Government plans for new minimum wage for seafarers meets opposition

Answer

The UK government’s plans to introduce pay protection reforms for seafarers employed on ferries that regularly enter UK ports have been met with some opposition from ship operators, unions and port authorities.

With the public consultation now closed, we await the government’s final decision on its proposals, which are reported to affect tens of thousands of seafarers. Although hailed by the government as “a major step forward on pay protection”, the British Ports Association (BPA) has already said that it has concerns about ports being made to regulate ships and that ports do not "have a core competency" in enforcing the minimum wage.

The proposal, which was formally announced in the Queen’s speech, is for new legislation that will enable port authorities to impose fines, and ultimately prevent ferries that don’t pay their workers the equivalent to UK national minimum wage from docking at UK ports. The public consultation sets out the detail on how this will work, and largely expands on the proposals to protect seafarers announced by the Secretary of State for Transport on 30 March 2022 in response to P&O’s decision to dismiss 800 workers.

Current minimum wage protections for seafarers

Broadly, the following categories of seafarer (subject to some exceptions) are currently entitled to the National Minimum Wage (NMW):

• Seafarers who are working or ordinarily working in UK territorial waters or in connection with the exploitation or exploration of the seabed or subsoil in the UK sector of the continental shelf, regardless of their nationality or residency. This includes seafarers on UK-UK routes (ie, those operating on domestic journeys).
• Seafarers working on international routes to/from UK ports on UK-flagged ships if the seafarers are ordinarily resident in the UK and at least some of their employment is in the UK (eg, ferry operating from UK to France where the seafarer lives in the UK – NMW is payable for the entire working time).
• Seafarers working on international routes to/from UK ports on non-UK flagged ships if the seafarers “ordinarily work in the UK” (a multi-factorial test to assess whether the seafarer has a sufficiently strong connection with the UK).

However, seafarers who work on vessels entering UK waters as part of an international voyage are considered to be under innocent passage and are not affected by UK NMW legislation. The current government guidance published in response to the October 2020 legislation expanding NMW legislation to some seafarers provides some specific examples of innocent passage which include “ferry services operating between the UK and mainland Europe”. 

Similarly, vessels exercising the right of transit passage will likewise not be affected by UK minimum wage legislation. Transit passage refers to navigation through straits that connect the high seas.

The government’s proposals

The government’s intention is to indirectly grant protection to seafarers working on ships that regularly use UK ports, by making access to UK ports conditional on operators of frequent and scheduled services evidencing that the seafarers onboard are being paid at least the NMW. The government is not seeking to extend legal entitlement to NMW to seafarers, but rather ensure that they are paid no less than an equivalent sum for the time spent in UK waters.

A consultation on the proposed measures was open for a period of just four weeks until 7 June 2022. It examined the type of services that could be included beyond ferries, how to define the “National Minimum Wage equivalent” and what the enforcement measures will be. Views were also sought on compliance costs and other effects of the proposals.

In particular, the consultation sought views on the following proposals:

• Statutory Harbour Authorities (SHAs) will be able to seek confirmation from service operators that seafarers are being paid the same minimum rates of pay for core hours worked while in UK waters as those working on domestic services that already qualify for NMW (ie, currently £9.50 per hour for those 23 years old and over).
• Relevant ship operators will have to certify periodically, and provide evidence, that the minimum wage requirements are being met as a condition of entry to UK ports.
• The new rules will apply in respect of seafarers working on scheduled services (defined as working to a published schedule) that frequently call at UK ports, at least once a week.
• Certain vessels and service types will be excluded: cruise vessels, pure container (but not ‘con-ro’ (ie, container/RoRo hybrid)) ships, dedicated car (trade vehicle) carriers, general cargo carriers and liquid and dry bulk services.
• SHAs will be able to surcharge operators that aren’t able to evidence compliance, at a level that is expected to be sufficient to incentivise compliance.
• For persistent non-compliance, the Secretary of State for Transport will be empowered to suspend the operator’s port access until compliance can be demonstrated.
• Failure to comply properly with any direction could result in a fine up to level 5 on the standard scale and unlimited additional fines for persistent non-compliance.
• The Maritime and Coastguard Agency will be empowered to inspect where non-compliance is credibly reported, or for purposes of random or targeted spot checks.

Timetable and further plans

The government announced on 10 May that it will implement the changes in the next parliamentary session and will consult closely with the ports and maritime sector on the new laws.

In addition, the government is continuing bilateral discussions with France, the Netherlands, Spain, Germany, Ireland and Denmark. This aims to establish routes between the countries as ‘minimum wage corridors’, where seafarers on routes between either country must be paid at least the equivalent of the minimum wage.

The consultation closed for comments on 7 June 2022.

Heidi Watson is a partner, and Ruth Bonino and Sophie Jackson are professional support lawyers at Clyde & Co LLP.

This article was originally published on Lexology.