The Employment Rights (Scotland) Bill?

By Douglas Brodie - Posted on 2 September 2025

Employees throughout the UK possess very similar employment protection rights but differences may arise where the common law is relevant. The decision of the Inner House in Aberdeen City Council v McNeill [2013] CSIH 112, for example, confirmed that the general Scottish contractual concept of mutuality of obligation applied to the law of the employment contract. This remained the case even where it was invoked in the context of statutory employment rights which are applicable across the UK.

In the natural course of things the common law may evolve to the benefit of the employee. The question might then be posed whether the Scottish Parliament could accelerate or mould such an evolution through legislative intervention. There might be a variety of reasons for wishing to do this. A doctrine of English common law may have found its way into Scots law (perhaps through inadvertent adoption) and employee protection would be furthered by statutory confirmation that the doctrine was inapplicable. The limited amount of case law that takes place in a small jurisdiction like Scotland may mean that the common law does not move forward even though the historical position provides the basis for a distinctive approach. There might also be situations where, despite past convergence, it is arguable that the English common law has taken a ‘wrong turn’ and it would be beneficial to revert to the previous position.   

A Scottish bill which sought to reform the law of the contract of employment would be in the realm of private law which, in general, is a matter for the Scottish Parliament. However, with the narrow exception of agricultural wages, employment and industrial relations are tightly reserved to the UK Parliament. These are legal hurdles that can be overcome with sufficient political will. The UK Government, for example, could – in the spirit of its ‘reset’ of relations with the devolved authorities - extend the legislative competence of the Scottish Parliament by making an order under s.30(2) of the Scotland Act 1998. Again, Westminster could extend the reforms to the whole of the UK though some peculiarly Scottish elements would not have wider application. At the end of the day, it would seem odd if a by-product of devolution was that the common law of the employment contract became ossified.

There would clearly be great scope for discussion over what measures of private law reform might be included in a bill of this sort. By way of illustration I turn to look at several possibilities.

Injury to feelings

As matters stand a common law claim cannot be made for injury to feelings should there be a breach of an employment contract as a result of the rule in Addis v Gramophone [1909] AC 488. Addis looks utterly anachronistic in the context of the modern employment relationship. It is worthy of note that in Johnson v Unisys [2003] 1 AC 518, 547 Lord Millett explains the rule by stating that contractual parties, by the very fact of contracting, take the risk of the ‘ordinary feelings of anxiety, frustration and disappointment caused by any breach of contract.’ Such a stance may be justifiable where commercial relations are concerned. It must be doubted whether it is appropriate to view an employment contract on this basis. Historically, the Scottish courts showed considerable sympathy for a claim of this nature. Older Scots law may have allowed recovery for injury to feelings in an action for wrongful dismissal.

Restoring the traditional Scottish position would have important practical consequences in terms of enforcement of the employment contract. Currently, the options open to an employee in the face of a material breach of the contract are decidedly limited and the position is particularly constrained where the employer’s breach has not caused pecuniary loss. It is conceivable that this could arise in a significant number of cases where the obligation breached is mutual trust and confidence. In the absence of pecuniary loss, the only remedy open to the employee is to resign and claim constructive dismissal; the choice has to be made between vindicating one’s right to dignity in the workplace and preserving job security. Breach of behavioural standards on the employer’s part may be significant. What of Sedley LJ’s hypothetical employee in Dunnachie v Kingston upon Hull CC [2004] EWCA Civ 84, [43] ‘who had been appallingly treated and finally driven out of his job with his self-confidence in tatters’. Dunnachie itself (at [7]) ‘was a bad case of workplace bullying, compounded by an equally serious refusal by management to deal with it’.

It is submitted that the current position is unsatisfactory. Common law reform by allowing recovery for injury to feelings would be an important step forward. Such a claim would be consistent with the recognition of the employment contract as a relational one by providing a remedy that facilitated preservation of the relationship. I would suggest that scope to make an award in respect of injury to feelings is essential in a case of non-pecuniary loss otherwise the employee may receive no compensation should they decline to resign. Such a reform would align well with the traditions of Scots law.

