Seafarers’ Wages Bill: Are Good Intentions Enough?

In March 2022 P&O Ferries made 786 seafarers redundant, without prior notice or consultation. The company also announced its decision to move to a new crewing model using agency workers who would be paid less than the NMW. In doing so, P&O Ferries openly took advantage of gaps in national and international legislation governing seafarers’ wages.

In the UK, for example, the NMW, which was first introduced by the NMW Act 1998, applies to anyone employed to work on board a ship registered in the UK, unless the employment is wholly outside the UK, or the person is not ordinarily resident in the UK.[1] The right to be paid the NMW also applies to all individuals working in the territorial waters of the UK or in the UK sector of the continental shelf, provided they were not employed in connection with a ship which is exercising the right of innocent passage or the right of transit passage, as defined by the United Nations Convention on the Law of the Sea (UNCLOS), or a ship which is engaged in dredging or fishing.[2]

What this effectively means is that seafarers working on board vessels serving domestic UK routes have a right to be paid the NMW, regardless of the flag of their vessel and even if they are not ordinarily resident in the UK. However, the NMW still does not apply to seafarers working on board ships serving international routes unless their ship is flagged in the UK, and they are ordinarily resident in the UK.

At an international level, on the other hand, the Maritime Labour Convention, 2006, although it includes a series of provisions regarding the seafarers’ right to be paid for their services,[3] it does not make any binding provisions regarding the right to be paid minimum wages. In fact, the MLC is limited to set guidance as to the procedures for determining minimum wages for seafarers and the minimum monthly basic rate of pay for able seafarers working on ships operating worldwide.[4]

In response to the P&O Ferries redundancies, the UK government announced, amongst other things, its intention to change the law so that seafarers working on ships that regularly use UK ports are paid at least equivalent to the UK NMW. Following a consultation from 10 May to 7 June 2022,[5] the UK government introduced the Seafarers’ Wages Bill to the House of Lords on 6 July 2022. The Bill, which had its first reading in the House of Commons on 8 November 2022, aims to ensure that seafarers with close ties to the UK are paid at least an equivalent to the UK NMW while they are in UK waters, and contains 15 provisions.

Cl. 1 to 2 set out the scope of application. Cl. 3 to 6 establish the obligation of ship operators to make NMW equivalence declarations to harbour authorities. Cl. 7 to 9 set out the powers of harbour authorities to impose surcharges and access restrictions where ship operators have not provided a valid NMW equivalence declaration. Cl. 10 sets out the power of the Secretary of State to institute proceedings relating to offences under this Bill. Cl. 11 to 12 deal with the powers of the Secretary of State to issue guidance, directions, and regulations. Cl. 13 and 14 define terms used in the Bill, including the terms harbour and harbour authorities. Cl. 15 deals with the extent and the commencement of the provisions of the Bill.

In essence, if the Bill passes it will create a system by virtue of which harbour authorities will have the power to request ship operators, the vessels of whom use their harbours at least 120 times a year, to provide a declaration that their seafarers are paid at a rate at least equivalent to the NMW for their work in the UK or its territorial waters if they do not already qualify for the NMW.[6] In addition, harbour authorities will be able to impose a surcharge on ship operators who fail to provide a valid NMW equivalence declaration.[7] The amount of the surcharge is to be determined by a tariff of surcharges specified by harbour authorities in accordance with regulations issued by the Secretary of State.[8] A surcharge paid by ship operators may be retained and used by harbour authorities for the purposes of any of their functions or for the creation of shore-based welfare facilities for seafarers.[9] Finally, subject to very few exceptions, harbour authorities will be entitled to refuse access to their harbours if ship operators fail to pay the surcharge.[10]

Apart from the powers vested on harbour authorities, the Bill will also create a dedicated enforcement system, allowing the Maritime and Coastguard Agency to play a role in checking the validity of NMW equivalence declarations.[11] The inspectors will have powers to board a ship in a harbour in the UK or to enter any premises for the purposes of determining whether ship operators comply with any NMW equivalence declarations, or of verifying information provided to ensure compliance with these declarations.[12]

So far, the Bill has been received with scepticism. The UK Chamber of Shipping, for example, commented that the Bill could potentially undermine existing international agreements.[13] Similarly, the British Ports Association raised concerns about the compatibility of the Bill with international treaties, as well as the suitability of ports to regulate the wages of port-users.[14] Nautilus, on the other hand, pointed out that the Bill could potentially lead to ship operators ‘port hopping’ to avoid having to pay seafarers the equivalent of the NMW.[15]

Despite its good intentions, the potential impact of the Bill on underpaid seafarers working on board ships serving international routes could be minimal. First, as it was commented by Nautilus, the requirement that a ship must enter a harbour at least 120 occasions in the year for the NMW equivalence declaration to apply means that unscrupulous ship operators can easily bypass regulation by shifting their services between different ports. As the Bill appears, this is an unavoidable risk. It is the author’s view that this risk could only be avoided by a more centralised regulatory approach which would not depend entirely on casting powers on individual harbour authorities. Secondly, the fact that ship operators who fail to provide a valid NMW equivalence declaration will still be able to use a harbour if they pay a surcharge undermines the whole purpose of the Bill. This is because ship operators with significant financial means will be able to buy themselves out of regulation. After all, this is exactly what P&O Ferries did when they dismissed 786 seafarers without prior notice or consultation. Finally, adding yet another issue on the agenda of port inspectors without conducting structural changes on the way port inspections are carried out can only be of minimal practical significance when it comes to the protection of the seafarers’ employment rights.

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[1] NMW Act 1998, s 40.

[2] NMW (Offshore Employment) (Amendment) Order 2020, s 2.

[3] MLC, Regulation 2.2. See also MLC, Standard A2.2.

[4] MLC, Guidelines B2.2.3 and B2.2.4.

[5] Department for Transport, Consultation outcome: Conditions for harbour access and seafarers’ pay-rates: scope and compliance, 10 May 2022 < https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1088162/seafarers-wages-consultation-gov-response.pdf> accessed 7 December 2022.

[6] Bill 184 2022-23, cl 3.

[7] Bill 184 2022-23, cl 7.

[8] ibid.

[9] ibid.

[10] Bill 184 2022-23, cl 9.

[11] Bill 184 2022-23, cl 6.

[12] ibid.

[13] UK Chamber of Shipping, ‘Seafarers’ Wages Bill’ (6 July 2022) <https://ukchamberofshipping.com/latest/seafarers-wages-bill-/> accessed 7 December 2022.

[14] British Ports Association, ‘ BPA Reacts to New Harbours (Seafarers’ Remuneration) Bill’ (10 May 2022) <https://www.britishports.org.uk/bpa-reacts-to-new-harbours-seafarers-remuneration-bill/> accessed 7 December 2022.

[15] Nautilus, ‘First reading of Seafarers’ Wages Bill’ (7 September 2022) < https://www.nautilusint.org/en/news-insight/news/first-reading-of-seafarers-wages-bill/> accessed 7 December 2022.