What Every Employer Needs To Know About Mediation.

Employment problems can take up a great deal of time and energy. They can also damage working relationships, affect the wider team and expose a business to significant costs.  

Mediation gives employers and employees a confidential way to resolve employment problems with the help of an independent mediator. It can be used while an employee is still working for the business or after their employment has ended.

For many employers, mediation is a practical alternative to defending a claim in the Employment Relations Authority. However, good preparation and the right representation can make a major difference to the outcome.

What is employment mediation?

Mediation is a structured discussion between the people involved in an employment problem. An independent mediator helps them identify the issues, understand each other’s positions and explore possible solutions.

The mediator does not represent the employer or employee. Their role is to manage the process and help the parties see whether an agreement can be reached.

Employment Mediation Services is provided by the Ministry of Business, Innovation and Employment, commonly known as MBIE. The service is free and is available to employers, employees, unions and others involved in employment relationships.

Mediation is normally voluntary. Both parties must be willing to take part. However, the Employment Relations Authority can direct parties to attend mediation in some cases.

Attending mediation does not mean that you accept you have done anything wrong. It shows that you are prepared to take the issue seriously and look for a practical solution.

When might mediation be necessary?

Not every workplace disagreement requires formal mediation. Minor problems can often be resolved through an early conversation, an internal complaints process or a facilitated meeting.

Mediation may be appropriate when the parties have tried to resolve the problem but remain unable to agree. It may also be helpful where communication has broken down or the legal and financial risks are increasing. Common issues taken to mediation include:

• personal grievances;

• alleged unjustified dismissal;

• claims of unjustified disadvantage;

• bullying or harassment complaints;

• disputes about disciplinary or performance processes;

• unpaid wages or holiday pay;

• redundancy disputes;

• allegations of discrimination;

• disputes about medical incapacity;

• breakdowns in working relationships;

• disagreements about changes to duties, hours or location; and

• negotiations about an employee leaving the business.

An employee does not need to file a claim in the Employment Relations Authority before requesting mediation. Mediation can be used at an early stage, after a personal grievance has been raised or after proceedings have begun.

Why should an employer consider mediation?

Even where an employer believes it has a strong case, there may be good reasons to mediate. 

It can save time and money

Employment disputes can become expensive. Managers may spend hours gathering documents, preparing statements and responding to allegations. If the matter reaches the Authority or Employment Court, the business may also face representation costs and significant disruption. Mediation may allow the problem to be resolved in one day, although preparation and follow-up work will still be required. 

The parties control the outcome

At mediation, the parties decide whether to settle and what the settlement will contain. If the case goes to the Authority, the outcome is placed in the hands of an Authority member. Mediation can also produce solutions that the Authority may not order. These might include:

• an agreed reference;

• an apology;

• changes to reporting lines;

• a return-to-work plan;

• agreed communication;

• training or coaching;

• correction of employment records;

• withdrawal of warnings;

• an agreed end to employment; or

• a financial payment.

It is confidential

What is said during mediation is generally confidential and cannot normally be used later in the Employment Relations Authority or Employment Court. Confidentiality gives both sides room to discuss risk, make offers and consider compromises without admitting liability. The parties must still comply with any confidentiality terms agreed as part of a settlement.

It can preserve the employment relationship

Mediation does not always result in an employee leaving. In some cases, the best outcome is to repair the working relationship and create a clear plan for moving forward. A mediator may help the parties discuss matters that have become too difficult to address without assistance.

It provides certainty

A negotiated settlement removes much of the uncertainty of litigation. It can allow the business to manage costs, protect key relationships and move forward.

What happens before mediation?

Either party can apply to Employment Mediation Services. The service will contact the other party, gather basic information and arrange a suitable date. Before mediation, an employer should identify:

• what the dispute is about;

• what the employee is claiming;

• what happened and when;

• what documents support the employer’s position;

• whether the employer followed its own policies;

• what legal or procedural risks exist;

• what outcome the business wants; and

• what outcomes may be acceptable.

  
  

Relevant documents might include the employment agreement, workplace policies, correspondence, meeting notes, investigation material, wage records, medical information and restructuring documents.

Only relevant information should be provided. Employers must continue to meet their privacy obligations and should take care when documents contain confidential information about other employees.

It is useful to prepare a short written summary setting out the key facts, the employer’s response to the claim and the preferred outcome. A representative can help ensure this summary is clear, accurate and focused on the issues that matter.

The person attending for the employer must have authority to make decisions and enter into a settlement. If further approval from an owner, board or insurer is needed, this should be arranged before mediation.

What happens on the day?

Mediations may take place in person, by phone or through a video meeting.

The mediator will normally begin by explaining:

• their independent role;

• how the meeting will run;

• the confidential nature of mediation;

• expectations about respectful behaviour; and

• how any agreement can be recorded.

Each party is then given an opportunity to explain its view of the problem. This is not the same as giving evidence at a hearing. The process is usually less formal, but it is still important to give an accurate and organised account.

