What Is A COT3
A COT3 is the name of the document used by Acas (the “Advisory Conciliation and Arbitration Service”) to record the terms of settlement of actual or potential Employment Tribunal Claims.
When people refer to a COT3, they are referring to a legally binding agreement that Acas facilitate to settle an employment dispute.
Is A COT3 Different From A Settlement Agreement?
Generally, a COT3 and settlement agreement have the same purpose (to record the settlement terms), but they are different as is the process to achieve a final settlement.
- The main difference is that a COT3 involves Acas and a settlement agreement is only binding if the individual received independent advice on the terms and effect by a “qualified person.”
- The wording of COT3s is generally shorter than settlement agreements.
- Settlement agreements are more commonly used when the employee is still employed and it records the terms of exit.
- A COT3 is more commonly used when the Tribunal process has started.
- The main way of settling Employment Tribunal Claims is a COT3.
What Does A COT3 Usually Include?
A COT3 sets out the agreement between the parties, usually to settle a claim made at the Employment Tribunal claim. The key provisions are similar to Settlement Agreement Terms, but the wording is generally shorter. The common things recorded are:
- The settlement of an existing claim at the Employment Tribunal and any other dispute between the parties.
- If the settlement includes a payment, it will record the amount along with the date and payment method.
- It will record the parties’ understanding of how any payment should be taxed.
- The agreement on confidentiality, for example, that the existence and terms of the COT3 will be kept confidential.
- The process of providing any agreed reference in the future.
- An agreement that the parties will not make derogatory comments about each other.
Key Considerations
- Even though professional advice is not required for a COT3 to be binding, the document is used to settle existing claims and other statutory rights/claims, so caution should be taken (professional advice is recommended).
- The terms become binding as soon as Acas have confirmation that the wording is agreed, so there is a binding agreement before the document is signed.
- The effect of such an agreement can restrict or end your ability to take legal action, so is important to understand the implications of this and the value of the rights you are forfeiting.
- The terms are negotiable. Much like negotiating a settlement agreement, there are ways to obtain more favourable terms.