Recommendations
on employment
problems

3.1 Third party dispute resolution

Guideline for employment problems / CONVENING: 3.1 Third party dispute resolution

Interventions and evidence explained

Most plausible interventions explained

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]:

The open-door policy: The open-door technique is often used as the first step in the workplace dispute resolution procedure and is a popular management method of grievance resolution involving a manager making himself or herself available at any time for an employee who wishes to raise an issue. The open door policy is essentially an informal, unstructured and ad-hoc form of dispute resolution.
Peer review: Peer review may be requested if an employee has been unable to resolve a grievance with his or her supervisor. Generally, application to peer review is through the issuing of a written grievance. Consisting of a panel of fellow employees or peers and management representatives, the panel listens to the arguments and evidence presented by the employee and by the other disputant, often a management representative. Panel members may ask questions and clarify any matters necessary before a binding decision is issued through the process of secret ballot on a course of action to resolve the problem. Panel members are required to maintain the confidentiality of the process and must receive specific training in their role.
Internal ombudsman: An internal ombudsman is responsible for the explanation of company policies and procedures, provision of advice on alternative courses of action, investigation of claims, referral to appropriate contacts and to arrange meetings and sometimes to mediate the dispute. The internal ombudsman is particularly suited to instances where disputes are complex or involve a number of parties and the facts around the matter are contested. Investigation by the internal ombudsman consists of a fact-finding exercise where the investigator is given access to documentation and may interview personnel relevant to the claim. The internal ombudsman often handles both staff and customer concerns which cannot be resolved by senior management. Because the internal ombudsman operates through a complaints and investigation process, the model is suitable for both ‘rights’ and ‘interests’ disputes which arise in the workplace.
Consultative committees: The use of consultative committees in workplace dispute resolution is also known as a voluntary voice system of dispute processing and includes both collective bargaining and nonunion grievance systems. Formal dispute resolution procedures in such a system allow employees to file complaints or challenge management decisions over matters covered by the collective agreement. Often the matter is referred to a formal bargaining committee which consists of union and management representatives.

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).

Selected interventions for comparison (defined as a PICO question)

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?

Search strategy

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, in-house ADR, third party, out-house, access, mediation, arbitration, NDA.

Assessment and grading of evidence

The main sources of evidence used for this particular subject are:

Bernadine van Gramsberg: Workplace Justice and the Design of Dispute Resolution Clauses (2001)
Lisa B. Bingham, Gregory Chesmore, Yuseok Moon and Lisa Marie Napoli: Mediating Employment Disputes at the United States Postal Service (2000)
Michael Gibbons: Better Dispute Resolution: A review of employment dispute resolution in Great Britain (2007)
Samuel Estricher; Arbitration of Employment Disputes without Unions (1990)

Quality of evidence and research gap

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.

