This blog aims to answer the question ‘what is a COT3 agreement?’ We also consider when COT3 agreements could be used and the advantages of alternative dispute resolution.
A COT3 agreement is a legally binding document that represents a settlement reached between the Claimant and Respondent. In essence, the Claimant would forfeit their Employment Tribunal claim in exchange for something, which is typically the settlement sum.
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The purpose of a COT3 Agreement
The primary purpose of a COT3 agreement is to provide a mechanism for settling disputes efficiently. By entering into this agreement both parties can avoid the stress, time, and costs associated with a tribunal hearing. In addition, the settlement of disputes, prior to a final hearing, reduces pressure on the Employment Tribunal.
ACAS involvement and COT3 agreements
When a Claimant submits an early conciliation notification form, the parties are allocated an ACAS conciliator. ACAS is impartial and the role of the conciliator is, where possible, to support the parties to resolve the dispute prior to the Employment Tribunal hearing.
If, at whatever stage in the process it may be, the parties agree to settlement terms, those terms of the agreement are sent to ACAS. ACAS will then incorporate the agreed terms into a document, and this document is a COT3. It may be that this situation occurs during a Dispute Resolution Appointment or due to without prejudice correspondence between the parties. To find out Why do you write without prejudice on a letter? Read our blog.
Is alternative dispute resolution mandatory for Employment Tribunal disputes?
Whether or not alternative dispute resolution is mandatory for employment disputes depends on a number of factors. For example, the number of days that a case is listed for and the region (geographical area) that the Tribunal hearing the case is in.
Alternative dispute resolution (in the context of Employment Tribunal proceedings) may be referred to as Judicial Mediation or Dispute Resolution appointments. It is important to remember that whether or not such appointments are mandatory, it is for the parties to decide if a settlement can be reached (and the terms of that settlement). If settlement is not possible, the parties will need to continue to prepare for the hearing (in accordance with the case management orders).
It is also worthy of note, that the parties can express a willingness to participate in judicial mediation within the agenda for the preliminary hearing. It will then be for the Employment Judge to decide what would be appropriate in the circumstances. To find out What happens at an Employment Tribunal preliminary hearing? Read our blog by clicking on the link.
Advantages of COT3 agreements and alternative dispute resolution
Cost effective – if a settlement can be reached through the use of alternative dispute resolution, and utilising a COT3 agreement to make the agreement binding, both parties could save considerable sums in legal fees compared to progressing the matter to a final hearing at an Employment Tribunal. Such savings are particularly significant if agreement can be achieved at an early stage as, once a binding agreement is in place, the work associated with the Tribunal directions (preparing for the Employment Tribunal hearing) will no longer be necessary.
Time saving – Depending on the commitments of the Tribunal that will hear the case, it may take a year (or more) for the case to be heard. Whereas alternative dispute resolution provides an opportunity for the case to be settled sooner. For example, depending on the circumstances, a dispute resolution appointment/ judicial mediation may have occurred, and as a result a settlement could be reached on that day.
Control over the outcome: litigation is, by its nature, uncertain. Reaching a settlement provides the parties with the opportunity of removing the risk associated with the outcome being determined by a judge at a hearing.
Preserving relationships – it can be particularly useful to resolve a dispute, before a hearing, in circumstances when the Claimant is still an employee of the Respondent.
What are the terms of a COT3 agreement?
The terms of a COT3 agreement are typically drafted by the parties. Gaining advice in preparation for, or during an alternative dispute resolution meeting, may well be helpful because, whether you are the Claimant or the Respondent, it is important to be fully aware of the strengths and weaknesses of the case. This is because views on the prospects are likely heavily influence the nature of any offers put forward.
In addition to the settlement sum itself, there are likely to be other terms that are important to the parties. An obvious example of a term, that is likely to be important to the Respondent, is confidentiality. If this is so, it is important that the wording of the confidentiality clause is appropriate and achieves the desired outcome. From a Claimant’s perspective, it is important that the individual fully appreciates the terms of the proposed agreement before it becomes legally binding.
A Cot3 agreement serves as a practical tool in the resolution of employment disputes. It enables parties to settle matters without resorting to lengthy and costly tribunal proceedings. However, it is important to ensure that those involved are properly informed so that the outcome is as good as possible.
Plotkin & Chandler works exclusively in the areas of HR and employment law and assists both employees and employers.
If you have brought an Employment Tribunal claim, or you are an organisation defending one, and want advice and or representation relating to alternative dispute resolution we can help.
Please contact us on 020 3923 8616 or via email on info@plotkinandchandler.com to discuss your needs and the ways in which we can help
