FAQs about COT3s
18 December 2020
Although many people have come across Settlement Agreements, not everyone knows much about their lesser known cousin the COT3. We thought it would be useful to answer some key questions about COT3 agreements and what they do.
What is a COT3?
COT3 (pronounced “cot three”) is the name given to a written agreement entered into via Acas to settle actual or potential claims in the Employment Tribunal.
Acas are the Advisory Conciliation and Arbitration Service, an independent (but state funded) body with the aim of resolving workplace disputes. They deal with cases through early conciliation (a stage most employees have to go through in order to bring a claim) but also conciliation between parties at any stage in Employment Tribunal proceedings.
What does COT3 stand for?
It isn’t an acronym, so the letters don’t stand for anything as such – which is a bit confusing!
The general view is that it is the name for the form that is used by ACAS to record the settlement. The full name is ‘Agreement in respect of an Actual or Potential Claim to the Employment Tribunal’, which is a bit of a mouthful!
What is the difference between a COT3 and a Settlement Agreement?
Both of them settle potential (or actual) employment claims, but a COT3 can only be agreed with the involvement of ACAS. Also, a Settlement Agreement requires the employee (or Claimant) to take independent legal advice on the terms in order for it to be valid, but that is not the case with a COT3. The process for achieving agreement is also slightly different, and sometimes different people sign them (see below).
Who drafts the wording for a COT3?
The wording may be drafted by solicitors acting for one of the parties involved, usually once an agreement in principle has been reached. The first draft is most often prepared by the employer’s solicitor, but that is not always the case. If the parties are unrepresented sometimes ACAS will produce some wording.
COT3s tend to be rather more brief than Settlement Agreements, but it is still important for the parties to ensure that the key points are covered. For example, whereas the tax position is often covered clearly in a Settlement Agreement, sometimes parties do not always consider that when preparing a COT3.
What terms are usually included in a COT3?
Normally the main thing the COT3 will deal with is a provision for some form of payment in exchange for full and final settlement (most commonly without admission of liability). Usually the trigger for payment will be a certain number of days from receipt of the signed COT3, even though the settlement is binding without it (see below).
Confidentiality is often important to both sides, and things like agreed references and announcements can also be included. Essentially it will contain anything that has been agreed by the parties in their settlement discussions. It is best to take legal advice to ensure that the COT3 adequately protects your position.
How are COT3 agreements usually concluded?
Once settlement terms have been agreed in principle and draft COT3 wording has been prepared, usually the ACAS conciliator will send the draft COT3 wording to the other party (or parties) in the case for their comments. This tends to happen by email. Once the terms are negotiated and all parties have confirmed their agreement to them by telephone or email, the agreement becomes legally binding at that stage.
Whereas with a Settlement Agreement the terms are only legally binding once the agreement is signed by all parties, that is not the case with a COT3.
Once agreement is reached, the conciliator will usually either telephone or email the parties at that stage to say, “I can confirm we now have a binding agreement in place.” If there are Tribunal proceedings ongoing, ACAS will then also notify the Tribunal that a settlement has been reached.
COT3 agreements do still get signed, but this usually happens later and is just as a record of the terms which are already binding. Unlike Settlement Agreements, COT3s tend to be signed by solicitors on behalf of their clients, rather than by the clients themselves.
If you are an employer and you need assistance with drafting or negotiating a COT3 or Settlement Agreement, then we can help. Please call us on 01243 836840 for a no obligation chat, or email us at [email protected].