by Katherine Robertson 

Workplace conflict is considered one of the biggest cause of staff turnover and costs to businesses. Queensland Government research shows over 65% of employee performance problems are the result of strained relationships rather than a lack of skill or motivation. It is imperative therefore that those responsible for dealing with workplace conflict have the necessary skills to ensure conflict is resolved effectively.

Do not judge or decide who is right or wrong

When we are the observer of conflict between others it is easy to feel that what we are observing is ‘childish’, or even unfounded. When we sit in judgement, dismiss conflict, or spend our time trying to determine who is right and who is wrong, we lose the ability to understand the driving forces behind the contention. This creates a situation in which the conflict continues or even escalates.

Uncover what is driving the conflict

Often when parties are in conflict, what they present on the surface is not what is driving the conflict. It is imperative that we unpack what is happening for the individuals through an assessment process. To understand what is motivating individual differences, leading to disagreement, one must actively and openly listen to what is being presented.

Take the example of two children fighting over an orange, it is easy for a parent to halve the orange and put a stop to the arguing. However, if the parent took the time to understand what was driving the conflict, they may learn that one child needs the pulp to make a cake and the other wants the juice to drink. It is important that we understand what the drivers of conflict are, as these motivating factors represent what lies underneath the conflict being presented.

Empathise without aligning

This can be difficult to achieve, particularly if we have preconceived ideas of what the conflict is about. To build rapport with the parties it is imperative that we actively listen and empathise with their situation. For example, "it sounds like this has been a difficult time for you", "I can hear that you are confused and upset". These statements reflect the ability to empathise with the persons situation as well as demonstrates active listening, this approach leads to effective rapport building without aligning with the aggrieved person.

Aligning involves agreeing with one of the parties and/or justifying their actions or behaviours. For example, "It sounds like the other party was out of line", "You have every right to be angry, I would be too". Aligning leads not only to ineffective conflict resolution strategies but can also lead to an escalation of conflict and/or further complaints.

Adopt a strength-based and solution focussed philosophy

Operating from a place where we acknowledge that everyone has strengths, they bring to the workplace sets the foundation for a solution focused approach to conflict resolution. If we can support the conflicted parties understand their strengths, we create an environment where positive and future focused agreements can arise, where people can feel confident and in control of their professionalism.

At WISE Workplace, our specialist mediators and workplace engagement experts can assist you to resolve workplace conflict in a timely and effective manner for lasting results and thriving interpersonal relationships. Contact us on 1300 580 685.  

By Katherine Robertson

Safe Work Australia research has found poor psychological safety costs organisations $6 billion per annum in lost productivity. The research also found interpersonal conflict was one of the main causes of work-related injury.   

It is essential that organisations have access to trained workplace mediators as they can be a valuable resource in resolving conflict amongst employees. Not all organisations have internal mediators and there are times when engaging an external mediator is advantageous.

Perception of alignment

When aggrieved employees feel their employer, or HR department is aligned with the other party to a dispute, whether this is real or perceived, it is often an indication that involving an external mediator will lead to better outcomes. External mediators do not have prior knowledge going into the mediation and only obtain information from the aggrieved employees to assess suitability for mediation. This means the mediator is only invested in the outcome being positive for all parties involved and not invested in a particular outcome.

Prior attempts to resolve conflict internally

Often as a first step, HR departments with the support of Senior Management seek to resolve conflict between their employees as a ‘soft touch approach’. This is often a good first step but if conflict is not resolved here, it can often lead to escalation, employees feeling nothing will change and also lead to an increase in sick days. If organisations have attempted the ‘soft touch’ approach to no avail, seeking the support of an external mediator can help offer a fresh perspective and support parties to reach agreements. 

High and complex conflict

Often HR professional become aware of conflict between employees when it has already escalated, become deeply engrained and is starting to have adverse effects across teams. Often in these situations a ‘soft touch’ approach will not resolve the conflict and engaging an external mediator is warranted.  Expert mediators can explore and uncover what is underlying the conflict and from there support parties to reach mutually accepted agreements on how they want to work with one another moving forward. External mediators adopt a strengths based, and solution focussed framework to support aggrieved employees reach practical workable agreements that are long lasting.

The need for practical future focussed agreements

Engaging an external mediator that does not know the day to day operations of the business can be advantageous because when it comes to supporting parties reach practical agreements they can often shed new light on areas that may not have been considered by HR and Management. Expert mediators are trained to support employees reach practical agreements by workshopping possible solutions and ensuring they are aligned with their organisational values.

WISE offers mediation and conflict resolution services in each state, which we can conduct remotely or in person. 

Get in touch with us on 1300 580 685 for more information, and be on the lookout for our next article on the Key Principles of Conflict Resolution.

Case study prepared by WISE Workplace State Manager NSW, Tracey Bosnich 

Most of us may believe that if a contract is not signed, it is not legally enforceable. On 10 September 2020, the NSW Supreme Court handed down a significant decision, awarding record damages to an employee for termination of employment and amongst other findings, providing grounds upon which an unsigned contract may be held to be legally enforceable and take precedent over a signed contract.

