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National Minimum Wage for seafarers8 October 2020

The UK’s National Minimum Wage (Offshore Employment) (Amendment) Order 2020 (the Order) came into force on 1 October 2020, widening the scope and application of the National Minimum Wage Act 1998 and extending its provisions to individuals in “offshore employment” who are working, or who ordinarily work, in the territorial waters of the United Kingdom. The Order also applies to those individuals on ships engaged in activities connected with the exploration of the sea-bed or subsoil, or the exploitation of their natural resources, in the UK sector of the continental shelf.

The intention behind the Order is that these seafarers become entitled to be paid at least the National Minimum Wage (NMW), irrespective of the ship’s flag or individual’s nationality.

The amendments mean that ships in the course of navigation, or engaged in dredging or fishing, are now included within the scope of NMW legislation.

"The intention behind the Order is that these seafarers become entitled to be paid at least the National Minimum Wage (NMW), irrespective of the ship's flag or individual's nationality."

Seafarers will be covered by the Order if they work on vessels operating between Great Britain and Northern Ireland, Scottish ferries or other domestic services, provided the vessel remains in UK territorial waters for its entire voyage.

However, the position on foreign flag vessels travelling regular routes between Great Britain and Northern Ireland remains unclear, as these may be outside UK territorial waters for a proportion of every voyage. There is no known case law on this matter yet, although commentary from the House of Lords does suggest ferries from Great Britain to Northern Ireland would be covered.

An exclusion has been carved out of the legislation for ships “exercising the right of innocent passage or the right of transit passage” (to be interpreted in accordance with the United Nations Convention on the Law of the Sea). The types of vessels that would come under this definition, and would be therefore unaffected by the Order, include:

Vessels entering UK territorial waters as part of an international voyage, such as ferry services operating between the UK and continental Europe (as well as the Republic of Ireland); and
Voyages calling at a British port as part of an international, multi-port voyage.

Enforcement

As under the previous legislation, an individual can pursue a claim personally if they believe they are being underpaid. HMRC will also endeavour to ensure that the NMW is enforced appropriately nationwide.

HMRC intends to use a risk-based approach to enforcement and target mostly companies. In particular, HMRC will target companies it believes are the least likely to comply with the new legislation.

The Government intends to maintain the international custom of not applying domestic laws to visiting ships registered outside the UK that will affect the internal economy of those ships, to avoid creating a disincentive to register ships under the UK flag.

It is expected that temporary arrangements or short-term provision of services, such as cruise ships offering a temporary “Around Britain” cruise at certain times of the year, would be considered out of the scope of the Order. However, if cruise operators continue to offer such a service on a more than short-term basis the Government may reconsider application of the Order.

Further guidance on the application and enforcement of the Order is expected to be released, following a consultation between the Government and the Chamber of Shipping.

This article was authored by London Employment Partners Anna Robinson and Devan Khagram, and Alice Halpin, a trainee solicitor in our London office.

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