.
Taken together, the available research suggests that creating a high PSC environment is beneficial to the well-being of employees and employers. A high PSC environment with a high level of psychological safety leads to fair and predictable interactions between employer and employee. It is also regarded to be the most ideal environment for conflict to appear, as in a high PSC environment conflict can enhance creativity. Furthermore, PSC is linked to a safe environment for employees to challenge their leaders, thereby possibly preventing escalation of conflict.
On the other hand, a low PSC environment is only linked to undesirable outcomes. Low PSC environments cause extra work pressure, social roles and unclarity about roles.
Therefore, actively creating a high Psychosocial Safety Climate with high levels of psychological safety is preferred.
Taking into account the balance of outcomes, the effect on well-being for all parties involved in an employment dispute, and the quality and consistency of the evidence, we make the following recommendation: For employees and employers looking to prevent the escalation of (contai)n an employment dispute, actively creating a high psychosocial safety climate is more effective for well-being.
Performance appraisal refers to a formal process, which occurs infrequently, by which employees are evaluated by some judge (typically a supervisor) who assesses the employee’s performance along a given set of dimensions, assigns a score to that assessment, and then usually informs the employee of his or her formal rating. Organizations typically base a variety of decisions concerning the employee partially on this rating (DeNisi and Murphy, p. 421).
Applying a system of performance indicators co-created by employer and employee
The Productivity Measurement and Enhancement System (ProMES) is a human resource intervention that provides feedback to members of an organizational unit via a measurement system constructed by the unit personnel. The unit constructs the system by defining their objectives, identifying productivity indicators for each objective, and developing utility curves or contingencies for each indicator, specifying the overall and relative value to the organization of different performance levels on each indicator (David, p. iii).
ProMES works according to a 4-step model:
ProMES is an intervention that relies on feedback to let personnel know their levels of performance; this knowledge then serves as a tool that leads to more efficient and effective ways of performing tasks (Pritchard, 1990). The system is developed and agreed upon by both employees and management, and provides an overall index of productivity (David, p. 5).
Classic top-down performance appraisal
Traditional top-down performance appraisal systems are formal meetings between employer and employee (DeNisi and Pritchard, p. 271). Performance reviews in the classic way work with rating scales. [A common] intervention here has been rater-training. This includes a strategy of telling raters about so-called rating errors (e.g., leniency, range restriction, halo) and urging them not to commit these errors (Adler et. al.).
For employees and employers looking to find out what led to a dispute related to being sacked or made redundant (fact-finding), is applying a system with performance indicators they have co-created or classic top-down formal performance appraisal more effective for well-being?
The databases used are: HeinOnline, Westlaw, Wiley Online Library, JSTOR, Taylor & Francis, and ResearchGate.
For this PICO question, keywords used in the search strategy are: Performance, review, management, appraisal, improvement, productivity, goal-based, relationships, dispute prevention, ProMES
The main sources of evidence used for this particular subject are:
The study by DeNisi and Pritchard is a literature review about designing and implementing performance appraisal systems. The authors review trends and their genesis, and propose a motivational framework as a means of integrating what we have learned and generating proposals for future research that focus on employee’s performance improvement. This literature review is mostly based on expert observational studies. The strength of this evidence can therefore be classified as low.
The article by Pritchard, Weiss, Goode and Jensen is a literature review on productivity improvement strategies. The study is mostly based on observational studies and expert opinions. The strength of this article is classified as very low.
The article Adler et al. is based on expert opinions. It reiterates the pros and cons of retaining performance ratings. The study by David identifies the effectiveness of the ProMES system and is also largely based on expert opinions. According to the Recommendations Methodology, the strength of these articles are classified as very low.
The article by Schmerling and Scudato is a response to the article of Adler et al. They discuss the shortcomings described in performance ratings and performance management, as well as challenge the field to further consider this well-researched and established evidence based solution as a viable alternative. This study is based on observational and empirical studies, and according to the Recommendations methodology the strength of evidence is classified as low.
There is a significant gap in the research on fact-finding in an employment dispute setting. Performance management and performance appraisal are important topics within employment dispute resolution research and can provide an important role in fact-finding when a dispute arises on the workfloor. However, research on performance appraisal is very limited. More interventions need to be studied, which would in turn improve this PICO question and employment research as a whole.
According to the HiiL Actionable Recommendations document and the GRADE approach, overall evidence is graded as very low.
Taking into account the balance of outcomes, it is clear that employees benefit from a performance appraisal system that they have co-created themselves, such as the ProMES system. The outcomes of systems such as ProMES clearly outweigh those of top-down performance appraisal systems.
First and foremost, their roles and responsibilities will be more clear, which can contribute to better fact-finding. Secondly, a system such as ProMES enables employees to see the results of their efforts. Top-down, formal systems on the other hand often omit to show certain objective results to employees, which can be detrimental to fact-finding. Furthermore, formal, top-down performance appraisal systems without input from employees are considered to have limited value by managers.
Taking into account the balance of outcomes and the quality and consistency of the evidence, we make the following recommendation: For employees and employers looking to find out what led to a dispute related to being sacked or made redundant (fact-finding), applying a system with performance indicators they have co-created is more effective than classic top-down formal performance appraisal.
In mediation, an impartial or neutral third party intervenes in conflict to assist the disputing parties in negotiating a mutually agreeable resolution. The mediator does not impose a solution to either party, but rather facilitates discussion between them to help them create their own solution. The parties are not required to reach a settlement; any final decision must be based on the voluntary, mutual agreement of the parties, and usually takes the form of an enforceable contract (Bingham et al. p. 5). Employers are experimenting with inside neutral mediation (the use of an employee as mediator) and outside neutral mediation [or third party dispute settlement] (the use of an employee from a different agency as mediator) (Bingham et al. p. 6).
In-house dispute resolution
Unlike third party models of ADR, [some interventions] utilise internal staff to simultaneously maximise the chance of resolving the matter in-house and minimise the costs associated with consultants or tribunals. Four dispute resolution techniques are considered [to be in-house]:
Third party dispute resolution
In mediation, an impartial or neutral third party [not linked to the employer] intervenes in conflict to assist the disputing parties in negotiating a mutually agreeable resolution. The mediator does not impose a solution on either party, but rather facilitates discussion between them to help them create their own solution (Bingham et al., p. 5).
Labor arbitration is an adjudicative institution established by the parties themselves as a means of closing agreements without spelling out all of the details of their ongoing relationship. The parties yield authority to an outside neutral in only a limited sense. The process provides an occasion for adjustments of agreements between employer and employee. For those relatively few grievances requiring arbitration, bargaining can continue while the hearings are going on, and a great many disputes are settled before an award issues (Estreicher, p. 759).
