Legal Briefing

Scottish employment law: small but significant differences can be a trap for the unwary

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Scotland | 01 May 2013

Scotland has always prided itself on having its own legal system, distinct from the rest of the UK and based on a unique combination of influences and precedents. In employment law specifically the differences are fewer – largely because 
so many of the rules are statutory in nature – but key differences still exist. It is important for employment lawyers to have a broad awareness of the subject areas within which differences arise and to ensure that they take proper advice on them if required. We are all familiar with the importance of knowing and respecting the practices of the court and judge before whom your case is to be tried, but that is all the more acute when you are working in a different legal system.


CONTRACT LAW

At the heart of employment law is the employment contract itself, and the common law basis of contractual relations has resulted in several Scottish-specific features surviving. It is not unknown for English counsel to appear in the Scottish tribunals citing passages from Chitty on Contracts. Needless to say, this does not go down well with the judges – the Scottish equivalent is McBryde on Contract. While it is fair to say that a study of the modern approach in England and Scotland will produce more similarities than differences, there are still aspects that may be truly different or alternatively nuanced in a way that could alter interpretation.

Looking at the construction of the contract itself, the English concept of negotiations being ‘subject to contract’ is important in distinguishing between mere discussions and binding obligations, but there has never been such an approach in Scotland. While the words can be, and often are, used to denote pre-contractual discussions in Scotland, their use will be illustrative of the parties’ intentions at best. Further, a contract can be formed in Scotland at an earlier stage, the test being based on whether there is consensus in idem – agreement on the fundamental terms, even if the finer details remain to be ironed out. There is no requirement for consideration to be provided – a party can unilaterally make a binding promise to another without any reciprocal obligation. While this would be an unusual basis for an employment contract normally, it is not uncommon for post-termination restrictions or compromise agreements to involve one-sided obligations. It is also possible for a Scottish contract to be established objectively, on the basis of how the parties’ relationship would be viewed by an outsider. In practice, these differences will rarely affect the day-to-day negotiation and construction of contracts, but it will be important in the event of a serious dispute to ensure that the analysis fits within the parameters of contract law in Scotland.

From a drafting point of view, Scottish agreements relating to employment will have specific features. Different rules govern the probative status of documents and signing particulars will often differ. The concept of execution as a deed does not apply. Schedules, strictly speaking, must specifically refer to the agreement they are intended to form part of, by reference to the parties’ names. There is no convention of specifying the date of the agreement at the front, with that being governed by reference to the date of the last party executing it. Equally, signature of multiple counterpart agreements by different parties will not result in a binding agreement – at least one copy must be signed by all parties. References to tort, for example in compromise agreement waiver provisions, should, of course, be replaced with the Scottish equivalent of delict. Also, the Contract (Rights of Third Parties) Act 1999 does not extend to Scotland, with the common law alternative of jus quaesitum tertio instead governing when and how other persons may acquire rights under an agreement to which they are not a party.

SCOTTISH EMPLOYMENT TRIBUNAL CLAIMS

The Scottish tribunal system remains separate from the English system, although the administration and judges from each interact regularly. The UK Employment Appeal Tribunal judges also sit occasionally in both Scotland and England. The Scottish system has its own president and issues its own practice directions. Tribunal judges will apply the Scottish rules of evidence and will expect those appearing before them to recognise the concepts referred to above, as well as the differences in practice. All references to ‘costs’ (except when used in the expression ‘wasted costs’) or ‘costs orders’ should be read as references to ‘expenses’ or ‘orders for expenses’ in Scotland. Similarly, references to tribunal proceedings being ‘stayed’ in England are referred to as ‘sisted’ in Scotland.

Date listing is carried out usually by use 
of a date-listing stencil, although it is becoming more common for simpler cases to be issued with a date at the time when the ET3 is served.

