Alternate Dispute Resolution (ADR)


Soumen Chatterjee
Department of Management Studies, NSHM Academy

A Relationship has to be dynamic and continuing. It is the core asset of an organisation. Depending on the way in which these relationships are handled can enhance or strengthen their overall relationships. Similarly the employee and employer relation has also to be dynamic and continuing. It has been proved that the cost to repair a strained employee relationship is less than to recruit and train a new employee. But we need to be clear as who is an employee and who is not?

An employee is...
An employee is anyone who has agreed to be employed, under a contract of service, to work for some form of payment. This can include wages, salary, commission and piece rates.

An employee is not...
a volunteer, who does not expect to be rewarded and receives only a reimbursement for their expenses
a self-employed or an independent contractor
a sharemilker
a real estate agent who has a contract that says they are an independent contractor.

Coming back to Alternate Dispute Resolution (ADR), which is the means to resolve, disputes other than the tradition court and administration forums.

Intermediate ADR possibly includes an internal grievance procedure , mediation, ombudsman and peer review which identifies it a broad spectrum activity covering a simple open door policy to binding arbitration of statutory claims . Some of the terms associated with are as follows:

Informal Company dispute resolution policies:- These are just statement of policies and procedures where in employees are encouraged to discuss their concern with highest management level usually with some assurance against adversal action.

Formal Internal grievance procedure:- These are company policies to establish procedures for challenging specific areas of employment with a specified appeal to the highest level within the organisation that provide a channel of dispute.

Mediation is an informal process: In which a third neutral party meets jointly with disputants with a purpose to find a common ground so as to resolve their claims.

Fact Finding: After the case presentation is over and a non-binding recommended decision is rendered formally, the third neutral party receives formal submission of evidence and then conducts a hearing on the dispute.

Arbitration: Is a formal process in which the third neutral party after hearing evidence and arguments of the dispute parties in a formal way renders a legal decision, which binds the disputants.

Peer Review: As the name signifies it consist of submitting a dispute to a panel or peers of the disputants for formal assessment and evaluation, sometimes with binding determination. Many standard and innovative ADR mechanisms are applied as an independent stage in conjunction with traditional litigation.

A structured ADR policy should use different types of ADR at different stages of the dispute. ADR policy may have the following progressive steps: First an employee is enquired to discuss a concern with a supervisor informally, then file a written complain with higher management, submit the dispute to mediation and, then finally proceed to binding arbitration. An effective ADR puts a solution at a lesser cost and time than court litigation.


There are also some disadvantages of ADR. Since arbitration is final and binding (except under rare circumstances) the parties are bound to accept the decision no matter how arbitrary or legally incorrect they are. Arbitrators have a reputation for "splitting the baby," frequently resulting in returning discharged employees to work with no back pay. ADR methods may not work at all, resulting in expenditure of time and resources to no avail.

Finally, there are cases of pressing legal or economic importance where full-fledged litigation still is the best way to fully resolve a clash of legal rights.


For an effective ADR proceeding the skills and resources are different than those needed to effectively litigate claims. This is because ADR is structured to reach resolution, whereas litigation focuses on total advocacy. Arbitrators, who practice are prone to "split the baby" than courts, and are sensitive to different areas than a judge or jury. In addition, arbitrators' apply the terms of collective bargaining agreements, which means that they approach the dispute from a different perspective than a court or a jury who tend to concentrate on the facts. This difference in perspective may very well alter the outcome of the dispute.


The solution to dispute or the mechanism of dispute resolution of the future is ADR. For workplace disputes, it is better than litigation. Today, it offers employers a far less expensive, less risky, quicker and potentially more effective means of dispute resolution than traditional litigation. It can improve organizational health by identifying and addressing the root cause of employment disputes and structuring creative resolutions.

As with all policies and core values, the particular form of ADR an organization elects to employ, as well as the policies implementing it, should be carefully structured to enhance your particular operations, your employee relations philosophy, your core values and your past experience in adjudication of employment disputes. The variety and flexibility of ADR enhances its potential for effectiveness.

Soumen Chatterjee
Department of Management Studies, NSHM Academy

Source: E-mail September 5, 2005


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