When to use a settlement agreement

Settlement agreements are appropriate in a range of situations: where you want to end an employment relationship without going through a formal disciplinary or redundancy process, where a formal process has concluded and both parties want a clean break, where there is a dispute about contractual terms or pay, or where both parties agree that the employment relationship has run its course.

The key advantage of a settlement agreement is finality. Once signed, the employee cannot bring the agreed claims.

COT3 agreements

A COT3 is a form of settlement agreement reached through ACAS conciliation. It is used to settle tribunal claims or potential claims, often in connection with an ACAS Early Conciliation process.

We draft COT3 agreements for clients and advise on the appropriate level of settlement, taking into account the merits of any claim, the cost of defending it, and the business's risk appetite.

Getting the amount right

The amount of a settlement payment depends on a number of factors: the length of service, the nature of any claim, the strength of the employee's position, and the cost to the employer of not settling. We advise on what a reasonable settlement looks like in your specific situation, taking into account the commercial reality as well as the legal position.

The independent legal advice requirement

The employee must receive independent legal advice for a settlement agreement to be valid. Typically, the employer contributes to the cost of this advice. We work alongside employment solicitors who can provide this advice promptly and efficiently.