Devolution of employment legislation: new approaches

The Institute for Employment Rights (IER) started a renewed debate on devolving employment law to Scotland with its Charter of Workers’ Rights for Scotland in 2019[i]. Many organisations, from political parties to trade unions and anti-poverty organisations, have since supported the principle. The challenge has been to articulate just what this means in practice. The Jimmy Reid Foundation[ii] has recently published a paper, Devolving Employment Legislation, which sets out a detailed policy for the devolution of employment-related law to Scotland.[iii]

We start with an examination of employment standards, which often underpin the case for devolution. Devolution initiatives like Fair Work have mitigated some of the problems facing workers in Scotland. However, as we set out in our assessment of Fair Work in Scotland last year, more could be done using these powers[iv]. This reflects the proposals in the IER Charter, although interviews with union representatives for that research recognised the limits of voluntarism and the powers of the Scottish Parliament. We also summarise the case for and against devolution. While we understand the preference of many UK employer organisations for the consistency of a single UK system of employment law, we conclude that this argument has limited credibility 25 years on from devolution.

In the chapter on the employment law framework in Scotland, we identify the differences between Scotland and the rest of the UK and the existing powers that impact employment. We cover all the areas of law that might have employment law implications and look at how these could be devolved. Some areas of law, like transport, company law and social security, have more minor elements of employment impact, and those areas need to be considered in the broader devolution debate. We recommend the following for devolution:

• Employment rights, primarily those set out in the Employment Rights Act 1996, and the related court structure are already being devolved.
• Trade unions and industrial action are primarily set out in the Trade Union and Labour Relations (Consolidation) Act 1992. This includes employer associations registered under that legislation. This devolution may require a separate Certification Officer for Scotland.
• Wages as set out in employment rights and the contract of employment. This should include the National Living Wage (NLW) and the National Minimum Wage (NMW).
• Equal opportunities and discrimination law as it applies to employment. This would also extend the role of the Scottish Human Rights Commission.
• Health and safety legislation and enforcement through creating a Scottish Health and Safety Executive.
• The partial devolution of immigration policy with a Scottish visa to enter the UK would let migrants live and work in Scotland with a Scottish tax code.
• The regulation of health professions.

While a case can be made for the devolution of occupational pensions, it is difficult to identify many benefits of establishing a separate pensions regulator, ombudsman and protection fund, with the associated costs. Pensions are one of the few policy areas where scale brings benefits, and there is a legitimate case for further consolidation in pension funds. We recognise that human rights legislation impacts employment law but argue that it will continue to be applied to employment law in a devolved administration. This issue would need to be reconsidered if the UK Government withdraws from the Convention treaty or repeals the Human Rights Act 1998.

The paper does not focus on setting out another wishlist of how employment rights could be improved through the devolution of employment law. However, there is no point in devolving any powers if they are not used for progressive purposes – powers for a purpose. We therefore examine proposals from the Scottish Government, the Institute of Employment Rights, and the Labour Party to strengthen employment rights. We propose that the IER Manifesto for Labour Law provides the basis for enhancing workers’ rights[v]. The underlying principle is that workers can only ensure dignity and respect in the workplace through collective action to determine their terms and conditions.

The strength of devolution is that a smaller administration can try new approaches that would be complex and slow to deliver across the UK. It could introduce a new constructive model of industrial relations and modern employment rights to replace the failed model facilitated by poor legislation from Westminster. In particular, we point to the Scandinavian model that fits a country like Scotland in scale and culture. These economies have managed to be socially inclusive and egalitarian, flexible, innovative and internationally competitive. We offer this paper as a practical guide to delivering a new model through devolution.

[i] Charter of Workers’ Rights for Scotland, (IER, 2019), https://www.ier.org.uk/projects/charter-of-workers-rights-for-scotland/

[ii] The Jimmy Reid Foundation is a think tank which brings together different voices from across the left in Scotland, building on the legacy that Jimmy Reid left us. https://reidfoundation.scot

[iii] D.Watson, Devolving Employment Legislation, (Reid Foundation, 2024), https://reidfoundation.scot/2024/02/devolving-employment-legislation/

[iv] D.Watson, Assessing Fair Work in Scotland (Reid Foundation, 2023), https://reidfoundation.scot/2023/08/assessing-fair-work-in-scotland/

[v] K.Ewing, J.Hendy, C.Jones, A Manifesto for Labour Law, (IER, 2016), https://www.ier.org.uk/product/manifesto-labour-law-towards-comprehensive-revision-workers-rights/