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Scottish Independence – Employers at the Ready

Posted on Aug 21, 2014 by Hayley Anderson  | 0 Comments

As 18th September is fast approaching, it is worth pointing out some possible consequences for employment law in Scotland and in particular for individual contracts of employment should Scotland become an independent country. Whilst no immediate changes would take place, it is still worth thinking about what might happen on ‘Independence Day’ in March 2016.

Most existing contracts of employment will provide for salaries to be paid in pounds sterling. Without delving any deeper into the controversial currency debate, there are some important questions to consider. What happens if the currency changes – how do we then pay our employees? And if there’s a change, could this be considered as a breach of contract by the employer as the employees would no longer be receiving what they signed up for? How would we go about determining whether individual employees are worse off under their employment contracts?

Also, what would happen to the minimum wage? The Scottish Government has stated in its White Paper that it is committed to ensuring that the national minimum wage rises at least in line with inflation and also proposes to set up a Fair Work Commission (FWC) which would advise on the minimum wage.

Should there be a ‘Yes’ vote, employers should consider taking legal advice on their contracts of employment to include wording to take account of a possible change in currency and they also may want to consult in advance with employees on any changes. Similarly, employers may want to review any definitions of the “UK” in contracts of employment, particularly in relation to the geographical boundaries of restrictive covenants and consider whether additional information is required if employees will be required to work “abroad” (i.e. in England, Wales or Northern Ireland).

As we know, continued membership of the EU is not a given, although it’s expected that Scotland would apply in its own right for membership. It may be, however, that there will be a period of uncertainty as to whether or not Scotland will successfully gain entry. It is not expected, at least initially, that there will be deviation from the significant body of EU legislation that currently governs employment rights in the UK. A new paper released yesterday by the Economic and Social Research Council considers the road to membership of the EU in more detail.

The Scottish Government has also pledged to repeal some changes made to UK employment law including the controversial tribunal fees now payable by claimants wishing to pursue claims for compensation from their previous employer and the two year qualifying period for claiming unfair dismissal (thus reverting to employees being eligible to claim unfair dismissal if dismissed after one year of service). The purpose of introducing these changes in the first place was to reduce the number of spurious claims being made and also significantly reduce the financial burden of running employment tribunal claims. Arguably, reinstating the previous position would result in a knock on increase to the number of tribunal claims lodged and full hearings taking place, thus resulting in a significant increase in spend – presumably back to a level similar as before. Other changes to be reversed would be Employee Shareholder Status whereby employees receive shares in exchange for waiving certain employment rights and the new 45 day consultation period for collective redundancies. This would revert to the previous 90 day period. The Scottish Government is also committed to tackling the controversial use by some employers of zero hours contracts and ensuring that women have equal opportunities by consulting on a target for female representation on company boards and, if necessary, introducing legislation to enforce this.

Whatever Scotland decides, MBM Commercial is committed to ensuring that it will be well equipped to advise clients both north and south of the border. We now have several solicitors who are qualified in both Scotland and England and Wales, myself in the Employment Team and Melanie Schwindt and Douglas Roberts in the Corporate Team.   If you would like to discuss any of the matters raised in this blog, or any other aspect of employment law please get in touch with me or Hannah

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