England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		21/12/2015

Mr Justice Leggatt:

Introduction

1. The question in this case is whether seafarers employed by the claimant fall within the territorial scope of the Pensions Act 2008, as the Pensions Regulator maintains, so as to qualify for automatic enrolment into a pension scheme in accordance with the Act. This depends on the meaning of section 1(1)(a), which brings within the scope of the Act a worker "who is working or ordinarily works in Great Britain under the worker's contract".

The Facts

2. There is no dispute about the underlying facts and the following summary is based on a statement of facts which the parties have agreed.
3. The claimant, Fleet Maritime Services (Bermuda) Limited (hereafter "the Employer"), is a company incorporated in Bermuda. The Employer is a wholly owned subsidiary of Carnival plc, an English company. Carnival owns the ships which trade under the names of P&O Cruises and Cunard. Most of the ships are registered in Bermuda. The Employer employs the crew (referred to in this judgment as the "seafarers") who work on these ships. The Employer uses a Guernsey based company as its payroll and administrative vehicle and has no place of business in the UK.
4. The seafarers live on board the cruise ships to which they are assigned during any particular "tour of duty". Each tour of duty is typically twelve weeks but can be up to six months, followed by six or twelve weeks of leave. All the cruise ships spend a significant majority of their time outside UK territorial waters.
5. The Employer has provided the Pensions Regulator with examples of the most commonly used contracts under which the seafarers work. Relevant extracts from those contracts are set out in an annex to this judgment.
6. Some of the seafarers reside in the UK and some reside outside the UK. The seafarers are mostly paid in British pounds, though some of those working on Cunard ships are paid in US dollars where that is the currency used by that particular ship.
7. As regards tax, the seafarers who reside in the UK and whose duties are wholly or mainly outside the UK may be able to claim Seafarers' Earnings Deduction on income that would normally be taxable in the UK. The seafarers are not automatically entitled to the Seafarers' Earnings Deduction as this will depend on their individual pattern of absence from the UK, and they must apply to HMRC for such tax relief.
8. The Employer is exempt from making any National Insurance contributions on behalf of those seafarers who live in the UK because the company has no place of business in the UK. Pursuant to regulations 115-121 of the Social Security (Contributions) Regulations 2001, seafarers are personally liable to pay National Insurance contributions if they are domiciled or resident in the UK and their contract was entered into in the UK (in circumstances where Carnival, which owns the ships, has a place of business in the UK).

The Pensions Act 2008

9. The Pensions Act 2008 introduced a system of "automatic enrolment" into pension arrangements within Great Britain.^[1] The effect of the legislation is to require an employer to automatically enrol an eligible "jobholder" into an "automatic enrolment scheme" which satisfies specified requirements, unless the jobholder is already an active member of a qualifying pension scheme under the Act. There are provisions which enable jobholders to opt out of automatic enrolment.
10. A "jobholder" is defined in section 1(1) of the Act as a "worker":

"(a) who is working or ordinarily works in Great Britain under the worker's contract,

(b) who is aged at least 16 and under 75, and

(c) to whom qualifying earnings are payable by the employer in the relevant pay reference period."

A "worker" means an individual who has entered into or works under a contract of employment or any other contract by which the individual undertakes to do work or perform services personally for another party (referred to in the Act as the "employer"): see section 88.

Enforcement

11. The Pensions Regulator is responsible for enforcing the automatic enrolment obligations placed on employers by the Act. It has published detailed guidance explaining its understanding of how the relevant statutory provisions operate. Under section 35 of the Act the Regulator has the power to issue a compliance notice directing an employer to take steps to remedy a contravention of one or more of its duties under the Act. If the employer does not comply with such a notice, the Regulator may issue a penalty notice which imposes a financial penalty for non-compliance or which is to take effect on an escalating basis if non-compliance continues after a specified date (sections 40 and 41).
12. The Regulator may review a notice on the application of an employer (section 43). An appeal lies to a tribunal if an application for a review of a penalty notice does not lead to its withdrawal (section 44). An employer who wilfully fails to comply with a duty of automatic enrolment is guilty of a criminal offence (section 45).

The Regulator's decision in this case

13. The duties on employers under the Act are being implemented in stages between October 2012 and February 2018. The stage at which an employer becomes subject to the duties depends on the number of workers it employs. It is not in issue that, if the Regulator is correct in its interpretation of section 1(1)(a), the Employer now has automatic enrolment obligations towards many of its seafarers.
14. On 10 July 2014 the Regulator sent a letter to the Employer to say that it had reached the view that certain categories of worker employed under contracts with the Employer fall within section 1(1)(a). In particular, the Regulator expressed the following views:

i) Where a worker lives in the UK but works on a British or foreign registered vessel spending several weeks away working in foreign waters and joins and leaves that vessel from a port within the UK, they should be assessed as ordinarily working in the UK, even though most of their tour of duty might be spent outside the UK.

ii) Where a worker lives in the UK, begins and ends their tour of duty outside the UK and is working under a permanent contract of employment in similar form to the contracts sent as examples to the Regulator, there is evidence in relation to travel and other arrangements at the beginning and end of a tour of duty to support the view that their work begins and ends in the UK and they should therefore be assessed as ordinarily working in the UK, even though most of their tour of duty might be spent outside the UK.

iii) Where a worker lives in the UK, begins and ends their tour of duty outside the UK and is working under a fixed term contract of employment in similar form to the contracts sent as examples to the Regulator, there is not sufficient evidence to support the view that their work begins and ends in the UK and therefore they are not ordinarily working in the UK.^[2]

15. The Regulator has subsequently confirmed that it does not consider that any seafarers working for the Employer who do not live in the UK fall within section 1(1)(a) of the Act.
16. The letter dated 10 July 2014 from the Regulator was accompanied by a compliance notice. The Employer requested a review of that notice. The outcome of the review, communicated in a letter dated 10 September 2014, was that the Regulator affirmed its earlier decision to issue the compliance notice.

These proceedings

17. In these proceedings the Employer seeks judicial review of the Regulator's decision to uphold the compliance notice. Permission to proceed with the claim was initially refused on paper on the ground that under the statutory scheme the appropriate procedure for challenging an adverse decision of the Regulator is to appeal to a tribunal under section 44 of the Act following a refusal to withdraw a penalty notice. Following an oral hearing, however, Mr Justice Mitting gave permission to proceed. He considered it appropriate for the Employer to seek clarity as to the law through judicial review rather than wait for the service of a penalty notice in circumstances where failure to comply with a duty of automatic enrolment under the Act potentially gives rise to criminal liability.