For employees and employers looking to open a channel of communication (meet) following a dispute, is third party dispute settlement or in-house dispute settlement more effective for well-being?
For this PICO question, keywords used in the search strategy are: employment dispute, dispute settlement, in-house ADR, third party, out-house, access, mediation, arbitration, NDA.
The main sources of evidence used for this particular subject are:
The article by Van Gramsberg examines the development of workplace dispute resolution in Australia and argues that workplaces have an opportunity to develop dispute resolution clauses which specifically meet the workplace justice targets of procedural, distributive and interactional fairness. This study is largely based on expert opinions. Therefore, according to the Actionable Recommendations methodology, strength of this evidence is classified as very low.
The study by Bungham et al. examines perceptions of procedural justice in a field experiment. The US Postal Service in New York district implemented an inside neutral model of mediation -that is, a model using existing USPS employees trained as mediators, for the period 1996 to 1998. In 1998 to the present, the USPS implemented a new, outside neutral model nationwide. Under this model, outside neutral independent contractors, compensated but not employed by the USPS, provide mediation services. This is a large empirical study. Evidence is classified as high according to the Actionable Recommendations methodology.
The study by Gibbons reviews the options for simplifying and improving all aspects of employment dispute resolution. It provides recommendations to the British government. This study can be classified as low, according to the Actionable Recommendations methodology.
There is much research available on in-house en third-party dispute resolution mechanisms. However, many studies are based on expert opinions and observational studies. Large empirical studies and meta analyses would strengthen the overall evidence and in turn improve this recommendation. According to the Actionable Recommendations document and GRADE methodology, the overall strength of evidence right now is very low.
Third party dispute resolution systems offer a better resolution rate than in-house dispute resolution. In-house dispute resolution has a lower impartiality rate and fairness rate compared to third-party dispute resolution.
On the other hand, in-house dispute resolution reduces access barriers (although some studies indicate that open-door policies can result in reluctant employees as well). In-house dispute settlement also results in better job-satisfaction rates, an open and trusting atmosphere and confidence in management.
Taking into account the balance of outcomes, the outcomes of third-party dispute resolution does not clearly outweigh those of in-house dispute resolution mechanisms. The higher resolution rate and perceived impartiality of third-party dispute resolution are important factors. On the other hand, regarding in-house dispute resolution, better access to employment dispute resolution is of importance as well.
For employees and employers looking to open a channel of communication (meet) following a dispute, third party dispute settlement is not necessarily more effective than in-house dispute settlement, for their well-being.
This recommendation is context-specific. If employers are looking to improve access to employment dispute settlement for employees, they should invest in in-house dispute resolution. In case employers want to improve dispute resolution rates and ensure impartiality, then they should invest in third-party dispute resolution.
Important to note is that an internal ombudsman could be a good intervention to invest in, as this is an in-house dispute resolution mechanism that is perceived to be relatively impartial.
First literature search: Most plausible interventions
Procedural justice has been found to be an important predictor of commitment to work organizations, the effort which employees put into doing their required duties, the likelihood that employees will stay with their organizations, the acceptance of and compliance with organizational rules, and the extent to which employees engage in extra role activities on behalf of their organizations (Blader and Tyler, p. 107). Research supports the conclusion that organizational commitment is affected more by procedural justice than by distributive justice, and this is especially true in collectivistic societies (Chang, p. 262-263).
Throughout the years, there has been much discussion on procedural justice and fairness. The main focus has been on reaching fair [distributive] outcomes. On the other hand, employees demonstrate a concern with their relationship to their work organizations because that relationship affects how they feel about themselves [their identity]. Further, they appear to evaluate that relationship with regard to the ways decisions are made and how they are treated by the organization [the quality of relationships between people within an organisation]. Therefore, the question arises in the literature whether people perceive treatment with consideration and politeness to be more important than fair distributive outcomes (Balder and Tyler, p. 109). Therefore, the interventions to be tested are:
For creating understanding in conflicts between employees/subordinates, is employers/supervisors focusing interaction and information-sharing solely on material outcomes more effective than focusing on relationships, for their wellbeing?
For this PICO question, keywords used in the search strategy are: organizational, justice, procedural, distributive, interpersonal, interactional, outcomes, relationship
The main sources of evidence used for this particular subject are:
The article by Blader and Tyler focuses on perceived fairness in group procedures. It is based on two empirical studies that tests the four-component model of procedural justice. The source is graded low, due to a potential risk of bias.
The article by He, Zhu and Zhen examines how procedural justice affects employee engagement. The source is graded low, as it is a medium observational study with no factors to be considered for upgrading or downgrading.
Tremblay, Sire and Balkin present research on organizational justice and employment benefit satisfaction and work attitudes, undertaken on a sample of six hundred employees in three different Canadian organizations. It can be considered a large empirical study and is therefore graded as moderate.
The article by Johnson, Chang and Yang presents an observational study with a potential risk of author’s bias, as the main focus of this study is to test a model on employee commitment and self-identity, which has been developed by the authors. The source can be graded as very low.
The study by Cole and Latham focuses on fairness behavior of supervisors, and its effect on subordinates. It is a randomised controlled trial with a risk of bias, and can therefore be graded as moderate.
Understanding between parties in an employment dispute has not been widely researched. Only few measures to prevent employment conflicts have been tested in the available literature. Therefore, targeted randomized controlled trials that focus on specific interventions to enhance understanding between employer and employee should be developed.
According to the HiiL Actionable Recommendations document and the GRADE approach, overall evidence is graded as low.
Taking into account the balance of outcomes, it is clear that focusing on relationships can significantly improve the well-being of the employee. This also applies to material outcomes, however less effective if relationships are not included. It is also important to mention that when employees identify with their organisation/employer on a high level, it can result in better employee engagement and better perceived personal success. Too much pressure on role-identity can lead to anxiety and guilt.
Taking into account the balance of outcomes and the quality and consistency of the evidence, we make the following recommendation: Interaction and information-sharing by the employer and employee should focus on their relationship (this includes treatment and identity), rather than only on material outcomes.
For parties to an employment dispute looking to understand each other, is text based online mediation or face-to-face online mediation more effective for well-being?
