Question

A company "Z", agrees to pay all the employees Rs.10,000/- salary per month. The employer failed to pay the salary because they wanted to go for lay off. Both the employer and employee want to settle the matter amicably by appointing a person and place of their choice. This process is known as ..........

• A. Mediation
• B. Arbitration
• C. Negotiation
• D. Litigation

Hint:

Mediation is a less formal and non-binding process that helps parties resolve conflicts without going to court.

Answer 1

The Correct Option is A

This process is known as Mediation. Mediation is an alternative dispute resolution method where an impartial third party (mediator) is appointed by the parties involved to assist in negotiating an amicable settlement. The mediator does not have decision-making power but helps the parties reach a mutually agreeable solution.

Answer 2

When both parties in a dispute — such as an employer and employee — agree to resolve their issue in a peaceful and mutually acceptable manner by appointing a neutral third party and selecting a venue of their choice, the process is referred to as Mediation.

What is Mediation?
Mediation is a form of alternative dispute resolution (ADR) where a neutral and impartial person, called a mediator, facilitates communication between disputing parties to help them reach a voluntary and mutually acceptable settlement.

Key Features of Mediation:
1. Voluntary: Both parties willingly participate in the process.
2. Confidential: The discussions during mediation are kept confidential and cannot be used as evidence in court.
3. Flexible and Informal: Unlike formal court procedures, mediation is informal and allows for flexibility in how it is conducted.
4. Control: The parties retain control over the outcome rather than leaving the decision to a judge or arbitrator.
5. Neutral Mediator: The mediator does not impose a decision but helps both parties explore options and reach an agreement.

Application in the Given Case:
In the scenario where company "Z" is unable to pay salaries and both the employer and employees wish to resolve the matter peacefully, mediation provides a platform for them to negotiate and reach a settlement — possibly including deferred payments, severance, or restructured compensation — without escalating to litigation.

Legal Recognition:
Mediation is recognized under Indian law and is often encouraged in labor and commercial disputes as a cost-effective and time-saving mechanism.

Therefore, the correct answer is: Mediation.