The issue for the court

18. The essential issue raised by the claim is whether or when a seafarer engaged by the Employer to work on a ship which spends all or most of its time outside Great Britain "ordinarily works in Great Britain under the worker's contract" within the meaning of section 1(1)(a).
19. In English law the meaning and effect of legislation is a question of law for the court. No deference is afforded to the interpretation of an administrative agency charged with enforcing the legislation, unless the legislation itself (as interpreted by the court) so requires.^[3] Although the Pensions Act 2008 gives the Regulator powers to issue compliance notices and penalty notices if the Regulator "is of the opinion" that the person to whom the notice is issued has failed to comply with a relevant duty, it does not other than in this procedural context give any special status to opinions expressed by the Regulator – for example, in its published guidance – about how the Act is to be interpreted.
20. The boundary between law and fact, however, is not hard-edged. It would not generally be desirable to treat every evaluative judgment made by a body which has to apply the legislation to primary facts as a question of law amenable to judicial review. In recognition of this, there is a body of authority which treats questions of degree and the application of inherently imprecise terms to primary facts as questions of fact: see e.g. R v Monopolies and Mergers Commission, ex p South Yorkshire Transport Ltd [1993] 1 WLR 23. More recently, the tendency has been to adopt a "pragmatic approach" to drawing the distinction between questions of "law" and "fact" which takes account of a broader range of considerations that affect the desirability of judicial intervention. Such an approach was taken, for example, by the House of Lords in the case of Lawson v Serco Ltd [2006] UKHL 1, [2006] ICR 250, discussed below, in determining the scope for an appeal from a tribunal where appeals are limited to reviewing errors of law;^[4] and it seems to me that the same approach should in principle be taken in determining the extent to which the court should treat as reviewable for errors of law decisions made by the Regulator.
21. The decision of the Regulator under challenge in this case, which I have set out at paragraph 14 above, has been made at a reasonably high level of generality. The Regulator has not decided whether any individual seafarer who works for the Employer falls within section 1(1)(a) of the Act but has described three categories of worker who in two cases are, and in the third case are not, regarded by the Regulator as ordinarily working in the UK. It seems to me appropriate for the court to approach the task of reviewing the Regulator's decision at a similar level of generality. To do so strikes a proper balance between providing useful guidance and avoiding micro-management. In considering the proper interpretation of section 1(1)(a), I will therefore focus on whether the three rules formulated by the Regulator accurately state the circumstances in which seafarers working under the contracts taken as examples fall within the scope of section 1(1)(a), or whether any modification of those rules is necessary.

The legal history

22. In support of their case on the meaning of section 1(1)(a), each party relies on judicial decisions interpreting the territorial scope of earlier employment legislation, albeit that they draw opposite conclusions from those decisions. To set the scene for the arguments, I must therefore first outline this legal history.
23. Under the Industrial Relations Act 1971 the right of an employee not to be unfairly dismissed did not apply to "any employment where under his contract of employment the employee ordinarily works outside Great Britain": see section 27(2). A similar territorial exclusion was re-enacted in subsequent legislation dealing with unfair dismissal. Its meaning was considered by the Court of Appeal in Wilson v Maynard Shipbuilding Consultants [1978] QB 665. In that case the Court of Appeal held that the question whether "under his contract of employment the employee ordinarily works outside Great Britain" was not to be decided simply by looking at what had actually happened during the employment and how much time the employee had spent working inside and outside Great Britain. Rather, the matter was settled when the contract of employment was made and was to be ascertained by reference to the terms of the contract. If the contract required the employee to work "wholly or substantially wholly" in Great Britain or "wholly or substantially wholly" outside Great Britain, that would normally provide the answer. Where the contract left it to the employer's discretion where the work should be carried out, the correct approach was to ascertain from the terms of the contract where the employee's base was to be. In the absence of special factors leading to a contrary conclusion, this was likely to be the place where the employee was to be treated as ordinarily working. That was so even though (as in examples given of an airline pilot or a long-distance lorry driver) the employee might spend much more of their time away from their base than working at their base.
24. A case involving an airline employee reached the Court of Appeal shortly afterwards. In Todd v British Midland Airways [1978] ICR 959 the employee was based in the UK but worked as a flight officer on international flights. The Court of Appeal allowed an appeal from a decision that Mr Todd ordinarily worked outside Great Britain because most of his working hours were spent outside Great Britain. Lord Denning MR endorsed the principle that an employee's base "is the place where he should be regarded as ordinarily working even though he may spend days, weeks or months working overseas" (p.964G). He disagreed, however, with the approach adopted in Wilson's case of treating the employee's base as determined by their contract. Lord Denning said:

"I do not think the terms of the contract help much in these cases. As a rule, there is no term in the contract about exactly where he is to work. You have to go by the conduct of the parties and the way they have been operating the contract. You have to find at the material time where the man is based."

25. The two other members of the court reached the same result by applying the test stated in Wilson's case. Lord Denning's opinion that the base of an employee is determined by what actually happens in practice was clearly an obiter dictum and the 'contract' test continued to be applied in later cases, including Carver v Saudi Arabian Airlines [1999] ICR 991. Mrs Carver was employed as a flight attendant under a contract which provided that she might be based at any location where the airline operated and could be transferred from one location to another. After training in Saudi Arabia, she was based in India for four years but was then transferred to London which remained her base for the next five or six years until her contract of employment was terminated. The Court of Appeal held that it was bound by Wilson's case to ascertain where the employee was based by considering the position as it appeared at the date of the contract. The court concluded that, so viewed, her base was clearly in Saudi Arabia.
26. The legislative provision applicable in Carver's case was section 196(2) of the Employment Rights Act 1996, which was in materially similar terms to section 27(2) of the 1971 Act quoted above. In 1999, Parliament repealed section 196 without enacting anything in its place.^[5] It was left to the courts to determine the implied territorial limits to the rights conferred by the 1996 Act.
27. In Lawson v Serco Ltd [2006] UKHL 1, [2006] ICR 250, the House of Lords heard appeals in three cases which raised the issue of the territorial scope of section 94(1) of the 1996 Act, which gives employees the right not to be unfairly dismissed. The only substantive speech was given by Lord Hoffmann (with whom the rest of the appellate committee agreed). He observed that the repeal of section 196 meant that the courts were no longer rigidly confined to the "single litmus test" of treating the place where the employee ordinarily works as the sole criterion determining their entitlement to protection. Nevertheless, Lord Hoffmann regarded the importance which Parliament had attached to the place of work as "a relevant historical fact which retains persuasive force" (para 11). He also considered that "a certain amount of guidance, or at any rate ideas and discussion" could be found in the earlier case law since, "although the judges who decided those cases were applying a particular verbal formula, they were trying to interpret that formula in a way that seemed appropriate to delimit the substantive right" (para 12).
28. In determining the implied territorial scope of section 94(1), Lord Hoffmann started from the position that what Parliament must have intended as "the standard, normal or paradigm case" of its application was the employee who was working in Great Britain (para 25). He drew support for this view from the fact that Parliament had, from 1971 until 1999 when section 196 was repealed, regarded ordinarily working in Great Britain as an appropriate criterion for territorial scope. Lord Hoffmann considered, however, that the emphasis in the language of section 196 and in Wilson's case on the contract, though in accordance with the prevailing attitude to the employment relationship in the early 1970s, could in practice produce "arbitrary and counter-intuitive results" (paras 25-26). He gave as an illustration Carver's case and said (at para 27):

"Since 1971 there has been a radical change in the attitude of Parliament and the courts to the employment relationship and I think that the application of section 94(1) should now depend upon whether the employee was working in Great Britain at the time of his dismissal, rather than upon what was contemplated at the time, perhaps many years earlier, when the contract was made. I would therefore expect Mrs Carver's case to be decided differently if it came before the courts today."

