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COT3 Agreement (Settlement FAQs)

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A COT3 agreement sets out the terms of a settlement agreement between an employer and employee. The COT3 forms part of the ACAS early conciliation process, intended to help resolve employment claims coming before the employment tribunal.

The following article sets out guidance on COT3 agreements, including whether they are enforceable.

 

What is a COT3 agreement?

Prior to making a tribunal claim, employees will first need to inform the Advisory Conciliation and Arbitration Service (ACAS) about their workplace dispute. At this stage, the parties will be offered early conciliation, a process during which the prospective claimant and respondent are provided with an opportunity to reach an agreement without recourse to tribunal proceedings.

Within this context, the COT3 form is a document setting out a legally binding agreement to settle a potential or actual claim in the employment tribunal. Both parties sign the COT3 form as a formal record of the agreement reached following conciliation with the assistance of an ACAS officer.

Technically speaking, completion of the COT3 form is not a strict legal requirement. A verbal or written agreement following ACAS conciliation, at least one that satisfies the legal formalities of a contract, will still be legally binding.

That said, in practice, the parties to either a prospective or existing employment tribunal claim are always encouraged to complete a COT3 form to document the terms of the agreement so as to avoid any dispute at a later date in the event that enforcement proves necessary.

 

What is the difference between a COT3 and a settlement agreement?

A settlement agreement is essentially a written agreement, regulated by statute, whereby an employee or worker agrees to waive their right to bring or pursue certain employment tribunal claims, usually in return for a lump sum payment.

In the same way as a COT3 agreement draws a line under potential claims that have been raised, and may also prevent further claims from being pursued, a settlement agreement prevents an employee from pursuing a number of tribunal claims against their existing or former employer.

In this way, the settlement agreement is similar in purpose to a COT3 agreement. They are both written agreements designed to document the terms upon which the parties to a workplace dispute have decided to resolve the matter without recourse to tribunal proceedings, although a settlement agreement can also be used in circumstances where a dispute has not even arisen, for example, to bring an employee’s contract of employment to an end on agreed terms.

Although a settlement agreement will essentially have the same effect as a COT3 agreement, the key differences between the two are as follows:

  • A COT3 agreement can only be entered into where ACAS have been involved in the context of a workplace dispute. In some cases, ACAS may have even been involved for some time, for example, in the context of an existing claim that has reached an advanced stage.
  • A COT3 agreement will usually relate to a particular complaint, whereas a settlement agreement will seek to settle a wide range of potential and existing employment claims at once, or to terminate the parties’ working relationship, even in the absence of any existing dispute.
  • The COT3 agreement will usually be much shorter and in a far simpler form than a settlement agreement which must comply with strict statutory requirements.
  • The COT3 agreement will usually be signed by the parties’ representatives rather than by the parties themselves although, prior to signing, an employee must have received legal advice about the terms and effect of a settlement agreement from an independent legal adviser.
  • A COT3 agreement, although typically documented, can be a verbal agreement, whilst a settlement agreement must always be in writing.

 

Why is a COT3 agreement used?

Once agreement has been reached to resolve a workplace dispute via the process of ACAS conciliation, there are several benefits to recoding this agreement using a COT3 form, not least to avoid any uncertainty in the event that the claimant needs to take further action to enforce the terms of the agreement at a later date.

Needless to say, there are also several benefits to engaging in early conciliation through ACAS, although the process is entirely voluntary. It is only a mandatory requirement to inform ACAS that you intend to make a claim, where either party may refuse to participate in this process. That said, the benefits of early conciliation can include any of the following:

  • It is free and impartial for both parties.
  • It is confidential, where ACAS is not part of the employment tribunal and, as such, will not disclose to the tribunal the nature of any negotiations.
  • It is quicker than bringing a tribunal claim, which can take several months.
  • It is easier than bringing a tribunal claim, with far less paperwork.
  • There is greater flexibility, where conciliation can include the provision of an apology and/or a job reference, as well as other outcomes that an employment tribunal does not have the jurisdiction to order.

The process of conciliating a tribunal claim will be undertaken by an experienced ACAS conciliation officer, who is under a statutory duty to assist both parties in understanding the process involved, and in reaching a settlement on mutually agreeable terms. As such, where the parties are both willing to fully participate, early conciliation can yield a high success rate.

It is important to remember, however, that the role of the ACAS conciliator is not to offer you any advice as to whether to accept or make any proposals for resolution, or as to the merits of your claim. For this, you will need to seek expert advice from an employment law specialist.

 

What should a COT3 agreement contain?

Given that the effect of a COT3 agreement is to restrict an employee from raising or continuing with certain claims in the employment tribunal, the COT3 form should always specify the nature of the claim(s), together with the amount payable in satisfaction of the dispute, including a timeframe within which this agreed sum must be paid.

The amount and timing of any payment are both a matter for negotiation between the parties, although it is fairly standard practice for the respondent to agree for payment to be made within 14-21 days of the COT3 being signed.

