Estimating the economic impact of Acas services: individual and collective conciliation, 2023 to 2024

This report was prepared for Acas by Peter Urwin, Richard Saundry and Frankie Saundry from the University of Westminster.

The views in this research paper are the authors' own and do not necessarily reflect those of Acas or the Acas Council. Any errors or inaccuracies are the responsibility of the authors alone. This paper is not intended as guidance from Acas.

Background

This report provides updated estimates of the costs and benefits from 2 key areas of Acas service delivery:

• conciliation in individual employment disputes
• collective conciliation

Estimates of economic impact are presented for the 2023 to 2024 operating year.

Changes to the costs and benefits of Acas services have been shaped by a number of factors since the last analysis for 2018 to 2019:

• a shift towards more complex employment tribunal claims
• increasing numbers of cases referred for collective conciliation after either a stoppage or a ballot in favour of industrial action
• high levels of inflation between 2021 and 2023
• the growth of remote and hybrid working, softening the impact of transport industrial action

Conciliation in individual employment disputes 

Drawing on a variety of sources, we adopt an updated, cautious approach to the calculation of economic benefit arising from Acas early conciliation for the 104,884 notifications received in the 2023 to 2024 financial year. This now differentiates:

• by jurisdictional track, reflecting the increased proportion of more complex (open track) cases, which take up more managerial time than standard or fast track cases
• between employee-led and the 5,346 employer-led notifications

From this, we estimate that 20,067 notifications reach a conciliation agreement (COT3) and 56,827 also do not progress to a tribunal claim, for reasons other than a COT3 settlement.

Overall, an estimated 39,283 early conciliation notifications that do not progress to a tribunal claim can be attributed to Acas intervention. In total, we estimate that Acas conciliation saves £114 million in management and staff time. This is a reduction compared with the previous 2020 evaluation, largely explained by fewer early conciliation notifications (the latter having been based on 2018 to 2019 volumes, which had temporarily peaked following the removal of tribunal fees).

In addition to savings from early resolution of current cases, 17% of employers report that the Acas conciliator provided information or advice that would help avoid having to deal with similar cases in the future. We also estimate savings in recruitment costs arising from reduced staff turnover, when Acas saves the employment relationship. Overall, the avoidance of future claims, savings in employer recruitment and administrative costs amount to £59 million of benefit.

Acas continued to attempt conciliation for the estimated 27,990 cases that progressed to an employment tribunal claim. At this later stage in the process the benefits were smaller. Using a similar approach to that for the early conciliation stage we estimate a £7.1 million saving in management time from Acas-conciliated cases that would otherwise have gone to a hearing; and £28 million in employer recruitment and tribunal administrative costs avoided.

Taken together, this provides an estimated total benefit of £208 million (very close in real terms to the previous £186 million estimate), leading to a benefit-cost ratio of 5.6. This is a drop from 7.2 in 2018 to 2019, driven by a variety of factors – including inflation and recruitment to address previous conciliator shortages – that in many cases have increased real costs of delivery. Some changes reflect changing patterns in individual conciliation cases and their recording; these also underpin the updated approach to consideration of jurisdictional track and employee-led cases.

Collective conciliation

Our estimate of economic impact from collective conciliation draws on 1,749 cases across three operating years (from 2021 to 2024) and uses an average, to increase its stability (following Urwin, 2020). From these, it is based on 266 instances where Acas conciliation achieved settlement following either:

• a stoppage arising from industrial action
• a ballot for industrial action

Other cases where conciliation followed a failure to agree, but without a crisis point having been reached, are excluded.

In this period there was a much higher proportion of these 'crisis' cases that achieved settlement than in previous years.

We estimate that between 2021 and 2024, Acas conciliation resulted in the following savings:

• London Underground – £137 million
• regional rail – £7.8 million
• bus transport – £31 million
• schools and academies – £4.8 million
• logistics and supply chain – £14.4 million

The estimated total annual average economic benefit from Acas conciliation that avoided strike days in these examples equates to £65 million (£195 million divided by 3). This is a reduction on the figure of £81.2 million in the previous study. This is mainly driven by lower estimated impact from action avoided in transport-related disputes and fewer strike days avoided on the London Underground Railway (due to a shift away from these disputes and the growth of remote and hybrid working which soften their impact).

Acas intervention may have contributed to avoidance of a net loss to the economy in other sectors – including healthcare, defence, justice, waste management, utilities and primary extraction – but we lack an adequate evidence base for estimation.

Collective conciliation may also have positive internal workplace impacts via improved communication, workplace practices, morale and 'improvement in days handling claims' in terms of management time spent. Previous studies of economic impact set out some challenges faced in assigning monetary values to impacts; concluding that "there is some potential for future estimates to be drawn from more recent research into workplace wellbeing and engagement". This report takes forward this recommendation, with a review of research evidence.

This update uses data from Steen et al (2024), showing that 56% of employees and 32% of employers reported improved communication; and reviews research evidence to consider whether a new or updated approach to estimation of internal impacts can be justified. Drawing on a range of literature, and adopting a deliberately cautious approach, we therefore estimate increases in productivity of 3% as a result of improved engagement, 2% improvement in ability to deal with change and 1% improvement in communication.

45% of employers and unions reported that collective conciliation improved the organisation's ability to identify potential disputes at an earlier stage. We argue that this reflects improved trust between union and employer that facilitates improved individual dispute resolution, making early resolution more likely. We draw on previous research estimating the cost of individual conflict as a basis for calculation of the benefit from individual conflict avoided. We estimate that organisational impacts amount to £52 million, much higher than the 2020 estimate of £11.8 million, for reasons described in the following section.

Overall, the estimated economic benefit of collective conciliation in 2023 to 2024 amounted to £117 million, compared to £93 million in 2018 to 2019. This gives a benefit-cost ratio of 70, slightly lower than the ratio of 73.6 in 2018 to 2019.

Implications and future evaluation

The analysis clearly shows that Acas's dispute resolution services continue to make a significant contribution to the UK economy of £325 million, providing very good value for money. It is important to note that the reductions in the benefit-cost ratios compared to the last evaluation of impact reflect neither reduced settlement rates nor lower levels of efficiency. Instead, this is largely explained by changes in the economic and employment relations contexts:

• high inflation
• a shift away from high-impact disputes in rail transport
• the growth of remote and hybrid working

Perhaps the most notable change in this analysis compared to previous evaluations is a substantial increase in the organisational ('internal') benefits from collective conciliation.

Contemporary literature on the links between staff engagement, communication and co-ordination provides a basis for valuing these impacts that have been understated in previous studies (Steen et al, 2024; Bosworth and Warhurst, 2021). Saundry and Urwin's (2021) work is central to our update, offering a more nuanced estimate of how conciliation helps organisations avoid litigation. However, further research is needed to quantify the negative impacts of industrial action on wellbeing, engagement, and productivity.

This analysis also points to the potential of work to prevent, contain and resolve conflict. The benefits from Acas activities derive predominantly from avoidance of the costs associated with conflict escalation, so the earlier the intervention the higher the expected benefit-cost ratio. Acas already commits significant resources to early resolution of individual conflict and disputes, and while upstream work is also a feature of Acas's collective offer, there is arguably a need to increase capacity and target further resources on the prevention of collective conflict.

The Advisory, Conciliation and Arbitration Service (Acas) is an independent public body that receives funding from the government. It provides impartial advice to employers, employees and their representatives on a range of employment issues, including:

• resolving problems at work
• understanding employment rights
• improving employee relations

This report provides updated estimates of the costs and benefits from 2 areas of Acas service delivery:

• conciliation in individual employment disputes
• collective conciliation

Estimates of economic impact are presented using service volumes for the period 1 April 2023 to 31 March 2024, updating figures from Urwin and Gould (2016) and more recently Urwin (2020). The report draws on a range of independent evaluations that capture the benefit of Acas services. Together these sources allowed a transparent cost-benefit analysis to be carried out.

