HANSARD
National Minimum Wage (Offshore Employment) (Amendment) Order 2020
- Motion to Approve
- 3:01 pm
- Moved by
- That the draft Order laid before the House on 6 May be approved.
- My Lords, this draft order amends Article 2 of the National Minimum Wage (Offshore Employment) Order 1999, known as the 1999 order, and will extend the provisions of the National Minimum Wage Act 1998, known as the Act, to seafarers working domestically in UK territorial waters or in connection with offshore activities in the UK sector of the continental shelf. The amended order will not, however, apply the provisions of the Act to seafarers employed on a ship which is exercising the right of innocent passage or the right of transit passage, which I will explain.It is clear that the current provisions do not go far enough to enable the minimum wage to be paid to most seafarers working domestically. This draft order has come about following a significant amount of engagement and consultation. The background is that in 2017, a working group encompassing government and industry was formed to explore this issue, which had been an area of significant interest for more than a decade. The working group was chaired by the Department for Transport, with policy and legal representation from interested government departments: BEIS, the Foreign and Commonwealth Office, and HMRC. The working group also included the maritime unions—the RMT and Nautilus International—plus the UK Chamber of Shipping and representatives from individual shipping companies. It met formally three times over nine months and was preceded and succeeded by other dialogue with industry and unions. This measure has also been considered, and is supported, by the Maritime and Coastguard Agency.The result was that this group recommended that the existing legislation should be amended to extend the eligibility of the minimum wage to all seafarers working domestically in UK territorial waters, on the UK continental shelf or in the UK’s exclusive economic zone. This order seeks to implement those recommendations as far as they apply to the UK continental shelf.I have referred to several concepts as they are defined in the 1982 United Nations Convention on the Law of the Sea—UNCLOS—and will give some further explanation. The continental shelf of a coastal state comprises the seabed and subsoil of the submarine areas that extend beyond its territorial sea to the outer edge of the continental margin. Where the outer edge is beyond 200 nautical miles, it shall not exceed 350 nautical miles. The coastal state has sovereign rights to explore or exploit the natural resources of the seabed or subsoil. The exclusive economic zone is related but does not extend beyond 200 nautical miles. The coastal state has sovereign rights to explore or exploit, conserve or manage the natural resources—whether mineral or living—within the sea, the seabed or its subsoil, and the area above the sea. In simple terms, the continental shelf could be considered with regard to oil and gas and the EEZ with regard to fishing and renewable energy.UNCLOS defines a vessel’s passage through a state’s territorial sea as being innocent if it is not prejudicial to the peace, good order or security of the coastal state. The word “passage” means navigation through the territorial sea for the purpose of traversing that sea without entering internal waters, calling at a roadstead or port facility outside internal waters, proceeding to or from internal waters, or a call at such a roadstead or port facility. Transit passage means the exercise of the freedom of navigation and overflight solely for the purpose of continuous and expeditious transit of the strait between one part of the high seas and another, or between exclusive economic zones.
- 3:10 pm
- My Lords, I thank the Minister for his comprehensive introduction and I am grateful for the opportunity to speak on this order. I also want to endorse the valuable role played by seafarers, given the dangers they face from time to time; we do understand that. In particular, as a Scottish Peer, it is important to highlight the critical role that offshore industries such as renewables, fisheries, oil and gas play in the Scottish economy, as well as the UK-wide economy. Indeed, I am proud of the progress that Scotland has made in piloting renewable generation, particularly onshore and offshore wind generation, paving the way for its adoption right across the United Kingdom.However, in the current climate, it is important to highlight the huge uncertainties facing workers in many offshore industries. Our fishermen are already facing extensive uncertainty over the impact of Brexit as well as the effect of the Fisheries Bill, currently being scrutinised so effectively in this House, as we saw in the Divisions yesterday. The result of all this will impact on fishermen, including those on the west coast of Scotland. Fishermen still live in Girvan and Ballantrae in my old constituency. Today I read that prawn catches, for example, have halved and that their price has also halved. That will affect many men and women in Ayrshire. On this occasion I should like to pay tribute to the late father of the noble Viscount, Lord Younger. I worked very closely with him and had the greatest respect for him.For many offshore oil and gas sector workers in Scotland, the impact of Covid-19 will result in substantial job losses, not to mention the further redundancies made as we transition towards a net-zero climate. Given that, I support this order and welcome the greater financial security that it will offer the seafaring community by guaranteeing workers the national minimum wage. However, given these increasingly uncertain times, even more should be done to support these communities. We should be going further than the national minimum wage by agreeing to pay these workers a real living wage—the wage rate that people need to have a halfway decent existence. The Living Wage Foundation has calculated that the real living wage should be £9.30 an hour across the UK and £10.75 an hour in London.
