Final answer:
Mediation involves a mediator helping parties to reach a mutual decision, and it's non-binding. Arbitration involves an arbitrator making a binding decision. Employers may choose one over the other based on cost, time, relationship, and privacy considerations.
Step-by-step explanation:
Difference Between Mediation and Arbitration
The difference between mediation and arbitration primarily lies in the role of the third-party involved and the binding nature of the decision. Mediation involves a mediator who facilitates dialogue between disputing parties to help them reach a mutual agreement. In contrast, arbitration involves an arbitrator who listens to both sides and then makes a decision that is usually binding.
Pros and Cons of Mediation
Pros: Less formal, usually less expensive, and offers a collaborative approach that can preserve relationships.
Cons: It may not result in a resolution if parties can't agree, and the outcome is not legally binding.
Pros and Cons of Arbitration
Pros: More efficient than court litigation, decisions are binding and enforceable, and arbitrators often have expertise in the subject matter.
Cons: Can be costly, less transparency compared to court proceedings, and limited rights to appeal.
An employer might pursue one strategy over another based on the situation's specifics, including relationship with the employee, costs, time, and desired outcome. For example, an employer facing a complex employment dispute that it desires to settle quickly and confidentially may prefer arbitration to avoid lengthy court litigation.