The cost of workplace conflict

Getting embroiled in a workplace conflict is a stressful and time-consuming process. If it does not get resolved and the problem escalates and ends up going to a Tribunal or Court, not only do the stress levels increase but so do the costs.

This has been highlighted in a report called Estimating the Costs of Workplace Conflict, published by the Advisory, Conciliation and Arbitration Service (ACAS) which showed that workplace conflict costs UK employers just under £30 billion a year, which is around £1,000 for every employee.

The figures in the report, published on 11th May, 2021, are based on the total cost to organisations in handling workplace conflict and include informal, formal and legal processes, plus the cost of sickness absences and resignations.

In addition to the disruption of having to deal with workplace conflict, it can also be a significant drain on productivity. According to ACAS, out of the 9.7 million employees who experienced conflict at work from 2018 to 2019, more than half suffered stress, anxiety or depression and just under 900,000 people took time off work, costing businesses and other organisations an estimated £2.2 billion.

It goes without saying that absenteeism can hugely affect the bottom line of a business which has to absorb all of these costs, arrange cover and deal with the fallout. This can also impact on the quality of work, continuity and general morale amongst staff. ACAS has invented the word ‘presenteeism,’ which is used to refer to employees who are physically at work, but not mentally engaged.  ACAS estimate that this issue costs around £2.3 billion a year in lost productivity.

ACAS, which aims to improve relationships between employers and employees, also notes that close to half a million employees resigned and over 300,000 were dismissed in a 12-month period. This alone can be very demotivating for the rest of the work force.

ACAS Chief Executive, Susan Clews, said: “A failure by employers to deal with conflict early can be costly to businesses.

“Poor conflict management can also cause staff stress, anxiety or depression and impact workplace productivity. There is a clear benefit to everyone in handling problems as early as possible.”

Echoing these comments, Gill Brown, who heads the Employment Law team at Phillips, said: “The ACAS report shows that employers need to take employee relations very seriously.   It is the case that the main findings of the ACAS report relate to the period before the pandemic took hold, which means there are now even greater challenges to employers and employees and an even greater potential for conflict as organisations come out of the lockdown and adapt to new ways of working.”

“Having clear and appropriate policies and procedures in place and training managers on how to deal with complaints and conflicts early and effectively can often avoid hefty financial costs as well as other consequences that risk damaging employment relationships. It is important that these policies provide clarity for everyone by setting out: (i) what is expected of employees; (ii) what is and is not acceptable behaviour; and (iii) how an employer will respond to violations.  This will ensure consistency and transparency.”

“Post-pandemic workforce stability will be key in allowing businesses to bounce back so early intervention to resolve all forms of conflict or dispute could not be more important.”

Whether you are an employer or employee, if you would like advice on these or any other matters please contact Gill or any member of the employment law team by emailing [email protected] or calling 01256 845605.

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This article is current at the date of publication set out above and is for reference purposes only. It does not constitute legal advice and should not be relied on as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action.