Mutuality of obligation

As I have mentioned the general Scottish contractual concept of mutuality of obligation is applicable to the employment contract and this gives rise to a difference compared to English law. Difficulties have emerged though because the English courts have adopted an employment-specific concept of mutuality of obligation where the employment contract is concerned. This has an entirely different and much more specific meaning and requires a commitment to on-going relations. The English innovation has posed a great deal of difficulty for casual workers though the English courts have recognised this and modified the doctrine’s application in recent years.

The English concept is probably best viewed as an application of the doctrine of consideration in the employment context. Despite that the concept has been found to be applicable by the Scottish courts (Toms v Royal Mail 2006 SLT 431). In Toms, Lord Glennie held that the relationship between an agency worker and the end-user did not give rise to a contract of employment because of the absence of mutuality of obligation. There does not appear that there has been any judicial discussion of whether the concept’s application is inappropriate given that the doctrine of consideration does not form part of Scots law. Unconscious borrowing has had a detrimental impact on employment protection and parliamentary intervention to declare that the employment-specific version of mutuality of obligation is not part of Scots law would be welcome.  

Stress at Work

Concern over the impact of stressful work is very much a contemporary issue. Should stress result in an employee suffering psychiatric harm one would have expected that any claim be resolved by general common law principles. However, an  employer’s liability for psychiatric harm has been limited by the approach set out by the English Court of Appeal in Hatton v Sutherland [2002] EWCA Civ 76 (Hatton) and approved by the House of Lords in Barber v Somerset CC [2004] UKHL 13.

In Hatton, Hale LJ set out a number of "practical propositions" to assist the courts in determining whether a breach of duty has taken place. It is important to appreciate that Hatton makes a number of assumptions about risk allocation. The practical propositions reflect common law policy on employer responsibility for occupational stress. Crucially, the value judgment is made that ‘some things are no one’s fault’. The judiciary strive to achieve an acceptable balance between safeguarding the wellbeing of employees and not burdening employers with some of the risks which are inherent in working life. It is regarded as fair that some such risks are borne by employees since: ‘There is no such thing as a pressure free job. Every job brings its own set of tasks, responsibilities and day-to-day problems, and the pressures and demands these place on us are an unavoidable part of working life. We are, after all, paid to work and to work hard, and to accept the reasonable pressures which go with that.’

The result of the ‘practical propositions’ is though to make it more difficult for employees to bring a successful claim and, in effect, puts the risk of stressful working conditions on their shoulders. Once again, the Scottish courts (without any real discussion) have fallen into line.

Such a position is by no mean inevitable. The High Court of Australia are of the view that Hatton constitutes a ’wrong turn’. In Australia the employer’s obligation to put in place a safe system of work involves an obligation to exercise reasonable care to avoid a foreseeable risk of psychiatric injury to employees: Zagi Kozarov v State of Victoria [2022] HCA 120. Hatton has not been followed and such an undiluted approach appears to offer far more encouragement to potential litigants. This, in effect, is the approach one would have expected to see from the Scottish courts had they been unencumbered by Hatton.

Nevertheless, while the path to recovery may be somewhat less daunting in Australia, the courts are still concerned to apply a restrictive approach lest the potential burden on employers be too great. The fear of over burdening the employer continues to loom large in the judicial mind. This can be seen very clearly should the complaint be of overwork. Awareness of such a commonplace state of affairs in itself is very unlikely to engage the employer’s duty; more would be required before an employer would be expected to have realised that an employee would be likely to be at risk of incurring psychiatric harm. In Ackers v Cairns Regional Council [2021] QSC 342 at [5] it was held that the "long hours worked by Mr Ackers, while extremely demanding, were not such as to alone make psychiatric injury to a person of ordinary fortitude reasonably foreseeable". It is also the case that other hurdles to a successful common law claim such as causation are as a significant in Australia as they are here.

I would suggest that the restrictive approach to common law claims derived from Hatton looks increasingly out of step with contemporary concerns over the promotion of mental wellbeing. A Scottish bill could choose to banish Hatton and restore general principles.

Conclusion

There is plenty of room for debate as to what a Scottish bill which aimed to reform the common law of the employment contract might contain. The three areas discussed above are only suggestions but do demonstrate that such a bill would have a beneficial impact on worker protection though I would not wish to overstate that. Given that we are in the realm of Scots private law one would hope that any constitutional difficulties could be readily overcome.