Scottish referendum: what would a “yes” vote mean for employment law in Scotland?


With not long to go until the Scottish independence referendum on 18 September, attention remains focused on currency, economics and energy. Employment law has not featured significantly in the political debate, but what might a “yes” vote mean for HR practitioners in Scotland? Tony Hadden, a partner in the employment team of Scottish-headquartered law firm Brodies LLP, looks at what the future might hold.

The Scottish Parliament currently has no power over the bulk of employment law matters, which makes the law in Scotland very similar to the rest of the UK. While Scotland has different civil law principles that affect its contract law, the legislation that underpins most of the work of HR practitioners in Scotland applies equally across Great Britain.

If Scotland were to become independent, domestic employment law would not change unless a post-independence Scottish Parliament decided to legislate to change it. Therefore, whatever the domestic political persuasions of a new government, it would not be starting on “independence day” with a blank employment law canvas.

All of the existing law would continue to apply, and employment law would have to compete with other policy areas for parliamentary time to debate and implement any proposed changes. Given the near-universal impact of employment regulation on the lives of employers and employees in Scotland, it is likely that some changes to how its workplaces are governed would be introduced relatively early in the life of any post-independence Scottish Parliament.

One of the features of recent elections in Scotland (for both Westminster and Holyrood) has been a significant majority voting for parties representing (more or less) the progressive left. Assuming this trend were to continue in the immediate aftermath of a “yes” vote, most commentators believe that independence would lead to new employment legislation designed to strengthen trade union powers and increase basic rights for workers and employees in Scotland.

An independent Scotland’s relationship with Europe would affect how much freedom an independent Scottish Parliament would have in making changes to employment law. Many employment law rights stem from EU legislation, and the main political parties in Scotland are all committed to remaining in the EU.

This means that, even if Scotland’s EU membership status on “independence day” were to be unclear, it is unlikely that legislation would be passed post-independence that contradicted EU law as this would jeopardise any arguments about continuing membership or future application for membership. Accordingly, most of the current discrimination laws, the law on working time, rest breaks and holidays, and the TUPE rules (all derived from European directives) would be extremely unlikely to change in an independent Scotland.

There has been some discussion about how European rules relating to the way in which final salary pension schemes that operate across European borders will be regulated. Given the complexity of pensions regulation and the number of schemes that operate on a pan-UK basis, this is one area where governments on both sides of the border would have a common interest in ensuring that EU rules were applied in a proportionate and reasonable way. However, considerable transition concessions would be required at EU level to allow scheme administrators time to organise their affairs. This may, therefore, be an area in which demanding and potentially lengthy negotiations would be required.

Areas where we may see change could be in respect of the unfair dismissal qualifying period, the fee regime in employment tribunals, collective consultation on redundancy and family-friendly rights, and protections. The upper limit of compensation for unfair dismissal could be increased, at least partially reversing the UK Government’s recent decision to restrict the award to the lower of £76,574 or a year’s pay.

The current UK Government has generally sought to reduce the impact of employment legislation on UK business. This has had an effect on the extent to which employees are able to enforce their rights in tribunals, and as a consequence the number of employment tribunal claims lodged in the UK has fallen by more than 50%. The Scottish Government’s White Paper, “Your Guide to an Independent Scotland” (November 2013), states that the Scottish National Party would, if re-elected post-independence, reverse some of the recent changes to employment protection that “reduce key aspects of workers’ rights”.

Legislation has already been passed at UK level that will, if there is a “no” vote, introduce a new “Scottish Rate of Income Tax” from 2016. Further, all the main pro-Union parties are proposing that income tax should thereafter be devolved further, or even fully. Employers will, therefore, have to be prepared to distinguish “Scottish taxpayers” from employees elsewhere in the UK.

With Northern Ireland already having powers over employment law in the province and the Scottish Labour party proposing that control over the administration of employment tribunals (though not the substance of employment law) be devolved if there is a “no” vote, the Scottish Parliament may have the opportunity to make its mark on employment law north of the border whatever the outcome on 18 September.

Tony Hadden

About Tony Hadden

Tony Hadden is a partner in the employment team of Brodies LLP. For more information, contact Tony on 0131 656 0290 or at [email protected]
Comments are closed.