29. Addressing the position of peripatetic employees such as airline pilots, international management consultants, salesmen and so on, Lord Hoffmann noted that the solution adopted in Wilson's case under the old statutory formula was to ask where the employee was based (para 28). He said that, while "we are today more concerned with how the contract was in fact being operated at the time of dismissal than with the terms of the original contract", "the common sense of treating the base of a peripatetic employee as, for the purposes of the statute, his place of employment, remains valid" (para 29). Lord Hoffmann then cited the opinion expressed by Lord Denning in Todd's case, which he thought "now that section 196 has been repealed … provides the most helpful guidance" (para 30).
30. Applying that approach to one of the cases under appeal, Crofts v Veta Ltd, Lord Hoffmann endorsed the view of the employment tribunal that Mr Crofts, an airline pilot who was originally based in Hong Kong but was later re-assigned to London, was based in Great Britain at the time of his dismissal. He therefore came within the territorial scope of section 94(1).
31. The other two conjoined appeals concerned what Lord Hoffmann called "expatriate" employees. He noted that the concept of a base provided no help in their case (para 35). He said that the circumstances would have to be unusual for an employee who works and is based abroad to come within the scope of British labour legislation (para 36) but identified two examples of cases in which they could. One was the case of an employee posted abroad by a British employer for the purposes of a business carried on in Great Britain (para 38). The other – which encompassed both cases under appeal – was an expatriate employee of a British employer who is operating within what amounts for practical purposes to an extra-territorial British enclave in a foreign country (para 39).

Subsequent cases

32. Two later cases dealing with the implied territorial scope of section 94(1) of the 1996 Act were also relied on in argument.
33. In Diggins v Condor Marine Crewing Services Ltd [2009] EWCA Civ 1133, [2010] ICR 213, the Court of Appeal confirmed that the principles identified in Lawson v Serco as applicable to peripatetic employees apply to a mariner claiming unfair dismissal. Mr Diggins was employed by a Guernsey based company as an officer on a ferry which plied daily between Portsmouth and the Channel Islands. The ship was registered in the Bahamas. Mr Diggins lived in England, joined his ship on a daily basis in Portsmouth, sailed from Portsmouth to the Channel Islands on a daily basis and returned each day to Portsmouth.^[6] The Court of Appeal affirmed the conclusion of the Employment Appeal Tribunal that Mr Diggins was based in Great Britain, which was where his duty began and ended, and therefore came within the scope of section 94(1) of the 1996 Act.
34. In Ravat v Halliburton Manufacturing and Services Ltd [2012] UKSC 1, [2012] ICR 389, the Supreme Court considered a category of case not covered by the decision in Lawson v Serco. Mr Ravat lived in England and was employed by a British company but worked for the benefit of a German company in Libya on a 'commuter' basis, spending 28 days in Libya followed by 28 days at home (where he was not required to work). Lord Hope, who gave the judgment of the court, observed (at para 13) that:

"it would be difficult to fit [Mr Ravat's] case into any of the categories identified by Lord Hoffmann in Lawson's case. He was not working in Great Britain at the time of his dismissal. He was not a peripatetic employee. He was not working abroad as an expatriate in a political or social British enclave. Nor had he been posted abroad to work for a business conducted in Great Britain."

Lord Hope nevertheless emphasised that the examples given in Lawson's case of employees working and based abroad who are covered by the legislation were examples only, and identified the relevant test as being whether the connection between the circumstances of the employment and Great Britain and with British employment law are sufficiently strong to make it appropriate for the employee to have a claim for unfair dismissal in Great Britain. The Supreme Court held that, applying this test, the employment tribunal was entitled to conclude that Mr Ravat came within the scope of section 94(1).

The arguments

35. The approach of the Regulator – as set out in the letter explaining its decision to uphold the compliance notice and as lucidly articulated on its behalf by Mr Adrian Lynch QC – is that, in considering whether a peripatetic worker such as a seafarer "ordinarily works in Great Britain under the worker's contract" within the meaning of section 1(1)(a) of the 2008 Act, definitive guidance is provided by Lawson v Serco. In accordance with that guidance, the question must be decided by identifying where the worker has their base, which in turn is largely determined by where the worker's tours of duty begin and end. Mr Lynch QC submitted that the Regulator's conclusions that the relevant seafarers have their base in Great Britain cannot be said to involve any error of law.
36. Mr David Reade QC, who argued the case most attractively for the Employer, submitted: (1) that the Regulator's approach is inconsistent with the plain meaning of the words used in section 1(1)(a); (2) that Lawson's case is not an authority on the meaning of the statutory test in section 1(1)(a) and the most relevant authority is Wilson's case; and (3) that, in circumstances where the seafarers work on ships which spend a significant majority of their time outside Great Britain, they do not on any view fall within the scope of section 1(1)(a). I will consider Mr Reade's arguments in turn.

The language of section 1(1)(a)

