National Minimum Wage (Offshore Employment) (Amendment) Order 2020

Lord Rosser Excerpts

Thursday 25th June 2020 Lords Chamber

[Lord Rosser (Lab) [V]]

My Lords, I put on record our recognition and appreciation of the vital contribution and role of seafarers at all times, and particularly at present.

We support the order since it reflects the agreed recommendations of a working group chaired by the Department for Transport on which seafarers, ship owners and companies were represented through their respective organisations. I understand, though, that the scope of the working group was restricted in advance to conditions on domestic—that is, UK-to-UK—and offshore energy routes, primarily North Sea oil and gas installations.

As the Minister has said, the order amends the National Minimum Wage (Offshore Employment) Order 1999 by extending the provisions of the National Minimum Wage Act 1998 to all seafarers working in UK territorial waters or in the UK sector of the continental shelf, except where they are working on a ship exercising the right of innocent passage or the right of transit passage. In practical terms it secures an enforceable legal baseline for seafarers’ pay on domestic offshore supply and cargo routes between UK ports, including the UK continental shelf.

What the order does not apply to is international routes from UK ports, including the short sea routes to the European mainland. UK ratings have been systematically replaced over the last three decades, to the extent that they now only account for just under 20% of seafarers in the UK shipping industry. That is because there is no legislation covering seafarers employed on ships working from UK ports that provides a baseline for seafarers’ pay that better protects UK ratings’ jobs from basic rates of pay well below our national minimum wage.

I understand that the working group that made the recommendations reflected in the draft order was an ad hoc body, and presumably it no longer exists. Surely, though, we need to look at the position of UK seafarer employment further in the light of what has happened over the last 30 years. There is a new restart and recovery group on which the International Chamber of Shipping and the seafarer trade unions are represented. Can this group not be asked to look also at means of increasing UK seafarer employment post Covid-19 to increase the resilience of ferry, coastal cargo and other merchant shipping sectors?

Do the Government not accept that we need plans to address the effect of nationality-based pay and other forms of discrimination against seafarers on international ferry and other routes from UK ports? Indeed, I understand that the Secretary of State told the Commons Select Committee this week that very low crewing costs for foreign seafarers on the publicly subsidised Hull to Rotterdam route is perfectly legal, so the Government cannot do anything about it. Does that mean that the Government are going to throw in the towel on this issue? That does not sound like “standing up for Britain”. Can the Government give an undertaking that they will take this issue on board and look seriously, with seafarer and employer organisations, at what needs to be done to address the issue of low-cost crewing well below our minimum wage that occurs on international ferry and other routes from UK ports to even other European countries with a similar standard of living?

I turn to the Explanatory Memorandum. I wanted to ask some questions about the extent of the impact of the order, but the memorandum’s wording in paragraph 12 suggests that this might not be a straightforward or simple question—an issue to which, for example, the noble Baroness, Lady Burt of Solihull, referred. The memorandum says that the total cost to business of extending the scope of the national minimum wage in line with the order

“could be as high as £3.2m per annum.”

It goes on to say that there is no robust data on how many employees who would now be covered by the order are not already being paid in accordance with the UK minimum wage, and that there is

“a lack of concurrence amongst sources which are available.”

Despite this lack of robust data, the memorandum goes on to indicate:

“Shipowners have stated that certain services may no longer be viable, but have been unable to identify any that may be impacted.”


Surely employers know how many people they employ and how much they currently pay them, so why was it not possible to provide a realistic costing of the changes to the scope and application of the minimum wage provided for in the order and the impact that it will have? How indeed was the figure of “as high as £3.2m” calculated?

Maybe there is a straightforward explanation for this lack of clarity, in which case, since the Department for Transport chaired the working group, I hope that the Minister will be able to tell us what it is. The other possible explanation is that that part of the shipping industry that will now be covered by the further national minimum wage order is all at sea when it comes to keeping accurate records—or, alternatively, that it does keep accurate records but, for reasons about which one can only speculate, is not prepared to disclose them.

Despite this—since, as I said, his department chaired the working group—I ask the Minister: how many seafarers are covered by this extension of the application of the national minimum wage? Can the Minister also tell us what impact this order is expected to have on the low-percentage figure for the number of seafarers in the UK shipping industry who are UK ratings?

The Government have said that this order will allow HMRC to focus enforcement on vessels working domestically. Like my noble friend Lord Hain, I want to ask: what budget will be provided to HMRC and the Maritime and Coastguard Agency to check, effectively and thoroughly, vessels working domestically, and what will be the additional training requirements?

Finally, the Explanatory Memorandum states in paragraph 12.4:

“In addition to the anticipated staff cost to business, there is the potential for extra costs as a result of proceedings in employment tribunals and the courts.”


What is the extent of these potential extra costs, and what circumstances are envisaged that could lead to the proceedings in employment tribunals and the courts that are referred to?