Google scholar was used to identify key literature to develop this recommendation. The databases used are: HeinOnline, ScienceDirect, SSRN
For this PICO question, keywords used in the search strategy are: online mediation, synchronous mediation, e-mediation, face to face online mediation
The main sources of evidence used for this particular subject are:
Colin Rule is a renowned scholar in the field of mediation and arbitration. In this article, Rule (2000) merits and demerits of online mediation. To do this, he conceptually unpacks online mediation step-by-step. This article is based entirely on expert opinion and lacks empirical evidence of any kind. So we grade the quality of this paper as low.
Braeutigam (2006) analyses the merits and demerits of online mediation for dispute resolution. She examines what features of online communication serve the purpose of online mediation and addresses criticism of online mediation. While doing so, she cites literature developed by various scholars and a few small observational studies. The quality of the evidence use in this paper is graded as low.
Ebner and Rainey (2021) using literature review and expert opinion to discuss the merits and demerits of synchronous and asynchronous methods in online mediation. We grade the quality of this paper as low.
The article by Exon and Lee (2017) examines the extent to which parties can trust a mediator when communicating in a video- collaborated environment known as telepresence. To that end, the authors design a small experimental study. In accordance with the GRADE method of assessing quality of evidence, we grade the quality of this paper to be low.
The paper by Exon (2017) provides an overview of online dispute resolution (ODR) methods and how it has developed. It addresses mediation values developed in Model Standards and critiques a project that applied Model Standards to issues in ODR. The paper is based on literature review and expert opinion. Due to the absence of empirical evidence in this paper, we grade the quality of this paper to be low.
Noam and Thomposon (2014) examine the effect of non-verbal communication on trust development in online video-based mediation. It identifies techniques that mediators can use to cultivate trust among disputing parties. The paper is based on literature review and expert opinion. So we grade the quality of this paper to be low.
The book chapter by Parlamis, Ebner and Mitchell (2016) provides an overview of the broad field of Online Dispute Resolution (ODR) so that we can set the stage for a more nuanced discussion of how e-mediation might contribute to dispute resolution mechanisms in the workplace. The chapter relies on literature review and expert opinion to develop an argument. Due to the complete absence of empirical evidence in this chapter, the quality of evidence is graded as low.
Ebner (2021) in this chapter discusses the significance of trust, empathy and social cues in the context of online mediation. Ebner, who has written several articles on online mediation, uses literature review and expert opinion in this article to make his argument. So we grade the quality of this paper as low.
Quality of evidence and research gap
According to our research method, we grade the evidence comparing text-based online mediation and face-to-face online mediation as of very low quality.
Although in practice, online mediation has been used to resolve workplace conflicts, research on merits and demerits of online mediation in resolving workplace conflicts is scant. Therefore, this recommendation is based on literature that lists general advantages and disadvantages of online mediation in dispute resolution.
Text-based mediation has been the norm in online mediation. Evidence indicates that text-based mediation helps disputing parties as well as the mediator in communicating effectively, as opposed to face-to-face online mediation where people are likely to react in the heat of the moment and not deliberate before responding. It’s likely in workplace disputes, disputing parties are likely to have several or serious grievances against each other. To be able to resolve the dispute swiftly, without any fuss, it is in the interest of the parties to compose themselves and reflect over an issue before contacting the other party.
Because face-to-face online mediation has recently emerged in the field of dispute resolution, it’s merits and demerits have not been researched by scholars. So far, scholars have uncovered few unequivocal advantages of face-to-face online mediation, one of which is that it’s easier for the mediator to build trust among disputing parties as compared to what is observed in text-based mediation. Majority of the other benefits of face-to-face mediation are disputed.
For instance, proponents of face-to-face online mediation state that it provides rich cues of non-verbal language which the other party can use to understand the party’s stance. However research has shown that such cues often distracts parties from tackling core issues and is likely to escalate the tension. Moreover, in recent years, people are increasingly using emoticons and language that is used on social media to communicate their feelings. So text-based communication has overcome the hurdle of not being able to communicate emotions. However, one must take into account that not everyone can articulate their feelings in-text. Neither is there substantial evidence to prove that people are able to articulate their feelings in online mediation. Therefore, we urge the reader to treat this point with caution.
Taking into account the balance of outcomes, the desirable outcomes of text-based mediation outweigh its undesirable outcomes as well as the desirable outcomes of online face-to-face mediation mediation.
Therefore, text-based mediation is preferred.
Taking into account the balance of outcomes and quality and consistency of the evidence, we make the following recommendation: For parties to an employment dispute looking to understand each other, text-based online mediation is more conducive to well-being than face-to-face online mediation.
As mentioned before, face-to-face online mediation is slowly emerging in the field of online mediation. Scholars are yet to explore its merits and demerits fully. We have made this recommendation based on the amount of evidence currently available. However, as the usage of face-to-face mediation increases and so does the amount of literature available on the topic, this recommendation will have to be reconsidered in light of new evidence.
During the orientation process of the available literature, we identified the following interventions as most plausible for communication in employment disputes:
“The role of internal communication in shaping organizational culture has been widely recognized by management communication and public relations scholars”…(as cited in Men and Yue 2019, p.1). “It is through internal communication that organizational leaders shape and transmit values and missions of the organization to employees and therefore involve employees in fulfilling bigger organizational purposes” (Mayfield & Mayfield, 2018; Welch, 2011) (as cited in Men and Yue 2019, p.3). It enhances employee engagement, commitment, and performance (Lee and Kim 2021, p.1). Public relations literature widely recognised symmetrical internal communication as instrumental in supporting employee-organisation relationships (Men and Jiang 2016).
Given the intervention’s suitability in regulating employer-employee relationship, in this recommendation, we will compare symmetrical and asymmetrical communication.
Symmetrical Internal Communication:
Symmetrical communication emphasizes understanding, collaboration, responsiveness, and a balance of power and interest (Grunig et al., 2002) (as cited in Men and Yue 2019, p.3). It is characterised by attributes of “trust, credibility, openness, relationships, reciprocity, network symmetry, horizontal communication, feedback, adequacy of information, employee-centered style, tolerance for disagreement, and negotiation” (Grunig, 1992 as cited in Men and Yue 2019, p.2).
The central notion of a symmetrical internal communication system is that organizations and leaders genuinely listen, address employees’ feedback, value their inputs, and care about employees’ interests and welfare (ibid).
Communication channels that can promote symmetrical internal communication include team meetings, group problem-solving sessions, supervisor briefings, employee one-on-one meetings, suggestion boxes, employee hotlines, annual surveys to gather employee feedback (Men 2014).
