O'Neill decided to part company with Villa after a four-year reign five days before the start of the current domestic campaign in August.
A statement issued by the League Managers' Association read: "Premier League managers' contracts contain a clause requiring the parties to mediate their differences in the event of a dispute."
It continued: "If the dispute cannot be resolved at mediation, that the case moves forward to the Premier League managers' arbitration tribunal.
"Regrettably, despite mediation, it has not been possible to resolve the dispute between Martin and Aston Villa concerning the termination of his employment with the club.
"The matter has now been placed in the hands of the Premier League Managers' arbitration tribunal.
"The tribunal is ideally placed to resolve disputes of this nature, combining the skills and experience of prominent individuals from football and the law."
Source: PA
Source: PA