COT3 Agreements and the Acas Conciliation Process

If an employee threatens an employment tribunal claim, or has already lodged one, Acas conciliation and a COT3 agreement are often the fastest and lowest-cost way to draw a line under the dispute. A COT3 is the document that records a settlement reached through Acas, and the conciliation process is the structured negotiation that gets you there. Understanding how both work puts you in a far stronger position to resolve a dispute on sensible terms rather than spending months and significant money defending a claim.

What a COT3 agreement actually is

A COT3 is a legally binding agreement that records the terms on which an employment dispute is settled with the help of an Acas conciliator. The unusual name simply comes from the reference number of a form once used by the Central Office of Industrial Tribunals. In return for an agreed payment, and sometimes other terms such as an agreed reference, the employee gives up the right to bring or continue the tribunal claims listed in the agreement.

A COT3 can be used at two different stages:

• Before a claim is lodged, during Acas early conciliation, to settle a dispute that might otherwise become a tribunal claim.
• After a claim is lodged, during the tribunal proceedings, right up to and even during the hearing itself.

The key feature that sets a COT3 apart from other settlement routes is that it does not require the employee to take independent legal advice to be binding. We explain that distinction in detail in our guide to the difference between a settlement agreement and a COT3, but in short, a COT3 is valid because an Acas conciliator has been involved, not because a solicitor has signed it off.

How Acas early conciliation works

Before an employee can bring most types of tribunal claim, including unfair dismissal, discrimination and unlawful deductions from wages, they must first notify Acas and go through early conciliation. This is a mandatory step set out in the Employment Tribunals Act 1996 and the associated regulations.

The process runs broadly as follows:

1. Notification. The employee (the claimant) contacts Acas and provides basic details of the dispute. Either party can in fact approach Acas, and employers can take the initiative too, which we cover in our guide on employer-led conciliation.
2. Allocation. Acas assigns a conciliator who contacts both sides to explore whether a settlement is possible. The conciliator is impartial and does not take a view on the strength of either side's case.
3. Negotiation. Over the conciliation period, the conciliator passes offers and counter-offers between the parties, helping them find common ground. Nothing said during conciliation can usually be used as evidence if the matter later goes to a hearing.
4. Outcome. If terms are agreed, they are recorded in a COT3 and the dispute ends. If no agreement is reached, Acas issues an early conciliation certificate, which the employee needs before they can lodge a tribunal claim.

The 12-week conciliation period and stop the clock

For cases notified to Acas on or after 1 December 2025, the early conciliation period lasts up to 12 weeks, doubled from the previous six weeks under The Employment Tribunals (Early Conciliation: Exemptions and Rules of Procedure) (Amendment) Regulations 2025. Cases notified before that date still fall under the old six-week rule.

While conciliation is running, the tribunal time limit is paused. This is often called the stop the clock mechanism. The clock stops on the day Acas is notified and restarts when the certificate is issued, and the claimant always has at least one month from the certificate date to lodge their claim. For employers, the practical point is that the extended 12-week window gives more genuine room to negotiate a settlement before any claim is filed.

What a COT3 can settle, and what it should contain

A COT3 settles the specific claims it identifies. It can cover claims that have already been issued and potential future claims arising from the same facts. A well-drafted COT3 typically deals with:

• The settlement payment, with the sum and the payment date clearly stated.
• The tax treatment, recognising that the first £30,000 of a genuine ex-gratia termination payment is normally free of income tax and National Insurance, while sums representing earnings such as notice pay remain taxable.
• The claims being waived, set out clearly so there is no ambiguity about what has been settled.
• An agreed reference, where the parties want certainty about what future employers will be told.
• Confidentiality and non-derogatory terms, where appropriate and proportionate.

Because a COT3 is concise and there is no requirement for the employee to take legal advice, it is tempting to treat it as a quick formality. That is a mistake. Once signed, a COT3 is final, and poorly drafted wording, for example a payment clause without a clear deadline or a waiver that is too narrow or too wide, can cause real problems later. If either side breaks the agreement, it can be enforced through the civil courts as a breach of contract.

When a COT3 is the right tool, and when it is not

A COT3 is often the best option where:

• The dispute is already heading towards, or has reached, the tribunal.
• You want a fast, low-cost resolution without the formalities of independent legal advice.
• Acas is already involved through early conciliation.

A settlement agreement may suit you better where you are managing an exit proactively, away from any active dispute, for example following a stalled performance process or a sensitive redundancy. In those situations the protected conversation framework and a formal settlement agreement often give cleaner control of the timing. Our settlement agreement guide explains that route in full, and our settlement agreements service supports employers through either approach.

It is also worth remembering that conciliation only works if both sides are willing to engage. Acas cannot force a settlement, and a stubborn or unrealistic opponent may leave you with no option but to defend the claim. Even then, the cost and uncertainty of a tribunal usually make a serious attempt at conciliation worthwhile.

Why early conciliation is worth taking seriously

Reforms under the Employment Rights Act 2025 have been steadily increasing the risk employers face when a dispute reaches a tribunal. The pool of employees who can bring claims is widening, the time available to bring them is growing, and the potential cost of getting it wrong is rising. The extension of Acas early conciliation to 12 weeks sits within that same direction of travel, giving both sides more room to resolve matters before they escalate.

In that environment, the ability to settle quickly and cleanly through Acas conciliation and a COT3 becomes a genuinely valuable commercial tool. Engaging early and constructively, rather than treating conciliation as a box-ticking exercise, can save you considerable time, cost and stress.

How Rebox HR can help

Conciliation is a negotiation, and how you handle it shapes the outcome. At Rebox HR, we work alongside employers throughout the Acas process, from the first contact with the conciliator to agreeing the final wording of the COT3. We help you assess the real risk in the claim, decide on a sensible settlement range, and make sure the agreement protects your business properly.

If you have received an early conciliation notification or a tribunal claim and want experienced support, visit our settlement agreements service or book a free consultation to talk it through in confidence.