Asymmetrical Internal Communication
“Asymmetrical communication tends to employ the one-way, top-down approach. This type of communication persuades or controls the behaviors of employees to achieve the goals of the management.”.(J. E. Grunig, 1992; L. A. Grunig et al., 2002) (as cited in Men 2014, p.260).
“Top-down communication involves transmitting messages from the highest to the lowest levels in the organizational hierarchy (Papa, Daniels & Spiker, 2009, 48). This type of communication is the dominant part of communication in a given organization. Since the top part of the organization (senior management, management level), leads the organization and gives orders to subordinates, this mandate is top-down vertical communication over other members of the organization” (Qerimi 2018, p.77).
Top-down communication can include mission statements, annual company meetings and reports.
For parties looking to prevent or resolve an employment dispute, where the employer and employee want to recognise emotions, needs and interests, is symmetrical internal communication or asymmetrical internal communication more effective for well-being?
The databases used are: Elsevier, Sage Publications, Springer, Routledge
For this PICO question, keywords used in the search strategy are: employee engagement, top-down communication, upwards feedback, asymmetrical communication, employees feeling unheard, internal communication
The main sources of evidence used for this particular subject are:
The paper by Men and Yue (2019) tests the effect of internal communication (i.e., corporate-level symmetrical and leadership-level responsive communications) on fostering a positive emotional culture characterized by companionate love, joy, pride, and gratitude on 506 respondents in the US. The respondents are employees who worked in 19 diverse industry sectors. The sample size is representative of gender, as well as management and non-management employees. The size of the study as well as the quality of its sample size makes this study equivalent to large empirical research. So we grade the quality of this study as moderate.
The paper by Lee and Kim (2021) examines how organizations’ internal communication
influenced by leadership communication at the supervisory and senior-levels impacts employee creativity and how employees’ feedback-seeking behaviors mediate these relationships. The paper is based on a sample size of 406 respondents from various sectors. The authors made efforts to gather a sample that was representative in terms of age, gender, race/ethnicity, and education level in the United States and results of this survey are comparable to other studies so we grade the quality of this study as moderate.
Men and Jiang (2016) examines respective linkages between employee–organization relationships (EORs) and authentic leadership, symmetrical internal communication, and organizational culture. Although the authors used stratified random sampling and quota random sampling to obtain a representative sample, the sample size is balanced in relation to gender but is overwhelmingly white (81.8%) and skewed towards better educated working age adults in the US. But the findings of this study align with the results of other studies so don’t grade down the quality of this study. According to the grade methodology, we grade the quality of this paper to be moderate.
The study by Mishra, Boynton and Mishra (2014) is based on findings from interviews with 6 public relations executives to explore the growing role that internal communication plays in employee engagement. The limitations of the study are small sample size of respondents and the interviewees being alumni or visitors to the university of the first author. However, the interviewees worked in the field of internal communications and the paper is widely cited (554). Taking all these factors into account, the assess the quality of this paper to be low according to the GRADE methodology.
The paper by Kang and Sung (2017) examines how a company’s symmetrical internal communication efforts could influence its employees’ perception of relationship outcomes with the company and the subsequent employee communication behaviors about the company to others and their turnover intention. It is based on data collected from a survey of randomly selected 438 individuals who work as sales representatives in a Korean cosmetics company. Authors have not reported the gender or ethnicity distribution of the sample size. But the paper is widely cited (211) and the results align with other similar studies. Taking all these factors into consideration, we grade the quality of this paper as moderate.
The paper by Men (2014a) investigates how leadership influences internal public relations by building the linkage between transformational leadership, the use of communication channels, symmetrical communication, and employee satisfaction. The study is based on a web survey of 400 employees working in medium-sized and large corporations in the United States. The sample size is representative in terms of gender but information about education level and ethnicity of the respondents is missing. A plus point of this study is that the paper is widely cited (395) and the author has written several articles on the same topic. Taking into account all these factors, we grade the quality of this paper to be moderate.
The study by Men (2014b) examines how organizational leadership influences internal communication by building the linkage between transformational leadership, symmetrical communication, and employee attitudinal and behavioral outcomes. It is based on an online survey conducted with 167 employees of a Fortune 500 energy company. The sample size of this study is sizable. The results of this paper are similar to findings from other studies. The paper is widely cited (212) and the author has written several articles of high quality on the same topic. So we grade the quality of this paper to be moderate.
The paper by Garon (2012) explores the perceptions of staff registered nurses in California, USA and managers about nurses’ ability to speak up and be heard in the workplace. The authors conducted focus group discussions with 33 nurses. The size of the study is comparable to small empirical study but the paper is widely cited (174). So, according to the GRADE methodology, we assess the quality of this paper to be moderate.
The study by Spencer (1986) investigates the relationship between opportunities for employees to voice their dissatisfaction and voluntary turnover in 111 hospitals based in the US. The sample size of this study is comparable to a small empirical study but the paper is widely cited (457). So we upgrade the quality of this paper to moderate, according to the GRADE methodology.
Quality of evidence and research gap
According to our research method, we grade the evidence comparing symmetrical and asymmetrical communication as low. There exists a large amount of empirical research on this topic. However, the majority of this research has been conducted in Western countries. As a result, how social norms around relationships between subordinates and superiors affect communication styles and overall employer-employee relationship is not accounted for.
Taken together, the available research suggests that symmetrical communication is more conducive to the well-being of the employer and employee than asymmetrical communication. Asymmetrical communication helps in clarifying rules and procedures and helps employees in identifying with the goals and objectives of the organisation. On the other hand, because symmetrical communication establishes a two-way communication channel, it helps in clarifying rules and procedures to employees as well as creates a sense of belonging among employees, in forging a good relationship between the employer and employee, and provides employees opportunities to participate in decision-making. Literature indicates that employees also experience positive emotions such as joy and gratitude when symmetrical communication is used.
Literature indicates that the nature of undesirable outcomes of asymmetrical communication is more serious than desirable outcomes. While symmetrical communication can result in employee dissatisfaction with the organization’s willingness to act upon the feedback given, asymmetrical communication can result in high employee turnover, inferior quality of services provided to the customer and reduced efficiency in the organisation.
Therefore, symmetrical communication is preferred.
Taking into account the balance of outcomes, employers and employees, and the quality and consistency of the evidence, we make the following recommendation: For parties looking to prevent or resolve an employment dispute, where the employer and employee want to recognise emotions, needs and interests, symmetrical internal communication is more effective for well-being than asymmetrical communication.