Readers should refer to the 'Dispute resolution services' sections of the previous 2 reports for a more detailed technical discussion, together with the accompanying technical annex that sets out updates to our approach.

Cost-benefit analysis is central to the process of decision-making in government, ensuring that public funds are targeted to activities that provide the greatest economic and societal benefit (read The Green Book guidance issued by HM Treasury on GOV.UK). This update was carried out as changes to the workplace and labour market since 2018 to 2019, when figures were last created (Urwin, 2020), are likely to have impacted estimates. Most notably:

• The nature of collective action has changed since the previous study. Acas conciliators are dealing with a higher proportion of 'crisis cases', as originally defined in A review of the economic impact of employment relations services delivered by Acas' by Meadows (2007), and there has been a shift in the industry sectors that are most likely to experience collective disputes.
• One such sectoral shift is the changing nature of transport-related disputes, with many more bus companies subject to collective conciliation and fewer collective conciliation cases from the rail and underground rail sectors. In addition, we needed to make some changes to our attribution of impacts across all transport-related conflicts, as the widescale adoption of working from home means fewer employees are affected by transport disputes.

• The particularly high levels of inflation experienced from 2021 to 2023 resulted in well-publicised pay disputes, many of which were sector-wide and likely to have affected net economic activity. These inflationary pressures also affect calculation of Acas costs, and economic benefits that relate to the earnings of managers and administrators using recent earnings data from the Annual Survey of Hours and Earnings (ASHE), altering benefit-cost ratios.

• The changes since 2018 to 2019 are particularly impactful for collective conciliation and, as a result, this update focused on reviewing the approach to estimation in this service area. The nature of conciliation in individual employment disputes has also changed and is by far the largest area of Acas services, accounting for 62% of all Acas service delivery costs. Acas is now embarking on its new 2025 to 2030 strategy, including ambitions for 'better conflict management' and 'earlier dispute resolution'. These considerations drove the focus of analysis.

The review of evidence in Section 3.2 focuses on the impacts from collective conciliation that are 'internal' to the organisation, such as performance improvements from better working relations. This draws together findings from the academic literature, the latest evaluation of collective conciliation and work on the cost of conflict. We consider whether the evidence supports a case for change to estimations used, in light of developments to the framework for cost-benefit analysis within government and more recent academic evidence on the workplace impacts of conflict.

This section provides estimated impacts of the benefits from Acas conciliation in tribunal applications, when costs are avoided that otherwise would have been incurred without Acas early intervention. For instance, time that would otherwise be spent by managers on employment tribunal cases is saved when Acas resolves cases early, especially at the early conciliation stage.

In terms of volumes, in the 2023 to 2024 financial year, Acas received 104,884 early conciliation notifications, which form the basis for estimation of economic impact. The Acas annual report 2023 to 2024 suggests that 13% of early conciliation notifications were resolved by Acas conciliation via a COT3 settlement. We should note that the Acas annual report shows a recent growth in numbers of early conciliation notifications to 124,000 in the last year. The 2019 evaluation of Acas individual conciliation also suggests a figure of 13% (read Note 18, Pedley et al, 2020).

The annual report is the definitive source for volume figures, but we draw on a variety of sources for estimates of the percentage of claims progressing, or not, to various stages of the early conciliation and employment tribunal process. For instance, the 13% figure cited in the annual report is for cases received between the period January 2023 to December 2023, to allow outcomes to be observed.

2.1 Updates to estimation approach

This update makes 2 changes to the approach to estimation of benefits.

We separately model 99,538 early conciliation cases initiated by employees (employee-led) from 5,346 that are initiated by employers (employer-led). Employer-led cases have grown from 3% in the 2018 to 2019 financial year, to 5% of the total early conciliation caseload and are a legal route into the employment tribunal process. If the employer did not request early conciliation via this route, the employee could still notify – employers typically notify because they wish to prevent this. If we expect that an employee would submit an early conciliation notification if an employer-led one is not resolved, then all assumptions hold regarding our approach to savings from avoidance of escalation for employee-led notifications.

Though the employer-led notifications are relatively small in number, they have a COT3 settlement rate of 96%, which materially impacts estimates – an effect that was not previously captured. The 2023 to 2024 update reflects this by disaggregating employer notifications, which now account for a growing proportion of the total early conciliation caseload.

Our approach to estimating benefits accommodates changes to the jurisdictional track since 2019. Overall, the caseload is smaller but more slanted towards open track cases and the proportion of fast-track cases has declined. Each calculation is carried out separately for fast track (35%), standard track (24%) and open track (41%) cases. This increases the estimated impact, as this approach now accommodates variation across tracks that was not captured previously, for instance in terms of the time spent on cases by managers (SETA 2018), COT3 settlement rates and likelihood of progress to a tribunal hearing (Acas annual report, 2023 to 2024).

Limitations of the data and caution still mean that we use some key parameters across tracks, for instance that 67% of the remaining early conciliation notices do not lead to submission of an employment tribunal claim (that is, they were not COT3 settled, but also did not result in a tribunal claim being lodged). Read section A2.2 of the technical appendix for more detail.

2.2 Applying the updated approach

Applying this new approach to the 104,884 early conciliation notifications received in the period 1 April 2023 to 31 March 2024, across all tracks, differentiating employee-led from employer-led notifications: 20,067 notifications reached a conciliation agreement (COT3) and 56,827 did not progress to a tribunal claim for reasons other than COT3 settlement.

As in previous studies of Acas's economic impact, our assumption is that COT3 settlements are attributable to Acas intervention. To estimate the proportion of the 56,827 cases that do not progress to an employment tribunal claim as a result of Acas conciliation, we use the 2019 evaluation of Acas individual conciliation by Pedley et al, (2020). A value of 58% is calculated using Figure 15 of this study: this is the proportion who – across claimants, claimant representatives, employers and employer representatives – 'strongly agree' that Acas was important in the decision to settle.

The proportion of cases that engage in early conciliation is reported as 58.3% in the 2023 to 2024 annual report . This is very similar to the 2019 early conciliation survey, which suggests that 58% of claimant-side participants reported conciliation took place (figures used for estimates at the early conciliation stage are taken from Pedley et al, 2020).

Applying these figures across all tracks, we estimate that 39,283 early conciliation notifications not progressing to a tribunal claim can be attributed to Acas intervention. From this it is estimated that:

1. 20,170 are cases avoided, that would otherwise have been cleared at the post-claim conciliation stage
2. 4,185 would otherwise have gone to a tribunal hearing following post-claim conciliation
3. 14,928 would otherwise have gone to a hearing without taking up the offer of post-claim conciliation

These figures are lower than those estimated in Urwin (2020) as the volume of early conciliation notifications received in the 2023 to 2024 financial year was lower. The previous analysis was based on 2018 to 2019 volumes, which had temporarily peaked following the removal of tribunal fees (read section A2.3 in the technical appendix for details).

2.3 Calculating management time saved for early conciliation

For each of the categories of avoided cases (1), (2), and (3) in section 2.2, we calculate the management time saved from early resolution of the case at the early conciliation stage:

• under (1) we estimate the management time taken to settle a claim at the early conciliation stage and the time taken to do so at the post-claim conciliation stage, and the difference between the two is the value added
• under (2) we estimate the difference between management time taken to settle a claim at the early conciliation stage and the management time taken if a case goes to a tribunal hearing (in situations where post-claim conciliation has been taken up)
• finally, (3) is a similar calculation, but using the figure for management time taken if a case goes to a tribunal hearing where post-claim conciliation is not taken up

These estimates draw extensively on the Survey of employment tribunal applications (SETA) 2018 and taken together, time savings to managers and other staff amount to £113.9 million.