37. Mr Reade QC submitted that, applying the simple proposition that, untrammelled by authority, a statute should be given its plain, ordinary meaning, the words of section 1(1)(a) are clear. They are directed to asking where a worker spends their working time. If their working time is spent in Great Britain, they are within the section. If their working time is spent partly in and partly outside Great Britain, one asks where they ordinarily spend their working time. Applying this test, the seafarers in this case work on board ships which are ordinarily outside Great Britain and they are therefore not within the scope of the Act.
38. I agree that the right place to start must be with the language of section 1(1)(a). It is of constitutional importance that citizens should be able to rely on what they read in an Act of Parliament so that they can regulate their conduct in accordance with it, and courts should be correspondingly slow to displace meanings which are otherwise clear and unambiguous and not productive of absurdity by reference to extraneous material: see R v Environment Secretary, ex parte Spath Holme Ltd [2001] 2 AC 349, 397-8 (Lord Nicholls). Insofar as the language of section 1(1)(a) is clear, it would be wrong to impose on it some different meaning derived from judicial interpretation of provisions in previous statutes which have been repealed (and which in any event related to different employment rights).
39. Furthermore, the wording of section 1(1)(a), although similar, is not identical to that of the earlier statutes. One difference is that, whereas the earlier statutes referred only to where the employee "ordinarily works", section 1(1)(a) refers to where a worker "is working or ordinarily works" (my emphasis). In addition, as Mr Reade emphasised, the old test of where the employee ordinarily worked had to be applied at one particular point in time – being the time of dismissal – whereas section 1(1)(a) has to be applied over the whole duration of a worker's contract. Thus, a worker may be a jobholder during some period or periods but not during other periods of their employment. That is obviously so if the worker's age moves in or out of the range specified in section 1(1)(b) or if qualifying earnings are payable by the employer in some pay reference periods but not others; and it must equally be so if the worker becomes or ceases to be someone who is working or ordinarily works in Great Britain under the worker's contract.
40. The inclusion of a worker who "is working" in Great Britain cannot, in my view, be intended to bring within the scope of the Act a worker who does any work at all in Great Britain for which qualifying earnings are payable. It is not reasonable to suppose that if, for example, a foreign worker is sent to Britain by their employer for a few months to carry out a particular project, the worker's employer is obliged to automatically enrol the worker in a qualifying pension scheme provided only that their earnings exceed the requisite threshold. To make sense of the provision, I think the test must be whether the individual is working in Great Britain in the sense of working with their base in Great Britain rather than doing work here on a temporary visit.
41. I take the purpose of including a worker who "ordinarily works" in Great Britain as being to ensure that an individual who spends part of their time working abroad does not lose the benefits of automatic enrolment – either for the periods spent abroad or altogether – provided they satisfy this condition. I accept that the words "ordinarily works" could be used to connote the place where the worker spends the majority of their working time. However, I do not think it necessary, or reasonable, to read section 1(1)(a) as imposing a test which depends simply on such a criterion.
42. In particular, such a test would not be a reasonable or fair test to apply to peripatetic workers. Take an example of someone living in England who works for a company in England but is required to go on frequent business trips abroad. It would be unfair if either the fact of being sent on such business trips or the length of time which they take were to disqualify such a worker from an important pension right conferred by UK legislation. It would seem even more unfair that a worker should lose the benefit of the legislation if the time they are required to spend abroad turns out to exceed half of their working time, though not if it remains just under half. The same would be true if the relevant threshold were taken to be any other particular proportion of time. Such a criterion would be all the more arbitrary when its precise meaning would itself be open to debate. For example, over what period is the comparison of time spent working inside and outside Great Britain to be made? It seems to me that there is no fair way of establishing a test of this sort other than by making detailed rules of a kind which Parliament has not made and which it is not the function of the courts to make.
43. I take it to be considerations of this kind which led the Court of Appeal in Wilson's case to reject such an interpretation of the words "ordinarily works outside Great Britain" in the earlier legislation in favour of asking where the employee was based.
44. That remains, in my view, an appropriate test. I do not think that treating a peripatetic worker who is based in Great Britain for the purposes of their work as a person who "ordinarily works" in Great Britain strains the language used unduly, even if a significant majority of the person's time is spent working outside Great Britain and especially if they travel far and wide and there is no one other country in which most of their working time is spent. In any event, the fact that the phrase has been given such an interpretation by the courts when used in earlier employment protection legislation is itself a reason, in the absence of any contrary indication, for interpreting section 1(1)(a) in that way. It is reasonable to presume that, in choosing to use a formula to define the territorial scope of the 2008 Act which had in previous statutes been consistently interpreted as requiring the court to determine where an employee is based, Parliament expected and intended the formula to be given such a meaning.

A return to the contract test?

45. This brings me to Mr Reade's second argument. He submitted that the leading authority on the meaning of the previous statutory provisions is Wilson's case, which established not only that an employee "ordinarily works" where they are based but also that the location of the employee's base is determined by the terms of their contract. That also reflects the words "under the employee's contract of employment" in the earlier legislation which have their counterpart in the words "under the worker's contract" in section 1(1)(a). Mr Reade argued that insofar as the House of Lords in Lawson v Serco departed from Wilson's case by making the touchstone where a peripatetic employee was in fact based at the relevant time, they felt able to do so only because section 196 of the 1996 Act had been repealed. By choosing to use in section 1(1)(a) a similar formula to that contained in section 196(2) of the 1996 Act before its repeal, Parliament must be taken to have intended to reinstate – for the purpose of defining whether a worker qualifies for automatic enrolment in a pension scheme – the 'contract' test for determining where a worker is based.
46. I agree that it is significant that Parliament has chosen in the 2008 Act to define the territorial scope of the right to automatic enrolment expressly, rather than to leave it to judicial implication. This means that, in contrast with the situation in Lawson's case, the courts are not free to apply general principles and are confined to interpreting a particular verbal formula. It is also clearly relevant that the particular verbal formula chosen is similar to the one used in section 196(2) of the 1996 Act (before its repeal) and its predecessors. I do not think it follows, however, that Parliament has signalled an intent to turn the clock back to the 1970s and renounce the "radical change in the attitude of Parliament and the courts to the employment relationship" since then to which Lord Hoffmann referred in Lawson's case.
47. It is true that in Lawson's case the House of Lords was not interpreting the "ordinarily works outside Great Britain" formula, which had been repealed. However, in deciding what test should be applied in relation to peripatetic workers, Lord Hoffmann turned for guidance to the cases which had interpreted that formula by asking where the employee was based. The House of Lords expressly endorsed this test, subject to the qualification that the test should depend on how the contract was actually operated rather than on what was contemplated as the time when the contract was made. Lord Hoffmann said in terms that, for this reason, he would "expect Mrs Carver's case to be decided differently if it came before the courts today".^[7]
48. A court interpreting section 1(1)(a) of the 2008 Act is not bound to follow authorities which interpreted similar language in earlier legislation when the approach taken in those authorities has been disapproved by the highest court in the United Kingdom as out of date. It would therefore be reasonable for Parliament in enacting the 2008 Act to expect that a court interpreting section 1(1)(a) would follow the guidance given by the House of Lords in Lawson's case regarding the emphasis which should now be given to what actually happens under the contract rather than on the position as it appeared when the contract was made. It seems to me that such an approach is just as, if not even more, appropriate when the test has to be applied continually over time – as it does in deciding whether a worker is a jobholder – rather than at a single point in time as in a claim for unfair dismissal. It makes no sense that a worker whose base was contemplated as being outside Great Britain when the contract was made should be precluded by that fact from qualifying for automatic enrolment if in the event the worker is based or subsequently becomes based in Great Britain.
49. I see nothing in the language of section 1(1)(a) to preclude such an interpretation. It is perfectly possible, and I think more natural, to read the words "under the worker's contract" as simply identifying what work counts for the purpose of section 1 rather than as requiring the question of where a worker ordinarily works to be determined purely by interpreting the worker's contract. Although I would not attach too much weight to the point, I also agree with Mr Lynch that the positioning of the phrase "under the worker's contract" at the end of the provision – rather than at the start where it was located in the previous legislation – is consistent with a demotion of its importance.
50. I conclude that, in asking where a peripatetic worker is based for the purpose of determining whether the worker "ordinarily works in Great Britain under the worker's contract" within the meaning of section 1(1)(a) of the 2008 Act, the correct approach is that commended by Lord Denning in Todd's case and by the House of Lords in Lawson v Serco. Thus, in contrast to the position under earlier legislation as interpreted in Wilson's case and the cases which followed it, the question is not necessarily settled by the terms of the worker's contract but will generally depend on how the contract is in fact being operated at the relevant time.