- 3:14 pm
- My Lords, I too welcome this order, which closes a loophole that allows companies operating in British territorial waters potentially to pay their workers below the minimum wage. The order amends Article 2 of the National Minimum Wage (Offshore Employment) Order, but I would like to ask the Minister why it has taken so long to close this loophole. Have some seafarers been paid below the minimum wage for many years? Did anyone know about that and did any of the unions complain?The order newly applies to shipping, with certain exceptions as described by the noble Viscount, operating in UK waters whether or not the vessels are UK-registered, and to workers who may or may not ordinarily be employed in the UK. I welcome this: anyone employing people working in British waters should not be allowed to undercut the competition by underpaying its staff.My second question relates to the estimated cost of implementation. The Explanatory Notes state that HMRC cannot estimate this exactly because there is“no robust data as to how many employees are in this position, and a lack of concurrence amongst sources which are available.”How will the requirement be policed and how can the legislation be enforced? I would be grateful to the Minister if he could explain that.Apparently some ship owners have said that certain services will no longer be viable on the implementation of this order. My heart bleeds for them. Any business that makes money on the backs of underpaid and exploited workers does not deserve to be in business. I remember business groups using the viability argument before the national minimum wage was first introduced. Today, it is an accepted part of business practice in this country and only cowboys, as opposed to pirates, exploit it.
- 3:17 pm
- My Lords, I congratulate my noble friend Lord Younger on bringing this very worthwhile order before the House today. He referred in his opening remarks to the costs of the sulphur emissions measures that were passed on to the industry. One of the costs of doing that was highly regrettable for me because any remaining ferry link to Denmark and the rest of Scandinavia was discontinued. I have family reasons for wishing to visit Denmark. Obviously, that was a very expensive measure indeed.I warmly welcome the measures set out in the order. As my noble friend said, this will bring huge benefits to seafarers and it is particularly appropriate that it will benefit non-officers—ratings working on or below deck. The order will extend to workers on fishing vessels operating in UK territorial waters, workers on dredgers in the territorial waters, and those working in the UK sector of the continental shelf, as well as all the seafarers in all the categories to which my noble friend alluded. I join others in celebrating seafarers’ day today and I recognise the immeasurable contribution to the economy and employment that the British shipping industry makes. The UK is an island nation, which has been built on trade, with a high percentage of goods travelling by sea.I note what the noble Lord, Lord Foulkes, said about the contribution of offshore workers and note in passing that the offshore industry and the fishing industry are two of the most dangerous industries, alongside farming. It is a matter of celebration today that we welcome this order but, as other speakers have noted, it has taken us some considerable time to reach this pass in adopting it.My noble friend remarked in passing about the ILO asking for continuous improvements for seafarers and other workers in this measure. Will he set out what other measures the Government envisage going forward? I thank him for introducing the order today and I wish it a safe passage.
- 3:20 pm
- My Lords, I, too, welcome this proposal to extend minimum wage protection to a group of workers whose vital contribution to the UK economy too often goes overlooked and underappreciated and who frequently do their jobs in dangerous conditions. Mentioned fleetingly in paragraph 7.8 of the Explanatory Memorandum is the Government’s claim that the amendment,“will allow HMRC to focus enforcement on seafarers working domestically in UK territorial waters”.Our whole experience of minimum wage law since 1999 has been of weak enforcement with insufficient resources spread widely and thinly, leaving low-paid workers vulnerable to rogue employers who ride roughshod over the minimum wage laws. In 2017, the then director of labour market enforcement Sir David Metcalf pointed out that a UK employer was on average likely to be inspected by HMRC only once every 500 years. In February this year the Department for Business, Energy and Industrial Strategy reported that since 2007, only 15 employers had been successfully prosecuted for underpaying the minimum wage, around one a year. Neither the department nor HMRC has the budget or the staff numbers vigorously to enforce Britain’s minimum wage laws. We have become used to this Government overpromising and underdelivering and sadly, they are doing so again here for seafarers working in UK territorial waters or in the UK sector of the continental shelf. The Low Pay Commission reckons that between 300,000 and nearly 600,000 over-25 year-olds were paid below the minimum wage in 2016. No wonder the Low Pay Commission concluded that“there remains a rump of employers and businesses that consider the low likelihood of enforcement worth the non-compliance gamble.”That is the reality of life in Britain’s so-called flexible labour market, including for seafarers. Sir David Metcalf believes we need tougher penalties for breaking the minimum wage laws. Companies caught paying staff below the minimum wage can currently be fined up to twice the value of the wage arrears they owe. Metcalf says that five times might be better. The total amount of fines imposed on employers for underpaying the minimum wage recently was £3.9 million, much less than the £10.9 million in wage arrears identified by HMRC. Millions of exploited people work in low-paid, insecure jobs and they deserve much better, including offshore workers.
