What is a COT3 and what do I need to think about before signing one?
/What is a COT3?
A COT3 is a legally binding agreement to settle actual or potential claims in the Employment Tribunal. Essentially, it is a form agreed following conciliation by an officer employed by ACAS (the “Advisory Conciliation and Arbitration Service”). The wording may be drafted by ACAS or by employment law solicitors or legal representatives acting for one of the parties involved.
Is a COT3 the same as a settlement agreement?
It is similar in purpose to a settlement agreement though the wording of a COT3 tends to be more concise. In the same way as a settlement agreement prevents an employee from pursuing claims in the Employment Tribunal, a COT3 draws a line under claims which have been raised and may also prevent further claims from being pursued in the Tribunal. The key difference between the two types of agreement is the involvement of ACAS.
What role does ACAS have in relation to a COT3?
A COT3 will only arise where ACAS has been contacted in connection with the issues at stake. It may be that ACAS has been involved for some time and that the claim has reached an advanced stage- perhaps even at the stage of an Employment Tribunal full hearing
What is the effect of a COT3?
In brief, the effect is to restrict an employee from raising or continuing certain claims in the Employment Tribunal. It might have the effect of terminating the employee’s employment. It may also impose confidentiality obligations upon one or both parties. Often, these agreements also prevent parties from bad-mouthing each other and may include an agreed reference that the employer will be bound to give.
What issues should employees consider when approaching a COT3?
There are many implications of entering into this type of agreement. Amongst the various consequences involved, the COT3 may ask the employee to waive certain claims that they had not anticipated. For example, there may be personal injury claims at stake and it is important to consider all potential claims in the circumstances in light of the scope of the waiver.
Is a COT3 a binding agreement?
It is important to note that the involvement of an ACAS officer may result in a binding settlement being reached even before a draft COT3 is produced.
Do I need to take legal advice before agreeing a COT3?
Caution should be exercised when settlement discussions take place and it is always advisable to take legal advice at an early stage to ensure that a COT3 is as fair as possible and that the settlement process goes smoothly.
In a similar way to settlement agreements, the wording of a COT3 and the settlement that it describes are usually negotiable provided this is done at an early stage. It is important to consider all aspects of a settlement during negotiations including compensation agreed as well as non-financial aspects such as a favourable reference and confidentiality.
For further advice on COT3 settlements please get in touch with our experienced employment solicitors today.