This week we are looking at COT3 agreements. COT3 agreements are akin to settlement agreements that settles potential or actual Employment Tribunal claims. Unlike a settlement agreement, a COT3 does not require an employee to obtain legal advice for a binding agreement. The agreements are also finalised and often negotiated via ACAS Early Conciliators.

The question in this case is:

Can a COT3 settle a subsequent tribunal claim against the same Respondent?

Mr Arvunescu, the Claimant, was briefly employed by Quick Release Ltd, the Respondent, for a period of two months in 2014. Upon termination of his employment, the Claimant commenced a claim for race discrimination against the Respondent. This claim was settled via a COT3 agreement in March 2018. The COT3 included the following clause:

The agreement is “accepted in full and final settlement of all or any costs, claims, expenses or rights of action of any kind whatsoever, wheresoever and howsoever arising under common law, statute or otherwise (whether or not within the jurisdiction of the employment tribunal) which the claimant has or may have against the respondent or against any employee, agent or officer of the respondent arising directly or indirectly out of or in connection with the claimant’s employment with the respondent, its termination or otherwise.”

In January 2018, the Claimant had applied for a job with QRG, a German company entirely owned by the Respondent. The Claimant’s application was unsuccessful and he commenced a separate claim for victimisation against the Respondent in May 2018 alleging that he was refused employment with QRG due to him bringing a previous race claim.

At a preliminary hearing the Employment Tribunal held that the victimisation claim fell within the remit of the COT3 wording. The claim was struck out. The Claimant appealed but the Employment Appeal Tribunal upheld the ET’s decision. The Claimant subsequently appealed to the Court of Appeal.

The CoA dismissed the appeal. It held that the victimisation claim arose in connection with the Claimant’s employment with the Respondent and was therefore within the remit of the COT3. The ET and EAT were therefore correct to strike out the claim.

The Takeaway Point

Yes, a widely drafted COT3 agreement can prevent future claims. In this case the words “in connection with employment, its termination or otherwise” was held to be grounds to strike out the claim. However, were this not in there the words “or may have against” the employer would also be applicable given the Claimant was aware of the potential victimisation claim when signing the COT3.

Whilst this COT3 drafting saved the Respondent in this case. The claim could have been avoided altogether had they included a restriction in the agreement preventing the Claimant from applying for future employment with the Respondent or any subsidiaries. Such clauses are common practice in settlement agreements and would have saved the cost of defending the claim at both ET and two subsequent appeals!