Ann Frances Cooney, employment expert and partner at DWF, has commented on the latest labour market figures in Scotland.

“Amid economic uncertainty and evolving legislative changes, Scotland’s labour market is under ongoing pressure.  The estimates for August to October 2025 indicate that over the quarter, the employment and unemployment rates increased while the economic inactivity rate decreased.

The headline figures for the period show the employment rate in Scotland was estimated at 74.9%, up 0.4% over the quarter.  Scotland’s employment rate was the same as the UK rate.  The unemployment rate in Scotland was 3.8%, up 0.3% over the quarter.  By way of comparison Scotland’s unemployment rate was below the UK rate of 5.1%.

The early seasonally adjusted estimates for November 2025 from HMRC Pay As You Earn Real Time Information indicate that median monthly pay for payrolled employees in Scotland was £2,562, an increase of 1.1% compared with November 2024.  The financial pressure for Scottish employers continues as inflation persists, employer National Insurance contributions have increased, and employees seek pay rises that reflect the rising cost of living.

The Autumn Budget did little to alleviate employer concern over rising employment costs.  We now watch with anticipation the final stages of Parliamentary scrutiny of the Employment Rights Bill.  The scrapping of day 1 unfair dismissal rights in favour of a six-month qualifying period should ease some pressure on employers. However, the removal of the compensatory award cap introduces a significant and unexpected risk, as potential liabilities for dismissal have increased substantially.  As the Bill passes back and forth between the Houses of Parliament, employers are eager to see the final position on the cap.

As businesses prepare for upcoming reforms, prioritising workforce resilience through forward planning and compliance readiness will be critical to minimising disruption and achieving lasting success.”