Gallagher, a risk management and consulting firm, found that among employers dealing with disputes, 40% reported an increase in flexible-working disagreements, 37% saw more bullying, harassment or discrimination cases, and 36% experienced more sickness, absence or disability-related issues.
Rising Costs and Time Investment
The average cost to resolve a workplace dispute is £2,500, according to Gallagher, with legal costs often emerging before cases reach employment tribunals. When disputes escalate to a tribunal, defending a claim costs businesses an average of £13,170, government analysis shows. Additionally, Acas estimates that formal disciplinary and grievance procedures cost UK employers £2.36 billion annually. Nearly 59% of employers reported that senior management, HR or legal teams spent at least 25 hours handling employee disputes over the past two years.
Employee disputes are not merely HR issues but significant operational and financial risks, consuming management time and driving legal costs while creating reputational exposure, said Laura Parris, executive director of management liability at Gallagher. She noted that the average dispute can cost thousands of pounds to resolve, with escalated cases carrying even greater burdens.
Misunderstandings About Insurance Coverage
Gallagher found that many employers lack insurance for employee dispute costs, mistakenly believing their employers’ liability insurance covers such expenses. Thirty-four percent of business owners thought this insurance would cover legal costs for grievances or disputes, 31% assumed it would pay for employment tribunal claims, and 27% selected settlement agreements with employees. Parris emphasized that standard employers’ liability cover is designed for work-related injury and illness, urging employers to verify their protection against employment dispute costs.
Regulatory Changes and Prevention Strategies
As the time limit for bringing an employment tribunal claim increased from three to six months, and employers are now required to take all reasonable steps to prevent sexual harassment, Gallagher said this data showed that these changes have arrived at a time when workplace disputes are already becoming more frequent. Alistair Dornan, managing director of Gallagher’s HR and consulting division, stated that workplace disputes divert valuable time and resources from core business priorities. He recommended employers invest in clear policies, manager training, and early intervention to prevent issues from escalating into costly legal battles, emphasizing that manager training is essential for handling difficult conversations and resolving issues promptly.
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