What is the main difference between mediation and arbitration?

The main difference is control over the outcome. In mediation, the parties reach their own agreement with the mediator's help. In arbitration, an arbitrator makes a binding decision after hearing both sides. Mediation is voluntary and non-binding; arbitration produces a final, enforceable outcome.

Is conciliation legally binding?

Conciliation itself is not legally binding—the conciliator cannot impose a solution. However, if parties reach a settlement through ACAS conciliation and sign a COT3 agreement, that settlement becomes legally binding and prevents further tribunal claims on the same issue.

When should an organisation use ACAS conciliation?

ACAS conciliation is most appropriate when an employment tribunal claim has been or may be raised. Early Conciliation through ACAS is now a mandatory first step before most tribunal claims can proceed. It's particularly valuable when you want to avoid the cost, time and publicity of tribunal proceedings.

Can mediation be used for disciplinary issues?

Mediation can be appropriate for some disciplinary-related disputes, particularly where the underlying issue is a breakdown in working relationships. However, it's generally not suitable for serious misconduct, safeguarding concerns, or situations where a formal investigation is required. Mediation works best when both parties are willing to engage and the relationship needs to continue.

What happens if arbitration fails?

Arbitration doesn't 'fail' in the traditional sense—the arbitrator will always make a decision. That decision is binding and can only be challenged on very limited legal grounds (such as procedural irregularity). This is why arbitration is typically used as a final step after other methods have been exhausted.

Which CIPD units cover dispute resolution?

Dispute resolution concepts appear in several CIPD units, particularly those focused on employment relations. At Level 5, units like 5HR01 (Employment Relationship Management) cover these topics. At Level 7, strategic employment relations modules explore dispute resolution in greater depth. People Study Pro provides learning materials for all assessment criteria across every unit.

Difference Between Mediation and Arbitration (Plus Conciliation Explained)

Understanding the difference between conciliation, mediation and arbitration is essential knowledge for any HR professional. These three methods of third-party dispute resolution appear frequently in CIPD assignments—and for good reason. They represent the core options available when workplace conflicts can't be resolved internally.

Yet many students and practitioners confuse them. This guide explains each method clearly, highlights the key differences, and helps you understand when to recommend each approach.

What Is Third-Party Dispute Resolution?

Third-party dispute resolution refers to any process where someone outside the immediate conflict helps the parties reach a resolution. In employment relations, this typically means bringing in an external person or organisation to help resolve disputes between employers and employees, or between an organisation and a trade union.

The three main methods are:

Conciliation: – A third party helps facilitate discussion and settlement

Mediation: – A neutral mediator helps parties reach their own agreement

Arbitration: – An independent arbitrator makes a binding decision

Each serves a different purpose and suits different situations. Understanding these distinctions is crucial for effective HR practice.

Conciliation Explained

Conciliation is a voluntary process where an independent third party helps disputing parties communicate and explore settlement options. In the UK, ACAS (the Advisory, Conciliation and Arbitration Service) is the primary provider of conciliation services.

How Conciliation Works

A conciliator acts as a go-between, typically communicating with each party separately rather than bringing them together. Their role is to:

Explain the legal position to both sides
Help parties understand each other's perspective
Explore potential areas of agreement
Suggest possible settlement terms

Key Characteristics of Conciliation

Voluntary: – Both parties must agree to participate

Non-binding: – The conciliator cannot impose a solution

Confidential: – Discussions cannot be used as evidence in tribunal

Free: – ACAS conciliation is provided at no cost

Impartial: – The conciliator doesn't take sides

When Is Conciliation Used?

Conciliation is most commonly used in employment tribunal claims. Before a case reaches tribunal, ACAS offers Early Conciliation—a mandatory step where parties have the opportunity to settle before formal proceedings begin.

Conciliation is particularly effective when:

There's a legal dispute heading towards tribunal
Both parties want to avoid the cost and stress of formal proceedings
The relationship has broken down but settlement is still possible
Parties need help understanding their legal positions

Mediation Explained

Mediation is a structured process where a neutral third party—the mediator—helps disputing parties work together to reach their own solution. Unlike conciliation, mediation typically involves bringing parties together in the same room (or virtual space).

How Mediation Works

A mediator facilitates discussion rather than providing solutions. The process usually involves:

Opening statements from each party
Joint discussions to identify issues
Private sessions with each party
Negotiation towards a mutually acceptable agreement
Documentation of any agreement reached

Key Characteristics of Mediation

Voluntary: – Participation and any agreement are entirely voluntary

Facilitative: – The mediator guides the process, not the outcome

Confidential: – Discussions remain private

Party-led: – The disputing parties control the solution

Future-focused: – Emphasis is on moving forward, not blame

When Is Mediation Used?

