The use of Confidentiality Clauses and Derogatory Statement Clauses within Settlement Agreements: The rights and responsibilities of NHSScotland employees and employers

Section 2. What is a COT3?

Settlement of a claim can also be reached through involvement with ACAS, the outcome of which, if agreed, is formalised in a document known as a COT3.

Whilst this Guidance focuses on the use of confidentiality clauses/derogatory statement clauses within settlement agreements the presumption against their use also applies to a COT3.

ACAS is a Government funded organisation that helps mediate settlement of employment disputes. If an employee decides to make a claim to an Employment Tribunal, an ACAS Conciliation Officer will contact them to offer to help settle a claim and stop the case before the tribunal hearing.

If the employee agrees to this, ACAS will then contact the employer to find out if it is also prepared to negotiate through ACAS to try and settle any claim.

Neither the employee nor the employer has to use ACAS, but many find the service helpful, particularly if the employee doesn't have a representative, for whatever reason. This service is free.

The ACAS conciliator cannot provide either the employer or employee with legal advice and, unlike in the negotiation of settlement agreements, there is no requirement for an independent legal advisor, acting on behalf of the employee, to be involved. However, employees should consider seeking legal advice from a trade union representative, solicitor or other legal advisor.

If a claim is settled through ACAS it is binding on both the employee and employer. When the employee advises ACAS that they agree to the settlement, they can no longer proceed with the related Employment Tribunal and their case will automatically be withdrawn.

The settlement agreed by the employee and employer is usually recorded on a form called a COT3. As with settlement agreements, unless there are clear and transparent reasons for inclusion, and this is explicitly agreed by both the employee and employer, the COT3 should not contain a confidentiality clause/derogatory statement clause.

More information on the ACAS conciliation process and COT3s can be found at: http://www.acas.org.uk/index.aspx?articleid=1697.