This figure is slightly lower in real terms than the £94.8 million estimate in Urwin (2020), but not by as much as the drop in early conciliation volumes might suggest. An increase in median earnings of managers and administrators between the two studies, which increased the value of management time saved from early resolution of a case; and a more detailed accommodation of employee-led, employer-led and jurisdictional track in the updated approach account for this. (The figures used for this study are from the latest (provisional) Office for National Statistics (ONS) estimates using the Annual survey of hours and earnings, ASHE). Read the technical appendix for more detailed discussion of the specific parameters used in estimation.

2.4 Calculating other benefits for early conciliation

In addition to time saved by managers and other staff from early resolution of cases, estimates of savings to employers from time saved as a result of being equipped with information to avoid future tribunal claims also provides a benefit. For this we use a 17% estimate of employers who report that the Acas conciliator had provided them with information or advice that would help avoid having to deal with similar cases in the future (Pedley et al, 2020). We also estimate savings in recruitment costs arising from reduced staff turnover, when Acas saves the employment relationship.

(The estimate relating to staff turnover costs applies to very few claimants, as only 6% of employment tribunal claimants still work for the employer that is the subject of the dispute. 2% of cases that actually make it to a hearing involve an order of re-engagement and 75% of claimants report that employment ended because of the dispute. We use a (proxy) estimate of 3%, to represent the proportion of cases that would otherwise have gone to a hearing, where Acas intervention saves the employment relationship. Note A4.1 in the technical appendix provides further details.)

Finally, savings to taxpayers from avoidance of administrative costs for tribunal hearings that would otherwise have taken place is estimated for cases resolved at the early conciliation stage. This covers savings from cases not conciliated by Acas at the early conciliation stage; and savings to Acas from not having to administer conciliation after the tribunal claim. Taken together, the benefit from avoidance of future claims, savings in employer recruitment and administrative costs amount to £58.9 million.

As with previous estimates, any impacts relating to 'third parties' have been removed. This is because any payments to third parties for attendance or support of the case represent a payment to another economic agent and therefore no net benefit to the economy.

2.5 Benefits from Acas conciliation in employment tribunal claims

The calculations in section 2.4 indicate the benefit derived from Acas conciliation at pre-tribunal stage. We also calculate the benefit from continued Acas attempts to conciliate for an estimated 27,990 cases that progress to an employment tribunal claim (read note A4.2 in the technical appendix for details on this figure).

Because this is at a later stage in the process the benefits are smaller, and using a similar approach to that for the early conciliation stage we estimate a £7.1 million saving in management time from Acas conciliated cases that would otherwise have gone to a hearing; and £28.2 million in employer recruitment and tribunal administrative costs avoided. Read section 5.1 of Urwin and Gould (2016) and Section 3.1 of Urwin (2020) for more detail.

This provides an estimated total benefit of £208 million, which is similar in real terms to the previous £186 million estimate. However, in contrast to the £26 million cost of delivery in 2018 to 2019 – which produced a benefit-cost ratio of 7.2 – the estimated delivery cost in 2023 to 2024 was £37.3 million, reducing the benefit-cost ratio to 5.6.

This is driven by a variety of factors – including inflation and recruitment to address previous conciliator shortages – that in many cases have increased real costs of delivery. Read Section A2.4 of the technical appendix for discussion of changing costs of service delivery.

This section provides estimated impacts of benefits from Acas conciliation, from avoidance of costs of disruption to the external economic environment, through avoiding strike action. In addition, we estimate the benefits from improved internal workplace practices, when collective disputes are resolved.

The estimate of economic impact from collective conciliation considers cases across 3 years and then utilises the annual average figure, to increase the stability of individual year estimates (following Urwin, 2020). Updated estimates of economic benefit from collective conciliation draw on 1,749 total cases across the 2021 to 2022, 2022 to 2023 and 2023 to 2024 operating years.

Section 3.1 sets out the process of identifying instances among these cases where Acas collective conciliation avoided significant disruption to the external economic environment through avoidance of strike action.

Section 3.2 details the findings of a review of the academic and practitioner literatures to inform possible updates to estimation of impacts internal to the organisation such as those related to workplace performance.

Section 3.3 then provides an updated estimate of the benefit from improved internal workplace practices, when collective disputes are resolved. In Sections 3.1 and 3.3 there is discussion of the approach adopted and consideration of the case for change.

3.1 Estimation of external impacts

Acas management information data identifies 266 instances among the 1,749 cases where Acas conciliation had achieved settlement following either:

• a stoppage arising from industrial action
• a ballot for industrial action

This first step is a continuation of the approach from Meadows (2007), where the aim is to identify 'crisis' cases; and then calculate the benefit where Acas conciliation had 'achieved settlement'. In 2023 to 2024 there was a much higher proportion of 'crisis' cases that achieved settlement than in previous years (note A4.3 in the technical appendix provides full details).

In addition, the changing sectoral distribution of cases is important in considering external economic impacts, as we need to identify those cases where the organisation in dispute had some monopoly power or customers had very limited alternative options in the event of strike action. In these situations, Acas intervention that avoids industrial action will result in substantial net economic gains because few competitors can step in to provide similar goods or services. There is a net loss to the economy in the event of strike action and a net gain if Acas avoids such action (note A4.4 in the technical appendix provides further explanation).

In previous studies the main sector categories delivering net impacts to the economy when strikes are avoided were:

• transport
• schools
• hospitals
• energy supply

Following the start of the covid-19 (coronavirus) pandemic, there have been changes in the sectors experiencing collective action, and changes in impacts felt across the economy – for instance, from transport disputes, given the rise in working from home.

The following discussion identifies additional sectors that contribute to the estimate of economic impact; and flags changes to estimation of impacts, in the light of changes to working practices. In many cases we are limited by a lack of evidence and acknowledge this to facilitate transparency.

3.1.1 Transport

There are 6 recorded instances of successful Acas conciliation in collective disputes experienced by the London Underground Railway operator and its employees that meet the sift criteria.

We draw on various sources of evidence to estimate the number of strike days avoided, combining free text fields in Acas management information data, with reports from various media, union press office and news archives, for example Tube drivers call off planned strikes after 'improved offer'. However, these cases of collective conciliation can cover a range of issues and conciliation sometimes lasts more than a year. Some issues may be resolved at a point in time, some will persist; and some issues cut across programmes of conciliation.

We give as much detail as possible on specific programmes of Acas conciliation and the estimate of strike days avoided, balancing the desire for transparency with the need for confidentiality and avoidance of disclosure. Each instance of a collective dispute where strike days are avoided is translated into whole-network equivalents. The estimation of impacts from these disputes is challenging and turning our estimated impacts into 'whole-network' equivalents gives a sense-check on orders of magnitude.

Estimating days of strike action avoided, London Underground Railway

• April 2021 to March 2022: We estimate that 1.5 days of whole-network strike action was avoided from successful Acas resolution of dispute(s) relating to the 'achievement of financial sustainability' on operations following the covid pandemic and reduced passenger volumes; most notably in this period the long-running contractual dispute over restarting of the night tube service after its suspension during the pandemic. This dispute was only settled later in 2022, following suspension of industrial action in July 2022 and therefore some of these 1.5 days avoided may be attributed to the following financial year.
• April 2022 to March 2023: When creating the estimates of impact for London Underground Railway there are always questions of how we deal with long-running disputes between the operator and employees, and those that overlap – an issue to which we return. For instance, a particularly impactful strike in June 2022 was the fourth 24-hour strike of 2022 and related to the potential for job losses, changes to pension arrangements, working conditions and earnings. A number of these issues, many covered by one case, continued until early 2024 and therefore we only attribute 0.5 of a day of strike action avoided during this period.
• April 2023 to March 2024: We estimate 2.5 days of whole-network strike action avoided from successful Acas resolution of long-running post-pandemic disputes, particularly the agreement between Associated Society of Locomotive Engineers and Firemen (ASLEF) and National Union of Rail, Maritime and Transport Workers (RMT) and London Underground Railway operator.