- 3:23 pm
- My Lords, I, too, thank the noble Viscount for introducing this statutory instrument, and his officials for their very useful Explanatory Notes. The noble Viscount’s party opposed the minimum wage when it was first introduced by the Labour Government. We supported its introduction as long overdue. There was concern at the time that paying the minimum wage might price people out of jobs, but that proved not to be the case. It is interesting and encouraging to see how times have changed, with widespread support for the principle. The debate has now moved on to a discussion of the more substantial living wage, as the noble Lord, Lord Foulkes, said. I am sure that we will come back to that as we come out of Covid, with the Government talking about levelling up yet facing an economy in crisis.When the national minimum wage was introduced in 1998 and then applied in 1999 to offshore workers, it did not include seafarers, and this SI remedies that. It is surprising that it has taken more than 20 years to do so, as my noble friend Lady Burt noted. The SI excludes boats that are in transit through our waters, and I note the UN definition of those with right of innocent passage. That rather begs the question of whether we should include in the minimum wage those invading us, which would certainly be very generously turning the other cheek.As the notes explain, the SI aims to include those whose work is on, for example, fishing vessels and dredgers in UK territorial waters and the UK sector of the continental shelf and other seafarers working domestically in UK territorial waters. It is striking to note that the question of whether they should be covered was raised more than a decade before the working group was set up. I am glad that the group included the maritime unions as well as the UK Chamber of Shipping and shipping companies, and that it seems to have made very clear and agreed recommendations. Has any estimate been made of the nationalities of those covered? What proportion are UK nationals? What proportion come from the EU and what proportion from the rest of the world? Are there any other groups which as yet have not been properly included in minimum wage legislation? If there are, what plans are there to remedy that?
- 3:26 pm
- My Lords, some of my family benefited financially from the introduction of the national minimum wage in 1998 and have done so since, so I support this statutory instrument today, but there are a number of questions about how it applies. I presume that the entirety of the burgeoning offshore wind energy workforce, maintenance as well as installation, will be covered as we are rightly and proudly the world leader in offshore wind energy production.If a seafarer is offshore for more than a day, their birthday occurs while offshore and their minimum wage entitlement therefore increases, will that increase automatically be applied, despite the fact that the birthday occurred while they were offshore?It is of concern that ferries—for example, Dover-Calais—appear not to be included. The Minister may want to confirm what was said in the House of Commons on this. Regarding the definition of spending a majority of one’s time working in the waters of our continental shelf, will any ferries to the continent be covered by this statutory instrument? If not, is this not a major omission of a group of British workers who sometimes work in difficult conditions, have important responsibilities and are not particularly well paid? As we enter Brexit, should not those working on our ferries, and those from this country working on other ferries that use our ports and harbours, have the best wages in Europe, rather than potentially being some of the cheapest ferry workers in Europe? Should this measure not therefore apply to all ferry workers?
- 3:29 pm
- Lord Sheikh (Con) [V]My Lords, I congratulate the Minister on introducing this order, which was long overdue. The National Minimum Wage Act 1998 created a minimum wage across the United Kingdom for workers. The aim of the Act was to guarantee a decent minimum standard of pay for workers and to promote fair competition between businesses. However, the Act excluded from its provisions various workers in offshore employment. Some of those workers were brought into the scope of the Act by The National Minimum Wage (Offshore Employment) Order 1999. However, certain exemptions applied. It did not cover employment on a ship in the course of navigation or workers on shipping vessels or dredgers. It is therefore important that these loopholes be examined.I commend the Government on setting up a working party to look at the issues and to commence consultations. The working party was made up of maritime unions, the UK Chamber of Shipping and the shipping companies. Following the consultations, it is now proposed that the wide-exception 1999 order be amended and that the 1998 Act will apply to employment in connection with a ship in course of any kind of navigation, or for workers on fishing vessels or dredgers. However, a narrow exception will apply to workers“employed for the purposes of activities on a ship exercising the right of innocent passage or the right of transit passage.”Can the Minister say why that exception applies?It is appreciated that the provisions of the National Minimum Wage Act will apply to seafarers working in UK territorial waters or in connection with certain activities in the UK sector of the continental shelf. Can the Minister say whether there is any intention to extend the scope of applying the 1998 Act?We were, and we are still, a great maritime nation. However, it is important that we do not have cheap labour in our shipping industry, and that these workers enjoy the same rights as employees working on land. We need to close as many gaps as possible to ensure that workers in our shipping industry are paid adequately in accordance with the spirit of the 1998 Act. We also ought to make sure that UK workers are not replaced by cheap workers from abroad in our shipping industry. In the past, UK workers made up less than 20% of the industry, which was not acceptable. I therefore support the order.
- 3:32 pm