For example, one situation where you might consider using a settlement agreement may be when an employee is not performing well and neither party wants to go through a lengthy skills process, and employers and employees are ready to finish their jobs quickly on agreed financial terms. What are settlement agreements, when and why they are used, and the impact of signing them. If the settlement agreement does not meet all legal requirements, it is not a valid settlement and leaves the employee with the door open to the claim against the employer. It is therefore important that a lot of care is taken in the drafting of the contract. An agreed reference is a form of words that the employer uses when a potential employer requests a professional reference. Positive professional references are a valuable part of settlement agreements for teachers and pedagogical professionals. In some cases, employees may avoid stressful formal disciplinary or fitness proceedings or other assessments by agreeing to dismissal under a settlement agreement. If you have an agreement with your employer and it has been communicated to the arbitration officer, the agreement cannot be changed. You must ensure that you agree to the terms and conditions that have been entered into before communicating them to the arbitration agent. Once a COT3 has been created, check the final version and make sure you are satisfied with all the requirements. A COT3 is an agreement that records the terms and conditions for settling a claim before an employment court (or a potential claim) agreed between you and your employer with the assistance of an arbitration agent employed by ACAS.