Nip it in the bud. If an employee has a complaint, listen. A supportive arm around the shoulder is better than fingers around the throat later.
Find a referee. If both parties are at loggerheads, an independent mediator can highlight ways for them to reach a voluntary agreement without any blood-spilling. They're cheaper and quicker than a tribunal.
Go to arbitration. In cases of unfair dismissal, an independent arbitrator offers a speedy, informal but legally binding alternative.
Pay-off time. Sometimes it's better to offer an employee compensation for not bringing - or withdrawing - a tribunal claim. A compromise agreement is legally binding, so stump up a small sum, and save time and bad publicity.
Lean on a lawyer. Sometimes, there's just no other way. If the town ain't big enough for the both of you, and neither of you is willing to blink first, it'll come down to a gunfight at the employment tribunal corral. Get the best legal sharpshooters you can.
Learn from it. Your fingers have been burnt, your wallet is a bit lighter, but you're wiser, too. Review work practices that led to the dispute, make the necessary changes, and get back in the saddle. It's time to move on.