ACAS COT3 vs settlement agreement: what's the difference?
Both end a workplace dispute with a payment in exchange for waiving claims. But they're reached differently, and that difference matters.
What is a COT3?
A COT3 is a settlement reached through ACAS (the Advisory, Conciliation and Arbitration Service), usually once you've either started the mandatory Early Conciliation process or already lodged an employment tribunal claim. An ACAS conciliator acts as a neutral go-between, and if both sides agree terms, they're recorded on a COT3 form. See ACAS's Early Conciliation guidance for the source.
What is a settlement agreement?
A settlement agreement is a direct contract between you and your employer, negotiated without ACAS in the middle, and it legally requires you to get independent legal advice before it's valid.
What are the key differences between a COT3 and a settlement agreement?
| COT3 | Settlement Agreement | |
|---|---|---|
| Who's involved | An ACAS conciliator facilitates | Direct negotiation between you and your employer (often through solicitors) |
| Independent legal advice | Not legally required for validity | Legally required for validity |
| When it's typically used | During Early Conciliation or an active tribunal claim | Usually before any tribunal claim is lodged |
| Speed | Can sometimes be quicker, with less paperwork | Can take longer due to the advice requirement, but often more thorough |
Why does the settlement agreement advice requirement matter?
Because a COT3 doesn't require independent legal advice, it's entirely possible to agree one without a solicitor checking it over. Which means the responsibility for understanding what you're giving up falls more heavily on you and, informally, on the ACAS conciliator, who is neutral and doesn't advise either side. If you're offered a COT3, getting your own independent advice is still a very good idea, even though it's not compulsory.
Which one applies to you: a COT3 or a settlement agreement?
If you've already started Early Conciliation or lodged a tribunal claim, you're likely looking at a COT3. If your employer has approached you directly, before any tribunal process, you're likely looking at a settlement agreement. Either way, the underlying question. Is the offer fair, and what am I giving up. Is the same.
Been offered either a COT3 or a settlement agreement and want a plain read on it? Get free advice and help.
Frequently asked questions
Is a COT3 legally binding like a settlement agreement?
Should I get a solicitor to check a COT3 even though it’s not required?
Can I get a settlement agreement instead of a COT3?
Wherever you are in the process, our free advice service is here to help.