Reference to Hansard

51. In reaching this conclusion, I have not found it appropriate or relevant to place any reliance on a passage from Hansard on which the Regulator has sought to rely recording the answer given by the Minister to a question raised at the committee stage of the Bill's passage through Parliament. The exchange is set out below:

"Andrew Selous

I hope I am not expressing my ignorance, but the second unclear area was that of employees of British companies, or perhaps people in the armed forces, working overseas. Paragraph (a) says that a jobholder is an employee or worker

"who is working or ordinarily works in Great Britain under a contract".

The employees of some of our multinational companies may have a home service type of employment contract but not be locally employed. Presumably they are not therefore ordinarily working in Great Britain. Does that mean that they cannot be auto-enrolled? For example, I am not sure whether the staff of HM Diplomatic Service are always paid under local conditions or whether they continue under the PAYE system and pay into their UK national insurance accounts. That aspect of the Bill is not clear either and I would be grateful if the Minister could elaborate on both those areas.

...

Mr O'Brien

The point raised by the Hon. Member for South-West Bedfordshire is interesting, and it is covered in case law. Lawson v Serco involved an employee of Cathay Pacific Airways, which is a company registered in Hong Kong. The claimant's permanent home base was at Heathrow, and the question was whether or not he was based in the UK. The court's answer was that he was, so it depends where the employee is based. Diplomats are based in their country of origin, so those who work here for a time, if this is their normal base for work purposes, are based here. If an American who works for an American company were to work in the UK for a period, and if this were their normal base for the job, then they would be subject to the legislation in the UK. Broadly, that is the way in which the legislation will work. The key issues are the claimant's home base and the normal place that they work."

52. Mr Lynch submitted that the court could have regard to the Minister's statement in order to correct or rebut the Employer's contention that Parliament must be taken to have intended that section 1(1)(a) of the 2008 Act should be interpreted in accordance with the approach adopted in Wilson's case.
53. In Pepper v Hart [1993] AC 593 the House of Lords relaxed the general rule which had been understood to preclude any reference to parliamentary proceedings as an aid to construing a statutory provision and held that such reference is permissible provided that: (1) the legislation is ambiguous or obscure, or leads to an absurdity; (2) the material relied on consists of one or more statements by a minister or other promoter of the Bill together, if necessary, with such other parliamentary material as might be necessary to understand such statements and their effect; and (3) the effect of the statements relied on is clear and unequivocal. See also R v Environment Secretary, ex parte Spath Holme Ltd [2001] 2 AC 349, 391-2 (Lord Bingham). In the present case I do not consider that the third of these conditions is met. Although he mentioned Lawson v Serco, the Minister did not address the question of whether or to what extent the terms of a worker's contract determine where a worker is based. In so far, therefore, as there is ambiguity about whether section 1(1)(a) bears a similar meaning to that given to a predecessor provision to section 196 of the 1996 Act in Wilson's case, the Minister's statement does not clearly resolve it.
54. Mr Lynch did not in fact argue that the conditions set out in Pepper v Hart are satisfied but submitted that, even when those conditions are not satisfied, the court has a residuary inherent jurisdiction to allow citation of parliamentary materials where the need to carry out the legislator's intention appears to the court so to require. The only evidence put forward for the existence of this jurisdiction was a passage in Halsbury's Laws of England, vol 96 (2012) at para 1124. A footnote lists a number of cases decided since Pepper v Hart where, according to Halsbury, "parliamentary materials must be taken to have been admitted under the residuary inherent jurisdiction, since the conditions in Pepper v Hart were not satisfied." However, Mr Lynch did not cite any of the cases mentioned and, without being shown binding authority for such a proposition, I cannot accept that this "residuary inherent jurisdiction", if it exists at all, allows reliance to be placed on parliamentary materials as an aid to the interpretation of a statute without the need to satisfy the conditions in Pepper v Hart. Such a course would be flatly inconsistent with Pepper v Hart, which established those conditions as necessary. Rebutting or 'correcting' an assertion made by another party to the proceedings about what Parliament should be taken to have intended the words of a statutory provision to mean is just as much an exercise in interpretation as advancing a positive case about its meaning. Reference to the Minister's statement, therefore, for the purpose on which Mr Lynch sought to rely on it is in my view precluded by authority where the Pepper v Hart conditions are not satisfied.

How does the 'base' test apply to seafarers?

55. Mr Reade's third argument on behalf of the Employer was that, even if the test to be applied in determining whether a peripatetic worker ordinarily works in Great Britain under the worker's contract for the purpose of section 1(1)(a) is that identified in Lawson's case, the position of seafarers is different from that of other peripatetic workers. Mr Reade submitted that, if one asks where a seafarer appointed to work on a ship for long periods at a time is based, the natural answer is "on the ship". Accordingly, where the ship in question spends a significant majority of its time outside Great Britain, then applying the 'base' test – whether by reference to the terms of the contract or by reference to what actually happens in practice – it cannot be said that a seafarer working on the ship ordinarily works in Great Britain.
56. Mr Reade also pointed out that all the legislation governing employment relationships to which reference was made in argument has contained special provisions relating to seafarers. Thus, the 1971 Act included a provision at section 27(3) that:

"… a person employed to work on board a ship registered in ... Great Britain shall, unless –

(a) the employment is wholly outside Great Britain, or

(b) he is not ordinarily resident in Great Britain,

be regarded as a person who under his contract ordinarily works in Great Britain."

A similar provision has been included in subsequent statutes protecting employment rights up to and including the 1996 Act. When section 196 of the 1996 Act was repealed, the parts of that section relating specially to mariners including the successor provision to section 27(3) of the 1971 Act quoted above were moved to section 199 and remain in force.

57. A different approach has been taken in dealing with seafarers under the Equality Act 2010. The circumstances in which that Act applies to seafarers are prescribed by regulations made under section 81. Under these regulations the Act applies to a seafarer who works wholly or partly in Great Britain on a ship in registered in the UK. It also applies to a seafarer who works wholly or partly in Great Britain on a ship registered in another EEA state or who works wholly outside Great Britain on a ship registered in the UK, if certain additional links with the UK are established.^[8]
58. The Pensions Act 2008 with which this case is concerned has also left the question of whether and, if so, when the Act applies to seafarers to be determined by regulations. Section 96 provides:

"(1) Subject to regulations under this section, a person employed or engaged in any capacity on board a ship is not, by virtue of that employment or engagement, a worker for the purposes of this Part.

(2) The Secretary of State may by regulations provide that, to the extent and for the purposes specified in the regulations, the relevant provisions apply, with or without modification, in relation to a person employed or engaged in any capacity on board a ship (whether or not that person is working or ordinarily works in any part of the United Kingdom)."

