Seafarers on several ferries sailing to and from the UK are set to receive pay rises with government changes aimed at forcing Irish Ferries, P&O Ferries and other operators to pay at least the national minimum wage.
This is the background and the likely effects.
What happened to bring this about?
In June 2021, Irish Ferries started sailing between Dover and Calais. This is the main route operated by P&O Ferries, and is also served by DFDS.
The business model of Irish Ferries uses cheap labour supplied through agencies. Its fares for freight and passengers could therefore undercut other operators.
The issue was raised with the transport secretary, Grant Shapps, by P&O Ferries’ parent company, DP World.
At a meeting in Dubai in November 2021, the chairman and chief executive Sultan Ahmed bin Sulayem raised the “challenges” facing P&O Ferries with Mr Shapps, saying: “In respect of our ferry business, there’s a new low-cost competitor from Irish Ferries.
“This poses challenges in respect of P&O’s operations. We kept ferries operating during the height of the pandemic to support movement of people and goods.”
The transport secretary replied: “I’m aware of the issues relating to P&O. I recognise you will need to make commercial decisions, but please do keep us informed.”
On 16 March P&O Ferries told the Department for Transport (DfT) that it was about to make 786 crew redundant, planning to replace them with cheaper labour. The company did not consult with the trade unions.
P&O Ferries said it took the action because but otherwise the whole company would close, with the loss of 3,000 jobs and the connectivity provided from England, Scotland and Northern Ireland.
The company said its lost £100m in the course of a year, working out at £3 per second.
What has changed?
The transport secretary, Grant Shapps, said that British ports will have statutory powers to refuse to handle ferries whose crew are paid below the national minimum wage – which on 1 April 2022 rises to £9.50 per hour.
He has instructed ports to refuse entry to ferries not paying workers the national minimum wage from today.
For comparison, P&O Ferries said it would pay an hourly average of £5.50.
Mr Shapps said HMRC will check that all UK ferry firms are paid at least the minimum wage. He has also said the UK government will push for an international minimum wage. And he has asked the UK Insolvency Service to disqualify Peter Hebblethwaite, the chief executive of P&O Ferries.
What will the effect of the new rules be?
Irish Ferries and P&O Ferries will be immediately banned from British ports unless they raise wages.
The increase in costs is likely to feed through to less choice and higher fares.
Most workers will not be rehired, according to Peter Hebblethwaite of P&O Ferries.
Over 97 per cent of the 786 redundant crew have accepted the settlement offer, with 64 per cent already having completed settlement agreements.
“These are legally binding agreements, and crew members who have entered them will rightly expect us to comply with their terms,” the P&O Ferries boss said.
“Accordingly, we cannot offer a change to the 31 March deadline for our redundancy offer to seafarers.”
What do the ferry firms say?
Most of them have welcomed the news – including P&O Ferries. Writing to Mr Shapps ahead of the finalised proposals, the P&O ferries CEO said: “We welcome the government’s commitment to increasing the minimum wage for all seafarers working in British waters.
“We have never sought to undermine the minimum wage regulations. Indeed, from the outset, P&O Ferries has called for a level playing field regarding salaries on British ferry routes.”
Ian Hampton, executive director of Stena Line, said the company “welcomes the package of changes proposed to address the present inequalities that exist for seafarers working on regular ferries services to and from the UK”.
He said: “We have a long-held strategy of employing local seafarers onboard our vessels. Today’s announcement protects that strategy and in addition creates the necessary consistency and equality needed across the sector.”
A spokesperson for Brittany Ferries said: “From the first sailing in 1973, we have committed to the wellbeing and fair treatment of all seafarers and we never forget the role these hard working professionals have played, particularly throughout the Covid crisis.”
Will this help seafarers on cruises serving British ports?
That was the expectation. On 23 March the prime minister told Parliament: “We will be taking steps to protect all mariners who are working in UK waters and ensure that they are paid the living wage.”
While cruise lines spend much of their time outside UK waters, many ships are based at British ports. Boris Johnson indicated that all seafarers must be paid at least the national minimum wage. But the new rules apply only to cruises on “regular ferry services”.
