UK businesses spend £277,000 in time and fees on a typical employment dispute

Barclays Bank, City law firm Lewis Silkin and the Centre for Effective Dispute Resolution (CEDR) have come together to announce research that highlights the costs and consequences of the most common and most damaging business dispute facing employers today – internal conflict with an employee.

The research, coordinated by CEDR, shows how the costs associated with dealing with a disgruntled employee can rise cumulatively. Most significantly, a typical case, which can amount to £277,000 by in the end, could cost far less if mediated early on, as in the initial stages costs could be around £9,000. Of the total figure over a quarter of the amount or £72,000 is spent on management time in tackling the dispute. The research was compiled using the experiential observation of the three participants in the research, all leading experts in this field, combined with fieldwork among 570 respondents in British businesses.

The findings were announced by CEDR on 30 November 2006 at Lewis Silkin’s Chancery Lane offices, in a dramatisation staged for 60 of the UK’s senior corporate managers, working in Human Resources, Finance and in-house Legal Departments. This research follows the announcement by CEDR earlier this year showing that conflict costs British businesses a total of £33 billion a year.

The new research also found that, second only to disputes with customers, internal disputes involving managers and employees have the biggest impact on the performance of businesses, but that internal disputes were far more numerous. The results from the 570 managers polled indicated that disputes with colleagues had a negative impact on business depending on the roles involved, 65 per cent said conflict with the boss would be detrimental to business compared with 55 per cent if the fallout was with someone one on the same level.