High Court confirms wide scope of pensions auto enrolment rules

Peripatetic ships’ crew living in the UK, who start and finish their voyages from a UK port do have automatic pension enrolment rights, a High Court judgement has ruled. Shipping sector employers should take action to ensure they meet their compliance obligations.

Under the 2008 Pensions Act, employers have a legal duty to automatically enrol workers who are working or ordinarily working in Great Britain under workers’ contracts, into a pension scheme. However, does ‘ordinarily working’ cover workers at sea outside UK waters?

Fleet Maritime Services (Bermuda) Limited (FMSB), which employs staff for cruise ships, challenged the Pensions Regulator’s guidance on peripatetic workers – employees who travel from place to place and work in various locations abroad, such as seafarers or airline pilots. The employer argued that its UK workers were not covered by the auto enrolment legislation because they worked in international waters and so could not be considered to be ordinarily working in Great Britain. In contrast, the regulator argued that a worker’s base was the key factor to consider when deciding whether they were covered by the auto enrolment rules.

The High Court has backed the regulator. The judge concluded that a seafarer who lives in the UK and works on a ship that begins and ends its voyage at a port in the UK should be regarded as a UK worker with a UK contract. Even if such workers spend the majority of their time outside UK waters, they still quality for auto enrolment. However, the judge came to a different conclusion for workers on ships that spend most of their time outside the UK and whose tours of duty habitually begin and end outside the UK: these workers can be excluded from auto enrolment, even if they live in the UK.

In the light of this ruling, shipping businesses should review their position on auto enrolment. Employers that thought their employees were excluded may now need to take urgent action.

However, some areas of uncertainty remain. Moore Stephens is seeking clarification from the regulator about whether seafarers employed by the overseas subsidiary of a UK business are covered by the auto enrolment regulations.

Contact

Stuart Stroud

Related pages

Shipping & transport