Reviewing management information data and media sources for these successfully conciliated cases, it is therefore estimated that Acas intervention avoided the equivalent of 4.5 days of whole-network strike action over the 3-year period. This figure of 4.5 days is lower than the 6.5 in Urwin (2020) and in addition, there is a need to reduce estimated transport-related impacts given the greater propensity to work from home – something that reduces the likely estimated economic gain from avoidance of disruption.

Previous reports have considered estimates from a number of studies, debated their potential validity and adopted an approach that balances the likely strengths and weaknesses of each. For instance, Federation of Small Businesses (FSB, 2017) estimates suggested an impact of £300 million per day associated with strike action on London Underground. However, the Centre for Economics and Business Research (CEBR) Chief Executive suggested a more appropriate figure would be approximately 1% of the 1.03 billion daily London gross value added (GVA) – leading to an estimate of £10 million.

For more detail of our approach, read page 26 of Estimating the economic impact of Acas services by Urwin and Gould (2016), which utilises estimates of gross value added per commuter, the number of commuters impacted and the time impact for each. A key change for this 2023 to 2024 update is that lower volumes of commuters using the network reduce the estimate of disruption to working Londoners from strike action.

Greater propensity for working from home drives another change to our approach. Previously we did not consider the revenue lost to London Underground from strike days (or more accurately the avoidance of lost revenue when strikes are avoided), as we saw this as a transfer. In a pre-covid context, where most workers still attempted to travel into London using alternative means, the lost revenue was mainly a transfer of funds between forms of transport. However, with many working from home, whilst the impacts on days lost may be reduced, there is a real impact on lost revenues.

Transport for London (TfL) estimated that £13 million was lost to two days of strike action amounting to £29.25 million revenue loss for 4.5 days (this is a 'whole-Transport for London' figure so we assume it is net of other transport options that people may have taken).

In addition to this benefit from avoiding lost revenue, we arrive at an estimated economic benefit of £107.8 million of costs avoided for 4.5 days of strike action that would have taken place, if not for successful Acas conciliation. This translates into an estimated impact of £24 million per day of strike action – 8% of the Federation of Small Businesses estimate and 2.4 times the rough approximation suggested in comments by the CEBR Chief Executive. Together these figures provide an estimate over 3 years of £137 million, compared to the previous estimate of £180 million.

Other transport-related disputes

In addition to these collective conciliation cases on the underground railway, we identify a number of other transport-related disputes from the Acas management information data, which have the potential for impacts to the external economy. Compared to previous reports, there is evidence that more bus operating companies (10) were in dispute where Acas intervention avoided economic disruption.

Where impacts arising from forms of transport are more locally focused, or where alternative forms of transport are more numerous (or both), we use sources to estimate the number of commuters using this form of transport; the number of buses run by the company; and reduce estimated impacts according to the availability of substitute forms of transport (taking some direction from Nguyen-Phuoc et al, 2017).

We adopt this approach to the calculation of impacts from 10 transport strikes avoided, with:

• 2 from the London bus network
• 2 from Glasgow
• 2 from North East
• 2 from Wales 
• 2 at companies providing services across regions

This results in an estimate of £31 million.

Similarly, estimates are created for strikes avoided:

• on the Cross Country rail network
• on Metro trains in the West Midlands area
• in 3 disputes with airport and airline operators

In these cases, we estimate 2 days of strike action avoided, as news reports make clear there were substantial congestion impacts and any strike action spilled over to impact at least 2 days. This approach leads us to estimate impacts of £7.8 million from disruption avoided.

3.1.2 Schools and academies

Schools and academies are included in our analysis of impacts (as opposed to colleges) because:

• parents cannot simply drop their children at an alternative (competitor school)
• the children are underage so represent a greater disruption to parents' productivity

We create estimated impacts from 2 days of strike action avoided across 23 schools and academies, which are the subject of multiple Acas cases across all 3 financial years. The growing number of these disputes continues a development since Urwin and Gould (2016), where the extent of 'localised' education disputes was much less pronounced. This leads to avoidance of an estimated £4.8 million of lost economic activity.

3.1.3 Logistics and supply chains

The market for delivery has undergone substantial change since Meadows (2007) and in previous reports we make clear why impacts arising from postal and delivery disputes avoided are not included in the estimate of benefit – there are many competitors, who can compensate for disruption of a rival's service at short notice. However, this is not the case when considering logistics and supply chains more generally, which have become more vulnerable to disruption in recent years.

In Urwin (2020) one such dispute contributed to estimates, but over the period covered by this update we identified 19 disputes involving logistics and supply chain companies with evidence of net economic costs avoided in 8. Our estimation considered the number of workers impacted by the dispute to estimate impacts on freight; and impacts on travel were calculated using estimated daily passenger numbers at Gatwick and Heathrow for two disputes. This provides an estimate of £14.4 million.

3.1.4 Total external impacts

The estimated total annual average benefit to the economy from Acas conciliation that avoids strike days is £65 million (£195 million divided by 3) in the above examples, which is a reduction on the figure of £81.2 million in the previous study. This is mainly driven by reduced estimates of impact from action avoided in transport-related disputes, and fewer strike days avoided on the London Underground Railway.

This lowering of estimated impact is offset to some extent by an increase in disputes in other economic sectors. However, some key sectors experienced heightened levels of crisis and where Acas intervention may lead to the avoidance of a net loss to the economy, there is no or inadequate evidence for estimation. For instance, 11 cases relate to service provision by very large firms supporting delivery across healthcare, defence, justice and other public sector activities.

These are wide-ranging disputes but there is a lack of evidence of their impacts, so it is hard to determine costs avoided; 9 of these disputes are in the same company and run across the 3 years. We adopt a cautious approach and omit these cases. Similarly, 5 disputes involving waste management services are in scope, but it is hard to identify evidence of monetary impact. There was also some evidence of potential impacts from 3 disputes from cleaners and maintenance staff in hospitals but this was very limited.

Finally, 5 disputes relate to utilities and primary extraction for example, drilling. Economic impacts from disruption to utilities and primary extraction and delivery for example, oil, could be significant, but estimating them is very challenging.

First, strikes that take place in these sectors lead to little reported evidence of disruption because strikes by maintenance and operations staff do not typically lead to immediate impacts. Sustained action may impact the resilience of networks and ultimately result in greater disruption, for instance when storms occur. But evidence of impacts from storms (How extreme weather will affect the insurance and energy sectors) and other disruption (Counting the cost: the economic and social costs of electricity shortfalls in the UK) cannot be used to capture impacts.

It is not possible to estimate the percentage probability that such disruption will occur and many of the costs estimated in existing evidence are focused on transfers between economic agents, such as insurance companies.

3.2 Review of evidence for internal impacts

The 2018 to 2019 update (Urwin, 2020) estimated £11.8 million of internal impacts that resolution of collective conflict brings via improved communication, workplace practices, morale and improvement in days handling claims.

Urwin (2020; page 14) considers some of the challenges faced when drawing on evidence from Booth, Clemence and Gariban (2016), to assign a monetary value to for instance, productivity gains arising from 'improved communication'; concluding that "there is some potential for future estimates to be drawn from more recent research into workplace wellbeing and engagement". This update uses more recent data from Steen et al (2024), showing that 56% of employees and 32% of employers reported improved communication; and reviews research evidence to consider whether a new or updated approach to estimation of internal impacts can be justified.

In sum, we find evidence to support a cautious revision of the estimation approach - specifically in relation to how improvements in engagement, communication, and an organisation's ability to manage change are monetised. The revised estimation approach is outlined in section 3.3 and builds on:

1. the discussion in sections 3.2.1 to 3.2.3, which reviews the literature in 3 key areas of internal 'indirect' costs and benefits – reputation, value and equity; quality and performance; and the psychological impacts of strike action
2. evidence on Acas conciliation and positive employment relations, discussed in Section 3.2.4, from the most recent evaluation (Steen et al, 2024)

Each of the areas under (1) considers evidence of impact from a range of academic studies and (2) allows us to relate this to evidence of impacts arising from Acas intervention. Section 3.3 draws together these findings to support a cautious update to the assumptions underpinning estimation, allowing for greater recognition of the indirect benefits identified.

