There are three categories of employment status:

• Employee;
• Worker; and
• Self-employed.

Yes. Employment contracts can be tailored to suit the circumstances and preferences of the employer and employee, including in relation to their duration (i.e. fixed-term and permanent) and their time commitment (i.e. full-time, part-time or flexible hours).

Contracts of employment do not need to be in writing in Scotland. As such, technical validity only requires that the parties have the capacity to enter into the contract; there is an agreement between the parties as to the essential terms; an intention on the part of both parties to create legal relations; and certainty as to the essential terms. It’s therefore entirely possible to have an employment contract through a verbal agreement.

However, we would always recommend that written contracts of employment are in place and that they are executed in accordance with the Requirements of Writing (Scotland) Act 1995 ("RWSA"). Contracts executed in this manner will be presumed to be genuine if any disputes ever arise.

Since 6 April 2020, there has been a requirement to provide all new employees and workers with a Section 1 Statement of Particulars. This statement sets out the basic terms of employment such as the role; the working hours and rate of pay; the entitlement to paid leave; and any mandatory training.

Failure to provide a compliant S1 statement may give rise to an Employment Tribunal claim.

Execution in accordance with RWSA is as follows:

1. The contract must be signed by somebody with the capacity to bind each party to the contract. In the case of an individual, the individual themself; in the case of a company, a director, secretary or authorized signatory.
2. The signatory must sign the contract and write: (1) their name legibly; (2) the date they signed; and (3) the place where they signed the contract.
3. The signatory must sign the contract before a witness. The witness must also sign the contract below the signature they witnessed.
4. The witness must also write: (1) the date they witnessed the signature; and (2) their full postal address, including the street, town and postcode (if any). The address can be their work address if they are witnessing the signature in the context of their work environment.
5. If there are any annexures or schedules attached to the contract, each must be signed only by the signatory for each party on the last page (the witness need not sign the schedules/annexures).

Part-time workers are protected (under a specific statutory regime) against less favorable treatment related to their part-time status unless the treatment can be objectively justified. This area of law can be complex and often involves interplay with indirect sex discrimination issues.

Contracts of employment can only be assigned with the consent of each party to the contract.

Where there is a transfer of a going concern, the Transfer of Undertakings (Protection of Employees) Regulations 2006 (as amended) ("TUPE") will likely apply. Workers may object to the transfer of their employment where TUPE applies. However, such an objection would serve to terminate the employment relationship between the worker and the company on the date of the transfer. If they did so, they would not have an entitlement to any statutory or contractual compensation on termination unless they object and resign in response to their employer's repudiatory breach or a substantial change to their working conditions to their material detriment.

Where there is a straightforward change of control, but no transfer of a business/part of a business or service provision change (which would give rise to the engagement of TUPE), there is no specific statutory protection. That said, the change of control would not impact the employees’ existing statutory rights prior to the change of control, so they would remain in place as would continuity of service with the business.

Unilateral changes to employment contracts are rare and can be risky. Contracts of employment can only be varied in accordance with their terms or with the consent of all parties. So, if the contract gave the employer the right to unilaterally change working hours, for example, this would be possible as long as that change was made in accordance with the implied term to act reasonably and not to breach trust and confidence. If an employee believes the employer has imposed a unilateral change without the contractual to do so or has done so in an unreasonable manner, they could resign and claim constructive dismissal (relying on the alleged breach of contract) or alternatively remain in employment and sue for any associated wage loss or damages.

Scotland is not an employment-at-will jurisdiction. Employers may only dismiss employees in circumstances which are not discriminatory, automatically unfair and (once the employee has one year and 51 weeks’ service) fall within a set of statutory fair reasons:

• Capability - an employee can potentially be fairly dismissed if their capability, assessed by reference to skill, aptitude, health or any other physical or mental quality, is not sufficient to carry out the kind of work the employee was employed to do; 
• Conduct - an employee can potentially be fairly dismissed if their conduct is of a sort that damages the relationship between employer and employee. This can be either a single act (gross misconduct) or a series of less serious acts (misconduct);
• Redundancy - an employee can potentially be fairly dismissed if the dismissal is wholly or mainly attributable to the employer ceasing or intending to cease business: for the purposes for which the employee was employed; in the place where the employee was employed. Or where there is a reduced requirement for employees to carry out the work of a particular kind or in a particular place where the employee was employed;
• Statutory restriction - an employee can potentially be fairly dismissed if the employee can no longer carry out their work without the employer or employee contravening a duty or restriction imposed by law; and
• Some other substantial reason - an employee can potentially be fairly dismissed for some other substantial reason of a kind which is sufficient to justify the dismissal.

