Rules on tribunals, minimum wage, working time, and immigration could be affected
The outcome of the referendum on Scottish independence will shortly be known, ending an agonising period of uncertainty for many about the future of Scotland and the rest of the UK. But even when the results of the vote are announced, the uncertainty will not be over.
If there is a ‘yes’ vote, there will be negotiations to resolve the detail of how separation will work. If the outcome is ‘no’, the changes will be less substantial. However, the UK government’s promise of devo-max within a short timeframe is likely to lead to significant changes – including the possibility of different income tax regimes. Whatever the result, there will be implications for UK employers to consider.
Legal system
Although Scotland currently has a separate legal system and there are some differences in employment law in areas such as contract law, the differences are relatively minor. Employment law matters are decided by Westminster at present: they are not devolved. As a result, the vast majority of statutory employment laws in Scotland are identical to those in England and Wales, making life easy for employers who employ staff across the UK. That, combined with a single tax regime, a single currency and a single employment tribunal system, has made it straightforward for employers to standardise HR and payroll practices across the UK, regardless of where employees are based.
It is not yet known what sort of currency Scotland will have if there is a ‘yes’ vote. In the event that Scotland does not continue to use the pound, employers with staff in both Scotland and the rest of the UK, would need to deal with the practicalities of operating in different currencies. Different tax laws would apply, bringing with them an additional administrative burden for employers to contend with.
EU membership
The extent to which employment laws may diverge if there is a ‘yes’ vote is unclear. This may depend largely on Scotland's membership of the European Union. Although the white paper on independence published by the Scottish government last year made it clear that the SNP would want Scotland to remain in the EU "from the day Scotland becomes an independent country", some commentators have suggested that it could take five or six years to rejoin the EU.
One possibility thrown up by independence is that there would be scope for any new government - depending on its political leanings - to make changes to employment laws without the restrictions of an EU legislative framework. Some may say that the likelihood of significant change is low if a Scottish government planned to rejoin the EU within a few years. However, the possibility of divergent employment laws certainly exists. For example, the white paper suggested that the national minimum wage would rise with inflation if the SNP were in charge.
Certain changes on Scotland’s re-entry to the EU may not be optional. For example, Scotland may not benefit from the ability of employees to opt-out of the 48-hour average working week as this concession was specifically negotiated by the UK.
Immigration
The white paper also proposed that Scotland would have a far more liberal immigration policy than the UK has at present. There is a stated intention to increase net migration to 24,000 a year and to encourage migrant workers to come to Scotland. Some would argue that such a policy may result in a need for border control between Scotland and England: so the movement of employees throughout the UK may involve increased red tape.
Whatever the result of the referendum, it is clear that change is afoot.
Elaine McIlroy is a senior associate at MacRoberts
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