How Scotland’s Independence Vote Will Impact HR

By Catherine Skrzypinski Sep 18, 2014

No matter the outcome of Scotland’s historic referendum on Sept. 18, 2014, experts say the vote will have a tremendous impact on human resource practitioners—whether an independent Scotland emerges, or if it remains part of the United Kingdom.

“This referendum has completely engaged the population in a way that no election ever has,” Alistair Booth, ‎managing director at The HR Booth, an HR consultancy based near Edinburgh, Scotland, told SHRM Online. “People are completely open about their views and beliefs, and these are being talked about in workplaces across Scotland.”

If a simple majority of the 4 million eligible Scottish voters choose independence, employment law is not likely to change overnight, Booth explained, unless a post-independence Scottish Parliament decides to reverse what the current U.K. coalition government has put in place.

How a “yes” to independence vote will impact HR in both Scotland and the U.K. will depend on which party is in power, and the changes that party wishes to make in employment policy, taxation and immigration, added Naeema Choudry, partner at international law firm Eversheds in Manchester, England.

The outcome could also affect Scotland’s place in the European Union. While Scottish lawmakers maintain that Scotland is committed to staying in the EU, an independent Scotland would need to apply to be an EU member.

“From a practical point of view, a ‘yes’ vote will mean that HR practitioners with operations in Scotland will need to get to grips with any new laws introduced that will affect the employment relationship,” Choudry said. “They will also likely see a raise in collective employment relations situations, due to the greater focus on employee representation. HR practitioners may need to ‘brush up’ on their negotiating and bargaining skills.”

HR departments with employees in Scotland, England and Wales are likely to find themselves operating two separate sets of employment policies and payroll systems, Choudry noted. “Effectively, the split is likely to create a two-tier workforce, and the headaches this brings.”

Even if the Scottish people choose to stay in the U.K., experts advise HR professionals to brace for change. In the event of a “no” vote, the U.K. government will devolve greater powers to Scotland—including issues of employment law, Choudry added.

Brighter Future for Workers

The Scottish government proposed a number of changes in Scotland’s employment policy in the white paper Scotland’s Future: Your Guide to an Independent Scotland, published in November 2013:

  • Implementing more family-friendly policies, including providing approximately 30 hours a week of state-funded child care for children ages 1-4.
  • Encouraging more women to enter the workforce, plus more female representation on corporate boards.
  • Creating a more fair and competitive workplace, and other changes such as companies offering a living wage to workers by linking the national minimum wage with inflation.

The white paper also states that Scottish businesses would develop closer relationships with trade unions, Booth explained. “If there is a ‘yes’ vote, this would lead to new employment legislation designed to strengthen trade union powers, and increase basic rights for workers and employees in Scotland.”

However, most of Scotland’s discrimination laws, guidelines on working time and rest breaks, and holidays abide by EU regulations, and would not change in an independent country, Booth stated.

The changes proposed in the Scottish government’s white paper are changes for the employees’ benefit, Choudry added. “These changes may make it more expensive and difficult for companies to operate in Scotland; but on the other hand, it could make companies more productive and competitive if these changes have a positive effect on the workforce.”

Job Loss Fears

The uncertainty around the vote has made hiring managers in Scotland more cautious about bringing on new workers during the summer, according to a September 2014 Manpower survey.

Several executives from the financial services, defense and energy industries have commented that a “yes” vote could mean a loss of jobs. CEOs of the Royal Bank of Scotland, Lloyds Banking Group and pensions firm Standard Life—all major employers in the country—announced in September that if Scotland votes “yes,” they might relocate their operations to England.

“The financial services industry in Scotland employs around 100,000 people,” Choudry said. “Therefore, if other financial institutions follow suit, job losses [in an independent Scotland] are likely to be significant.”

Booth disagreed. “The companies mentioned have had bases in Scotland for several years, and employ a high quality of people,” he said. “I don’t believe they would automatically make these people redundant, and then transfer operations to London or elsewhere in England. “Commercially, it would be damaging to make their workforce redundant, and there’s no guarantee they could replace that quality elsewhere.”

Choudry and Booth agreed both the defense and energy industry could take a hit in Scotland, as the U.K. government would seek to relocate its positions within the U.K. border. “This will inevitably result in job cuts, unless the Scottish government funds the industries in other ways,” Choudry added.

John McGurk, head of the Chartered Institute of Personnel and Development (CIPD) in Glasgow, Scotland, argued that the structure of Scotland’s economy is problematic, and that leaders should focus on building a workforce plan for the country, regardless of the referendum’s aftermath.

“The real issue is Scotland needs more trained and productive people in work to pay for whatever kind of country we end up choosing on Sept. 18,” wrote McGurk on his CIPD blog Aug. 29. “Both sides should be addressing the fact that in the future Scotland’s workforce will look very different.”

Catherine Skrzypinski is a freelance writer in Toronto.

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