When resolving employment related disputes, two common options are COT3 agreements and settlement agreements. Both are written agreements that aim to avoid an employment tribunal hearing and provide a full and final settlement. However, there are key differences between a COT3 and a settlement agreement that you should understand before deciding which is right for your situation.
Here’s a clear guide to help you navigate these options.
What Is a COT3 Agreement?
A COT3 agreement is a legally binding contract facilitated by an ACAS conciliation officer during the ACAS early conciliation process or at any stage of an employment tribunal claim. It is designed to resolve employment related claims quickly and cost-effectively.
Key features:
Facilitated by ACAS: An ACAS officer acts as an impartial negotiator, providing a free service called conciliation.
No Legal Requirement for Advice: You don’t need to receive independent legal advice for a COT3 to be binding, but it’s recommended to ensure fairness.
Covers a Wide Scope: A COT3 can settle potential claims, including those not yet raised in an employment tribunal claim, such as personal injury or pension disputes.
Enforce Payment: If an employer fails to pay the agreed settlement figure, you can use a high court enforcement officer to ensure compliance.
Verbal Agreement: In some cases, a verbal confirmation to the ACAS conciliation officer can make the COT3 binding.
What Is a Settlement Agreement?
A settlement agreement is a legally binding contract that resolves an employment dispute or ends an employment relationship. Unlike a COT3, it is negotiated directly between the parties or through their representatives, often with the help of employment law specialists.
Key features:
Legal Requirement for Advice: To be valid, you must receive independent legal advice from a relevant independent advisor who holds professional indemnity insurance. This is confirmed by the adviser’s certificate attached to the agreement.
Employer Covers Legal Costs: Employers typically pay for your own costs to obtain independent legal advice, with contributions ranging from £350 to £1,500.
Customised Settlement Terms: Includes tailored clauses for settlement terms, compensation paid, confidentiality, and the waiver of future claims.
Preferred Terms: You and your employer can negotiate favourable terms that meet your needs, including agreed references or a warning notice giving details about expectations.
Key Differences Between a COT3 and a Settlement AgreementFacilitation
COT3: Managed through ACAS, a free service, without the need for lawyers acting for either party.
Settlement Agreement: Negotiated directly, often involving parties’ representatives and lawyers.
Legal Advice
COT3: No legal requirement to seek legal advice, though it is recommended.
Settlement Agreement: You must receive legal advice from an independent legal adviser, such as a solicitor, certified trade union advisor, or authorised adviser.
Scope
COT3: Covers employment related claims raised during conciliation and potential employment law complaints not yet submitted.
Settlement Agreement: Lists specific claims being waived, such as unfair dismissal or potential claims related to discrimination.
Cost
COT3: The employer isn’t required to cover legal costs.
Settlement Agreement: Employers typically contribute to legal fees to help you meet the requirement to receive legal advice.
Enforcement
COT3: Breaches can be resolved via a free penalty enforcement scheme or with the help of a high court enforcement officer.
Settlement Agreement: Breaches may require separate court action to enforce payment.
When to Use Each Agreement
COT3 Agreements: Best for resolving disputes during the ACAS conciliation process or avoiding tribunal proceedings. They are cost-effective and ideal for swift resolution.
Settlement Agreements: Suitable for more complex disputes or when the employment relationship is ending. These agreements provide tailored options and require independent legal advice.
FAQs: COT3 and Settlement Agreements
1. Do I need to sign a COT3 for it to be binding?
No. A verbal or email confirmation to the ACAS officer can make the agreement legally binding.
2. Can I negotiate the terms of a COT3 or settlement agreement?
Yes. Both are negotiable, and you can discuss terms like compensation, confidentiality, or references.
3. Are legal fees covered for a COT3?
No, employers are not obligated to cover your legal fees for a COT3. However, they often contribute to legal fees for a settlement agreement.
4. Can I make further claims after signing a COT3 or settlement agreement?
No. Both agreements typically prevent further claims related to the dispute. Always check with an independent legal adviser before agreeing.
Final Thoughts
Understanding the difference between COT3 and settlement agreements ensures you choose the right option for resolving your employment related disputes. A COT3 agreement offers a cost-effective and straightforward resolution during the ACAS early conciliation process, while a settlement agreement provides a more tailored and legally protected outcome. Always seek legal advice to safeguard your rights and ensure you get the best outcome for your situation.
