COT3 and settlement agreements are both written agreements which are intended to settle, or resolve potential employment law complaints that could be brought by employees, workers and suchlike.

Settlement agreement

Pretty much every employment law right given to workers can be found in government legislation. Because these rights are so important and fundamental, the same legislation that gives the rights will usually include a provision that they cannot be given away by employees, in exchange for money or otherwise, unless they have previously been advised by a suitably qualified person. This is usually a solicitor, but could equally be ACAS, a trade union official or a legal executive. Where an employee has potential employment claims, and the employer wants to have a clean break so that none of these claims can be brought against them, they will want to enter into a settlement agreement with the employee. In these cases the employee will need to be advised by a solicitor, trade union rep or legal executive (but not all trade union reps or legal executives can do this).

A settlement agreement will usually be in the form of a long agreement (20 or so pages is not unusual), with adviser’s certificate attached. There will usually also be an agreed reference and a very long list of the claims you are settling.


A COT3 agreement, on the other hand, can only be achieved through ACAS. They are usually used where a Tribunal claim has actually been issued, or sometimes when the early conciliation process is being followed. They have the same effect as the settlement agreement but will usually be much shorter and involve the signature of representatives rather than the parties themselves.

The key differences between settlement agreements and COT3 agreements are as follows:

  1. The COT3 agreement will usually be in a far simpler format than the settlement agreement. ACAS has standard form agreements that it can use. Settlement agreements will usually have been drafted by lawyers acting for employers and will seek to put far more obligations on the employee.
  2. Whilst settlement agreements will usually have to be signed, COT3 agreements can be entered into verbally, provided ACAS has been involved.
  3. Whilst a settlement agreement can always be entered into, COT3 agreements can only be entered into when ACAS has been involved. ACAS will only usually want to be involved where there is a dispute, and will not want to be involved at the last minute.
  4. COT3 agreements will usually relate to particular complaints only, whereas Settlement Agreements will seek to settle all employment claims.
  5. COT3 agreements are usually signed by representatives, whereas settlement agreements will have to be signed by employees themselves.

Further reading

Settlement agreements – everything you need to know

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