Employment Tribunal Claims: A move towards compulsory ADR?

In November 2023 the Court of Appeal’s decision in Churchill v Merthyr Tydfil County Borough Council attracted much attention in legal circles.

Departing from the previously established position that both parties must agree to pursue alternative dispute resolution (ADR), the Court of Appeal held that a Judge may put a case on hold and order that out-of-court resolution be explored, whether or not both parties consent to this.

We consider the implications of this civil court decision for cases litigated in the employment tribunals, and the accuracy of suggestions that it is now ‘compulsory’ for parties in dispute to take part in ADR.

What happened?

This case was a property claim, brought in the civil courts. The claimant, Mr Churchill, brought a claim against Merthyr Tydfil County Borough Council for damages arising from Japanese Knotweed which he claimed had encroached on his land from the Council’s neighbouring land, thereby reducing the value of his property.

In response to Mr Churchill’s letter of claim, the Council highlighted a Practice Direction issued by the civil courts which, amongst other things, emphasised that the parties are encouraged to resolve disputes before presenting a formal claim to court and must consider whether some form of ADR is appropriate.

On this basis, the Council invited Mr Churchill to explore ADR via their Corporate Complaints Procedure. However, he declined and went on to issue his claim. The Council applied to ‘stay’ the claim (or put it on hold) so ADR could be explored via their preferred process. At first instance, the Council’s application was dismissed. However, the Council appealed and the case garnered such public interest that it was joined by various ‘interveners’ (interested parties not directly connected with the case) including the Law Society, the Bar Council, and a number of mediation and social housing law associations.

The decision

The Court of Appeal considered the existing case of Halsey v Milton Keynes General NHS Trust [2004] which appeared to state that a Court could not compel unwilling parties to take part in a particular form of ADR.

However, it held that this aspect of the decision in Halsey was not binding on other civil courts and did not prevent a Judge from ordering parties ‘to engage in some alternative, non-court based, ways of resolving their disputes’ without their agreement. The wording chosen by the Court of Appeal is broad enough to capture an internal complaints process as well as formal ADR facilitated by a third party.

However, importantly, the Court of Appeal applied a caveat to this general principle; In ordering parties to take part in ADR, a court must not impair the essence of the ECHR Article 6 right to a fair and public hearing, where that right is exercised in pursuit of a legitimate aim, and in a manner proportionate to achieving that legitimate aim.

Importantly, the Court of Appeal did not say whether it considered the Council’s proposed form of ADR was appropriate and declined to lay down any fixed principles to determine whether to stay a claim and compel ADR. Each case will turn on its own facts, and the Judge in any given matter will retain discretion as to when ADR should be ordered.

Dispute resolution in the employment tribunals

The Churchill case was litigated in the civil courts, and so was subject to the Civil Procedure Rules (and associated Protocols ). We have reported separately on the civil implications of the case and, specifically, its relevance to social housing disputes.

However, most workplace disputes will be litigated in the employment tribunals, which are a separate pillar of the civil justice system and are governed by separate rules; the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013. The ET Rules contain a number of alternative dispute resolution mechanisms, some of which are mandatory.

Most notably, a party must contact the Advisory, Conciliation and Arbitration Service (ACAS) as part of part of the Early Conciliation (EC) scheme before bringing a claim. Failure to obtain an EC reference number from ACAS will result in the claim form being rejected by the employment tribunal. However, there is no positive obligation on the parties to engage in substantive settlement discussions at this stage, and taking part in EC can often be a pre-claim ‘tick-box’ exercise.

Much later in proceedings, an ET may order parties to attend a ‘Dispute Resolution Appointment’ (DRA). This process was trialled in specific areas from 2020 but was incorporated into employment tribunal procedure nationally in June 2023 via Presidential Guidance . These appointments are mandatory and parties are obliged to attend or face costs sanctions. There is provision for parties to make submissions as to why a DRA should not proceed in particular circumstances, but no indication of the criteria that may be relevant in that regard. At a DRA, an Employment Judge will give the parties an evaluation of their respective prospects of success and possible outcomes, while remaining impartial. The process will only usually be deployed for complex cases, such as discrimination or whistleblowing, which have been listed for final hearing lasting 6 days or more.

Parties to an employment tribunal dispute may also be invited to take part in Judicial Mediation (JM) or Judicial Determination (JD). However, currently both these processes are consensual and parties cannot be compelled to take part if they do not wish to do so. In Judicial Mediation an ET Judge will facilitate discussions between the parties but will not express a view on the prospects of success of the case (unless the parties agree that they should do so). By contrast, Judicial Determination is an ‘evaluative’ process and, like a DRA, will involve a practical, provisional assessment of the case by an ET Judge.

Comment

The Court of Appeal’s decision in Churchill is a very significant milestone in the general trend towards expanding the use of ADR in civil litigation. However, the employment tribunals chose, to some extent, to pre-empt the outcome of this appeal by introducing mandatory DRAs within their own sphere of control.

How willing the courts and employment tribunals will be to order parties to attempt to resolve disputes out-of-court remains to be seen, although significant backlogs and operational pressures facing the civil justice system provide compelling policy reasons to do this more frequently.  

These developments should sharpen employer focus on effective internal dispute resolution and provide a significant incentive to resolve issues at an early stage to head-off litigation.