• Mediation and arbitration answer different questions. Mediation helps two people rebuild a working relationship through a voluntary process with no imposed outcome. Arbitration produces a binding decision from an independent third party, in the way a private judge would, and it settles a dispute rather than repairing the relationship behind it. 

• Genuine arbitration is rare in UK employment relationships. Statutory rights such as unfair dismissal are normally decided by an employment tribunal, not private arbitration. The one significant exception, the Acas Arbitration Scheme, is voluntary, limited to unfair dismissal and flexible working disputes, and can only be entered into with Acas’s involvement, not commissioned privately the way mediation can be. 

• Investigation is often mistaken for arbitration because both are evidence-based rather than collaborative, but they are not the same step. Investigation establishes facts only, and the decision about what happens next is made separately. Arbitration decides the outcome itself, in one binding step, with no separate decision to follow. 

The two terms get used loosely, and it matters, because they sit at opposite ends of how a workplace dispute can be resolved. One rebuilds a relationship, whilst the other ends one, with a decision neither party can simply walk away from. Understanding the difference, and where arbitration genuinely fits in UK employment law makes the actual decision facing most organisations much clearer. 

What each process actually is 

Workplace mediation is a voluntary, confidential process in which an impartial third party helps two people find their own way back to a working relationship. Nothing is imposed. Both parties stay in control of the outcome, and either can walk away at any point, a distinction we’ve set out in more detail here. 

Arbitration works differently. An independent arbitrator hears both sides of a dispute and issues a decision that is binding on both parties, with very limited grounds for appeal. It is the standard route for resolving commercial and international contract disputes outside the courts, but it plays a far smaller role in UK employment relationships than many assume. 

Where investigation actually fits 

It is easy to assume investigation and arbitration are close cousins. Both are evidence-based rather than collaborative, and both carry a weight and formality that mediation deliberately avoids. But they sit at different points in the process, and treating them as interchangeable causes real planning problems. Independent workplace investigation establishes facts only. It answers what happened, on the balance of probabilities, and reaches evidenced findings. It does not decide what happens next, that decision is made separately, usually at a disciplinary or grievance hearing. 

Arbitration collapses both steps into one. An arbitrator hears the evidence and decides the outcome itself, in a single binding step, with no separate hearing to follow, because the arbitrator’s decision is the outcome. Set out in order of who holds the decision and how binding it is, the full range available to an organisation looks like this. 

Stage	What it does	Who holds the decision
Mediation	Helps two people reach their own agreement	Both parties, jointly, non-binding
Investigation	Establishes facts and reaches findings	An independent investigator, facts only, no outcome imposed
Disciplinary or grievance hearing	Decides what happens as a result of those findings	An internal panel or chair, appealable within the organisation
Arbitration	Hears evidence and decides the outcome in one step	An external arbitrator, binding, minimal right of appeal
Employment tribunal	Determines the outcome under statute	An independent panel, binding, with defined rights of appeal

Why arbitration barely exists in UK workplace disputes 

Employees generally cannot be made to give up their right to bring a claim to an employment tribunal in advance, which is what makes private arbitration clauses common in commercial contracts but largely unworkable in employment ones. The one statutory exception is the Acas Arbitration Scheme, a voluntary alternative to tribunal for unfair dismissal and flexible working disputes only. 

Even within that narrow scope, the scheme has real constraints. Both parties must agree to it, usually with Acas’s help or as part of a settlement agreement, and Acas appoints the arbitrator, not the parties. Hearings are informal and confidential, but the resulting award is final, with only very limited scope to challenge it afterwards. In practice, take-up has stayed low since the scheme was introduced, and it is not something an organisation can simply commission the way it would mediation or an investigation. 

What organisations are actually choosing between 

Because true arbitration is rarely available in the way set out above, and cannot be commissioned privately, the practical decision most employers face is between mediation and the investigation-to-hearing route already covered, potentially escalating to tribunal if it remains unresolved. The table below sets out how the two ends of that choice compare in practice. 

	Mediation	Formal decision-based process
Goal	Rebuild a working relationship	Establish facts and reach a decision
Outcome	Agreed jointly, not imposed	Imposed by an investigator, panel or tribunal
Participation	Voluntary, either party can withdraw	Can proceed even if one party disengages
Confidentiality	Private and off the record	Documented, and disclosable if challenged
Relationship afterwards	Often continues, ideally improved	Frequently ends, or continues under strain
Typical timeframe	Days to a few weeks	Weeks to several months, longer at tribunal

When mediation is the right call 

• Both people are expected, or need, to keep working together, and the underlying issue is relational rather than a matter of serious misconduct. 

• Trust has broken down but neither party has disengaged completely, and both are willing to sit down and talk with the right support. 

• The organisation wants to resolve the issue quickly, privately and without the cost or disruption of a formal process. 

When a formal, decisive process is needed instead 

• The allegations are serious, contested, or involve conduct that could justify disciplinary action, such as harassment, discrimination or fraud. 

• One party has already disengaged, refuses to participate voluntarily, or has raised a formal grievance. 

• The organisation, or an employee, needs a documented, defensible outcome rather than a private agreement, particularly where a tribunal claim is a realistic possibility. 

Getting it right 

Mediation and a formal, evidenced process serve different purposes, and most organisations need reliable access to both rather than a single default. CMP delivers workplace mediation to rebuild relationships where that is still possible, and, where a documented decision is required instead, independent investigation and independently chaired disciplinary hearings and appeals that give both parties confidence the outcome is fair, whether or not the case is ever tested at tribunal. 

You can read more about our approach and experience, or get in touch to talk through which route fits a current situation before positions harden.