Employing in Scotland: essentials for small businesses

Employment is one of the areas in which a Scottish business can read United Kingdom guidance and rely on most of it. Employment law is reserved to the United Kingdom Parliament, so the substantive rights, including protection from unfair dismissal, the discrimination framework, working time and statutory pay and leave, apply in Glasgow on the same terms as in Leeds.

What is not the same is where a claim is heard, who hears it, and where an appeal goes. Employment tribunals in Scotland are separately administered, with their own leadership and their own listing arrangements, and an appeal from the Employment Appeal Tribunal in a Scottish case proceeds to the Inner House of the Court of Session and not to the Court of Appeal of England and Wales.

That matters more than it may appear. Scottish tribunal decisions, Scottish practice and Scottish counsel are the relevant reference points, and guidance written for the English tribunal system will occasionally describe a process that is not the one an employer is in.

A note on currency

Employment legislation has been under sustained reform, with provisions commencing in stages over several years. Any article that states a qualifying period, a compensation cap or a statutory rate is accurate for a limited time only.

We have deliberately not included figures below. Check them, or ask, at the point at which you need them, rather than relying on anything written months earlier.

The documents

Most employment problems in small businesses are document problems that were left alone.

Every employee is entitled to a written statement of the particulars of their employment, and there are prescribed contents. Meeting that obligation with a one-page offer letter is common and inadequate. A proper contract also deals with notice, confidentiality, intellectual property created during employment, deductions, garden leave, and where it is justified, post-termination restrictions.

Policies belong in a handbook that is expressly non-contractual, so that improving a procedure does not amount to varying everyone's contract. The disciplinary and grievance procedures in particular should be capable of being followed by a manager under pressure, which usually means shorter than the version bought off the shelf.

Process is what tribunals examine

The most useful thing a small employer can understand is that dismissals are lost on process far more often than on substance. A genuine reason, honestly held, will not save a dismissal carried out without investigation, without putting the allegations to the employee, without a hearing at which they can respond, and without a right of appeal.

The corollary is more encouraging. An employer who follows a fair process, keeps contemporaneous notes and can explain the reasoning is in a strong position even where the decision itself was finely balanced.

Two habits do most of the work. Write things down at the time, in terms you would be content to read aloud. And separate the roles, so that the person who investigates is not the person who decides, and neither of them hears the appeal.

Restrictive covenants

Post-termination restrictions are enforceable in Scotland, but they are restraints of trade and will be read narrowly. A covenant drafted too widely is not read down to something reasonable; it fails altogether.

In practical terms, restrict by reference to the clients the employee actually dealt with and not to the whole client base, keep the duration to what is needed to protect the connection, and review the covenants when somebody is promoted. A restriction agreed when a person was a junior salesperson may be worthless by the time they are a sales director.

When a business changes hands

If a business, or a distinct part of one, is transferred, employees may move automatically to the buyer with their terms and their accrued service intact, and both parties take on information and consultation obligations before it happens.

This applies to service provision changes as well as to conventional business sales, so it can be triggered by outsourcing a function, by bringing one back in-house, or by changing contractor. It is regularly discovered late in a transaction, by which point the timetable is already compromised.

Time limits

Employment tribunal time limits are measured in a small number of months and are enforced far more rigidly than ordinary civil time bars. Conciliation through the statutory service is a required step before most claims, and it adjusts the calculation of the deadline rather than suspending it indefinitely.

For an employer, the practical point is that a claim form arriving starts a short clock. The response deadline is unforgiving, and a missed response can result in judgment without a hearing.

A quarterly check

Confirm that every employee has a compliant written contract. Confirm the handbook is expressly non-contractual. Read the disciplinary procedure and ask honestly whether a line manager could follow it. Review the restrictive covenants of anyone promoted in the last three years. And where a transaction is in prospect, raise the employment position at the outset and not at completion.