UK & Europe
Employment, Pensions & Immigration
From 1 October 2020, the wide statutory exclusion which denies certain seafarers who navigate UK waters the right to minimum rates of pay will be removed.
Entitlement to the National Minimum Wage ("NMW") is to be extended to all seafarers working on domestic ferry, offshore supply and cargo routes between ports in the UK and from UK ports to installations on the UK continental shelf. This will be regardless of nationality or where the vessel is registered. A "seafarer" is defined as anyone who is employed or engaged or works in any capacity on board a ship.
Currently the NMW is payable to individuals who are working or ordinarily work in the UK, as well as those employed on UK registered ships. Additionally, NMW is payable to those individuals who ordinarily work on oil and gas rigs or off shore renewable installations based in UK territorial waters (the area of sea 12 miles around the UK) or on the UK continental shelf.
NMW is currently not payable to share fishermen or seafarers on non-UK registered ships in the course of navigation or engaged in dredging activities.
From 1 October, seafarers who navigate UK waters will benefit from the NMW. These will include seafarers working on domestic ferry, offshore supply and cargo routes between ports in the UK and from UK ports to installations on the UK continental shelf.
The relevant seafarers will be legally entitled to a minimum hourly pay for all work done from 1 October 2020 of £8.72 (for those aged 25 and over), £8.20 (for those aged 21 – 24), £6.45 (for those aged 18 – 20) and £4.55 (for under 18s), in line with the current April 2020 NMW rates.
Nevertheless, the NMW will still not apply to seafarers on ships exercising “a right of innocent passage” and those exercising the right of “transit passage”. Broadly, this means ships which merely navigate across UK territorial waters such as routes running between UK ports and international ports or on voyages calling at a UK port as part of a longer, international, multi-port voyage. Examples include:
The seafarers union RMT has been lobbying alongside other maritime unions and the TUC to extend the NMW to cover seafarers in UK waters since its inception in 1998. In recognising the new rules as a significant moment, the RMT has commented that it will not lose sight of its wider ambitions to end all forms of seafarer discrimination on vessels working from UK ports.
It is expected that there will be a roundtable meeting with the RMT, the TUC, and the relevant Employment, Shipping and corresponding shadow government ministers in April 2021, to analyse progress and discuss any enforcement issues.
From 1 October, employers must increase pay to NMW levels for all seafarers in UK waters on routes between ports in the UK and from UK ports to installations on the UK continental shelf. This includes those in coastal shipping, passenger and freight ferry services, and fleets which service offshore windfarms and offshore oil and gas exploration and decommissioning.
The new rules apply whatever the size of the employer. Therefore even small employers must pay their relevant employees the NMW. Initially this will mean that small employers may be more significantly affected as they will be required to spend the same amount on becoming compliant, despite having fewer resources overall. However after this, the costs of paying some staff the additional amount to bring them up to the minimum wage will be proportionate to the size of the company, and as a result, small businesses will not be disproportionately affected overall.
Regulators are expecting an increase in the number of complaints of non or under payment of the NMW as a result of the new rules. It is therefore important that maritime employers review their current rates of pay for relevant seafarers to ensure they are in line with the new legislation, and ensure their payroll systems are updated accordingly.
Failure to pay the NMW can result in an investigation from HMRC, the issuance of a notice of arrears to an employer, a penalty fine of up to 200% of the underpayment (up to a maximum of £20,000 per worker), or potentially civil claims from employees for unlawful deductions from wages or breach of contract. Employers who fail to pay can also be named publicly in press notices issued by the Department for Business, Energy and Industrial Strategy. The most serious cases of non-compliance, for example production of false records or refusing to engage with an investigation, may result in criminal prosecution by the Revenue and Customs Prosecutions Office.
According to the RMT, it is possible that the new rules will pave the way for further reforms to employment rights for seafarers. Stay up to date with the developments by subscribing to Clyde & Co's updates here.
The changes arise as a result of the National Minimum Wage (Offshore Employment) (Amendment) Order 2020 , which amends the existing National Minimum Wage (Offshore Employment) Order 1999 by removing the wide exclusion to seafarers. The Order was made on 21 July 2020 and came into force on 1 October 2020