With the respective “yes” and “no” campaigns heading to their final stages and televised debates between politicians being well underway, the question of whether Scotland will vote for independence in just 2 weeks’ time is looming large.
We already know that the mere fact of the referendum is likely to result in increased autonomy for the Scottish Parliament, even in the event of a “no” vote this month. A “yes” vote will give them independence. What is just as unknown as the outcome, however, is quite what a vote either way might ultimately mean for employers with operations in Scotland or those who trade with Scottish businesses. No-one seems to offer any clear answers as yet.
There is good reason for that: even ardent followers of the debate will tell you that the politicians are not (necessarily) being evasive when they appear not to answer this vital question. The truth is, we are in uncharted waters and no-one can be certain where they will lead. Many key issues, such as what Scotland’s currency will be, how Scottish institutions will be regulated and whether or not an independent Scotland will be part of the EU, will require negotiation between Scotland and other states/bodies.
Those negotiations will not commence unless and until a vote in favour of independence is confirmed. The major issues such as currency, taxation and EU membership will clearly be at the front of the queue for those discussions and will be of greatest significance to employers. But what of employment law more generally and the aspirations of an independent Scotland?
Newly acquired powers on independence
As part of the United Kingdom of Great Britain and Northern Ireland, Scotland is currently subject to one set of economic and social policies, one regulatory system and one taxation system. Legal systems within the UK are different, with England and Wales having a shared legal system and each of Scotland and Northern Ireland having their own legal system (although England and Wales and Scotland share the same Employment Tribunal system, something that would change on independence).
Devolution has meant that the Scottish Parliament is already responsible for all matters that are not expressly reserved to the UK Parliament, including health, education, policing, housing, planning and some aspects of transport. One example in an employment context is the enhanced public sector equality duties, which were introduced through regulation by Scottish Ministers in 2012 and which exceed the requirements of the Equality Act 2010 and, therefore, the statutory requirements in England and Wales. However, decisions about many important matters are still reserved to the UK Parliament. These include fiscal, economic and monetary policy; currency; employment and equality; financial services and financial markets; data protection; creation, operation, regulation and dissolution of business associations; insolvency; competition; intellectual property; import and export control; consumer protection; energy; defence and national security; foreign policy and immigration; tax; social security and pensions.
It appears the most likely outcome of a “yes” vote is that Scotland would become a new state and the remainder of the UK would be a continuing state. The stated intention is that a new Parliament would be operational from 24th March 2016.
As a new state, Scotland would be an independent country with a separate legal identity. In the context of establishing its own regulatory and institutional framework, currency, taxation system, public spending priorities, economic and social policies, etc., Scotland would need to consider the extent to which it retains or changes existing laws enacted by the UK Parliament, including those newly inherited aspects not currently devolved.
Key areas of change likely on independence
The White Paper, “Scotland’s Future –your guide to an independent Scotland”, sets out many of the aspirations for an independent Scotland on the part of the Scottish National Party (SNP). Whilst the White Paper suggests that, if an SNP government is formed following a “yes” vote, a Scottish Parliament would initially adopt existing UK employment legislation and amend it as and when necessary, it also makes clear that employment law will be tailored to Scotland’s needs and that it intends to have a written constitution.
Although detailed policy considerations are not addressed, the document nonetheless identifies some of the thoughts as regards employment policy and where some changes and divergence from UK law might arise:
A key objective is to increase female and parental participation in workforce. In part, this would be achieved through expansion of state-funded childcare, which the SNP would aim to introduce eventually for all children from age 1, starting with 30 hours per week during term time for all 3-4 year olds. A second arm to this policy is the development of female representation on company boards and an intention to consult over how this might be achieved. Quotas are a distinct possibility.
- Industrial relations
Increased employee representation and influence would be very much on the agenda for the SNP. Indications are that trade union participation would be encouraged and the 45 day redundancy consultation period could be reversed (with a return to 90 days). A Convention on Employment and Labour Relations (as a forum for dialogue between parties over labour reforms) is also proposed.
There is also speculation that an intention to explore different ownership models for industries, such as rail travel, could indicate a preference for re-nationalisation in some quarters.
A stated aim is to establish a Fair Work Commission to guarantee minimum wage rises in line with inflation, which would be likely to result in an increase on current UK levels of 16%, to £4.36 per hour for adult workers. An enhanced New Deal programme would also be established to get the unemployed back to work and improve skills training.
A Scottish Employment Savings Trust would provide a pension scheme for lower earners. Pension age would rise to 66 in line with UK proposals but, thereafter, a review would be carried out before further rises are effected.
The SNP also says it would reverse recent employment law changes which ‘reduce key aspects of workers’ rights.’ Aside from restoring the 90 day consultation period for larger-scale redundancies, the SNP also promises to abolish employee shareholder status. Employment Tribunal fees could also be in the SNP’s sights, with a promise of a ‘constructive dialogue’ on access to Employment Tribunals.
Like the UK Government, the SNP would review immigration law. Current proposals included a new, points-based system (possibly including incentives to work in remoter geographical areas).
As the above suggests, there is so much currently that is unknown and will remain so for some time. The White Paper suggests key areas for reform in the event of a vote in favour of independence but provides no certainty or time frame. The areas highlighted are therefore ones to watch after the more significant currency and other issues but even are not definitive.
However, one interesting aspect of the White Paper in this context, is its reference to EU laws and a seeming commitment to retaining current EU treaty obligations and provisions, not as a member of the EU initially, but via the principle of continuity of effect (unless or until membership for Scotland is negotiated). That could suggest that like UK currently, Scotland will allow much employment law to be dictated from Europe and that, long term, differences between Scotland and England/ Wales may be subtle, particularly if Scotland did gain membership of the EU in its own right in due course.