3.2.1 Reputation, value and equity

It is likely that industrial action will have negative impacts on the reputation of the organisation. This could be reflected in a variety of negative outcomes – lost sales or difficulty in recruiting staff. However, there is little robust evidence of the link between brand image and these potential impacts. One study in the US sports sector found that consumer sales were damaged during strike action but returned to pre-strike levels very quickly after the conclusion of the industrial action (Schmidt and Berri, 2004).

We have more evidence, albeit quite dated, of the impact of strike activity on shareholder equity. For example, Davidson et al's (1988) analysis of US data between 1962 and 1982 found that the average strike involving 1,000 or more workers resulted in a 4.1% reduction in shareholder equity. A range of multi-industry studies have estimated reductions in market value between 2% and 4% (Neumann, 1980; Neumann and Reder, 1984; Becker and Olson, 1986; Kramer and Vasconcellos, 1996). 

Studies have also found that resolution of industrial disputes could see stock prices increase. It is important to note that the overall impact of this would be reduced given the predominance of public sector organisations involved in industrial action in the UK. Importantly McHugh's (1991) research found that the negative productivity effects were greater in associated firms rather than the firms which were subject to strike action.

Urwin and Gould (2016: section 3.2) and Urwin (2020: page 6) contain detailed discussion of the challenges of capturing impacts on brand and equity in cost benefit analysis. This focuses on the Acas brand of independence, but discussion is relevant for all organisations. There is not sufficient new evidence to justify a change to our approach in this area.

3.2.2 Quality and performance

Assessing the impact and potential costs associated with quality of service provision may be more useful in the British context, given the dominance of services and public sector provision. Here there is more direct evidence, although quite disparate and US-centred, so a clear pattern begins to emerge. For example, strike action undertaken by US nurses had a measurable negative impact on patient care – increasing hospital mortality by 18% and readmission within 30 days by nearly 6% (Gruber and Kleiner, 2012).

There are similar findings in very different sectors. One study examined the impact of strike action on the quality of tyre production (Krueger and Mas, 2004). Tyres produced by replacement workers during the action had a significantly higher level of defects. This study also suggested that interpersonal relationships post-strike were negatively impacted, with poor quality at its highest after the strike when strikers were forced to work alongside replacement workers. It also points to the importance of the conduct of negotiations as higher levels of defect coincided with management demands of concessions from the workforce.

Similarly, research during the 1990s that compared quality levels between plants operated by Caterpillar, which were subject to strike action; with those that did not experience industrial action, suggested a negative impact on quality equivalent to a reduction in sales value of 5% (Mas, 2008). Machines manufactured in strike-affected plants were more likely to be discounted, resold and had lower prices. In total this resulted in a cost of at least $400 million. This study is important as it highlights the potential effect of strike action on the labour process and the quality of work.

In relation to productivity there is relatively consistent evidence that strike action has a negative impact. A range of studies in the US (McHugh, 1991) found significant reductions in average labour productivity during and immediately after strikes (Leonard and Pilarski, 2002; McHugh, 1991). However, the evidence also suggests that these effects are not sustained in the longer-term. For example, Leonard and Pilarski's (2002) study in aerospace manufacturing suggested that productivity levels recovered between 1 and 4 months after the industrial action.

More generally, while existing literature points to potential links between unionisation and organisational performance the evidence is mixed (Doucouliagos et al, 2017; Bryson and Forth, 2017; OECD, 2019). Perhaps a more useful approach is to explore the links between voice and representation and production. An analysis of the CIPD's UK Working Lives Survey found that productivity among workers most satisfied with their access to voice and representation was 14% higher than those who were least satisfied (Bosworth and Warhurst, 2021).

Short-term and longer-term impacts from industrial action may be particularly severe in more labour-intensive sectors in which personal care and interaction are more important. This makes the UK economy particularly vulnerable given the dominance of services, where indirect impacts on motivation, morale and commitment may be more detrimental to productivity.

Even if striking workers are replaced, there is evidence of negative impacts on quality as skills, knowledge and experience are lost. It is also possible that workers react to collective conflict situations by deliberate actions to reduce quality or through exit (Coviello et al, 2022).

3.2.3 Psychological impacts of strike action

The factors that contribute to lower productivity, performance and quality during and after strike action may be direct, related to co-ordination and reduced staffing. However, it is also likely there will be significant indirect impacts connected to the wellbeing of staff involved in strike action or employed in strike-affected workplaces. For example, Jennings and Greenberg (2009) found that lower levels of mental health among teachers following strike action was linked to poorer student outcomes.

We now know from research on the cost of individual conflict that around 6 in 10 workers involved in conflict report stress, anxiety or depression with related negative impacts on motivation and productivity (Saundry and Urwin, 2021). These reactions are analogous to involvement in collective conflict – particularly in workplaces in which support for the action is contested. This will create interpersonal conflict and tension and in customer service focused industries (transport, higher education, healthcare) there is likely to be an element of conflict between employees and service users.

This is supported by an extensive, if disparate, body of literature which has examined the negative health effects of strikes and industrial action. Researchers have found damage to psychological wellbeing up to 6 months after adverse industrial relations events (Barling and Milligan, 1987).

This study argued that impacts were linked to financial and economic insecurity, changes to work relationships and roles and wider uncertainty about the outcome of the dispute and the future. Moreover, these impacts persist even after controlling for a range of individual and demographic variables (Bluen and Jubiler-Laurie, 1990). Interestingly, these negative impacts have also been found in situations where workers have voted in favour of action, but the strike has not taken place, for example where legal constraints have been breached (MacBride, Lancee, and Freeman,1981). This arguably points to the wider benefits of positive and collaborative employment relations, which we discuss in a little more depth.

However, these effects are not straightforward, and the impacts can be more negative for workers peripheral to the action. For example, those who are actively involved in industrial action arguably enjoy a sense of solidarity and achievement which can attenuate some of the negative impacts of collective conflict. Fowler, Gudmundsson, and Whicker (2009) investigated the relationship between psychological wellbeing and members' involvement with union activity during a strike.

Although they found that the mental health of strikers was worse than non-strikers, this difference appeared to be reduced somewhat by active involvement in union activity. Active strikers tended to have lower levels of depression and anxiety and better mental health than those who took strike action but were not actively involved in picketing and other union activities. Academic commentators have also argued that union members and managers who do not join strike action will see stress increase and mental health deteriorate (Lusa, Häkkänen, Luukkonen, and Viikari-Juntura, 2002; Scales et al, 2014).

Although there is clear evidence of the negative impact of strike action and collective conflict, creating a robust cost estimate is challenging. One could argue that involvement in strike action – whether as a striker, non-striker or manager – is similar to involvement in individual conflict. Therefore, it would be possible to aggregate costs of individual conflict in relation to presenteeism, sickness absence and resignation. However, there is no evidence about the intensity of different types of conflict.

Nonetheless, it is likely that individual conflict is likely to have a greater direct effect – for example resigning because of perceived mistreatment – while the impact of collective conflict (albeit damaging) is likely to be more diffuse. This is underlined by the findings outlined above regarding the ameliorating effect of union activism.

3.2.4 Acas conciliation and positive employment relations

Analysis of the economic impact of Acas collective conciliation tends to focus on avoidance of the costs associated with strikes, industrial action and adverse industrial relations events. However, Acas conciliation could have a longer-term positive economic benefit by improving employment relations, in line with the literatures detailed above. This is reflected in the theory of change shown in Figure 1, in the Evaluation of Acas collective conciliation 2023 report (Steen et al, 2024). This underpins the 2023 evaluation of Acas collective conciliation.

