Workplace expert ACAS has published new analysis that estimates that workplace conflict costs UK employers £28.5bn every year, an average of just over £1,000 for every employee.

This estimate is based on the total cost to organisations in handling workplace conflict that includes informal, formal and legal processes as well as the cost of sickness absences and resignations.

The report shows that nearly half a million employees resign each year as a result of conflict and that handling disagreements and complaints early before employment relationships are damaged can help save businesses money.

ACAS Chief Executive, Susan Clews, said:

"A failure by employers to deal with conflict early can be costly to businesses and our study estimates that these costs add up to nearly £30bn a year.

"Poor conflict management can also cause staff stress, anxiety or depression and impact workplace productivity. There's a clear benefit to everyone in handling problems as early as possible. While our main findings relate to just before the pandemic took hold, our report reveals potential for increased conflict as organisations try to adapt to new changes after COVID-19."

ACAS’s new report, Estimating the costs of workplace conflict, estimates that 9.7 million employees experienced conflict in 2018/2019.

The annual costs to employers identified in the report include:

• £11.9bn from resignations.
• £10.5bn from disciplinary dismissals.
• £2.2bn from sickness absences.

Workplace conflict can lead to staff stress, anxiety or depression, which has a knock-on effect on productivity. The report identifies effective conflict management as critical in maximising productivity and efficiency in organisations.

It also suggests investing in effective and early resolution to repair employment relationships. This can include managers identifying problems early to help prevent unnecessary resignations or dismissals and employees engaging with their managers, HR or trade union representatives.

Many potential disciplinary and grievance issues can be resolved informally, and employers and employees should always look to resolve disciplinary and grievance issues in the workplace. If discipline and grievance issues are settled at an early stage they are normally less time-consuming and less likely to damage working relationships.

​​​​​​The report highlights that conflict will be more likely as organisations adapt to a new normal following the Coronavirus (COVID-19) pandemic. Problems suppressed during the crisis will start to rise to the surface and will need effective responses from organisations.