During the orientation process of the available literature, we identified the following interventions as most plausible for distributing financial resources in a fair way (sharing) in employment disputes related to dismissal:
Severance pay makes up for a large portion of the costs of dismissals borne by employers. Garibaldi and Violante (2005) find that severance pay accounts for about two thirds of total dismissal costs for employers in Italy. Fifty percent of the total cross-country variation in the OECD strictness of employment protection legislation that seeks to protect the interests of employees is also attributed to severance pay (Boeri, Garibaldi and Moen 2013). Clearly, severance pay has the potential to impact the well-being of the employer as well as the employee. Hence, in this recommendation we try to find a method to formulate the severance pay such that it is fair to both parties to a dispute related to dismissal: the employer and employee.
A severance pay is given to a dismissed employee to provide him or her an income until the time he or she is re-employed. The generosity or level of severance pay (also known as termination pay, redundancy pay) depends on the nature of the dismissal. Severance pay is not provided when an employee is being fired for disciplinary reasons, unless a court deems the dismissal to be unfair which is when the employee can claim a higher compensation. If the employee is being dismissed for reasons not related to his/her behaviour or for serious misconduct on part of the employee, then it constitutes a fair dismissal where the employee is entitled to receive a severance pay (Boeri, Garibaldi and Moen 2013). In such cases, the reasons for dismissal can be related to operational purposes, economic circumstances of the employer, lack of suitability for the job of the employee, definite term contracts, liquidation, bankruptcy of the form or other such economic reasons, breach of duties by the employee or long-term sickness of the employee.
It is important to note here that often employees are given a severance pay in lieu of a notice period. A notice period gives an employee enough time to secure another employment, before he or she loses the previous source of income or employment. When employees receive severance pay in lieu of notice period, they receive an amount that is equivalent to the period for which they would have worked in the notice period. At times, employees get both: a notice period and severance pay. It is not clear in literature if the calculation of severance pay differs in presence of notice period. So we also keep this recommendation broad, such that we recommend one single formula of severance pay irrespective of whether it is accompanied by a notice period.
This recommendation pertains to dismissal where the employer dismisses the employee without notice and violates terms and conditions outlined in the contract of the employee when the worker is not guilty of serious misconduct (ILO 1995). Here, the employment relationship is being terminated for reasons such as operational purposes, economic circumstances of the employer, lack of suitability for the job of the employee, definite term contracts, liquidation, bankruptcy of the form or other such economic reasons, or long-term sickness of the employee. The terminology for such dismissals vary across countries, so instead of using particular names, we are specifying the core reason for the dismissal so that the reader can judge despite inconsistency in the terminology.
The recommendation is applicable for employees who are employed in the formal economy. Rules and regulations governing short-term contracts, zero-hour contracts or relationships of people in the informal economy and so on may be distinct from the rules governing employees with permanent contracts. As a result, this recommendation may not be applicable there. However, that does not preclude this recommendation from being taken into consideration when formulating rules on severance pay for such employment relationships in the future.
In the below paragraph, we will compare two methods used to calculate severance pay:
The current formula for severance pay is derived from laws, collective agreements and specific contractual provisions. It takes very few factors into consideration. On the other hand, the courts have taken a more comprehensive approach to calculating the severance pay. Therefore, we combine the approach of courts with macro-economic, political economy and miscellaneous factors to form the second intervention. Literature shows that these factors are taken into account by policy makers in an indirect or non-systematic manner when developing the formula for severance pay or while defining the severance pay level (Holzmann 2011).
Current formula of severance pay (Laws, collective agreements and specific contractual obligations)
Most countries have labour laws, collective labour agreements and the specific employment contract that define the severance pay of an employee. The severance pay is determined based on the law/agreement/contract that is held to be applicable for this particular employee. Rules set out by the collective labour agreement or the specific employment type in question can override the rules set out by common law. Employees can also seek severance pay by seeking recourse from courts.
Countries across the world such as those in Europe, or Canada, UK, India have formal guidelines that determine the formulation of severance pay. It is beyond the scope of this recommendation to delve into the guidelines that govern the formulation of severance pay in various countries. However, in the paragraphs that follow, we give an overview of guidelines used in some countries so that the reader can get a sense of practices that are being currently used.
In Austria an employee who has worked in an organisation for more than 3 years is entitled to receive an amount from a special fund in which the employer has been transferring 1.53% of each employee’s salary. The employee can opt in to retrieving the accumulated amount or choose to leave this amount in the fund after terminating the employment relationship so that the new employer can continue to deposit monthly payments in this fund.
In the case of Canada, the Employment Standards Act (ESA), calculates the severance pay by multiplying an employee’s regular wages for a single work week by the sum of the number of completed years of employment and the number of completed months of employment (divided by 12 for a year that is not completed). However, some employees may have rights under the common law or other legislation that allows them to claim more severance pay than the one set out by ESA. To claim this amount, employees have to rely on court based adjudication. The upper limit for notice period (based on which the severance pay is determined) as set by Canandian courts is 24 months (Thornicraft 2015, p.783).
In Germany, if a dismissal is based on business needs or compelling operational reasons, the employee that works for a company that has more than 10 employees, has a right to a severance payment if he or she does not bring his or her case to the court within 3 weeks. The amount of the severance payment is a half month pay for each year of tenure.
In the UK, employees who have worked in an organisation for 2 years or more are entitled to a redundancy pay if they are dismissed due to economic shocks experienced by the firm. The amount the employee receives depends on his/her age and tenure. An employee who has been wrongfully dismissed (the employer has not given the employee adequate notice or payment in lieu of notice) can seek help from an employment tribunal who will then award damages to the employee.
In India, an employee who has worked for an organisation that has more than 50 employees for one year or more is entitled to a severance pay of 15 days of his or her salary for each completed year of service or any part thereof exceeding six months.
From the above examples, we can summarise that laws, collective agreements and specific contractual agreements take into account 1) tenure, 2) age, 3) firm size and 4) salary of the employee while calculating the severance pay.
Comprehensive and systematic way of developing severance pay formula
There is multiplicity in the laws and institutions that govern the calculation of severance pay. As mentioned before, employment law, collective agreements, common law as well as the actual contract drafted between the parties, can all be used to determine the severance pay. In such cases, employers and employees can contest the incidence of severance or the generosity of severance in courts. As a result, courts have also been involved in the determination of severance pay. Courts involved in the adjudication of such cases have taken into account various factors that were otherwise not included in laws, collective agreements and contracts that determined severance pay.