Impacts 1 to 4 in that evaluation's theory of change relate closely to the avoidance of direct and indirect costs of collective conflict. However, impact 5 is that organisations enjoy better employment relations on an ongoing basis. The evaluation then provides useful data regarding user attitudes on the longer-term impact of conciliation.

Some Acas customers reported improvements in management-union relationships. Qualitative data pointed to increased respect trust and recognition. Overall, just over a third (36%) of customers said that conciliation resulted in a long-term resolution; and almost 9 out of 10 (87%) saw Acas conciliation as being important in achieving this result.

The evaluation also provides important insights into the ways in which conciliation could have positive impacts.

First, customers felt that Acas had helped them to understand the position of the other party and reduce feelings of resentment. Second, conciliation provided the basis for developing new ways of working, for example by management and unions working together to identify and address issues at an earlier stage. 36% of employers and 53% of employee representatives agreed that conciliation helped them to identify potential disputes at an earlier stage.

Furthermore, conciliation appeared to provide a much stronger basis for resolving these issues - around one-third of customers felt that 'trust between management and workers had improved'.

It is important to note that the development of high trust employment relations has the potential to deliver benefits across a number of dimensions:

• avoidance of collective conflict in the future
• early resolution of individual conflict and minimisation of consequent costs of conflict
• Productivity benefits from improved co-ordination and negotiation of change

The evaluation found that 29% of employers felt there was an improvement in morale and motivation, 19% agreed that the organisation's ability to deal with change had improved, 10% felt that productivity and staff retention had improved, while 8% cited improvements in productivity and 3% reported reductions in staff absence.

While this provides us with a measurement of the proportion of Acas customers who recognised concrete benefits from conciliation, it does not provide a sense of the extent of the benefit. In the following section we consider where the literature on impacts in sections 3.2.2 and 3.2.3 provide a basis for the quantifying of these benefits and whether this justifies an update to our approach.

3.3 Estimates of internal impact

To calculate the number of organisations that experience positive impacts internal to the organisation, as a result of Acas conciliation in collective disputes, we first consider the percentage who are reported as successfully completed in the table of collective disputes closed by outcome in the relevant Acas annual reports (GOV.UK). These percentages are then applied to the collective disputes received in the relevant financial year (see Table 1):

We calculate the overall weighted percentage from these figures (the sum of 94% of 510 cases, 91% of 621 cases and 94% of 618 cases; divided by the sum of 510, 621 and 618 cases) and apply this to a figure of 583 (one third of the 3-year period's 1,749 cases).

We then use the 2023 Acas evaluation of collective conciliation (Steen et al, 2024) as the basis for estimating internal impacts for the organisations subject to dispute arising from improvements in employment relations and working practices reported by survey respondents – in each case taking the mid-point between the responses for employee representatives and those of employers. The following approaches are adopted, introducing updates in line with the evidence review in section 3.2.

Improvements in wellbeing, morale and motivation

Taking a mid-point between the proportion of employers and employees suggests that 33% reported improvements in moral or motivation arising from collective conciliation. Discussion in section 3.2.3 considers research that evidences the psychological and wellbeing impacts from strike action; and research that links wellbeing impacts to motivation and performance.

We conclude from this evidence that the assumption of a 1% improvement carried over from Meadows (2007) seems low. Considering further figures on the closely related metric of engagement From Gallup (2020) and Rich, Lepine and Crawford (2010), a one standard deviation change in engagement would increase productivity by 10 to 18%; 10 points on a 10-point-scale would increase productivity by 6 to 10% and a big shift from the bottom to top quartile would give 17 to 20%. As a result, we increase the figure of 1% inherited from Meadows (2007) to 3%.

Organisational ability to deal with change

Adopting the same approach, we use a figure of 33% reporting an improved ability to deal with change arising from collective conciliation. Discussion in section 3.2.4 provides compelling evidence for large impacts in this area from the recent Acas-commissioned evaluation; and considered alongside additional evidence on the impact of workplace practices that reflect innovation, agility and adaptability, we may conclude the assumption of 2% for this impact seems low (see discussion under 'Improved communication' in the following section).

For instance, a major study found that firms adopting innovative work practices (like flexible task design, self-managed teams, digital workflows) are 20% more productive on average (OECD, 2016). Analysis of organisational agility finds organisations with high change capability were 70% more likely to be in the top quartile of productivity during periods of economic disruption such as covid-19 (McKinsey, 2020). These orders of magnitude are supported by more dated studies, such as the MIT Sloan Management Review (2013) which also finds that differences persist.

Improved communication

Here the percentage used to reflect those agreeing that Acas intervention led to change is 44%. From the reviews in section 3.2 it seems apparent that improved communication cuts across aspects of potential workplace improvement. For instance, Nidumolu et al, (2014) linked communication to collaboration and found that companies with strong internal collaboration reported 5 to 10% higher productivity on average. Cross-functional teams that communicated well executed projects 30% faster.

As a result of the cross-cutting nature of communication, there seems potential for double-counting across reported change in communication and ability to deal with change. Taking a cautious approach, we leave the 2% estimate carried over from Meadows (2007) that relates to impacts of changing workplace practices (ability to deal with change) and only slightly increase the percentage impacts associated with communication, from 0.5% to 1%.

Organisations' ability to identify potential disputes at an earlier stage and improvement in days handling claims

Here we use a figure of 45% for those reporting an improvement in the organisation's ability to identify potential disputes at earlier stage; and the assumption (from Meadows, 2007) is that this is associated with an average improvement of 5 days in handling claims.

Underlying this impact is improved trust between union and employer that facilitates improved individual dispute resolution, making early resolution more likely. Here is where we believe the impact is very much understated at only £280,000 of savings. In Saundry and Urwin (2021) the suggestion is that across the whole of the UK, the cost of individual conflict is on average £1,000 per worker so we use this as a basis for calculating the benefit from individual conflict avoided.

Updating the figures for internal impacts from collective conciliation using these approaches provides us with an estimated impact of £52 million. The estimate attempts to balance caution with new research findings which suggest that a much higher impact than the previous £11.8 million estimate (Urwin, 2020) is justified. This is predominantly driven by a higher estimated benefit from improved workplace engagement and avoidance of the costs of individual conflict.

Drawing together the internal and external collective estimates results in an overall estimated benefit of £117 million, dropping the benefit-cost ratio slightly from 73.6 to 70.

This report updates estimates of economic impact for the Acas services of conciliation in individual employment disputes and collective conciliation. Estimates capture the economic value of a year of Acas delivery of these services during the 2023 to 2024 financial year.

Creating estimates for these areas of Acas service delivery provides benefit-cost ratios of 70 for collective conciliation and 5.6 for conciliation in individual employment disputes. This is based on estimated benefits of £117 million and £208 million respectively. We provide detail on the approach to estimation of economic benefits throughout the analysis, to facilitate transparency and have produced an accompanying technical appendix.

A summary of the estimated economic benefits and costs for these services during the 2018 to 2019, and 2023 to 2024 financial years are outlined in Table 2.

In the case of conciliation in individual employment disputes, the drop in benefit-cost ratio is driven by a variety of factors – including inflation and recruitment to address previous conciliator shortages – that in many cases have served to increase the real costs of delivery. Section A2.4 of the technical appendix discusses these in detail. Some of these changes are a response to the changing pattern of individual conciliation cases and their recording, detailed in section A2.3 of the technical appendix; which also underpins the updated approach to consideration of jurisdictional track and employee-led cases.

With regard to collective conciliation, discussion in section 3.1 highlights reasons for any change to estimates relating to external impacts from collective action avoided. This includes the changing nature of collective action since the previous study, in terms of the proportion of crisis cases; shifts in the industry sectors likely to experience disputes; and the related challenge of inflation between 2021 and 2023, which resulted in pay disputes that were often sector-wide. This environment resulted in conflict within some companies that lasted throughout the period of analysis.

