And individual claims cost each business on average £4,000 to defend themselves. It cost the taxpayer £84 million to run employment tribunals last year. The whole process ties businesses, their managers and HR professionals within these organisations, up in red tape. And what can't be accounted for is the hidden cost that a claim can involve for business - in particular SMEs - when the impact on other employees, productivity and stress is taken into account. And that is in addition to the disruption that dealing with a claim causes when every business is all hands to pump at the moment.
That is why last year, the Business Secretary Vince Cable and I, unveiled a host of measures aimed at tackling this problem. In addition to streamlining the tribunal system as a whole to make it more efficient and less costly, we set out our proposals to encourage parties to resolve their disputes without the need for judicial determination, by requiring all claims to go to Acas for pre-claim conciliation before they can be lodged with the tribunal, and increasing the use of mediation in workplace disputes.
We want to take an approach that encourages employers and employees to resolve their disputes at an early stage, avoiding the tribunal process. Quite simply we want to help employers and employees to help themselves. We want to see independent, third party mediators, who do not take sides, intervening to help both parties reach resolution rather than calling in the lawyers and ending up in the courtroom. Mediation has the potential to revolutionise how workplace disputes are handled, cutting out the lawyers, the tribunals and the courts. Although many practitioners are former lawyers, mediators do not necessarily need formal legal training and many new mediators are often former professionals looking to enhance their skill set.
So today we are announcing funding for two regional pilot schemes, in Cambridge and the Greater Manchester area, to form two new 'mediation networks'. Individuals from 24 selected SMEs in these areas will be trained to become mediators - allowing these SMEs to experience mediation, for the first time, in a low risk, low cost way. These networks will be launched later this year and if the pilot is successful then we will look to roll this out across other regions of England, Scotland and Wales.
Following the 'Resolving Workplace Disputes' consultation it was clear from the responses that a significant proportion of businesses don't use, rarely use or have never even experienced mediation. Last week I met representatives from some of the country's biggest and best known employers. They all had positives stories to tell of mediation and use it in varying ways - from their own in-house teams to utilising external private providers. They all said how it had helped nip workplace disputes in the bud. How it had helped staff morale. How it had saved them time and money. Some parts of the public sector are also using mediation, but we aren't seeing this across the board, so Government needs to practise what it preaches.
Above all, however, it is clear that SMEs and micro-enterprises aren't getting involved. They more often than not don't have specialised HR teams to help and don't know how to avoid going down the tribunal route. In fact, a lot of the time they haven't even heard of mediation. In the long term, as part of the 'Every Business Commits' agenda we want to encourage large businesses to think about how they can share their mediation experience with smaller businesses and the important role they can have in promoting mediation across the private sector. We are also taking steps within central government to strengthen the provision and take-up of mediation.
In an ideal world there would be no need for employment tribunals - but of course workplace disputes are often unavoidable. However, anything that can help smooth the resolution process can be hugely beneficial. There is much work to be done to help change the attitude towards mediation as an alternative workplace dispute method over the coming months and years - there are just the first steps. I believe the mediation networks we will be launching can become flagships for a new approach in how workplace disputes are resolved in the future.
Edward Davey, employment relations minister