Since the Employment Relations Act 2000 (ERA) came into force 24 years ago, mediation has been central to solving employment relationship problems. It is the gateway for all employment issues to be resolved, whether it be for dismissal or low-level issues.

However, storm clouds are blackening the horizon. 

The below article discusses the potential impact of public sector job cuts and the dwindling number of mediators. You can also listen to Employment Partner, Bronwyn Heenan’s interview with Kathryn Ryan on RNZ’s nine to noon show this morning about the backlog of mediation applications and what it means for New Zealanders.

Mediation is the first formal step in resolving employment relationship problems and ‘the primary problem-solving mechanism’ under the ERA. It is essentially compulsory for anyone who wants to bring a claim in the Employment Relations Authority (Authority). Under section 159 of the ERA, the Authority has a duty to consider mediation. If parties have not been to mediation before an application is lodged with the Authority, it will almost always be referred or directed to mediation.

In an often-quoted phrase, the Hon. Margaret Wilson, the author of the ERA, said mediation would be ‘free, fast and fair’. The current mediation landscape is anything but that.

The problem 

With so many job cuts across the public and private sector, and the cost of living increasing, former employees are naturally turning to mediation to sort disputes. We are seeing many unjustified dismissal claims for serious misconduct, poor performance and medical incapacity. The Ministry of Business, Innovation, and Employment (MBIE) has advised that demand for mediation of employment disputes is 23% higher than this time last year. 

MBIE, the entity tasked with facilitating free mediation for employment disputes, has itself cut 286 jobs, with further redundancies expected. MBIE has confirmed that when it called for voluntary redundancies in order to achieve its government savings target, mediators were among those who took voluntary redundancy. Anecdotally, this could be as many as 20% of mediators. Today, there are only 28 MBIE mediators, compared to 40 to 50 when the ERA was introduced. 

The increase in demand for mediation services, combined with the reduced number of mediators, has inevitably resulted in an increase on the standard wait times for mediation. The average wait time for mediation from the date of application has increased from 10 - 28 working days, to around two - three months (for non-urgent matters). For face to face mediation this is even longer.

When using MBIE’s mediation website, it says: “Mediation: Our availability is limited at the moment due to high demand. We apologise for any inconvenience caused by the delay”. Parties are given a link to explore other ways to address employment issues. However, this is problematic as the ERA sets up mediation as the primary problem-solving mechanism. The alternative options suggested by MBIE essentially require employers to work through employment relationship problems without assistance, going against the spirit of the ERA.

The consequences 

While some employment conflicts are minor and can be resolved internally, many escalate to a level where assistance is essential. Employment relationship problems are most likely to be resolved if issues are dealt with as close to the source as possible, as quickly as possible and face-to-face. 

If there are significant delays in mediation, by the time the parties reach mediation, the focus is likely to be on assisting the parties to reach a financially-based way of parting, rather than restoring the employment relationship. However, the current economic climate means many employees are staying in jobs instead of canvassing the job market. It is especially difficult for employers and employees to navigate these issues when they must wait up to three months for mediation. Employers must also grapple with their employer obligations while they wait for the scheduled mediation, especially the duty of good faith.

By attending mediation, there is also the added benefit of mediator expertise. Generally, mediators are up to date with the changes in the law and trends, for example the recent upwards trend of compensatory awards being given in the Authority and the Employment Court. Mediators are also expected to bring cultural competence to their work. MBIE has taken steps in this regard, for example, mediators are trained in the potential role of tikanga in the resolution of employment matters.

Even when employers secure a mediation date, MBIE has been encouraging mediations to take place virtually over Zoom or Teams, as there are longer delays for mediations to be held in person. Zoom mediations benefit MBIE given its reduced resources. However, mediation is more effective when the parties can sit down in a room together to flesh out the issues. The Chief Judge agrees, stating in the recent case of Pact v Robinson that a disciplinary process conducted by Zoom “was hurried and conducted in a distanced, impersonal way that undermined, rather than maintained, Ms Robinson’s mana”. 

Conclusion 

Increasing, not decreasing, the numbers of mediators will be important as we move forward during these difficult times. The full impact of the recession has not yet been felt, with public sector organisations continuing to make employees redundant, and other employers looking at redundancies. Given this, the need for MBIE mediation will only increase. Employers and employees need to have access to timely and skilled mediators to resolve issues between them. More and more of our clients are turning to private mediation to have issues mediated in a timely way, which the parties have to meet the costs of. 

Get in touch

If you would like advice on any aspect of this article, please contact one of our experts.

Special thanks to Solicitor, Meg Vogel and Law Graduate, Matthew Maitland for their assistance in preparing this article