Alternative dispute resolution
By Dr. Alexander Insam, M.A. and Nikolai Fritsche
Digitization determines almost every aspect of our professional lives, with most companies effectively beholden to IT. This digital world has now been enshrined in the (German) Works Constitution Law (Betriebsverfassungsgesetz).
Many companies face the challenge of introducing new IT systems on the one hand while resolving the conflicting interests of the management and the works council on the other.
Whereas the works council represents and protects the interests of the employees, for example personal rights and data protection rights, the management must focus on productivity, efficiency and effectiveness. In the event of a dispute, the management or works council often takes the matter up with the arbitration committee (Einigungsstelle). Since the final decision rests with the chairperson of the committee, the risk with arbitration proceedings is that the result fails to meet the expectations of either party. This often leads to difficulties for the implementation of IT framework agreements that are part of daily professional life. Moreover, most IT agreements become nigh on unreadable legal documents containing innumerable obligations and rights for both parties that essentially hamstring new IT programs and even updates. Yet time is always of the utmost importance, as almost every process relies on smooth-running IT systems.
Therefore, mediation can be a successful alternative to conclude a works council agreement that is suitable and understandable for both parties. In contrast to arbitration proceedings, in mediation procedures the decisions are taken not by the mediator but by common accord (between the management and the works council). Therefore, mediation can result in cooperation that is built on trust, saving time and safeguarding IT operation.
In many companies, disputes and conflicts between the management and the works council are commonplace and integral to the role of both parties. They are known as structural conflicts that occur regardless of who is acting for the management or the works council. Some conflicts escalate and have a negative effect on both the company’s resources and its future goals. These are known as dysfunctional conflicts and they cost companies both time and money (see also: Konfliktkostenstudie: Die Kosten von Reibungsverlusten in Industrieunternehmen (https://www.kpmg.de/Publikationen/11479.asp); Konfliktkostenstudie II: Best Practice – Konflikt(kosten)-Management 2012 – Der wahre Wert der Mediation (https://www.kpmg.de/Publikationen/30558.asp)).
Many structural and dysfunctional conflicts between the management and the works council result from the method of communication. If parties only communicate via email and not face-to-face, and make their concerns and requests known to parties not directly involved, misunderstandings occur and conflicts escalate. In the worst-case scenario, this leads to additional interpersonal conflicts and increased costs. In such situations, cooperation and mutual trust between the management and the works council are all but impossible. The result is often multiple arbitration proceedings and increasing difficulty in resolving and regulating complex issues in a mutually constructive way. And the costs of the conflict escalate too.
One example for a complex issue is the conclusion of a (framework) works council agreement for IT applications. The reasons for conflict surrounding new IT system applications are as follows:
- they may be ‘determined’ in a legal sense to monitor the behavior or performance of employees, depending on their content and purpose.
- in some cases, they may cause a physical or psychological strain on the employees.
- they may impose higher requirements for day-to-day work, both physically and mentally.
Mediation can help find a constructive solution to such conflicts.
The mediation approach
The aim of mediation is to achieve a mutual agreement that is voluntarily concluded by the parties and not imposed by the mediator. The mediator is omnipartial, supports both parties, helps the
parties negotiate and facilitates the conflict resolution process without judgment.
At the beginning of every mediation process, it is necessary to take stock and look at which facts are disputed and which are undisputed. It is quite interesting to note that visualizing the undisputed and disputed facts of a case will often bring new insights to both parties. Then targets, goals and the interests of both parties will be discussed and evaluated. Again, both parties will clearly see where they agree and where they disagree.
For the next step, it helps if the parties ask themselves how they would solve the conflict from the other party’s point of view. This enables both parties to see the case from another standpoint and facilitates a better understanding of the other party. Then the mediator can sum up and evaluate the options together with the parties and determine if one of the options fulfills more interests of both parties than their best alternative to a negotiated agreement (BATNA), which is normally an arbitration committee or labor court. If the BATNA test is successful, both parties know that they have found a better solution and can agree on it.
All in all, the aim of mediation is to engage both parties to look for creative ideas to resolve their conflicts and to find solutions that build long-term cooperation between the management and the works council.
Framework works council agreements for IT systems
During one of our practical case studies, the parties – the management and the works council – agreed to modify a complex and very long framework works council agreement of 18 pages and 20 sections to a new version with only seven pages and 12 sections.
How did we do it? In a first step, the existing concept of the framework works council agreement was modified so that not every possible disagreement is defined in detail. We focused instead on agreeing on a modus operandi for handling conflict in the event of a disagreement. An important cornerstone here was to establish a permanent working group that consisted of two members of the management and two members of the works council.
To deal with existing IT systems and the implementation of new IT systems, it was important for both parties that the working group was able to reach mandatory decisions. The parties agreed that a unanimous working group decision would be accepted as binding by both parties.
The parties also agreed on communication in person first, then via telephone and only as a last resort via email. Furthermore, they agreed on regular meetings between the management and the works council as well as working groups regarding the different IT issues. In the case of disputes within the working groups, the parties agreed that they would use mediation before considering arbitration or legal action.
Moreover, the parties agreed that all current and future IT systems should be placed in one of three categories: (1) green IT systems that do not violate the codetermination rights of the works council or the personal rights of employees, (2) yellow IT systems that need to be monitored to determine if they violate codetermination rights or personal rights and (3) red IT systems that clearly violate codetermination rights or personal rights.
Categorizing all IT systems together with the parties helped to build trust and erased the fear of the unknown.
The main reason the new works agreement came to fruition was that it was legally defined as a mediation agreement that did not replace the old works agreement. A mediation agreement is only effective during the mediation process and may be terminated or discontinued at any time. This flexibility helped convince the parties to see the positive outcome of trying this approach. After three months, both parties found that using the working group resolved all their conflicts and that they did not need to fight each other if they could talk openly about their conflicting interests. In addition, the mediation agreement helped them overcome their fear of the unknown or unwanted surprises.
After another three months of successful evaluation, they formally agreed to replace the old works agreement with the mediation agreement and now new works agreement.
This practical example shows that there are cases in which alternative communication methods or other approaches like mediation can produce close cooperation between the management and the works council. They can help reduce conflict costs, save time and form a basis for constructive cooperation in the future.
Short framework agreements are beneficial, as the need for communication between the parties builds trust and ultimately increased confidence in each other, instead of strictly observing detailed regulations. It is essential to create processes in which parties and people talk directly to each other and take the time to do this beyond mediation. We believe in trusting the parties to trust themselves.”