There may also be non-financial aspects that the parties want to include, such as a confidentiality clause to prevent the claimant from discussing the matter publicly, or even a derogatory statement clause preventing the claimant from making negative remarks about the respondent.

In many cases, a COT3 settlement agreement will be relatively short and straightforward, although you should always seek expert legal advice in the event of any uncertainty as to the nature and effect of the proposed terms.

In particular, as most settlements will only be offered on the basis of “without admission as to liability” on the part of the respondent, you will completely forgo the opportunity of having your dispute considered by an employment tribunal and any formal findings being made against your employer.

As set out above, you may even be precluded under the proposed terms of the agreement from openly discussing the matter ever again, otherwise risk breaching the agreement and even repaying the agreed sum to be paid to you.

In contrast to the strict statutory requirements associated with settlement agreements, there is no legal requirement for an employee to seek independent legal advice prior to signing a COT3, nor would a COT3 agreement usually contain provision for the employer to cover, or contribute towards, the cost of this. That said, the ACAS conciliation officer is under a duty to explain the terms of the COT3 and their effect. It is also open to you to negotiate a reasonable financial contribution towards your legal costs from your employer.

 

Can an employee bring a tribunal claim after signing a COT3 agreement?

Once the terms of a COT3 agreement have been agreed, the employment tribunal will no longer be able to hear your workplace dispute. In short, you will be precluded from making any future claim in relation to any matters incorporated within that agreement. Further, where you have already lodged a tribunal claim, the ACAS conciliation officer will need to notify the tribunal that the claim has been settled and the matter will be closed.

It is also important to bear in mind that an agreement will become binding at the point both parties confirm to ACAS the terms upon which an agreement has been reached, even before these terms are documented by way of a COT3 form. As such, the agreement can come into effect via a telephone call or even by email. Further, once agreed at this stage, the terms cannot be changed and you will have no further claim against your employer.

Accordingly, it is vital that you are happy with the terms reached before you communicate them to the conciliation officer. Once a COT3 form has been drawn up in writing, you should also carefully check the final version and ensure that this reflects the terms agreed prior to signing.

 

Is the COT3 enforceable?

As a legally binding enforceable agreement to settle a potential or actual tribunal claim, the employer will be required to make any payment as set out under a COT3 settlement agreement within the time specified.

In circumstances where payment is not made, the first step would be to contact the ACAS conciliation officer who will be able to remind the respondent of their obligations under the COT3 agreement. However, where the respondent still fails to comply, it is open to the employee to enforce the agreement via the courts in exactly the same way as an unpaid tribunal award.

In particular, a COT3 agreement can be enforced using the ‘ACAS and Employment Tribunal Fast Track’ scheme, through which a High Court Enforcement Officer will be able to demand payment from the respondent on your behalf. This can include recovery of the outstanding amount, together with any interest and fixed enforcement costs that may fall due.

In addition to recovery of the settlement figure, you can also separately apply for an enforcement penalty to be imposed on an employer who fails to pay the full sum due under a COT3 settlement agreement. In the context of an ACAS conciliated settlement, you can submit a complaint if payment has not been received by the date agreed as part of the settlement.

The respondent will be contacted by the employment tribunal penalties team and issued with a warning notice requiring payment of the outstanding sum within 28 days, otherwise risk a financial penalty equivalent to 50% of the outstanding amount at the time the notice is issued. This is subject to a minimum of £100 and a maximum of £5000.

The penalty will be payable to the government, but the respondent must still pay the award to you. Applying for the issue of a penalty is a free service that can be taken advantage of in advance of any formal enforcement procedure. As such, if the employer does not pay the money that you are owed, you can still seek enforcement separately through the courts.

Having agreed a COT3 settlement, it is important to remember to retain a copy to enable you to issue enforcement proceedings, although the ACAS conciliator may be able to access a copy of this agreement on your behalf for a period of up to six months from the date the settlement was reached.

 

Need assistance?

Prior to signing a COT3 settlement agreement, it is important to seek legal advice at the earliest possible opportunity, to explore the merits of any tribunal claim and potential level of settlement.

As employment law specialists, we can assist if you have any queries relating to settlement agreements, ACAS early conciliation or workplace mediation. Speak to our experts today for advice.

 

COT3 agreement FAQs

What is a COT3 form?

The COT3 form is used as part of the ACAS early conciliation process to detail the terms of settlement agreement between an employer and employee. The COT3 agreement is a legally binding on both parties.

What is the difference between a COT3 and a settlement agreement?

The COT3 form can only be used following ACAS early conciliation. A settlement agreement can be drawn up and signed at any point during a workplace dispute or employment claim.

Is the COT3 enforceable?

Yes, a COT3 is enforceable in the same way as other court judgments or legal agreements. They also qualify for ACAS and employment tribunal Fast Track Scheme enforcement.

Last updated: 14 February 2020

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