The parties may begin in the same room. The mediator may then meet with each side privately. These private discussions allow the mediator to test each party’s position, identify risks and explore settlement options. The mediator may move between the parties with questions, proposals or offers. This is sometimes called shuttle mediation. Anything said privately to the mediator will not normally be shared with the other side unless permission is given.

Does the mediator decide who is right?

The mediator does not normally decide the case. Their main role is to help the parties reach their own agreement.

A mediator may ask difficult questions or point out possible weaknesses. This does not mean they have taken the other party’s side. It is part of helping each party make an informed decision.

In some circumstances, the parties may jointly ask the mediator to make a recommendation. They can agree in advance whether the recommendation will become binding if it is not rejected within an agreed period.

The parties may also agree to ask the mediator to make a binding decision. This should not be done without understanding the consequences and getting advice.

What happens if an agreement is reached?

If the parties agree, the terms will usually be written into a record of settlement. A mediator can sign the settlement under section 149 of the Employment Relations Act 2000. Once signed, the settlement is final, binding and enforceable. It cannot be cancelled simply because one party later regrets the agreement.

The mediator will check that the parties understand the effect of the agreement and that it does not unlawfully remove minimum employment entitlements. A settlement may cover:

• payments and payment dates;

• the end of employment;

• notice and holiday pay;

• return of company property;

• an employment reference;

• an agreed statement about why employment ended;

• confidentiality;

• non-disparagement;

• withdrawal of claims;

• tax treatment;

• future communication; and

• what happens if a party breaches the agreement.

Payment terms should be carefully drafted. Different payments may have different tax consequences. Employers should not assume that describing a payment in a certain way automatically makes it tax-free.

What if mediation does not resolve the problem?

If no agreement is reached, the employment relationship continues unless it has already ended. Either party may take further steps, which could include applying to the Employment Relations Authority.

The discussions, offers and concessions made during mediation generally remain confidential. They cannot usually be disclosed in later proceedings.

Even if full settlement is not reached, mediation may narrow the issues or help the parties understand what information is still needed.

Why might an employer want representation?

Employers are not required to have a representative at mediation. However, representation can be valuable, especially where the dispute involves dismissal, substantial financial claims, complex facts or serious allegations. An experienced employment representative can:

• assess the strengths and weaknesses of the case;

• identify procedural or legal risks;

• help gather the right documents;

• prepare the employer’s written summary;

• explain likely Authority outcomes;

• develop a negotiation strategy;

• speak for the employer when appropriate;

• help evaluate settlement offers;

• keep discussions calm and focused; and

• draft settlement terms that protect the business.

Mediation can be emotionally demanding. A manager who was personally involved in the events may find it difficult to hear criticism, answer unexpected allegations and make commercial decisions at the same time.

A representative can provide some distance and help the employer distinguish between what feels fair and what represents a sensible business outcome.

Representation does not mean taking an aggressive approach. Effective mediation usually requires a combination of preparation, careful listening and realistic negotiation.

FAQs

Is employment mediation compulsory?

Mediation is normally voluntary. However, the Employment Relations Authority can direct parties to attend. Refusing a reasonable request for mediation may also make a dispute harder and more expensive to resolve.

Is MBIE mediation free?

Yes. Employment Mediation Services is a free government service. However, each party is responsible for the cost of its own advocate, lawyer or other representative.

Can an employer bring a support person?

Yes. An employer may attend with an advocate, lawyer, HR adviser, employer organisation representative or another suitable support person. The mediator should be told in advance who will attend.

Does attending mediation mean we admit fault?

No. Attending mediation is not an admission that the business acted unlawfully. It is an attempt to resolve the problem.

Are mediation discussions confidential?

Yes, mediation communications are generally confidential. There are limited legal exceptions, and the final settlement may include its own confidentiality obligations.

Can the employee remain employed after mediation?

Yes. Possible outcomes include returning to work, changing duties, agreeing on expectations, repairing relationships or restarting a workplace process fairly.

Can mediation end employment?

Yes. The parties may agree that employment will end on negotiated terms. The wording, payments, reference and public explanation should all be recorded clearly.

Can we refuse an employee’s settlement demand?

Yes. No party is normally required to accept an offer. Employers should assess the demand against the legal risk, likely costs, disruption and value of certainty.

What if we settle before the mediation date?

The parties can prepare a written agreement and submit it to Employment Mediation Services for certification. Once properly signed by an authorised mediator, it becomes final and enforceable.

How long does mediation take?

Many mediations are scheduled for half a day or a full day. Complex cases may take longer or require follow-up discussions.

Should a small business have representation?

Representation can be particularly helpful for small businesses that do not have an internal HR team. A representative can help the employer understand the law, prepare properly and avoid agreeing to unclear or risky terms.

Mediation can be one of the fastest and most practical ways to resolve an employment dispute. However, it works best when the employer understands the risks, prepares carefully and has a clear settlement strategy. Employer Direct supports employers before and during mediation. We can assess the problem, prepare your response, represent your business and help negotiate an outcome that is practical, lawful and commercially sensible.

Getting advice early can stop a manageable employment problem from becoming a lengthy and expensive dispute. If you have a dispute and need some advice or support, get in touch with Employer Direct today. Employer-Direct.co.nz | 0800 612 355

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