Regulation 52 of The Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2012, made under section 96, provides:

"Persons working on vessels

The relevant provisions apply, without modification, in relation to a person employed or engaged in any capacity on board a ship as if such a person were a worker for the purposes of those provisions."

59. The upshot is that the test of whether a seafarer is within the territorial scope of the 2008 Act is the same as it is for other workers. I did not understand Mr Reade to dispute this. He sought, however, to derive a general point from the various statutory provisions dealing specially with seafarers that ships are places of work in themselves and should be regarded as such in determining where a seafarer "ordinarily works" for the purpose of section 1(1)(a) of the 2008 Act. Mr Lynch countered that such an approach would leave seafarers "rootless and rightless". Mr Reade responded that as a matter of international law ships have the nationality of the state where they are registered and whose flag they are entitled to fly (the flag state), and accordingly seafarers serving on a ship are not rightless but have whatever rights are conferred by the law of the flag state. Furthermore, the Maritime Labour Convention 2006 has established a minimum set of employment protections for seafarers which all contracting states have undertaken to enforce. The UK has given effect to the Convention by means of The Merchant Shipping (Maritime Labour Convention)(Minimum Requirements for Seafarers etc) Regulations 2014. These regulations apply the requirements of the Convention not only to all sea-going UK ships wherever they may be but also to other sea-going ships when they are in UK waters.
60. I cannot accept that the ship on which a seafarer works (for whatever length of time) can be regarded as that worker's base. As applied to a peripatetic worker, the concept of a base is that of a place from which the worker sets off at the start and to which the worker returns at the end of a period when the worker is travelling in the course of their work. A ship is not such a place; rather it is a means of transport from one place to another.
61. It seems to me that a ship could only be regarded as a place of work for the purpose of identifying the country in which a seafarer is working at any given time if in law a ship was viewed as part of the territory of the flag state. It is true that ships are, as Lord Donaldson MR put it in Wood v Cunard Line Ltd [1991] ICR 13 at 16F, "regarded for many purposes as floating extensions of the territory whose flag they fly". However, seafarers are not for the purposes of employment legislation treated as working in Great Britain just because they work on a ship which is registered in a port in Great Britain. Rather, the premise of the legislation is that work done on board a ship is done in Great Britain only when the ship is within the territory of Great Britain. Even section 27(3) of the 1971 Act (quoted at paragraph 56 above) did not treat a person employed to work on board a British ship as, on that account, a person who "under his contract ordinarily works in Great Britain". It did so only if the employee was ordinarily resident in Great Britain and if the employment was partly in Great Britain. Where, in Wood's case, all the seafarer's work was done on board a ship which spent all its time outside Great Britain, it was held that the work took place wholly outside Great Britain.
62. There is nothing in the Pensions Act 2008 which would justify treating a person who works on board a ship as, for the purposes of the Act, working in the flag state. To the contrary, the regulations made under section 96 of the Act make it clear that no special rules apply to such a person. Thus, in principle, as I see it, for the purposes of the 2008 Act as well as for the purposes of other employment legislation, whether a seafarer is working in Great Britain depends on where the ship to which the seafarer is assigned is located at the relevant time. When the ship is in port, the seafarer is working in the country in which the port is situated. When the ship is on the high seas, the seafarer is not working in Great Britain – nor for that matter in any other country.
63. Any argument that a seafarer "ordinarily works in Great Britain" because the seafarer is based in Great Britain must therefore depend upon identifying a port or other fixed place in Great Britain as the seafarer's base. The need to identify such a place cannot be side-stepped by treating as the seafarer's base the ship on board which the seafarer is engaged to work.
64. This conclusion, which I have reached on the basis of principle, is confirmed by authority. Thus, in Todd's case Lord Denning commented on the case of Claisse v Keydril Ltd [1978] ICR 812 where the Employment Appeal Tribunal had held that a man employed on an oil rig in the North Sea was based on the rig because that was where he worked and lived during his periods of duty. Lord Denning considered that the EAT had misinterpreted the 'base' test. The employee's base was not the rig; it was the place where he started off from and where he received his orders from, which was Great Yarmouth. Similarly, in Diggins v Condor Marine Crewing Services Ltd [2010] ICR 213 the Court of Appeal rejected the suggestion that Mr Diggins was based on the ship on which he worked. Elias LJ said (at para 30):

"In my view, if one asks where this employee's base is, there can only be one sensible answer: it is where his duty begins and where it ends."

65. In the Diggins case, according to the judgment of Elias LJ in the Court of Appeal, the employee lived on the vessel for the duration of his duties which typically involved two-week rosters.^[9] By contrast, in the present case each tour of duty of a seafarer is typically twelve weeks but can be up to six months. I do not think that the length of each tour of duty can of itself affect the determination of where a seafarer is based. On the other hand, the fact that a seafarer commences one tour of duty at a particular port and returns to the same port at the end of the tour cannot by itself justify regarding that port as where the seafarer "ordinarily works". To satisfy the test in section 1(1)(a), there must, as it seems to me, be a sufficient degree of regularity in the seafarer's departure from and return to a port or ports in Great Britain to constitute the ordinary or normal pattern of their work. That was certainly the position in the Diggins case and similarly in Crofts v Vesta, where the airline pilots reported to London Heathrow at the start of each tour of duty and ended each tour of duty in London.
66. Thus, a seafarer engaged for only a single tour of duty could not, in my view, be regarded as ordinarily working where the tour of duty begins and ends. It is also possible to envisage a situation in which a seafarer assigned to a particular ship does not always or even normally join and leave the ship at a port in the same country but does so at different ports in different countries on different occasions, depending on the ship's itinerary at the time. I do not know whether any seafarers who work for the Employer are in this situation. But if they are, it seems to me that there is no port which could be identified as the seafarer's base and hence as a place where it can be said that the seafarer ordinarily works.
67. In its decision letter dated 10 September 2014, the Regulator regarded it as clear based on the principles in Lawson v Serco that "all peripatetic workers must have a base". In expressing this view, the Regulator may have had in mind a passage in the judgment of Lord Hoffmann where he said (at para 31):

"Unless … one regards airline pilots as the flying Dutchmen of labour law, condemned to fly without any jurisdiction in which they can seek redress, I think there is no sensible alternative to asking where they are based. And the same is true of other peripatetic employees."

68. There are plainly policy considerations which militate in favour of finding a country within whose territory an employee is regarded as working or ordinarily working if the alternative would be to hold that there is no jurisdiction in which the employee is entitled to complain of being unfairly dismissed. It does not seem to me that any similar imperative exists, however, in relation to the automatic enrolment obligations imposed by the 2008 Act. As noted earlier, there are potential tax exemptions for seafarers who reside in the UK of working wholly or mainly outside the UK, and I see no inherent reason to assume that Parliament must have intended such seafarers to have the benefit both of those exemptions and of automatic enrolment. Nor does it make any difference in this context whether or not a peripatetic worker is found to be based and hence as ordinarily working in some other country. All that matters is whether the worker ordinarily works in Great Britain. It is not necessary, in order to answer that question in the negative, to identify another country in which the worker ordinarily works. I therefore see no justification for straining the concept of an employee's base and the language of the statute beyond its breaking point by insisting that every peripatetic worker must have a base which is to be regarded as the place where they ordinarily work.

