A COT3 Settlement is a legally binding contract between two or more parties in a dispute at work. They are used to settle potential or actual Employment Tribunal claims.
If someone is making a claim to an Employment Tribunal about a workplace dispute, they must inform Acas, who will offer ‘early conciliation’. This gives the parties an opportunity to come to an agreement without having to go to Tribunal.
When a resolution is reached, the Acas conciliator will draw up an Acas settlement form, otherwise known as a COT3, which is then signed by both parties. A COT3 becomes binding at the moment that both parties have agreed the terms, which can be done by email or over the phone.
Once a COT3 has been signed it is both legally binding and enforceable, meaning that the same issues cannot be pursued in the Employment Tribunal, and if a claim has already been lodged it will be closed once the COT3 is signed.
A COT3 is usually offered after a prospective claimant has contacted Acas, but it is possible for you as employers to initiate Acas involvement, if you consider that relevant proceedings may be issued against you.
An employer can contact Acas to request talks if they believe a dispute with an employee could lead to a Tribunal claim, or they may suggest that an employee enter into Acas Early Conciliation to reach a settlement if there is a dispute between the parties that cannot be managed informally.
A COT3 can terminate employment if this is something that is agreed during the Acas Early Conciliation negotiations or is the outcome of an Employment Tribunal judgement.
Once an agreement in principle has been reached, a COT3 may be initially drafted by an Employment Law solicitor acting for one of the parties, although this will also be coordinated by the ACAS conciliator. It can be important to consult an expert Employment Law solicitor to ensure that the agreement covers all issues.
The case law on future claims is complex and may depend on the precise wording of the COT3 agreement (see Arvunescu v Quick Release (Automotive) Ltd). If there is a chance that future claims may be an issue it is vital to contact a specialist Employment Law solicitor to ensure that the wording of the Agreement is clear and unambiguous.
A COT3 can be challenged on the same basis as any other Agreement. There are circumstances in which a COT3 can be set aside by a Tribunal – for example, due to misrepresentation. It is important to consult with an Employment Law solicitor if you are concerned about a COT3 being set aside.
The wording and terms of a COT3 Agreement will reflect what has been agreed between the parties involved. The COT3 Agreement will often have been drafted by a lawyer. Both parties will have the assistance of a ‘conciliation officer’ employed by Acas who will coordinate the drafting and signing of the Agreement.
Before involving Acas, you should identify where the risk of any future claim may lie and assess your potential financial liability. It may also be wise to use a COT3 where an ex-gratia payment is being made, as in the case of redundancy. This is to ensure that no further claims for compensation can be made against you and/or your company.
In certain situations, it may be necessary to commence “best practice” procedures such as a formal capability, disciplinary or redundancy process before a COT3 offer is made. This ensures that the matter can be resolved, with minimal financial risk and ensures that if negotiations break down, you have an alternative process in place to complete a fair dismissal.
We offer comprehensive advisory services to ensure your business is protected. In the first instance, we will thoroughly explore the background issues. We will work with you to ensure there is no unintentional discrimination in any aspect of your process. We also review any outstanding contractual, redundancy, disciplinary, capability and grievance matters before advising on a suitable settlement sum.
If you have been contacted by Acas about a potential claim or are considering involving them, please contact us. We are more than happy to have a free initial chat with you to point you in the right direction.
Our fees for a well-drafted COT3 Agreement are usually between £500 and £1,000 plus VAT, depending on the complexity and breadth of the issues.
For example, whether you are reiterating existing or even introducing new post-termination restrictions to protect your business. In addition, you might be asked to pay a contribution to enable your employee to obtain legal advice, usually between £350 and £500 plus VAT.
Where possible, we will offer you a fixed price for a tailor-made Agreement advice package which will include drafting the COT3 and also negotiations with your employee’s legal representative.
We also offer a multiple redundancy Settlement Agreement sign-off service for employers and trade unions. The service offers a professional and efficient way to sign off multiple Settlement Agreements.
Martin Searle Solicitors is the trading name of ms solicitors ltd, which is authorised and regulated by the Solicitors Regulation Authority, and is registered in England under company number 05067303.© 2023