What’s the difference between a COT3 and a settlement agreement?

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Unsure about the difference between COT3 and settlement agreement contracts and how you choose the right route for you? As very similar types of legal documents used to settle disputes, it’s no wonder that these terms are commonly confused.

To help you learn more about these agreements and how they can be used to resolve your employment disagreement, we explain the main difference between COT3 and settlement agreement contracts below.

COT3 v settlement agreement

A settlement agreement is a legally binding contract used to settle employment disputes as per the agreed upon terms that are negotiated by all involved parties. In order for these contracts to be legally binding, they must meet the requirements set out in section 203 of the Employment Rights Act 1996.

So, what about COT3 agreements? Widely known by the acronym COT3, this term refers to a ‘compromise of tribunal’ agreement which is a legally binding settlement agreement used in the ACAS early conciliation process.

A COT3 agreement sets out the various terms that have helped a business and the concerned employee to settle actual or potential claims before the case comes before the Employment Tribunal.

If the terms are agreed upon verbally by both parties to ACAS, then the claim is settled, and the case doesn’t go to tribunal. If not, the case will continue to an employment tribunal hearing in an attempt to resolve the matter.

Difference between COT3 and a settlement agreement

While a COT3 agreement and a settlement agreement are often used as interchangeable terms and both can be used to resolve employment related disputes, there is a distinct difference between the two types of contracts.

Put simply, a COT3 agreement is typically used in relation to a particular dispute between two parties. A settlement agreement, on the other hand, usually covers a range of claims in one contract, and is often arranged in conjunction with the termination of an employee’s employment.

Not to mention, unlike a standard settlement agreement, a COT3 is agreed through the ACAS early conciliation process and there’s no legal obligation for both parties to receive legal advice, though they may choose to seek legal guidance, if desired.

Experienced settlement agreement solicitors

When it comes to supporting you with understanding, drafting, and negotiating legally binding settlement agreements, the team of experienced solicitors at Freeman Jones can help.

Our selection of settlement agreement services are essential for helping both businesses and employees come to an amicable arrangement without seeking court action or souring professional relationships.

Regardless of whether you’re concerned about breach of contract, particular clauses in the settlement agreement you’ve been asked to sign, or you’re struggling to understand certain legal terms, please don’t hesitate to contact our team of dedicated solicitors.

The first 20 minutes of your no-obligation, over-the-phone consultation with our legal team are completely free, so there’s nothing to lose and everything to gain.

To speak to one of our professional settlement agreement solicitors today about COT3 and settlement agreement contracts, simply call us on 01244 506 444, email us at info@fjsolicitors.co.uk, or get in touch using our convenient online contact form

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Author Colin Freeman View Profile
Colin qualified as a solicitor in 1998. He specialises predominantly in family law, litigation / dispute resolution, wills, probate and settlement agreements and has notable cases reported in the Court of Appeal and High Court.
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