Any dismissals of employees, even with short service, would need to be carefully risk assessed to identify any legal risks, and in all circumstances, the relevant notice would need to be honored.

Depending on the kind of termination (unfair or wrongful) there are different remedies available. In the context of unfair dismissal, the remedies available to the employee are:

• Reengagement or Reinstatement: the employee could ask for their job back, or to be reemployed by their employer in a similar position; or
• Compensation: a financial payment to compensate the employee for their losses incurred as a result of their unfair dismissal. 

In the context of wrongful dismissal (dismissal in circumstances that breach the contract of employment i.e. dismissal without notice), the employee would be entitled to the damages for breach of contract.

The protections afforded whistleblowers are twofold: 

• whistleblowers are protected from any detriment arising as a result of their having made a protected disclosure; and
• the dismissal of a whistleblower will be automatically unfair if the dismissal is by reason, or principally by reason, of the whistleblower having made a protected disclosure.

A protected disclosure is a disclosure which in the reasonable belief of the worker making the disclosure is in the public interest and tends to show one or more of a statutory list of wrongdoings.

Scots law recognizes a right to privacy at common law. The remedies available are similar to those for wrongful dismissal:

• Damages - a financial award to compensate the employee for any losses suffered due to the breach of their privacy;
• Interdict -  a court order to prevent a course of action from being taken; and/or
• Declarator - court order stating that rights have been breached.

It is unlawful for an employer to directly or indirectly discriminate against, harass or victimize workers in respect of the nine protected characteristics set out in the Equality Act 2010:

• Age;
• Disability;
• Gender reassignment;
• Marriage and civil partnership;
• Pregnancy and maternity;
• Race;
• Religion or belief; 
• Sex; and
• Sexual orientation.

Workers have a statutory right to holiday leave and pay (a minimum of 5.6 weeks’ leave per year). 

In addition, employees have a statutory right to the following types of leave and statutory pay:

• Maternity leave;
• Paternity leave;
• Adoption leave;
• Shared parental leave; and
• Parental bereavement leave.

As of April 2024, there has been an extension of redundancy protection for individuals who have taken maternity, adoption, or shared parental leave.  Employees returning from these types of leave will have the right to be offered any suitable alternative role over other employees in a redundancy situation for a period of 18 months from the first day of the estimated week of childbirth (maternity), date of placement (adoption) or birth/placement for adoption (shared parental leave).

There have also been changes to paternity leave from April 2024, with employees now being able to take leave as two separate blocks of one week of leave (previously a continuous two-week block), and this can be taken any time in the 52 weeks after birth (previously 56 days).

April 2024 also saw the introduction of a new right for unpaid carers to take up to one week of unpaid leave per year. A new right to leave and pay for employees whose babies spend an extended period of time in neonatal care is expected to be introduced in 2025.

In terms of medical leave, if an employee is ill or injured, employers will manage those absences in accordance with their internal policies and will need to be careful of the interplay of disability discrimination legislation.

The social security system provides workers with an entitlement to Statutory Sick Pay ("SSP") from the State (which is processed and paid by the employer). Additionally, many employers offer enhanced contractual sick pay policies.

Restrictive covenants are recognized in Scots law. To be enforceable, they should not go further than necessary to protect the legitimate interests of the company. Generally speaking, restrictive covenants within the employment context will be interpreted more strictly and so determining the limits of what is necessary to protect the employer's interests will be very context-specific and so it’s not possible to give general standards as to the reasonableness of geography, scope or duration.

By way of example, the range of activities that can be protected by restrictive covenants are:

• trade connections with suppliers, customers and clients; 
• confidential information and trade secrets; and
• stability of the workforce, preventing the poaching of both colleagues and clients.