Mediation works best when the working relationship needs to continue. It's commonly used for:

Interpersonal conflicts between colleagues
Disputes between managers and team members
Bullying and harassment complaints (where appropriate)
Team conflicts affecting productivity
Grievances where the relationship can be preserved

Many organisations now use internal mediation schemes or bring in external workplace mediators before conflicts escalate to formal procedures.

Arbitration Explained

Arbitration is a formal process where an independent third party—the arbitrator—hears evidence from both sides and makes a binding decision. It's the most formal of the three methods and most closely resembles a legal proceeding.

How Arbitration Works

The arbitration process typically involves:

Both parties presenting their case formally
Submission of evidence and documentation
Witnesses may be called
The arbitrator considers all evidence
A binding decision (award) is issued

Key Characteristics of Arbitration

Binding: – The arbitrator's decision must be followed

Formal: – Structured process with rules of procedure

Final: – Limited grounds for appeal

Determinative: – The arbitrator decides the outcome

Adjudicative: – Similar to a court or tribunal hearing

When Is Arbitration Used?

Arbitration is typically used when:

Other resolution methods have failed
Parties cannot reach agreement themselves
A definitive, binding outcome is needed
Collective disputes between unions and employers
As an alternative to employment tribunal

ACAS offers an arbitration scheme as an alternative to employment tribunal for unfair dismissal and flexible working claims.

Key Differences at a Glance

Which Method Should HR Recommend?

Choosing the right dispute resolution method depends on several factors:

Choose Conciliation When:

A legal claim has been or may be raised
You want to avoid tribunal costs and publicity
The employment relationship has ended or will end
ACAS Early Conciliation is required before tribunal

Choose Mediation When:

The working relationship needs to continue
Both parties are willing to engage constructively
The dispute is about relationships, not legal rights
Early intervention could prevent escalation
Internal resolution has stalled but formal procedures seem excessive

Choose Arbitration When:

Mediation or conciliation has failed
A binding decision is necessary
Collective bargaining has reached impasse
Parties prefer a private alternative to tribunal
Complex legal or contractual issues need determination

The Role of HR in Dispute Resolution

As an HR professional, you're often the first point of contact when workplace disputes arise. Understanding these methods helps you:

Advise managers: on appropriate intervention strategies

Guide employees: towards suitable resolution options

Design policies: that incorporate early resolution mechanisms

Reduce costs: by resolving disputes before they escalate

Preserve relationships: through appropriate early intervention

Many organisations now include mediation clauses in contracts and grievance procedures, making it a standard step before formal action.

How People Study Pro Helps You Master This Topic

Third-party dispute resolution appears across multiple CIPD units, particularly in employment relations and employee engagement modules. Whether you're studying 5HR01 (Employment Relationship Management), 5HR02 (Talent Management and Workforce Planning), or Level 7 units on strategic employment relations, you'll need to demonstrate clear understanding of these concepts.

People Study Pro provides learning materials for every single assessment criteria across all CIPD units. When your assignment asks you to "distinguish between third-party conciliation, mediation and arbitration," you'll have clear, assessment-focused content that explains:

What assessors expect in your response
How to structure your answer for maximum marks
Key theories and models to reference
Practical examples to demonstrate application

Our learning content breaks down exactly what's required—so you understand not just the definitions, but how to apply them in your written responses with confidence.

Building Your Knowledge Further

Understanding dispute resolution is just one aspect of effective employment relations practice. To deepen your knowledge:

Study ACAS guidance: on conciliation and arbitration services

Review your organisation's policies: on grievance and conflict resolution

Consider mediation training: if you want to develop internal capability

Practice applying: these concepts to case study scenarios

The ability to recommend appropriate dispute resolution methods is a valuable skill that demonstrates both knowledge and practical HR competence.

The Bottom Line

Conciliation, mediation and arbitration serve different purposes in the dispute resolution toolkit:

Conciliation: helps parties settle, typically in legal disputes heading to tribunal

Mediation: helps parties reach their own agreement, preserving ongoing relationships

Arbitration: provides a binding decision when agreement cannot be reached

For HR professionals and CIPD students alike, understanding when to recommend each method—and being able to explain the differences clearly—is fundamental to effective employment relations practice.