Both routes can finally settle employment claims, but they are formed differently. Read the scope, payment mechanics and continuing obligations before focusing on the headline figure.
Use this guide to identify what should have happened, which records should exist and which questions still need an answer.
Key points
- Start with employment status and the exact event.
- Separate contract, policy, statutory right and good practice.
- Ask for reasons and records that can be tested.
- Keep internal and external deadlines on separate calendars.
Compare
Settlement agreement or COT3?
| Issue | Settlement agreement | Acas COT3 |
|---|---|---|
| Route | Private statutory agreement meeting legal conditions. | Agreement reached through Acas conciliation. |
| Independent advice | Required on the agreement and its effect for statutory validity. | No equivalent statutory independent-advice condition, although advice may still be valuable. |
| Form | Must be in writing and identify the particular claims covered. | Can become binding once terms are agreed through Acas, before a later form is signed. |
| Timing | Can be used with or without tribunal proceedings. | Used through Acas before or during tribunal proceedings. |
Map every term, not only compensation
Check termination date, notice, accrued holiday, wages, expenses, pension, tax wording, contribution to advice costs, reference, announcement, return of property, confidentiality, non-derogatory statements, restrictions, warranties, indemnities, repayment provisions and payment deadline. Separate sums already owed from the additional settlement payment.
Which claims are being settled?
A settlement agreement must relate to particular complaints or proceedings and satisfy statutory conditions. Broad wording can still have serious practical consequences. Ask the adviser to identify each waived claim, any preserved claims, and whether unknown claims or future events are addressed.
A COT3 can also settle claims widely depending on its wording. Do not assume that only the claim named in early conciliation is affected.
Confidentiality and speaking to others
Check permitted disclosures to close family, professional advisers, tax authorities, regulators, police and healthcare professionals. A clause cannot safely be understood from the word “confidential” alone. Ask what happens if either party breaches and whether any repayment term is proportionate.
Time to consider and independent advice
The Acas Code on settlement agreements recommends a reasonable period to consider formal written terms, generally at least 10 calendar days unless the parties agree otherwise. That is a benchmark, not an automatic extension of tribunal limitation. Protect external deadlines while negotiations continue.
If payment is late
Keep the binding agreement, payment date and account records. Acas provides a route for reporting non-payment of a COT3 and government enforcement processes may be available. A settlement agreement is enforced as a contract, subject to its terms and the relevant court route.
What can you realistically ask for?
- A clear written explanation of the decision and the rule used.
- Correction of factual or procedural errors.
- A reconsideration, meeting, appeal or grievance outcome where appropriate.
- Preservation and disclosure of the material needed to understand the decision.
- A specific practical remedy rather than a general request to “deal with it”.
Evidence worth keeping
Preserve original, dated records. Keep a short chronology linking each item to the fact it may prove.
Common employer responses, and what they do not necessarily prove
| Employer says | What to check |
|---|---|
| “The tax clause guarantees no tax is due.” | Tax treatment depends on the nature of each payment and the law, not the label alone. |
| “You can decide after signing.” | A binding agreement may remove the underlying claims. Advice and negotiation belong before commitment. |
| “The reference will be sorted later.” | If a reference matters, agree the actual wording or a clear process as part of the settlement. |
What to say next
Adapt the wording to the facts. Do not state that a right definitely applies until you have checked status, eligibility, dates and the correct legal route.
What to do
A practical next-step plan
- Record the event, decision, date, people involved and practical effect.
- Identify the contractual, policy and statutory routes separately.
- Request the precise reason and the smallest useful evidence set.
- Use the internal process and ask for a defined remedy.
- Protect the Acas and tribunal deadline independently of internal discussions.
Escalation and time limits
For most employment tribunal claims whose time limit starts on or after 1 October 2026, the primary limit is now six months minus one day. If the time limit started before that date, the earlier three-month-minus-one-day framework usually continues to apply. Some claims have different limits, including statutory redundancy pay, and interim relief in certain dismissal cases can require action within seven days.
An internal request, grievance, disciplinary process or appeal does not normally stop the tribunal clock. Notify Acas within the applicable limit. Early conciliation pauses the clock only within the statutory scheme, and the calculation can be technical where there are several acts or respondents.
Official sources
Check the current source material.
- Acas: Settlement agreements ↗
- Acas: Early conciliation ↗
- Acas: Getting paid under a COT3 ↗
- GOV.UK: Enforce an Acas settlement ↗
ConsumerWise provides general information rather than individual legal advice. Check current rules, dates, status and eligibility against the official source before acting.