What Is a COT3 Agreement?

A COT3 is a legally binding agreement that records the terms on which an employment dispute is settled through Acas (the Advisory, Conciliation and Arbitration Service). Like a settlement agreement, it ends your ability to bring the claims it covers, but it is reached with the help of an Acas conciliator rather than drafted between solicitors, and, crucially, it does not require you to take independent legal advice to be valid.

The name comes from the form number Acas historically used. If you are in the middle of an employment dispute and Acas is involved, a COT3 is one of the two main ways your case can be settled, so it is worth knowing exactly what you are signing and how it differs from the alternative.

Deen & Co advise on both COT3s and settlement agreements. If Acas has been in touch about your dispute, talk to us before you agree anything.

How a COT3 works

If you have started (or are about to start) an employment tribunal claim, Acas offers conciliation, a free service where a conciliator acts as a neutral go between to help you and your employer reach a settlement without a full hearing. In fact, Early Conciliation through Acas is a mandatory step before you can lodge most tribunal claims.

If both sides agree terms, the conciliator records them in a COT3. Once you have both agreed, which can be done in writing, by email, or even orally through the conciliator, the COT3 is binding. You typically agree to withdraw or not pursue the claims in exchange for a payment or other terms.

COT3 versus settlement agreement, the key differences

Both are legally binding and both end the claims they cover, but they differ in important ways:

| | COT3 | Settlement agreement | |---|---|---| | Who is involved | Acas conciliator brokers it | Negotiated directly or via solicitors | | When it is used | Usually once a dispute or tribunal claim is live | Often before any claim, for example on exit | | Independent legal advice | Not required for validity | Required; you must take advice from an independent adviser | | Format | Short Acas form; can be concluded by email or orally | Formal written contract, often long and detailed | | Legal fee contribution | Employer not obliged to pay for your advice | Employer usually contributes to your solicitor's fees | | Scope | Tends to cover the specific dispute | Can waive a very broad range of claims |

The single most important practical difference: because a COT3 does not require you to take legal advice, no one is obliged to check the terms are fair to you before you agree. That protection is built into a settlement agreement. With a COT3, it is on you to get advice if you want it.

Should you get advice on a COT3 even though it is not required?

Yes, often. A COT3 is just as binding as a settlement agreement, and once agreed you generally cannot reopen the claims. Because the terms are frequently agreed quickly and informally through a conciliator, it is easy to:

• Settle for less than your claim is worth.
• Agree wording that waives more than you intended.
• Miss out on non cash terms (references, tax structuring, confidentiality that runs both ways).

Acas conciliators are neutral. They do not advise you on whether the deal is good. A short review by an employment solicitor can catch problems before they are locked in.

Which one applies to you?

• If your employer has offered you money to leave before any dispute or claim (for example, as an alternative to redundancy or a performance process), it will almost always be a settlement agreement, and your employer should contribute to your legal fees.
• If you are already in a dispute or tribunal process and Acas is involved, it may be settled by COT3.

Sometimes both routes are on the table, and the choice affects your rights, your tax position and whether your advice is funded, so it is worth understanding which you are being offered.

The bottom line

A COT3 is a binding settlement reached through Acas that ends the claims it covers, without the requirement for independent legal advice that a settlement agreement carries. That makes it quick, but it also means no one is obliged to make sure the deal is fair to you. If a COT3 is on the table, getting it checked first is time well spent.

Been offered a COT3 or settlement agreement? Deen & Co will tell you which protects you best and whether the terms are fair. Get in touch.

Related reading: How Much Should You Get in a Settlement Agreement?, Should You Accept a Settlement Agreement?, Settlement Agreement Solicitor Fees.

FAQ

Is a COT3 the same as a settlement agreement? No. Both are binding and both settle claims, but a COT3 is brokered by Acas and does not require independent legal advice, while a settlement agreement is a formal contract that does.

Is a COT3 legally binding? Yes. Once both parties agree the terms through the Acas conciliator, a COT3 is binding and you generally cannot pursue the settled claims afterwards.

Do I need a solicitor for a COT3? It is not legally required, but it is strongly advisable. No one is obliged to check a COT3 is fair to you, so a review can prevent you settling for too little or waiving more than you meant to.

This article is general information, not legal advice. Speak to a qualified employment solicitor about your situation.