EN NL

Minimum wage act

Priority: Modernise the Minimum Wage Act

Dutch shipowners:

“Clear agreements with the government about limiting and enforcing the scope of the Minimum Wage Act must contribute to maintaining the international competitive position of the Dutch shipping industry.”

Ultimately, this process should lead to a modernisation of the WML. As of 1 January 2020, merchant shipping parties working to collective labour agreements have already given constructive input to all international collective labour agreements that apply to non-EU seafarers.

 

IMG_20131219_110712.JPG
Guido Hollaar 150.JPG
Contact

 

Guido Hollaar
Head of Labour Affairs

+31 10 4146 001
hollaar@kvnr.nl

 

Nathan Habers 150.JPG
Press inquiries

 

Nathan Habers
Public Relations


+31 10 2176 264
habers@kvnr.nl

Context

For decades, Dutch government policy has been that the Minimum Wage and Holiday Allowance Act (WML) does not apply to seagoing vessels sailing under the Dutch flag. This is an important pillar of Dutch maritime shipping policy.

However, as a result of inspections by the Netherlands Ministry of Social Affairs and Employment Inspectorate SZW (ISZW) on board Dutch-flagged seagoing vessels a few years ago, this government policy has come under severe pressure. The ISZW found that non-European seafarers should be paid in accordance with Dutch minimum wage requirements. These WML inspections concerned: i). a cargo ship in international scheduled service and ii). ships active in harbour towage operations.

The ISZW has withdrawn the case relating to the international cargo ship, after the Dutch Minister of Social Affairs and Employment wrote to the Lower House on 5 March 2019, stating that the WML does not apply to internationally sailing seagoing vessels.

The ISZW stood firm in the harbour towage case. The employer of the seafarers on board the harbour tugs therefore asked the Council of State to make a ruling on the applicability of the WML on seagoing vessels used for harbour towage operations. The Administrative Jurisdiction Division of the Council of State did this on 17 April 2019, concluding that the WML does apply to harbour towage operations within the port area of IJmuiden.

The clarity gained from the example of harbour towage operations is positive. However, the conclusions of the Council of State yielded a new problem. The Council of State introduced the so-called ‘home port concept’, which replaces the ‘country of residence principle’ that has always been used until now.

Country of residence principle vs. Homeport concept

The country of residence principle means that, in determining the wages of non-EU seafarers, the welfare situation of their country of residence is taken into account. These seafarers do not come into contact with the Dutch welfare environment. They work and stay on board and, during their leave, they stay in their country of residence outside the EU. On this principle, they do not have to be remunerated under Dutch WML laws. Furthermore, payment is always at least in accordance with the internationally applicable minimum wage for seafarers stated by the International Labour Organization (ILO). To this end, there is demonstrably no exploitation of foreign seafarers.

The government’s maritime shipping policy regarding non-EU seafarers working on Dutch-flagged seagoing ships is based on the country of residence principle. This policy guarantees a level playing field and therefore preserves the international competitive position for Dutch shipowners.

However, in April 2019, the Council of State concluded that the homeport of the ship should be used, meaning that, if a seagoing vessel has a Dutch homeport, the Dutch minimum wage should be paid. This could pose a threat to the future of the Dutch shipping industry and Dutch employment.

Many Dutch-flagged seagoing vessels could be said to have the Netherlands as their homeport, despite the fact that they regularly enter international waters. As a result, the wage costs of non-EU seafarers on these seagoing vessels would increase significantly, thus causing the international competitive position of those seagoing vessels to deteriorate significantly. In addition, foreign seagoing vessels with a non-Dutch homeport would also be favoured.

Therefore, in the interests of both shipowners and seafarers, consultation has taken place over the past two years between social partners the KVNR and Nautilus International trade union. Together with the Netherlands Ministries of Social Affairs and Employment, and of Infrastructure and Water Management, they have identified the scope of the WML regarding seafarers living abroad.

The challenge

The KVNR’s starting point is that the ‘Country of Residence Principle’ must remain intact; the Minister of Social Affairs and Employment supports this. Consequently, on 14 October 2019, the Minister of Social Affairs and Employment confirmed in a letter to the House of Representatives that the WML does not apply to international shipping despite the decision of the Council of State.

The minister urged the KVNR and Nautilus International to provide conclusive advice on which cases should receive minimum wages and which cases not. On 5 December 2019, this produced advice in the form of a results list.

The KVNR is currently making an effort to clarify the ‘grey areas’. This means that, in order to maintain the competitive position of the Dutch fleet and a level playing field, clear agreements will have to be made with the government about limitation and enforcement.

On 5 March 2020, consultation took place between the various social partners (KVNR, Fisheries Shipowner Association, and Nautilus International) and the Minister of Social Affairs and Employment, Minister of Infrastructure and Water Management and State Secretary of Social Affairs and Employment. This resulted in a summary list explaining the minimum wage situation. The summary contains a number of basic principles with which an amended Minimum Wage Act should comply.

State of play - 26 January 2021

For certain shipping areas in the summary list, the applicability of the WML is dependent on the answers to the following two questions: i) whether the government in the shipping area in question has jurisdiction under the UNCLOS international law of the sea and ii). whether the government can effectively enforce the WML in that shipping area in order to prevent distortion of competition such as seagoing vessels operating from a foreign port. As soon as this is clear, the consultation between the social partners will continue. After such time, they can present the results of that consultation to the two ministries concerned.

Ultimately, this process should lead to a modernisation of the WML. As of 1 January 2020, merchant shipping parties working with collective labour agreements have already given constructive input to all international collective labour agreements that apply to non-EU seafarers. These have been countersigned by Nautilus International. This has made it clear in which cases the WML is applicable on seagoing vessels, and what remuneration is then applicable to international crews, who fall under the common international collective labour agreements. Thanks to the workable way round, employers can now at least keep their seafarers in employment in accordance with clear and well-defined remuneration agreements.