Review of the Regulator's decision

69. I return in the light of this discussion to the three categories of worker described by the Regulator in its decision letter (as set out at paragraph 14 above). I can leave aside the third category, as no issue is taken with it by the Employer, and focus on the first and second categories.
70. The first is that of a worker who lives in the UK but works on a British or foreign registered vessel spending several weeks away working in foreign waters and joins and leaves that vessel from a port within the UK. In the Regulator's view, such a worker should be assessed as ordinarily working in the UK, even though most of their tour of duty might be spent outside the UK. It follows from my conclusions above that I regard this as a correct interpretation of the Act, provided that the Regulator is not simply referring here to a single tour of duty but to a situation in which the seafarer undertakes multiple tours of duty and habitually begins and ends those tours at a port in the UK. Whether on particular facts an individual's pattern of working under their contract satisfies this test and hence enables it to be said that the individual "ordinarily works" in Great Britain (or Northern Ireland) is a question of degree for the Regulator to assess and, provided the Regulator's conclusion reached is reasonable, should not be regarded as a question of law for the purpose of judicial review.
71. The second category of worker described by the Regulator is that of a worker who lives in the UK, begins and ends their tour of duty outside the UK and is working under a permanent contract of employment in similar form to one of the examples sent to the Regulator. The Regulator decided that there is evidence in relation to travel and other arrangements at the beginning and end of a tour of duty of such a worker to support the view that the work begins and ends in the UK and that they should therefore be assessed as ordinarily working in the UK, even though most of their tour of duty might be spent outside the UK.
72. I do not consider this to be a correct interpretation of section 1(1)(a). As discussed above, a key question in determining whether a peripatetic worker is based in Great Britain and hence can be regarded as ordinarily working in Great Britain is where their tours of duty begin and end. The sample contracts make it clear that each tour of duty for a seafarer employed under a permanent contract of employment starts when the seafarer joins the ship to which he or she is assigned to work and ends when they leave the ship. I do not consider that such a worker who begins and ends their tours of duty outside the UK, and who spends most if not all of those tours of duty outside the UK, can legitimately be regarded as ordinarily working under their contract in the UK.
73. The Regulator appears to have taken the view that, in circumstances where under the terms of the contract days spent travelling to and from the ship are treated as days of work for the purposes of entitlement to pay and leave, the seafarer should be regarded as beginning and ending their work in the UK and, on that footing, as based in the UK and hence as a worker who ordinarily works in the UK. I do not think that this is a correct approach. Although it is understandable that under the worker's contract travel days are paid and are not counted as leave, the seafarer is not in fact working on those days but is commuting to and from the place where they are required to begin and end their work.
74. I cannot see any material difference between the position of such a seafarer and that of someone like the claimant in Ravat v Halliburton Manufacturing and Services Ltd [2012] UKSC 1, [2012] ICR 389 (referred to at paragraph 34 above). The reason why Mr Ravat could not be regarded as a peripatetic worker was that he performed all his work in Libya. He travelled to and from his place of work in Libya but he did not travel in the course of his work to and from that place. He therefore could not rely on the 'base' test approved in Lawson v Serco and succeeded only by reason of a broader principle which does not depend on whether the employee is working or ordinarily works in the Great Britain. Although the judgment of Lord Hope in the Supreme Court does not reveal whether Mr Ravat was paid on his days of travelling between his home in England and his place of work in Libya or whether those days counted as part of his leave, I cannot conceive that an affirmative answer to the first question and a negative answer to the second would have meant that Mr Ravat was entitled to redress on the ground that his work base was in Great Britain. Nor could it have made any material difference if on arrival at his place of work in Libya Mr Ravat had been required to travel for the purpose of his work around North Africa, so that his work was peripatetic.
75. The case of Wood v Cunard Line Ltd [1991] ICR 13, mentioned earlier, is also in point. Mr Wood, who lived in England, served on board a vessel used entirely for Caribbean cruises. He was given air tickets to fly to and from the Caribbean when he joined or left the ship and – like his present day counterparts who have permanent contracts with the Employer – he was paid during the time spent travelling (see p14H). The Employment Appeal Tribunal upheld the decision of the industrial tribunal that Mr Wood did not ordinarily work in Great Britain within the meaning of subsections 141(2) and (5) of the Employment Protection (Consolidation) Act 1978: see [1989] ICR 398. Those provisions were in materially similar terms to section 27(2) and (3) of the 1971 Act (of which the latter is quoted at paragraph 56 above). On a further appeal to the Court of Appeal the only argument pursued was that, although not otherwise a person who under his contract of employment ordinarily worked in Great Britain, Mr Wood was to be regarded as such pursuant to section 141(5) because he was employed to work on board a ship registered in Great Britain, was ordinarily resident in Great Britain and the employment was not "wholly outside Great Britain". The Court of Appeal rejected that argument. In their view there could be no doubt on the facts that Mr Wood was employed wholly outside Great Britain. Lord Donaldson MR (with whom the other members of the Court of Appeal agreed) did not accept that the time spent travelling to join the ship could count as part of the relevant employment for this purpose, observing (at p.17G):

"There is nothing special about the position of a seaman when he is travelling to join the ship. The same is equally true of somebody who is travelling to the Middle East in order to reach the site where he is to reach a pipeline."

76. In the present case I likewise see no scope for concluding that a worker who is engaged to work on board a ship which is at all times situated outside Great Britain works in Great Britain at all. Such a person therefore cannot be regarded as a worker who ordinarily works in Great Britain.

Conclusions

77. My conclusions can be summarised as follows:

i) A seafarer may be regarded as ordinarily working in Great Britain during any period when the seafarer is working from a base situated in Great Britain even if the ship on which the seafarer works spends most of its time outside Great Britain so that the majority of the seafarer's work is performed outside Great Britain.

ii) A seafarer who lives in Great Britain and whose tours of duty habitually begin and end at a port in Great Britain may be regarded as based in Great Britain and hence as a worker who ordinarily works in Great Britain under the worker's contract.

iii) A seafarer who lives in Great Britain but who works on a ship which spends all or most of its time outside Great Britain and whose tours of duty do not habitually begin and end in Great Britain cannot be regarded as based in Great Britain or as a worker who ordinarily works in Great Britain under the worker's contract.

