Disputes within companies

Business disputes are often a problem that can paralyze a company for many months, and sometimes even years, which are associated with conducting a long-term lawsuit. Also, disputes within companies and organizations may paralyze the functioning of the company, and an unresolved conflict, e.g. between departments responsible for strategic areas of the company’s activity, may cause considerable perturbation for the entire company. Often such dispute arising within the organization turns into an employee problem, which may end up in a lawsuit in which the employee speaks out against the organization.

Employee – Employer Relationship

Pursuant to Article 243 of the Labour Code, the employer and employee should aim at an amicable settlement of a dispute arising from the employment relationship. Such settlement of the matter begins within the organization. In the area of intra-organisational disputes, a special role is played by the human resources department (HR), which, being in fact a part of the enterprise, is involved in resolving disputes between colleagues from work or colleagues and its supervisor, e.g. a member of the company’s management board, so that this conflict does not end with specific claims of the employee resulting from the employment relationship and does not “land” in court.

It is a very difficult situation in which the person responsible for the employment relationships in the company, paid de facto by the company, must remain objective in a given situation, supporting the parties in search for an amicable solution. Such “mediation” of the dispute is far from ideal mediation, which assumes full impartiality of the mediator and as a person helping the parties to find the best solution to the situation. The mediator, in accordance with the binding provisions of the Code of Judicial Procedure, should maintain impartiality when conducting mediation (Article 183(3) of the Code of Civil Procedure).

Employee mediation may allow for an amicable resolution of such conflicts as:

• disputes related to disciplinary proceedings,
• disputes concerning mobbing or discrimination,
• conflicts within a team of employees or
• industrial disputes.

In Poland, the system of solving industrial disputes is specified by the Act of 23 May 1991 on solving industrial disputes. Pursuant to Article 1 of the aforementioned Act, a collective dispute between employees and their employer may concern working conditions, wages or social benefits, as well as trade union rights and freedoms. Under this Act, mediation proceedings are mandatory and must be carried out after the impasse of negotiations. Mediation may also precede strike action or, if the right to strike is not exercised, proceedings before the college of social arbitration. The function of a mediator may be performed by any person whose participation in the mediation proceedings is agreed by both parties to the collective dispute. Such a person should enjoy general trust and guarantee neutrality. Participation in mediation proceedings is obligatory for the parties to the dispute and evasion of participation in the mediation process by the employer is an illegal action – preventing mediation – which entitles the trade unions to organize a strike, without prior exhaustive  possibilities to resolve the dispute in accordance with the rules set forth in the Act.

Mediator

External experts who are not in any way dependent on any of the parties to the dispute are best placed to act as mediators within the organisation. The same applies, of course, in the case of industrial disputes, where there are trade unions on one side and the management board on the other.

The legislator also supports the use of mediation at the stage when the conflict has already reached the courtroom. According to the binding provisions of the Code of Civil Procedure, a judge is obliged to persuade the parties to the proceedings to settle the matter amicably through mediation at all times. Moreover, at any stage of the proceedings he may refer the parties to mediation (Article 183(8) § 1 of the Code of Civil Procedure). As of 8 September 2016, each statement of claim filed with the court should include information whether the parties have attempted to mediate or otherwise resolve the dispute out of court. If this was not the case, it is necessary to explain the reasons for such omission.

When deciding whether to engage an external expert/mediator to resolve a dispute within the company, it is worth looking at the potential losses that a badly ordered conflict that arises within an organisational structure can bring.

In addition to a potentially lengthy court case in a labour court, which could last for years, if the case was finally brought to the court’s attention, we may be dealing with a complete paralysis of activities of individual departments of the company, involved in a given dispute. Not without significance are also the general principles of labour law, which are binding on each court, namely the principle of protection of employee interest (from which it follows that any unclear issues should be interpreted in favour of the employee), the principle of employer risk and the principle of formalisation of employee’s actions, from which, in principle, less is required in court proceedings.

A solution for the future

Appropriate use of mediation in disputes not only allows to solve a given conflict, but also to make communication within the company so clear that it may also positively influence other processes which are important from the point of view of the functioning of the company. Similarly as in economic mediation between enterprises, internal mediation also allows to arrange relationships for the future.

Also, by concluding an agreement with a mediator it is possible to establish various solutions important for the functioning of the company and trade unions. Unfortunately, there are no statistics which show how much mediation within enterprises is used in Poland and what real savings it brings to entrepreneurs. Such disputes and mediation often do not come to light. Statistics and research conducted in relation to classical mediation indicate even ten times lower cost of mediation in relation to the costs that can be generated by an ordinary litigation, not to mention the indirect costs that any conflict generates for any company, such as the involvement of persons managing the company in the resolution of disputes, loss of image, broken relationships with the contractor, or paralysis of the company in connection with the conflict, such as key departments in the organizational structure of the company. Also, the lack of professional dialogue with trade unions may cause further escalation of the conflict. Through mediation, the culture of conducting business in general and intra-organizational culture in the company is significantly improved.