A Canadian court in the case Bardal vs The Globe and Mail Ltd., for example, identified that the below factors need to be taken into consideration when determining the severance pay of an employee:
So far, Canadian courts have applied the Bardal factors in 1,010 other judicial decisions as of June 2015, according to the database maintained by the Canadian Legal Information Institute (Thornicraft 2015, p.782).
As mentioned before, at times severance pay is given in lieu of the notice period. In such cases, employers have to arrive at a notice period that is acceptable and fair to both parties keeping in mind that the notice period can be switched with a monetary compensation. To help employers provide employees with the right amount of severance pay, McShane and McPhillips (1987) identified the factors that significantly affected the length of notice awarded in more than 100 British Columbia cases between 1980-86. They find that seven predictors account for 69 percent of the variance in reasonable notice awards. They are:
In West Germany, a survey of labour courts show that 75% labour courts calculate the severance pay based on tenure (in years) and the last monthly gross wage of the employee. This severance pay acts as the baseline pay. It is then modified by taking into consideration the characteristics of each case such as
In Bohemier v. Storwal International Inc., Justice Saunders of Canada ruled that the notice period or severance pay has to be reasonable for both parties, the employer and employee. If the employer is functioning in an unfavourable economic environment, it should be possible for him or her to reduce the staff without having to bear large dismissal costs.
Following from what we discussed above, this intervention suggests the following factors should be used to determine the severance pay: 1) age, 2) tenure, 3)
character of employment, 4) firm size, 5) economic condition, 6) availability of new employment, 7) gender, 8) salary 10) cost of employment `11) alimony. These factors have been identified by courts while adjudicating disputes between employees and employers over severance pay whereas factors outlined in the first intervention have been determined by laws, collective agreements, macro-economy and political economy and a few miscellaneous factors.
Holzman et al. (2011) establish the economic rationale for severance pay. They reason that ‘’severance payment is a primitive form of social benefits which predate or complement existing benefits for unemployment and retirement and that it also functions as a job protection instrument. Based on that hypothesis, they identify the following factors as determinants of severance pay: 1) per capita income of the country 2) unemployment benefits 3) pension and 4) union density ( political economy factor). The authors perform correlation analysis using empirical data which indicates that these factors are taken into consideration by policymakers while making decisions on labour rights and social protection programmes.
A model developed by Goerka and Panenburg (2015) predicts that the generosity of severance payments increases if firms expect court-awarded payments to be high. As a consequence, the incidence and expected level of severance pay increases with the determinants of such payments (implicitly) laid down by employment protection legislation. The model also predicts that employers are less likely to provide a generous severance pay or provide a severance pay at all, if the employee cannot bear the financial costs associated with a court dispute. Thus, two additional factors of severance pay emerge from this model: 1) expected court-awarded payment and 2) the ability of an employee to afford a court dispute.
To sum up, this intervention uses the following 18 factors to determine an employee’s severance pay: 1) age, 2) tenure, 3) character of employment 4) firm size, 5) economic condition 6) availability of new employment 7) gender, 8) salary 10) cost of employment `11) alimony 12) per capita income of the country 13) unemployment benefits 14) pension and 15) union density 16) expected court awarded payments and 17) ability of employee to afford a court dispute 18) pension entitlements forfeited due to job loss.
For parties to an employment dispute related to dismissal looking to distribute (share) financial resources in a fair way, is the current four factor method of calculating severance pay or a comprehensive formula that takes into account additional factors more effective for well-being?
To assess the status quo of the formula of severance pay and identify severance pay, Google Search and Google Scholar were used.
Keywords used in the search strategy are: Severance pay formula, determinants of severance pay, recession, labour courts, factors that compose severance pay, economic downturns, gender
The main sources of evidence used for this particular subject are:
The article by Thornicraft (2015) examines whether firms treat older workers differently compared to young workers while giving them notice of dismissal. The article is based on statistical analysis and experimental simulation. This evidence is graded as moderate.
In the article by McShane and McPhillips (1987), the authors identify the factors that affected the length of notice awarded in more than 100 British Columbia cases in 1980-86 and develop a regression-based algorithm to estimate reasonable notice. The sample size of this study is comparable to a small empirical study, so we grade this evidence is graded as low.
The article by Goerka and Pannenberg (2009) investigates factors that contribute to the incidence and generosity of severance pay in West Germany. Using a theoretical model and regression analysis of data from German Socio-Economic Panel for the years 1991-2006, the authors find severance pay is affected by ability of the employee to bear costs of litigation and legal regulations experienced by the firm around such transfer payments. This study is comparable to a small empirical study, so we grade this evidence as low.
The report by Deloitte (2012) gives an overview of the regulations that determine severance pay across all countries in Europe. This evidence is graded as low.
Holzmann et. al (2011) give an overview of the existing severance pay programmes, examining their historic development, assessing their economic rationale and describing current reform attempts. It uses empirical evidence to test 3 hypotheses: (i) a primitive income protection program, (ii) an efficiency enhancing human resource instrument, and (iii) a job protection instrument. This evidence is graded as moderate as it is based on extensive empirical research.
The article by French and Treleaven (2014) identifies factors used by Canadian courts to determine the severance pay or notice period of employees. The authors refer to particular cases and judgements made by Canadian courts to justice their choice of factors. Although the arguments made by the authors are intuitive, convincing and at times complemented with evidence from court cases, the evidence used is largely anecdotal. There is no proper study design, reference or analysis of empirical evidence. So the quality of the article is graded as low.
The article by Ha-Redeye (2015) examines the applicability and interpretation of Bardal factors through cases adjudicated by Canadian courts. It argues that although the Bardal factors originally focused on circumstances of the employee, they can also be used to examine the circumstances of the employer to arrive at a conclusion that does not harm the employer either. The article refers to several court cases in Canada to justify its argument but it lacks the backing of robust empirical data. So the quality of the article is graded as low.
Note: In the below section, we will compare the advantages and disadvantages of each intervention (current formula for calculating severance pay and severance pay as calculated by courts). Both interventions have overlapping factors that determine severance pay, namely tenure/length of service, age of employee, salary, and age. Despite being present in both interventions, these factors have not been included uniformly across countries, so it becomes important to list their disadvantages and advantages so as to come to a common understanding on the calculation of severance pay.
Quality of evidence and research gap
According to our research method, we grade the quality of evidence as low. Many of the articles are based on court cases and are not backed up by robust statistical analysis, empirical research, meta-analyses or systematic reviews. This can be explained by the fact that in the absence of proper guidelines that define severance pay, courts have set a precedent by factoring in every employee’s personal circumstances as well as the macroeconomic context that employee lives in. These one-off decisions then became baseline decisions for other courts. Additionally, due to the lack of data and scholarship, it was challenging to identify undesirable outcomes for most of the factors.