The review of evidence in section 3.2 provides support for the attribution of internal impacts from collective conciliation. Some of the evidence is dated and there is a question over how much of the internal impacts identified should feature in a cost-benefit analysis. Therefore section 3.3 considers each parameter used to estimate the internal impacts of collective conciliation, relates them to the relevant literature and makes clear where we have, and have not, made changes.

As with the preceding Urwin and Gould (2016) and Urwin (2020) studies, the aim of this update is to provide transparent discussion, that is clear on how we arrive at estimates and acknowledges where evidence is less than ideal. We adopt a cautious approach where evidence is lacking (see for instance section 3.1.4) and continue to adopt approaches that reflect good practice in cost-benefit analysis. These add to the caution of our estimation approach (for instance, only monetising immediate, as opposed to second and third round impacts; as discussed in Urwin and Gould, 2016).

Perhaps the most notable change in this analysis, compared to previous evaluations, is a significant increase in estimated internal benefits from collective conciliation. Contemporary literature on the links between staff engagement, communication and coordination provides a basis for valuing these impacts, which have been understated in previous studies because of a lack of evidence.

Saundry and Urwin's (2021) work on the cost of (individual) conflict is key to our updating in this area, as it provides a more nuanced estimation of the benefits of individual conciliation in helping organisations avoid potential litigation through early resolution.

Our review of evidence in section 3.2 suggests strike and industrial action can have a range of negative impacts on the staff involved, that are arguably analogous to the individual conflict analysed in the cost of conflict work. These could include negative impacts on wellbeing, increased absence and greater staff turnover. While we lack contemporary data on how collective conflict impacts individual wellbeing and engagement – and related responses such as absence and exit – drawing these disparate literatures together provides a basis for updating our estimates.

The analysis also highlights a difference in how Acas directs its services for individual and collective disputes, to meet its statutory duties. In both cases, most Acas resources are focused on resolving disputes through conciliation once they have escalated. However, the new estimates of internal impacts point to the potential of preventative and proactive work in delivering much more significant benefits – in line with Acas's strategic focus on preventing, managing and resolving conflict.

This is further illustrated by comparing impacts secured at the employment tribunal stage, which are much less pronounced than those from resolution at the early conciliation stage. The benefits from Acas activities derive predominantly from avoidance of the costs associated with escalation, so the earlier the intervention the higher the expected benefit-cost ratio.

Acas already commits significant resource to early resolution of individual conflict through helpline advice, online guidance, and training products – including innovations such as a conflict management online course for managers, developed with the University of Westminster via the Skilled Managers project. The nature of advice-seeking arguably lends itself more readily to individual issues, making these upstream services especially well-suited to that space.

Collective conflict, by contrast, may require different approaches to identify and address underlying tensions before they surface. While upstream work is also a feature of Acas's collective offer – most notably through advisory projects that follow on from disputes, aimed at improving future employment relations – there remains a case for further developing capacity and resource to support earlier intervention in collective contexts.

It is also important to note that the estimation of internal benefits of collective conciliation is made difficult by an absence of reliable data. When analysing the benefits of individual conciliation, the Survey of Employment Tribunal Applications provides valuable detail on the time spent by managers dealing with potential claims. It is also possible to explore the costs of individual conflict at different stages through CIPD data (although even this is now dated). But there is no similar source of data in relation to impact of collective conflict either at early stages or after this has escalated into industrial action.

A study focused on collective conflict would have to overcome some additional challenges, as impacts are likely to be more diffuse than those associated with individual conflict, but such a study is feasible. Whilst this study has managed to provide an updated approach, there remains a clear need to develop new and innovative ways of capturing the organisational costs of collective conflict and the potential benefits of Acas intervention.

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A.1 Introduction

This technical appendix accompanies the main report providing updated estimates of the costs and benefits from two areas of Acas service delivery:

• conciliation in individual employment disputes
• collective conciliation

Estimates of economic impact are presented using service volumes for the period 1 April 2023 to 31 March 2024. The following discussion refers readers to some of the relevant sections of Estimating economic impact of Acas services, Urwin and Gould (2016) and Urwin (2020), in instances where we continue the approach to estimation detailed in these previous studies. Readers should refer to the 'Dispute resolution services' sections of these previous reports for detailed discussion.

Where there is an update of the approach to estimation, for instance accommodating the jurisdictional track of individual employment disputes and separately modelling employer-led cases, detail is provided. In addition, notes on the changing nature of individual conciliation cases and other aspects of change not included in the main report are detailed in this appendix.

A.2 Conciliation in individual employment disputes

We initiate 2 changes to the calculation of economic impact associated with conciliation in individual employment disputes at the early conciliation and employment tribunal stages, for the 2023 to 2024 financial year; compared to the approach in Urwin (2020):

• we separately model 5,346 early conciliation cases that are initiated by employers (employer-led). Previously we would have included these cases as part of our modelling of the 99,538 early conciliation cases that are initiated by employees (employee-led)
• each calculation for employee-led cases is carried out separately for fast track cases (35%); standard track (24%) and open track (41%). Previously we did not differentiate our modelling according to jurisdictional track

A2.1 Modelling employee-led and employer-led cases

The separate modelling of employer-led cases is a response to the rise in these cases as a proportion of all cases and concern that, whilst they still represent a relatively small proportion (5%) of all cases, they have a very high rate of COT3 settlement (96%). As a result, including them as part of the overall modelling of employee-led cases, where the COT3 settlement rate is on average 13%, risks understating impacts.

There are limitations placed on our approach. For instance, employer-led early conciliation cases do not involve a formal notification process (though they do form part of Acas's statutory duty), and no early conciliation certificate is issued. As a result, Acas cannot use a certificate reference to track such cases – for instance, to identify whether a conciliation case is new or returning. However, this is not a major concern given the 96% COT3 settlement rate.

As suggested in the main report, if the employer had not requested via this route, the employee could instead notify Acas of their intention to bring a claim – and the reason employers put in a claim is that they wish to prevent this. If we expect an employee early conciliation notification if an employer-led claim is not resolved, then all assumptions hold regarding our approach to savings from avoidance of escalation for employee-led claims. As a result, we do not change any of the assumptions from previous approaches to employee-led early conciliation cases when separately modelling the impacts of employer-led cases, compared to Urwin (2020).

A2.2 Modelling individual conciliation by track 

The separate modelling of cases by track is a response to changes to the jurisdictional mix since 2018 to 2019, with open track cases now making up a much larger share of caseloads, while fast track cases have declined proportionally.

Each calculation for employee-led cases is carried out separately for fast track cases (35%), standard track (24%) and open track (41%). These proportions are taken from the 'Early conciliation notifications received' table in the 2023 to 2024 Acas annual report (GOV.UK). The percentages relate to all cases received for which a track is identified. As a result, we implicitly assume that cases where no track is identified (just under 20%) have a similar distribution (if we could observe their jurisdictional track). In the absence of further information this seems appropriate, but it is worth noting there has been an increase in the proportion of cases where jurisdictional track is not identified. This is because claimants can now bypass the full early conciliation process at the point of notification and simply request a certificate.

Separately modelling the stages of escalation and associated costs for early conciliation and employment tribunal claims, by jurisdictional track, necessitates the following changes to our approach, when compared to Urwin (2020) and earlier studies. The following discussion details the changes made and associated justification, identifying any data limitations and noting the direction of impact on estimates of economic impact. Readers should refer to section 5.2 of Urwin and Gould (2016) and section 3.2 of Urwin (2020) for an explanation of the overall approach to estimation – the following discussion highlights key points of deviation from the approach set out in these previous publications.

