15 Sep 2014

Scottish Referendum: any change for employment law?


This week, Scotland will decide whether to remain part of the UK or establish itself as an independent country. Whilst numerous debates on currency and economics have taken the centre stage, less consideration has been given to the impact the vote may have on employment issues.

It's a "Yes" - now what?
In the event of a "Yes" vote, it is likely that recent changes brought in by the Coalition Government will be overturned in Scotland. In particular, unfair dismissal and qualifying periods, fees in the Employment Tribunals and family-friendly rights will be reviewed and brought in line with a pro-employee and union-friendly agenda to support and bolster basic employment rights.

The Scottish government is already proposing to overturn recent changes to collective redundancy consultation requirements and reintroduce the 90-day consultation period. Since many businesses have predicted that they would withdraw head office functions from an independent Scotland, this could slow their exit by some weeks and increase the cost of the exercise.

As the main Scottish political parties are pro-EU and it is generally accepted that Scotland will seek to become a member of the EU, the new state will need to be careful in maintaining the relationship with Europe and avoid bringing in any legislation that may contravene EU legislation. The process to re-join the EU could be slow, and that in itself will slow down any extensive rewriting of employment law.

Recent history tells us it is likely that future independent governments will be politically left of centre. This is likely to have a significant impact on any future changes in independent Scottish employment law, which may draw away from the English "Anglo-Saxon" work culture to a more "continental" European approach to labour law.

It's a "No" - does anything change?
In many respects employment law in Scotland is the same as that in England and Wales. However, Scots law differs from that of England and Wales in its interpretation of certain contractual obligations and administration of employment law in the tribunals. However, most basic employment rights, such as unfair dismissal and discrimination, are based on the same principles as those in England and Wales.

In the event of a "No" vote, Scotland will continue to be subject to UK employment legislation. However, the Westminster Government has already decided that a new "Scottish Rate of Income Tax" will be introduced from 2016. There are currently additional proposals for income tax to be further or even fully devolved in the coming years. That could lead multinational companies (for example in the competitive oil sector) to come under even heavier pressure from their workforces to provide tax-efficient arrangements for employees and consultants.

In a gear up towards the upcoming general election, Shadow Business Secretary Chuka Umunna has announced that, if elected, the Labour Party will seek to move away from the current tribunal system. They will look to replace it with "a fairer system", which the Party believes "will ensure that affordability is not a barrier to employees seeking redress in the workplace". Whilst intended probably to support Labour's "No" campaign, Mr Umunna's words will (contrary to plan) resonate with independent Scottish policymakers, too. Scotland may well lead the way in showing her neighbours how to dispense accessible workplace justice.