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How will the changes to Alternative Dispute Resolution impact SMEs?

Alternative Dispute Resolution (ADR) refers to all of the ways in which civil disputes can be resolved without the necessity to go to court. The UK government recently announced some changes to the system, which will have their effect on UK businesses. Here’s what you need to know.

Automatic referral to mediation for all small claims

The government propose to introduce automatic referral to mediation for small claims. This will not be a mandatory requirement, but the government hopes that automatic referral will encourage parties to engage with mediation where appropriate.

The government is clear that these proposals are not intended to force parties to mediate, but to ensure parties have the information required to consider whether mediation is appropriate.

There is currently a scheme in Salford piloting automatic referrals of small claims to mediation. However, parties will only be automatically referred where they have agreed to consider mediation on their Allocation Questionnaires.

Increase knowledge of ADR

The consultation considered the introduction of mandatory information sessions for claims of a higher value, up to £100,000, but this is no longer proposed.

In response to the continued lack of awareness of ADR, the government wants to assess how information can be best delivered through a variety of mediums, including by telephone, face-to-face, using the internet and hard copy documentation; as well as considering at what stage such information should be provided.

They will work with the Law Society to increase awareness of the role of lawyers in mediation. This collaboration with the Law Society is hoped to emphasise the important role played by the legal profession in promoting the awareness of, and facilitating access to, mediation.

Claims determined on paper

It is proposed that in low value small claims, where a judge deems it appropriate, parties may be given the opportunity to choose whether their claim is determined on paper.

Improve the Accreditation process

The Ministry of Justice plan to work closely with the Civil Mediation Council (CMC) in order to strengthen the accreditation process for mediation providers, with a view to enabling individual mediators to gain accreditation.

Top tips on ADR for SMEs

Consider Internal Mediation

Generally, organisations use external mediation services to resolve a dispute. Small and medium sized businesses, however, should consider the number of disputes that typically arise each year to determine whether an in-house mediator may be more cost-effective.

Anyone undertaking an in-house role would need to be properly trained and ideally be accredited with the CMC. The CMC are working with the Civil Justice Council (CJC) to determine the existing provision of ADR training at both university and vocational levels. ACAS also offer a mediation qualification.

Providing mediation training for an existing employee is one option, but where a dispute is acrimonious, true impartiality and independence may not be achievable using an internal contact.


Generally, the employer pays for mediation in a workplace dispute with fees charged on an hourly basis. Where two businesses are involved costs are split equally.

When should mediation start?

Mediation can be attempted at any stage during proceedings, but a dispute is less costly if it’s resolved sooner rather than later. The new proposals are likely to encourage mediation prior to any proceedings being issued. In any event, the government is aiming for small claims to be automatically referred to mediation in the first instance.

Who can help with the process?

Your legal representative can arrange mediation on your behalf and attend any meetings to advise you along the way. They will generally consider and present the option of mediation when advising you on the prospects of success in litigation and potential cost risk.

ACAS provide a conciliation service, but usually mediate between legal representatives so that the parties are not directly involved unless they are acting in person. Another useful source is the CJC who are due to publish an ADR handbook in Spring 2013.

The Citizens Advice Bureau may also be of assistance.

Changes businesses can implement

Ensure grievance and other procedures are comprehensive and compliant.
Appoint someone in HR or Management to deal with any disputes.
Seek advice or training on mediation.

Alexis Asher is employment solicitor at Hertfordshire based SA Law.


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