Terminating an employee for refusing to sign a restrictive covenant is not unlawful, as such, if the employee has less than one year and 51 weeks’ service (and therefore hasn’t attained the right to bring an unfair dismissal claim), but could be problematic depending on the context of that refusal and termination. Once the employee has attained the right to bring an unfair dismissal claim, it would not be lawful to terminate their employment for refusing to sign a restrictive covenant.

When entering into the employment contract, no specific consideration is required to be assigned to covenants, the overall remuneration will be deemed to be sufficient. The introduction of new covenants during employment or on termination should typically be associated with specific consideration (and taxed accordingly) to maximize the enforceability of restrictive covenants.

Under the Pensions Act 2008, every employer must put their UK workers who meet the qualifying conditions into a pension scheme and, where required, pay certain minimum contributions. This is called auto-enrolment. 

The UK also has a state pension provision, with an individual’s eligibility based on qualifying years of payment of national insurance contributions. 

There are also a number of public service pension schemes (including those working, for example, in teaching, the police, the fire service and local government). Qualifying employment with an employer admitted to these schemes will entitle the employee to pension contributions/membership.

In addition to pension entitlement, employees have a statutory right to paid annual leave as well as sick pay, maternity, paternity, parental and shared paternity leave.

The default position is that a compulsory retirement age will amount to unlawful age discrimination unless the employer can objectively justify it as a proportionate means of achieving a legitimate aim. Objective justification of a mandatory retirement age is extremely difficult and as such very few employers operate mandatory retirement ages.

Paragraph 14 of Schedule 9 to the EqA 2010 provides that it is not unlawful discrimination for employers to cease to offer benefits (such as life assurance, health insurance and medical insurance) to employees at the point when they reach the greater of age 65 or state pension age (paragraph 14(1)).

Further, it is not unlawful discrimination for employers to make arrangements for, or provide access to, insurance or related financial services for employees who are under the age of 65 or state pension age, whichever is greater (paragraph 14(2)).

These exemptions do not apply to those who self-insure and different provisions apply to the above benefits provided under a pension scheme.

There is no provision in the EqA 2010 allowing an employer to cease pension contributions when an employee reaches retirement age and this would be discriminatory on the grounds of age unless objectively justified. The rules of the pension scheme will set out what happens in relation to scheme membership beyond retirement age. 

Under auto-enrollment referred to in paragraph 17 above, employers are required to enroll qualifying workers up to age 75.

There is no clear answer as to whether vaccines can be mandatory and this will vary depending on the circumstances of employment.

There is currently a government review concerning mandatory vaccinations for those operating in the care sector.

In other sectors, individual employers will need to undertake their own risk assessments and make a decision regarding mandatory vaccinations.

For existing employees, this may be difficult to impose as it would require a contractual change. Employees may be unwilling to agree to this, especially where their role could be undertaken with additional COVID-19 security measures in place.

For new employees, it may be easier to include a mandatory vaccine requirement.

In all circumstances, there is also an underlying discrimination risk. For example, an individual may refuse the vaccine on grounds of a pre-existing medical condition or a religious or philosophical belief.  There are also concerns regarding privacy and data protection if the employer intends to hold information about those staff who have been vaccinated.

Termination for refusing the vaccine may be possible but would be high risk. This is due to the underlying discrimination risk and the difficulty in justifying the dismissal in an unfair dismissal claim (for those individuals with over 2 years service).

It may be considered a reasonable management request to order employees to return to the office.

However, there may be initial resistance to this from some individuals. Employers should therefore manage this risk by informing and consulting with their workforce about a return to the office.

If an employee refuses to return to the office, without good reason, the employer may be able to subject them to disciplinary proceedings and ultimately dismissal.  Those with over 2 years of service will have unfair dismissal protection.

There may also be an underlying discrimination risk for those who refuse to return due to an underlying medical condition.

Under UK law, employees, and more recently workers, have protection from being subjected to detriment and dismissal in connection with health and safety matters. If the individual states that they refused to return as they did not believe the work environment was safe, they may potentially have a claim against the employer for any subsequent dismissal or detriment suffered in connection with this.

The belief held by the individual must be reasonable in the circumstances. Employers are therefore encouraged to consult and inform on a collective and individual basis in order to address the concerns of the workforce.