Keeping in line with this methodology of developing recommendations, in the section of desirable and undesirable outcomes, we are mentioning factors associated with each intervention that have outcomes identified in literature. Unfortunately, research on many of the factors is lacking despite the wide usage of the factor across court decisions or laws. Yet, we would like to present these factors as evidence because a) we want to provide practitioners an overview of the different factors that go in severance pay calculation across different countries and b) we could not access some of the research that could have justified the inclusion of the factor because it was available in a language other than English c) it makes intuitive sense. To explain the third point, intuitively, we know that men may be required to pay alimony which is an amount previously agreed upon between the couple. In the event that the man loses his job, he might still be required to pay the alimony regardless of him being employed or not. To protect the financial well-being of the employee, it is necessary that the alimony sum is taken into account while calculating his severance pay.
Following are the factors that literature does not offer desirable and undesirable outcomes for but are relevant to the recommendation.
Level of expected court-awarded payments: ‘’Empirical data from Socio-
Economic Panel (SOEP) for 1991–2006 in West Germany shows that severance payments offered by firms in order to avoid a verdict rise with the level of expected court-awarded payments’’(Goerka and Pannenberg 2009, pg.82).
Severance pay as determined by courts
Alimony, pension entitlements forfeited due to job loss, age, tenure, salary, firm size, probability of being re-employed: More than 75% of labour courts in Germany, use factors such as age, probability of being re-employed, firm size and alimony payments to determine severance pay along with classic factors of age, tenure and last monthly gross wage (Goerka and Pannenberg 2009, p.3).
Literature suggests that each country, court, and agreement has developed its own unique formula of calculating the severance pay. There is no uniformity in this formula. Often, its calculation left up to the discretion of the employer, who in turn depends on laws. At times, the employer makes necessary modifications according to the nature of employment.
As demonstrated above, laws, collective agreements and specific contractual obligations have a simplistic way of calculating the severance pay as opposed to courts that seem to have taken a more comprehensive approach, as they take into account several factors that have positive outcomes associated with them (McShane and McPhillips 1987; Goerka and Pannenberg 2010; Thornicraft 2015). Scholars have also established the importance of taking macro-economic and political economy factors into consideration while calculating the severance pay (Holzmann et al. 2011) along with a few miscellaneous factors (Goerka and Pannenberg 2009). Literature suggests undesirable outcomes of the two interventions are very few and not sufficiently strong enough to negative the positive outcomes. However, the lack of negative outcomes on the two interventions can also be indicative of the lack of research on the issue.
Comparing the two interventions, we conclude that a more comprehensive formula is more effective for the well-being of both the employer and employee as it takes into account various aspects that influence the well-being of the two, as compared to the current formula of calculating severance pay. By that, we mean the 1) age, 2) tenure, 3) character of employment 4) firm size, 5) economic condition 6) availability of new employment 7) gender, 8) salary 10) cost of employment `11) alimony 12) per capita income of the country 13) unemployment benefits 14) pension and 15) union density 16) expected court awarded payments and 17) ability of employee to afford a court dispute 18) pension entitlements forfeited due to job loss.
In practice, that would mean that each of these factors need to be assigned weights. The assigned weight may depend on the strength of the relationship between the factor and its ability to affect the well-being of the employer and employee. Moreover, not every factor will be relevant to every type of employment relationship or at a given time. All of which leads us to conclude that the calculation of severance pay is a complex and nuanced process. It needs the attention of an interdisciplinary and multi-level team of scholars, policy-makers and experts. Therefore, international development organisations need to play a role in developing a standard formula that can be taken as a baseline by a country or industry and then modified according to their requirements. Similarly, this standardised formula can also serve as a baseline formula for employers who can then adapt it to suit their own needs.
Meanwhile, from a practitioner’s perspective, this recommendation can serve a starting point when making decisions about the severance pay to be provided to employees.
The discussion in the balance of outcomes suggests that a more comprehensive and systematic way of calculating the severance pay is more effective for the well-being of the employer and employee as they try to resolve disputes related to dismissal and sharing of financial resources in a fair way.
This recommendation is based on the current way of defining severance pay, court rulings on the same and macro-economic factors identified by scholars with the help of regression analysis. Empirical evidence that shows benefits of including these factors in calculation of severance pay is lacking. So this recommendation is primarily based on theoretical justifications that establish the importance of these factors in calculation of the severance pay.
In the first literature search carried out, two interventions stood out as most plausible interventions for exploring possible solutions that meet needs and interests of both parties
Organisational dispute resolution mechanisms are of various types: mediation, arbitration, early neutral evaluation and ombuds programme. Organisations in the UK (ACAS), US (REDRESS, EEOOC), Netherlands (court-connected mediation) are increasingly using mediation programmes. These programmes are based on three techniques that are widely used in mediation and in resolution of employment disputes: facilitative mediation, evaluative mediation and transformative mediation.Transformative mediation is a therapeutic mediation technique that came after evaluative and facilitative mediation techniques. It was developed by Rober A. Baruch Bush and Joseph P. Folger in 1994. It is based on the principles of facilitative mediation. In this recommendation, we will compare facilitative and evaluative mediation as they have a starkly different way of resolving conflicts and understanding the contrasts will be useful for practitioners.
The terms “facilitative” and “evaluative” mediation derive from the work of Leonard Riskin. They represent opposite ends of one dimension of a grid intended to illustrate some variations in mediation practice (Lande 2000, p.322).
“Riskin described the facilitative mediator, who focuses on clarifying and enhancing communication between the parties and helping them decide what to do. The mediator generally will listen to opening statements and may conduct caucuses, but the focus of the process is not on the legal merits of the dispute, so much as on the parties’ underlying needs and how those needs might be met in an interest-based settlement. The mediator generally will avoid evaluating the case, but may engage in reality-testing to help the parties achieve a more objective sense of their alternatives to a negotiated settlement” (Bingham et al. 2009, p.12).
“The facilitative mediator does not give advice, legal or otherwise; does not provide opinions on the relative value of a parties case or individual issues within the matter; and does not make predictions on the possible outcome of the action should the parties fail to reach agreement and proceed to litigation or arbitration” (Hughes 1998).
