Will employers be facing two sets of rules north and south of the border?
Prior to the general election result, and following the Scottish independence referendum, the implications for employment law of the proposed devolution of increased powers to Scotland seemed clear. The Smith Commission, set up to make proposals about devolution, suggested that while most employment laws would remain under the control of Westminster (except in some minor respects), the administration and funding of the employment tribunal system should be devolved to the Scottish Parliament. So it looked like the main impact of the Smith report would be that Scotland could gain the power to abolish tribunal fees, resulting in a sharp rise in claims against employers in Scotland.
The Scotland Bill, published on 28 May, has adopted the report’s proposals on employment law, although the tribunal funding outcome is not yet clear. The Bill is being fast tracked through Parliament and is due to become law in early 2016, so employers should not have long to wait to find out the implications of this aspect of devolution.
But the expectation that the vast majority of employment laws would remain broadly the same north and south of the border has now been called into doubt as a result of the landslide victory of the SNP in the general election. The party clearly has more political leverage than previously, not just through the number of Westminster seats it has but through the government’s aim to reduce the risk of another referendum being called for in the short to medium term.
And it seems that David Cameron may be prepared to listen to what SNP leader Nicola Sturgeon is suggesting. In talks in May, the prime minister said he was open to “sensible suggestions” about devolving further powers to Scotland. The SNP has said it will “put forward proposals for devolution further than the Smith Commission proposals”. The party has become increasingly vocal about wanting the devolution of substantive employment laws to the Scottish Parliament, although whether or not they will get them remains to be seen.
Nicola Sturgeon has said she is concerned about “the potential erosion of employment rights” and in May, the party announced it had reached an agreement with the Scottish Trades Union Congress to call for Westminster to prioritise further devolution to the Scottish Parliament of substantive employment law, including equality and trade union laws and the power to set a minimum wage. Although the SNP has yet to give precise details of what changes it would like to see, the party clearly leans towards bolstering employment law protections rather than weakening them.
Devolving the power to legislate about substantive employment laws to a Scottish Parliament could result in an unsatisfactory position for UK-wide employers. Although there are currently some differences in employment law between Scotland and the rest of the UK, they tend to be fairly minor. The vast majority of employment laws are the same which allows for clarity, consistency and reduced administration.
Having two sets of employment law rules would cause unnecessary complexity for national employers. For example, the SNP has proposed having a 90-day collective consultation period for redundancies in Scotland, whereas the current rules only require 45 days’ collective consultation. For employers trying to make job cuts across the UK, it would be difficult to deal with two sets of rules. Similarly, having a higher minimum wage in Scotland than in England may result in employees south of the border being disgruntled at the differential treatment. Changes to equality legislation may result in employers having to apply different procedures depending on where an employee is located.
It is unclear how the SNP’s influence will play out in practice. It is possible that the government may be paying lip service to “listening” to proposals for further devolution while planning to stick closely to the Smith commission proposals. The Scotland Bill as currently drafted certainly does not anticipate the devolution of substantive employment laws, although that could change.
In the meantime, employers will have to wait to see what happens next. The political landscape is perhaps not what many would have predicted 12 months ago and the coming months may hold some further surprises.
Elaine McIlroy is a partner and employment law specialist at Weightmans (Scotland)
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