Postscript: costs

78. After this judgment was circulated in draft, I received written submissions from the parties on the question of costs. Mr Lynch submitted that, although its decision has not been upheld in full, the Regulator succeeded on most of the issues argued and the order for costs should reflect this. Mr Reade submitted that the claimant is the successful party and compared the approach of Mr Lynch to Napoleon sitting on St Helena recounting the victory at Quatre Bras but ignoring Waterloo.
79. I regard the result of this case as not merely a close run thing but too close to call. Mr Lynch is right to say that on most of the points argued I have endorsed the Regulator's approach and that the respects in which I have found that its decision needs to be amended were not specifically raised as grounds of challenge by the claimant. To that extent the Regulator has been successful. On the other hand, it follows from my findings that the Regulator's decision must be quashed. In my view, there is no clear victor and no question of either party having acted unreasonably in any way. In the circumstances the disposal which I consider best meets the justice of the case is to make no order as to costs
ANNEX
80. The Employer has provided to the Pensions Regulator examples of the contracts most commonly used for the seafarers it employs. These are either permanent contracts or fixed term contracts. The permanent contracts are themselves of two kinds, namely, Tour Paid Agreements and Annual Paid Agreements.
81. Each of the permanent and fixed term contracts contains the following Place of Work clause:

"Place of Work: You may be appointed to any ship owned and/or operated by the Shipowner under either of their brands, P&O Cruises and Cunard or any other brand(s) owned and/or operated by the Shipowner from time to time.

During your employment and/or during a Tour of Duty, you may be required to transfer between ships within these brands.

The Employment Agreement continues to apply whilst serving on any of the ships within these brands."

82. Each of the permanent contracts and fixed term contracts has the following Tax and Social Security clause:

"Tax & Social Security: If domiciled in the UK, your pay is subject to PAYE and National Insurance deductions unless you are exempted by the HMRC or the National Insurance Contributions office (NICO). To enquire about exemptions you should contact either your District HMRC Office or the NICO."

83. The following are examples of clauses relating to pay from the Tour Paid Agreements:

"Pay Details

2.1.1 Pay

(a) Your Rate of Pay as stated in Part A of your Agreement is a consolidated rate, inclusive of all contractual hours worked, statutory leave and public bank holidays which accrue during your Tour of Duty and Tour Leave.

(b) For pay purposes a month is 30 days. Tours of Duty of less than one month are calculated on the basis of one thirtieth of the rate per month for each day worked.

(c) You are paid monthly in arrears.

…

2.1.2 Commencement/End of Pay

(a) Pay commences on the day of joining the ship for your Tour of Duty or, if joining the ship outside the UK, pay commences on the day of departure from a UK airport.

(b) Pay ends on the day you reach your repatriation destination.

(c) Where you are required to undertake non-seagoing duties/activities, such as training or secondment ashore, pay commences on the day of assuming such duties, or as otherwise agreed. Pay ends at the conclusion of such duties/activities.

…

2.3 Pay during training

Where you are required to attend Company requested training during a period of Tour Leave, you will be paid your daily rate for the duration of the training."

84. The following are examples of clauses relating to pay from Annual Paid Agreements:

"1.1 Tours of duty

(a) The number of annual days of work, as specified in Part A of your Agreement is inclusive of all days worked in accordance with your Employment Agreement and as agreed with the Company including, but not limited to, Tours of Duty, travel days, office days, training days, conferences and other events which may take you away from the ship during a Tour of Duty or being required during a period of Tour Leave. Study leave is excluded from annual days of work.

…

Pay Details

2.1.1 Pay

(a) Your annual salary and daily rate of pay as stated in Part A, is a consolidated rate, inclusive of all contractual hours worked, statutory leave and public bank holidays.

(b) Your annual salary will be paid to you in 12 equal monthly instalments (known as 'monthly pay').

(c) Your daily rate is shown in Part A of your agreement (Your daily rate is based on your annual salary divided by your number of contracted annual days of work).

…

2.1.2 Commencement/End of Pay

(a) You are paid monthly in arrears, commencing from the start of your employment and continuing each month until the day you reach your repatriation destination following the end of your employment (see Part A, Section 7, Notice Period). Your final payment on termination will normally be paid in the next payroll and no longer than one month since your previous monthly payment.

(b) On joining employment part way through a month, your pay will be calculated on a part month basis of your monthly pay.

(c) In the event you do not return to work/fail to arrive for an agreed Tour of Duty, following a period of Tour Leave or any other agreed absence from work, and your non-attendance has not received prior approval from the Company or, where applicable, the relevant sickness certification has not been provided, the Company reserves the right to suspend pay, pending an investigation.

…

2.3 Pay During Training

(a) Your annual salary is a consolidated rate, inclusive of pay for periods of training which will normally be scheduled within your contracted annual working days."

85. The following are examples of clauses relating to pay from the Fixed Term Monthly Paid Agreements:

"Pay Details

2.1.1 Pay

(a) Your Rate of Pay as stated in Part A of your Agreement is a consolidated rate, inclusive of all contractual hours worked, statutory leave and public bank holidays.

(b) For pay purposes a month is 30 days. A Tour of Duty of less than one month or a part month is calculated on the basis of one thirtieth of the rate per month for each day worked.

(c) You are paid monthly in arrears.

2.1.2 Commencement/End of Pay

(a) Pay commences on the day of joining the ship for your Tour of Duty.

(b) Pay ends on the day you leave the ship or as defined in the applicable legislation implementing the Maritime Labour Convention 2006 if later. If you are a 2 Stripe or above Officer, you will be paid until you reach your repatriation destination.

(c) Your final payment on termination will normally be paid in the next payroll and no longer than 1 month since your previous monthly payment

…

2.3 Pay During Training

Where you are required to attend Company requested training outside of your agreed Tour of Duty, you will be paid your day rate for the duration of the training."

Note 1    A separate Act – the Pensions (No 2) Act (Northern Ireland) 2008 – established a similar regime for Northern Ireland.     [Back]

Note 2    The references to the UK rather than Great Britain reflect the fact that the compliance notice was issued under the equivalent legislation applicable in Northern as well as under the Pensions Act 2008.     [Back]

Note 3    This can be contrasted with the position in the United States under the doctrine associated with the decision of the Supreme Court in Chevron USA Inc v Natural Resources Defenses Council Inc, 467 US 837 (1984).     [Back]

Note 4    See also R (Jones) v First Tier Tribunal [2013] 2 AC 68.     [Back]

Note 5    The only parts of section 196 to be preserved were certain provisions relating specifically to mariners which I mention later. These were moved to section 199 of the 1996 Act.     [Back]

Note 6    See the judgment of the Employment Appeal Tribunal reported at [2009] ICR 609, paras 1, 3 and 41.    [Back]

Note 7    See the passage quoted at paragraph 28 above.    [Back]

Note 8    See The Equality Act 2010 (Work on Ships and Hovercraft) Regulations 2011.    [Back]

Note 9    See [2010] ICR 213 at para 2. This is hard to reconcile with the judgment of the EAT, referred to at paragraph 33 above, which states that he joined and left the ship each day in Portsmouth. However, I do not think it material to the decision in that case which is correct.    [Back]