There are very few practice directions in Scotland. The most important relates to the disclosure of documents prior to the tribunal hearing. Unlike the more complex approach to disclosure that is adopted by many of the English tribunals, the Scottish practice direction simply requires legally represented parties to exchange, 14 days prior to the hearing, a list of the documents on which they will rely. Active case management was slow to catch on in Scotland but is now common. Standard case management directions have not, however, been adopted across Scotland and it remains clear that there will be ongoing resistance to replication of the English CPR rules.

Witness statements are generally not used or favoured in Scotland. It is possible to apply for an order from the tribunal requiring the exchange of witness statements but many Scottish employment judges remain resistant to this. Their use is developing to deal with evidence that is uncontroversial, but, in practice, time may be wasted trying to fine tune the detail of what is agreed rather than simply dealing with it on the day.

Scottish solicitors generally draft precognitions – witness statements that are not exchanged with the other side but form the basis on which evidence will be led. Witnesses then give evidence at the tribunal through examination in chief. It is important that anyone appearing in Scottish tribunals is familiar with this process. Taking a witness through their evidence without leading is a real skill, the development of which is difficult in courts where witness statements are the norm. It is unfortunately not uncommon for English agents to attend hearings expecting witnesses to read out their statements. This is an unpleasant experience for both the witness and the representative and can be easily avoided by simply lifting the phone to a Scottish practitioner. In one recent case, counsel was instructed to appear at short notice but was given no precognitions. The English instructing agents explained this by saying that there was no direction for exchange of witness statements so they assumed that they would not be required.

The fact that evidence is not given by witness statement has led to the preservation of certain other practices 
for taking evidence. Witnesses are not usually allowed to remain in the tribunal room while other witnesses are giving evidence. In some circumstances, an instructing witness is allowed to remain 
in the room if permission is granted.

The approach to remedy does not differ significantly between England and Scotland, although in Scotland the use of separate hearings for remedy has been far less common and parties are always expected to turn up for a hearing equipped to deal with it. Aggravated damages cannot, however, be awarded in Scotland. Where there are aggravating features, a tribunal in Scotland should still be asked to take these into account when deciding the appropriate award for injury to feelings.

The primary criticism levelled at the Scottish tribunals is that a case can take considerably longer to hear than it would in England. The absence of witness statements is the primary reason for that. Although the pressure to complete hearings on time and efficiently remains, the majority of judges in Scotland are of the view that the truth is easier to test with evidence in chief and this is highly unlikely to change in the near future.

CIVIL COURT LITIGATION

The courts themselves are specific to Scotland, with sheriff courts rather than county courts governing claims within distinct areas of the country and the more senior Court of Session, broadly equivalent to the High Court, dealing with disputes arising anywhere in the country. For employment cases brought in these courts the terminology, and remedy being sought, will differ from that in the rest of the UK. An errant executive might find themselves the defender in an action seeking specific implement (ie performance) of contractual obligations, peculiarly the default remedy available to a contractual party as opposed to the English preference for damages. At the same time, the remedy of interdict (equivalent to injunction) may be sought by an employer as pursuer, to prevent the executive from soliciting customers, using confidential information or otherwise competing unfairly.

Procedurally too, the position is different. Interdict can be sought as an interim measure by an employer by way of an ex parte hearing before a judge in chambers, and granted almost immediately, in some cases on the basis of little more than the submissions of counsel. To be entitled to answer the petition, the individual would have had to lodge a document known as a caveat with the relevant court in advance. The interim remedy is all the more powerful – and in most cases determines the entire dispute – as typically it can be months later before the matter can be fully heard at proof. There is a view that practice in this area, and the courts themselves, are less favourably disposed to parties who try to obtain an interdict without having attempted to secure undertakings or agreement on the resolution. It is still, however, professionally negligent for a solicitor to fail to give advice about caveats to a party potentially in breach of contract.

2014 will be an exciting time for Scots, Commonwealth Games notwithstanding, as we approach the independence referendum on 18 September. While the future possibilities will naturally fuel discussion and speculation – raising questions such as whether Scots could really opt out of all EU directive-based law at a stroke – it is still important to remember that the system in Scotland remains distinct and the differences have influenced the development of practice in employment law.