Background

Ms Melinda Roderick (“Roderick”), the Executive Director of Washington H. Soul Pattinson & Company Ltd (“WHSP”) had been employed since 2006,  when Roderick commenced in the role of Chief Financial Director. She was appointed as Finance Director in 2014, till 12 April 2018, when she was terminated without notice. More notably, Roderick was the only female on the Board and was the second most senior employee in the company.

On 10 September 2020, Roderick was awarded record damages in the amount of $1.105 million. The case was litigated on the issues of termination of employment without warning, failure to give reasonable notice of termination, and failure to pay both short term and long-term incentive entitlements.

Original Signed Contract v Unsigned Contract

Roderick's terms and conditions of employment were originally set out in the 2006 contract ("the original contract"). However, following Roderick becoming the Finance Director in 2014, a draft ‘new contract’ was made in 2015, but was never signed. WHSP argued the original contract prevailed. 

Roderick submitted that when she became the Finance Director, the original contract was discharged. The Court noted that there was a significant change in her role tasks, obligations and duties and that the original contract could not have appropriately been applied in the circumstances, especially where the original contract ‘did not contain a clause specifying that it would remain in force, even if the duties are altered’. It was noted that under the new contract Roderick's responsibilities had significantly increased, in that she became the director of 12 companies. 

Despite the new contract being unsigned, the Court found that the implied intention was for her original contract to be discharged and for the parties to be bound by the new contract. Therefore, the terms and conditions of the unsigned new contract were found to apply and took precedent over the signed 2006 contract.

Calculation of termination payment 

WHSP calculated Roderick’s termination payment based on the signed original contract. Accordingly, Roderick was only paid three months’ of her old salary, in lieu of notice, which was expressly stipulated as the notice period in the original contract.

Key issues litigated with respect to damages

There were five issues litigated: whether the original 2006 contract containing the express term of three months' notice applied; if the new unsigned contract applied, what was the implied period of notice; the notice period Roderick should have actually been given; determination of whether Roderick was eligible for entitlements pursuant to the short term and long-term incentives; and the reason for her termination.

Implied Notice and Incentive Bonuses

WHSP argued the original contract provided an express term of a three-month notice period.  As they did not give three months' notice, WHSP paid Roderick an amount in lieu of the three months’ notice and therefore argued they were not in breach of contract.  Roderick argued she was entitled to 24 months’ notice in accordance with the unsigned 2015 contract.

Once the Court established that the original contract no longer applied, it had to determine, what the ‘implied reasonable notice term’ should be. The Supreme Court did not uphold the 24 months’ notice period in the new contract, but determined that Roderick was entitled to 12 months' notice.

Roderick argued the new contract entitled her to the incentives. WHSP argued it was not obliged to pay the incentives as payment was discretionary and dependent on performance, and that Roderick was terminated for ‘poor performance’,  had not worked the full year and was no longer employed. WHSP further submitted that Roderick was terminated prior to the assessment of these incentive benefits.

The Court stated any "decision as to payment is only discretionary in the sense of assessing [Roderick's] performance against the KPIs". The Court stipulated that was an implied contractual obligation to "exercise any discretion conformably with the purpose of the scheme and not to choose arbitrarily or capriciously or unreasonably to not pay money, irrespective of whether the agreed parameters had been achieved". The argument to not pay Roderick as the employment ended "only a matter of days before the end of the relevant financial year would be quite unreasonable and arbitrary".

Reason for termination

The termination letter stated that Roderick was "not the right fit". Roderick argued that she was terminated without explanation. WHSP then subsequently submitted during the litigation, that Roderick was actually terminated for “poor performance”.

The Court noted that it was a "curious feature" that there was not a single document noting an issue with Roderick's performance, including the termination letter itself. It did not accept that Roderick had performed poorly,  but more so "that it (WHSP) could do better in terms of value for its money" given that a day after terminating Roderick, WHSP hired a new CFO on a lower salary. Further, the new CFO had no position on the board and reported to the chief executive, which the Court noted "would have saved [WHSP] a considerable sum".

Key lessons

This case illustrates the following important points for employers:

• employers should be aware of the terms of their employment contracts;
• employers should ensure the contract is executed by all the parties;
• where an employee’s role title, duties and obligations are changed, the Court will look into the ‘intention of the parties to be bound by that contract’ as well as any alteration of responsibilities and duties, to determine when there is a signed contract and an unsigned contract, which contract will apply.

The dangers of wrongful termination for employers are significant – in this case, to the tune of over a million dollars. Employers should always be cautious when ending employment contracts, particularly if the termination involves role changes, very senior employees, complaints, disputes, poor performance or particularly wrongdoing, to ensure termination processes are both compliant and procedurally fair. 

WISE Workplace offers consultancy support with HR and dispute resolution matters to assist employers in meeting these obligations.  If you are seeking advice on the proper way to resolve an internal workplace dispute, contact us today.