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COT3 v Settlement Agreement


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Can anyone explain me why COT3 agreement (brokered through ACAS) does not require the claimant to take an independent legal advice and Settlement Agreement does? The ACAS conciliator does not provide any advice on the terms of settlement, so it must be a clear disadvantage for an unrepresented claimant to go via ACAS(COT3) then?

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Because s203 Employment Rights Act 1996 says so ... legally speaking no other reason is required.

 

In an ideal world an unrepresented claimant would always want advice on the terms of a settlement. However unrepresented claimants might not be able to afford this advice. Sometimes it is paid for by the employer, but the employer the costs of this would be taken into account by the employer when deciding on the level of its settlement offer.

 

Also remember that the only legal advice required for a binding settlement agreement is on " the terms and effect of the proposed agreement and, in particular, its effect on his ability to pursue his rights before an employment tribunal". An employer would usually only pay for the bare minimum - this doesn't cover advice on whether the terms of settlement are fair or advice on whether the claim has a good chance of success.

 

I'm not quite sure why parliament took this decision. I imagine they thought that having an ACAS conciliator involved would offer some sort of protection and that use of the COT3 form would help make things clear for claimants. My guess is that parliament was concerned about people settling their claims without realising what they are doing - for example, a situation where an employer asks all its employees to sign a piece of paper, which includes a clause about settling all claims, without properly reading the document.

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