Comparing the two interventions

Desirable outcomes of the interventions

Third party dispute resolution	In-house dispute resolution
Full or partial settlement is more often reached through third party resolution. The outside model produced a statistically significant higher reported rate of full or partial settlement than the inside model, even though it was open to a broader range of more intractable cases (Bingham et al., p. 17).	The open door policy can prevent major conflicts. [Regarding open-door policy], with training in the role of grievance handling, and in particular, in the concepts of workplace justice, the open door policy, along with a strategy of ‘management by walking about’ is an effective mechanism for drawing out employee grievances before they become major issues (Van Gramberg, p. 9).
People feel more procedural justice in third party dispute resolution. One study on labor management and grievance mediation using outside neutral mediators in disputes between coal mine workers and managers concluded that most of the participants in the process had favorable attitudes toward the process and the outside mediator, regardless of the outcome of their case (Bingham et al., p. 10).	Open door policy is linked to a higher job satisfaction and higher satisfaction of the outcome of the dispute. The open door policy should contribute to an employee’s sense of being afforded interactional justice which has been linked with employee loyalty, job satisfaction and satisfaction with the outcome of the dispute (Van Gramberg, p. 9).
People are generally happy about third party mediation. According to a study based on qualitative interviews, supervisors and employees experienced empowerment during mediation. Interviewees were generally enthusiastic about [third party] mediation as a process (Bingham et al., p. 10).	Peer reviews are participative and create an open and trusting atmosphere. [Peer reviews] remain a powerful alternative to litigation in the US, particularly as most peer review policies require the parties to agree to abide by the decision of the panel. In this way, peer review decisions are considered final and binding. Peer review systems have received accolades from a number of researchers claiming that the system is participative and builds an open and trusting atmosphere. (Van Gramberg, p. 10)
	People working at companies offering an ombudsman are more likely to raise issues. Research on the uptake of dispute resolution procedures by employees has shown that employees offered a company ombudsman are more likely to raise their issue than those who are limited to contacting a supervisor or going over a supervisor’s head (Van Gramberg, p. 10).
	In-house dispute systems build employee participation and confidence in management. Offering grievance systems [in house,] which promote procedural, distributive and interactive fairness not only assists in the maintenance and demonstration of workplace justice, it builds employee participation and their confidence in both the organisation and in their management. Apart from good business practice, affording employees’ workplace justice also represents sound business ethics and social responsibility (Van Gramberg, p. 11).
	Giving employees an opportunity for voice within an organization will enhance commitment to the organization and job satisfaction (Bingham et al., p. 8).
	A workplace ombudsman program is cost effective and can benefit an agency and its personnel. A survey conducted in five federal American agencies, concluded that managers, employees, and other agency staff who handle workplace conflict (such as Equal Employment Opportunity and Employee Assistance Plan program personnel) all rated ombudsman programs highly (Bingham et al., p. 8).

Undesirable outcomes of the intervention

Third party dispute resolution	In-house dispute resolution
Vulnerable employees might experience barriers to third party dispute resolution mechanisms. Vulnerable employees can be deterred from accessing the tribunal system by the complexity of both the underlying law and tribunal process. In such cases the need to confront the employer directly before applying to a tribunal could act as a barrier to justice. (Gibbons, p. 9)	The open-door policy has been described as inappropriate for a number of workplace disputes. For instance, this method may make the employee raising the complaint highly visible to his or her co-workers and this could act as a disincentive to raise sensitive matters such as sex discrimination claims (Van Gramberg, p. 9).
[Parties in a third-party dispute settlement process] tend to get caught up in the [dispute resolution] process rather than focusing on achieving an early acceptable outcome (Gibbons, p. 9).	The open-door policy has been described as inappropriate for a number of workplace disputes. For instance, this method may make the employee raising the complaint highly visible to his or her co-workers and this could act as a disincentive to raise sensitive matters such as sex discrimination claims (Van Gramberg, p. 9).
	In peer review, panels often have a restricted role in determining dispute outcomes. They are often limited to hearing matters of appeals against disciplinary action, work assignments, transfers, performance evaluations and promotions (Van Gramsberg, p. 10).
	Disputants experience in-house dispute settlement as partian. One study examined the impact mediators have on disputant satisfaction with the mediation process when they are not perceived as impartial, but rather as partisan third panies. Predictably, disputants are more satisfied with impartial than partisan mediators. Researchers have repeatedly recognized the importance of mediator impartiality as an integral factor in assuring procedural justice and increased participant satisfaction with the overall conflict resolution process (Bingham et al., p. 9).
	Literature suggests that participants may be less satisfied with an inside neutral mediator model because of key underlying differences in perceptions as to their neutrality and impartiality. Inside mediators would be more responsive to management’s perspective on a dispute than to the perspective of a complainant lower in the organizational hierarchy. Even if the inside mediator did not act responsively to management during the course of the mediation, it is likely that employees would perceive the mediator as less neutral for precisely this reason-that is, the inside mediator must continue to function within the organization and repon to superiors in a position of power or authority in relation to the inside mediator (Bingham et al., p. 15).
	Participants in the inside model are less satisfied with the impartiality and fairness of their mediator than participants in the outside model. The fact that the results are so similar with the two outside neutral models leads us to conclude that the differences between inside model and outside model are not a function of timing, but rather a function of intrinsic procedural justice features of the models themselves. In particular. the key features of fairness of the process. impartiality and fairness of the mediator are significantly higher in the outside model. This is a likelier explanation for the differing levels of satisfaction with the two models than the timing of the interventions (Bingham et al., p. 16).

Balance of Outcomes

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.

Recommendation

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.