“Facilitative mediation is based upon three fundamental assumptions: first, the disputants are reasonably intelligent and potentially able to work with each other if placed in a neutral and safe environment. Second, the parties, after being properly counseled by their attorneys are, capable of understanding their situations better than the mediator and, perhaps, better than their lawyers. And, third, the clients can develop better solutions than any mediator might create. Facilitative mediation calls upon the parties to create options, explore alternatives, brainstorm possibilities and think laterally to fashion a resolution to the dispute. In facilitative mediation, the emphasis is on self-determination” (Hughes 1998).
“The evaluative mediator focuses on helping the parties understand the strengths and weaknesses of their case by providing assessment, prediction, and direction. Evaluative mediators generally ask the parties to make formal opening statements presenting their case, and then conduct one or more caucuses to meet privately with disputants. The mediator focuses on collecting facts, identifying issues, and analyzing the parties’ legal arguments to develop a sense of the case’s economic value. In other words, the mediator evaluates who is likely to win and how much the winning party will probably recover. In order to press the parties to settle, the mediator will judiciously share this evaluation with each side at strategic moments” (Bingham et al 2009, p.39).
“The mediator may propose fair and workable resolutions to one or more issues, press the parties to accept a particular resolution, and state opinions, including opinions on the likely outcome. This model also tends to involve a more directive mediator, one who will not hesitate to ‘arm-twist’ the parties to achieve settlement. It is seen as more adversarial than facilitative mediation” (Hughes 1998).
For shaping solutions during a conflict between employer and employees, is evaluative mediation or facilitative mediation more effective on their well-being?
The databases used are: HeinOnline
Key words used in the search strategy are: employment dispute, mediation, facilitative mediation, evaluative mediation.
The article by Waldman (1998) frames the debate between supporters of evaluative and facilitative mediation through the lens of therapeutic jurisprudence. The author provides a detailed analysis on the kind of therapeutic benefits each mediation style offers. Although convincing, this analysis is theoretical and is based on experts’ opinion. The author does not refer to empirical evidence to support the arguments made. The lack of empirical research on the advantages and disadvantages of facilitative and evaluative mediation for disputants has also been acknowledged in the article. Hence, we grade this paper as low.
The paper by Lande (2000) reasons that the debate between evaluative and facilitative techniques has led to a better understanding of the benefits and drawbacks of each and has stimulated a discussion on the appropriate use of each technique in different contexts. The arguments made in the paper are well-thought and convincing but largely rely on literature on expert opinion. Reference to empirical research has been made only once. So we grade the paper as low
Berggren (2006) presents evidence from a case study on othe Equal Employment Opportunity Commission (EEOC)- a federal agency established to enforce civil rights against workplace discrimination in the US. The EEOC uses facilitative techniques to mediate employment disputes. The author presents evidence from various studies conducted on the effectiveness of the EEOC in resolving employee disputes. Therefore, this paper can be regarded as high-quality evidence.
Hughes (1998) analyses literature on evaluative and facilitative mediation to infer which mediation style should be used for a client’s dispute. This analysis is done using theoretical reasoning. There is no reference to empirical research in the paper. So the paper is graded as low.
Boon, Urwin and Karuk (2011) present the findings of an evaluation of a facilitative judicial mediation, piloted by the Employment Tribunal Service in the UK. It analyses qualitative evidence on satisfaction of clients with the process and outcome of the mediation as well as reports drafted by judicial mediators. Although the sample size of this study was not large, it is still significant. The data includes a satisfaction survey of those expressing interest in judicial mediation, with thirty five claimants and fifty one employers who had experienced judicial mediation, and forty five claimants and thirty seven employers who had not. Also, there is data on 98 mediation reports completed by judicial mediators.
The paper presents both perspectives, that of clients and mediators. Since the sample size of this study is comparable to a small empirical study, we grade the quality of this paper as low.
Love (1997) presents arguments against using evaluative mediation. The paper largely relies on conceptual and theoretical literature to make its case. Empirical research is not used to back up the arguments. Due to the absence of any reference to empirical literature, we grade the quality of this paper as low.
Quality of evidence and research gap
A large amount of literature on both these interventions (evaluative and facilitative mediation) is based on conceptual research, expert opinions and a few small empirical studies. Large empirical studies or meta analyses are lacking. According to the Actionable Recommendations document and GRADE methodology, the overall strength of evidence right now is low. The fact that there is not a lot of empirical research, our understanding of the desirable and undesirable outcomes of both interventions is limited.
Mediators frequently mix facilitative and evaluative techniques in individual cases, which is often appropriate and beneficial. Appropriate use of predominantly one approach or the other may vary in part depending on the type of case. The Massachusetts Commission Against Discrimination (MCAD) initiated a mediation programme where the mediators used a mix of facilitaitve and evaluative techniques. An evaluation of the programme showed that 63% of the people who underwent mediation reached a settlement compared with 21% of those who relied on traditional mediation. Additionally, participants expressed a higher degree of satisfaction with the process than the outcomes: 63% of claimants and 77% of supervisors said they would use mediation again while 50% of claimants and 68% of the supervisors were satisfied with the outcomes (Bingham et. al 2009).
However, literature on the desirable and undesirable outcomes indicates that certain mediation techniques are more appropriate in certain cases. In some cases, a facilitative model is more useful. For example,1) when parties are interested in continuing their relationship after the problem is resolved, 2) when both parties have enough power and can negotiate on a level-playing field 3) where there is space for creative and future focused solutions (Alexander 2008, p.11). Evidence indicates that facilitative mediation by EEOC has worked well for employers who are interested in gaining a better understanding of the problems that their employees face (Berggren 2006). Facilitative mediation is not useful when the dispute is long-standing (Seargeant 2005).
Evaluative mediation is more useful where parties are interested in distributive justice where 1) there is an exchange of money or other resources (Hughes 1998), 2) when parties have unrealistic expectations from outcome of the dispute, 3) when clients require an objective opinion of an expert, 4) when parties want a quick resolution to the dispute and 5) when resolving relational aspects of the issue is not important (Alexander 2008).
For shaping solutions during a conflict between employer and employees, both evaluative and facilitative mediation techniques are effective. However, in some contexts, the use of one technique is more useful. For instance, evaluative mediation is more useful when parties have when disputing parties have unrealistic expectations from outcome of the dispute, when clients require an objective opinion of an expert, when parties want a quick resolution to the dispute and when resolving relational aspects of the issue is not important and where there is distribution of material and financial resources.
On the other hand, facilitative mediation is more useful when disputing parties are interested in continuing their relationship, when both parties have equal power in negotiations, where a wide range of solutions are possible and where the employer wants to make a sincere effort in understanding the concerns of the employees.