The net overall effect of separately modelling jurisdictional track is to increase the value of associated benefits, as the changes to the jurisdictional mix since 2019 have increased the proportion of cases that mangers (on average) spend more time working on; and which tend to have higher rates of early Acas resolution (especially COT3 settlements). This combines to increase the overall value of costs avoided from escalation.

As suggested in the main report, we utilise track-specific figures for the percentage of early conciliation notifications that are COT3 settled and these can be found in the 'Early Conciliation notification outcomes' table of the 2023 to 2024 Acas annual report. This means we utilise a figure of 13% for fast track; 18% for standard track and 15% for open track. The overall average we would normally utilise is 13% – this is the figure from the aforesaid annual report table that includes in the denominator all cases with 'no track' that have no COT3 settlements. This change has the net effect of raising benefit, whilst our use of track-specific figures for the percentage of ET1 cases that go to a hearing (from page 47 of the annual report) has minimal net impact when compared to the previous approach.

A key driver of the higher estimated costs-avoided are related to updating of our approach to the values used for the mean number of days directors or senior managers (and other staff) spend on a case after the submission of an employment tribunal application. The figures we use are taken from Table 6.10 of the Survey of employment tribunal applications (SETA) 2018 findings. This table provides figures on the differential time spent by managers and other staff according to track, but it does not allow us (in contrast to previous approaches) to further differentiate according to whether the case is Acas-settled (which is the figure we utilised previously, when not differentiating by jurisdictional track).

It may be possible, depending on the specific filtering utilised in the survey of employment tribunal applications, to create the figures for time spent by managers, for each jurisdictional track, for cases that are ultimately Acas-settled, as part of a separate study. However, any such analysis would be based on low sample numbers, especially for fast track cases where sample numbers are lower. The figures are now dated and pre-date the covid-19 pandemic. The figures we utilise are on average higher than those utilised in Urwin (2020), but this seems justified by the continued increase in complexity of cases and associated time spent, experienced since 2018. In addition, we counter this to some extent by adopting the same parameters as previously for directors, senior managers and other staff time spent on a case settled at hearing as a case settled at hearing will take more time than the average for all cases.

When calculating the management time avoided on cases that would otherwise have gone to a tribunal hearing without post-claim individual conciliation, we already faced data limitations from our existing approach (read section 5.2 of Urwin and Gould, 2016). In addition, at this level of escalation many of the costs of management time have been incurred and therefore any differentiation by track has limited impact. Therefore, at this stage of escalation (avoided) we retain the approach used in previous studies.

The above discussion applies to calculations at the early conciliation stage, in terms of the points of escalation where we retain the existing approach to parameters and where we now differentiate impacts according to track. In addition, the post-employment tribunal stage now uses track-specific figures (taken from page 47 of the Acas annual report 2023 to 2024) for the following:

• percentage of employment tribunal cases which are settled (including Acas settled)
• percentage of employment tribunal cases which are withdrawn
• percentage of employment tribunal cases which are heard

Between the 2013 survey of employment tribunal applications and the 2018 survey of employment tribunal applications, the time that managers and administrators reported spending on cases increased substantially. Evidence cited above suggests this trend has likely continued and, in addition to the justifications above, our new approach has some potential to counteract the potential for under-estimation of value from time saved, that results from using figures from the 2018 survey of employment tribunal applications.

A2.3 Recording volumes of individual conciliation disputes

Since the previous estimates of economic impact, there have been significant shifts in individual conciliation disputes, in addition to those detailed in A2.1 and A2.2. For instance, the removal of employment tribunal fees in 2017 was associated with a surge in early conciliation and employment tribunal numbers (coinciding with the previous estimates for 2018 to 2019). Volumes then fell during the pandemic and had not returned to pre-pandemic levels by the 2023 to 2024 reporting year, although they were trending upward. These shifts are also occurring alongside wider changes introduced through the Smarter Resolutions programme.

In addition, there have been changes to the case management system and the recording of 'group' cases, and this has acted to reduce recorded numbers. These and other changes mean that we are not necessarily comparing 'like-with-like' across years when considering volumes. As suggested in the latest Acas annual report, these changes in case management, "figures presented for EC notification numbers, group cases and employment tribunal cases are not able to be directly compared between the previous and current case management systems". More detail can be found in method changes to early conciliation and employment tribunal data 2023 to 2024.

A2.4 Changes to the costs of delivering collective and individual conciliation

Costs of delivering the collective conciliation service increased by £0.38 million – from £1.29 million in 2018 to 2019, to £1.67 million in 2023 to 2024. This is an increase of around 29%, similar to effects of inflation during the period, so real service delivery costs remained essentially flat.

In addition to reduced individual conciliation caseload which makes cost per case higher, costs of delivering individual conciliation increased by £11 million – from £26 million in 2018 to 2019, to £37 million in 2023 to 2024. Inflation costs of £26 million in 2018 to 2019 equate to around £33 million in 2023 to 2024. After adjusting for inflation, the residual cost increase is £4 million.

The largest share of the remainder is driven by increased headcount to address acute individual conciliator shortages in 2018 to 19, which resulted in overallocation of cases and a service performance dip. The need to sustain performance and continued caseload complexity means staffing was not reduced in subsequent years when cases decreased. Shares of higher graded staff also increased, reflecting the need to handle more complex cases. When combined, these staffing changes account for £3.5 million additional cost. The remaining £0.5 million cost difference is accounted for largely by:

• recharging of overheads increasing in proportion to individual conciliation headcount
• increased estates costs despite streamlining Acas estate
• estates costs being altered to cover individual conciliation teams' full share of Acas headcount as conciliators are no longer assumed to be homeworkers

A3 Collective conciliation

Discussion in the main report details the changes made to estimation of impacts and associated justification, in the case of collective conciliation. Readers should refer to section 5.1 of Urwin and Gould (2016) and section 3.1 of Urwin (2020) for an explanation of the overall approach to estimation, to better understand the key points of deviation from the approach of previous publications.

A4 Technical notes 

The following notes provide additional details for specific passages in the main report.

A4.1 The 3% proxy estimate referred to in section 2.4 of the main report replaces an assumption carried forward from Meadows (2007) and the Public Value Programme (PVP) review (2010) that there is a saving in recruitment costs of one post for every ten cases that would have been heard in the absence of Acas intervention.

A4.2 The calculation of benefits from continued Acas attempts to conciliate referred to in section 2.5 of the main report uses a figure (27,990 cases) that is different to that published in the 2023 to 2024 annual report, as a result of our approach to estimation; which takes 104,884 as the volume measure but then applies figures for COT3 settlement from other sources, including the annual report, which utilises a different time period to allow outcomes to accrue. To avoid double counting, the figure of 27,990 is the difference between the estimated number of cases that do not progress (the 76,894 underpinning estimates at the early conciliation stage) and the 104,884 volume figure, with a small rounding error).

A4.3 As noted in section 3.1 of the main report, there was a much higher proportion of 'crisis' cases that achieved settlement in 2023 to 2024 than in previous years. In Urwin and Gould (2016), a trawl of 2,229 cases produced 109 that met the initial sift criteria (5%); and of the 2,066 cases reviewed in Urwin (2020) there were 173 (8%). Applying the same criteria to the 1,749 cases we identify 266 (15%), which reflects an increase in crisis cases.

A4.4 As outlined in section 3.1 of the main report, Acas intervention that prevents industrial action can generate substantial net gains in cases where the organisation involved holds monopoly power or where customers have few alternative providers of similar goods or services. In contrast, where a company operates in a market with multiple direct competitors, any losses to Company A from strike action are compensated by gains to a competitor Company B. It is hard to argue that there is a significant net loss to the economy in the event of strike action, and therefore we do not attribute gains from avoidance of strike action in such contexts. Cost-benefit analysis is focused on capturing net gains and losses to the economy as a whole; any gains or losses to one economic agent that are cancelled out by losses or gains to another are not captured. For a more detailed discussion, read section 5.1 of Urwin and Gould (2020).