Small businesses should consider mediation much earlier if they want to avoid the risk of employment tribunals, employment relations service Acas has warned.

The warning follows research into 500 small businesses, which suggested that 68% of managers would only consider mediation as a last resort and 52% thought this was only suited to large organisations.

Just 7% of those polled had used mediation as a means of solving a dispute.

Yet despite this reluctance to get involved in such a process, the findings also revealed that nearly three-quarters (72%) said mediation sounded like a good means of resolving disputes and 63% thought greater use of such services would reduce the number of employment tribunal claims.

Of those companies that had used mediation, 82% said it had either partly or completely resolved the issue.

"Resolving an issue at an early stage instead of clearing up its eventual consequences saves money, time and grief," said Ed Sweeney, chair of Acas.

"Mediation and dispute resolution are often associated with bigger businesses, but without in-house HR and legal functions, some small businesses can be vulnerable to minor disputes escalating into something more serious and damaging."

Mediation was often used to address several issues at once, the research found.

Of the organisations that had used mediation to resolve disputes, 43% had used it for discipline issues, while 36% had used it for relationship breakdowns and 31% had used it for bullying and harassment.