COT3 and Settlement Agreements are both agreements which are used to resolve employment related disputes but there are some differences between the two.
COT3
A COT3 Agreement is used once a dispute has arisen. It is commonly used to resolve a specific claim once the complaint has been submitted to the Employment Tribunal or during the compulsory early conciliation stage.
It is similar to a settlement agreement however it can only be agreed with the assistance of an ACAS conciliation officer where there is an active dispute. ACAS needs to have some genuine involvement in the conciliation of the dispute so a COT3 agreement is inappropriate if an agreement between the parties has already been negotiated prior to ACAS’s involvement. In the latter situation a settlement agreement would need to be used.
A COT3 is usually in a written format, and it is a good idea for it to be recorded in that manner so that the parties are clear about the terms, however, unlike a settlement agreement it is not a legal requirement for the terms to be recorded in writing. As a COT3 can be orally agreed it is very important that the parties are satisfied with the terms before they confirm to the ACAS officer their agreement because once it is declared binding by the ACAS officer it cannot be undone.
Unlike a settlement agreement a Claimant does not need to receive independent legal advice before agreeing to a COT3. The ACAS officer is impartial and cannot give legal advice to either party about the terms of the COT3.
COT3 agreements tend to be simpler and shorter than settlement agreements and the parties tend to cover their own costs.
COT3 agreements can be signed by an advisor on behalf of their client.
Once the COT3 Agreement is binding ACAS will contact the Employment Tribunal and notify it that the claim has been settled. An employee may also be required to formally withdraw their claim by writing to the Employment Tribunal.
Settlement Agreement
A settlement agreement is more commonly used before or just as a dispute has arisen, or before the employee/worker has raised the complaint with the Employment Tribunal. However, it can be used to settle an active Employment Tribunal claim.
Settlement agreements tends to be on a ‘clean break’ basis and will generally settle all employment related claims the employee might have against the employer rather than just one specific dispute. The terms are often more onerous on an employee compared to a COT3.
A settlement agreement must be in writing. It is often a very lengthy document, generally in excess of 10 pages.
It is a legal requirement for an individual to receive legal advice on the terms and effects of the settlement agreement from a relevant independent advisor. This is usually a lawyer but can be a certified trade union advisor. This person must be identified in the settlement agreement and hold professional indemnity insurance. It is likely that the independent advisor will recommend amendments to the settlement agreement so that it is suitable for the employee.
The employer will commonly offer a contribution towards the employee’s legal fees.
The employee must sign the settlement agreement; not the independent advisor. The settlement agreement is not binding until all parties have signed.
See here for more information about settlement agreements. If you require assistance with negotiating a COT3 or a settlement agreement please contact us on 01483 303636 or email info@jesolicitors.com to see how we can help you.
