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The national minimum wage does not apply to the foreign national seafarer where the ship goes out of UK internal waters, even if the ship trades between two UK ports-for example, between Liverpool and Belfast or Aberdeen and Shetland. The current law does not give an entitlement to the national minimum wage to foreign national seafarers in these examples, even where employment is on a UK-flagged ship. On top of that, a simple transfer of flag can mean that the ship owner can avoid responsibility for payment of the national minimum wage to foreign national seafarers even where the seafarer is employed on a trip deemed to be within UK internal waters. Under current legislation that could potentially apply to a ferry sailing to one of the isles west of mainland Scotland.

Legal advice to the seafaring unions advises that an amendment limiting coverage of the national minimum wage to all ships trading solely between UK ports or in the UK offshore sector should not infringe the right of innocent and free passage for a ship. Amendment 30 would apply the national minimum wage to ships and vessels of all flags trading solely between UK ports and in the UK offshore sector. Applying the national minimum wage to ships of all flags tackles the usual argument that ships will flag out to avoid any minimum standards. To repeat, the amendment provides for the application of the national minimum wage to all ships trading between two UK ports or working from one UK port-that is, in the UK offshore sector.

I hope that my noble friend the Minister will recognise the unfairness to seafarers of the current situation, in relation to both the Race Relations Act and the national minimum wage, and that the Government will accept these amendments. I beg to move.

Lord Clinton-Davis: My Lords, many years ago I had the privilege of dealing with aviation and shipping. I welcome the stance taken by my noble friend Lord Rosser today. We have many interests in common. My noble friend may well succeed me as president of the British Airline Pilots Association, a post that I have had for some 29 years. He has done the House a great service today in outlining the position, to which the Minister ought to reply.

In my day-I am looking back quite a long time-the shipping industry was rather healthier than it is today. My noble friend Lord Rosser referred to the position in 1980. I ceased to be the Shipping Minister in 1979. At that time, one of the key features of my relationship with the industry was that I was not entirely satisfied to accept only the view of civil servants. I had regular meetings with the ship owners and with the seafarers' trade unions. In many ways, that is an imperative, which I hope the Minister will say is still practised today. I do not know the present situation.

Of course, there were disputes between the seafarers and the ship owners and the Government were left in a rather awkward position. However, as a result of the relationship that a Shipping Minister enjoyed with both sides, they were able to come to a reasonable accommodation, which is all that my noble friend is

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asking for. I would like to know whether the current Minister with responsibility for shipping has the same sort of relationship that I had at that time.

Although there was some improvement in the situation when the Labour Government took office, that improvement has not been sufficient. We rely on our shipping industry and I am sad that, whereas 30,000 people were employed in the industry in 1980, now there are only 9,000. Although, as I said, there have been some improvements on the position that existed before, nobody would proclaim that with satisfaction. I am grateful for the points made by my noble friend today. They are of immense importance not only to the trade unions but to the ship owners of our country and the people who are served thereby.

Earl Attlee: My Lords, I am grateful to the noble Lord, Lord Rosser, for explaining the purpose of his important amendment. However, I thought that he would propose his new schedule and other amendments to primary legislation merely as a probing amendment. I thought that the noble Lord was too experienced to propose amendments that would, at this late stage in the parliamentary process, have the effect of removing the power to make such regulations and of enshrining the extent to which the Bill as primary legislation will apply to ships and seafarers.

To all intents and purposes, the contents of the proposed schedule repeat the draft regulations on which the Government are currently consulting all relevant stakeholders. As this process is not yet complete, it would be odd to enact the provisions now. Of course we look forward to the results of the consultation. The noble Lord makes it quite clear that these are complex issues. When the Minister replies, will she comment on the assertion of the UK Chamber of Shipping that, if adopted, the amendments would massively increase the costs of many ships operating under the UK flag and make their operation uncompetitive, with obvious consequences?

On Amendment 30, will the Minister confirm that the FCO has clearly advised the Chamber of Shipping that to apply the national minimum wage to foreign-flagged vessels when they are on innocent passage within UK waters, including to and from UK ports, would be unlawful under the United Nations Convention on the Law of the Sea and would interfere with collective agreements made between ship owners and mariners' representatives in accordance with the law of the relevant flag state and, as such, would be unenforceable?

Lord Clinton-Davis: The noble Lord has expressed the position of the UK Chamber of Shipping, but has he also had conferences or discussions with the trade unions concerned?

6.45 pm

Earl Attlee: Unfortunately not, my Lords. I would have liked to have had the opportunity, but the amendment arose at short notice, so I am not as well briefed as I would like to have been.

Because any such requirement is not enforceable against non-UK ships, the amendment would have the explicit effect of making UK-flagged operations

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uncompetitive in international markets, which would harm both the economic contribution of the British shipping industry and the employment that it is able to provide British seafarers.

Finally, does the Minister reject the notion that foreign seafarers on UK-flagged ships are being paid poverty wages? Seafarers who live with and maintain their families outside the UK are paid at international rates that reflect the living costs in the countries where they live. Their wages, while in some cases below the UK national minimum wage, can nevertheless be on a par with high-earning professionals such as doctors and lawyers in their home countries. Moreover, they are above the International Labour Organisation's minimum wage level and, in many cases, meet or exceed the levels in the standard agreements of the International Transport Workers' Federation.

The noble Lord, Lord Rosser, touched on working hours. I am extremely concerned about fatigue and safe manning levels, but that is not an equality issue and is therefore outside our discussions this evening.

Lord Greenway: My Lords, the Government would be unwise to accept these amendments. After all, this Government brought in the tonnage tax in 2000, thanks to the former Deputy Prime Minister, since when the British-flagged fleet has increased by a factor of six, bringing substantial amounts to the Treasury. Indeed, in the last year for which figures are available, 2008, the turnover of British shipping was more than £13 billion.

The amendments would inevitably, as the noble Earl just said, make the operation of ships under the British flag more expensive. Charges for tankers and bulk carriers would rise by an estimated 130 per cent, for container ships by over 80 per cent and for cruise ships by something over 40 per cent. The inevitable result, with shipping being in a difficult state at the moment as a result of the recession, would be the reflagging of quite a number of ships. It is estimated that as many as 172 ships, making up 43 per cent in terms of tonnage under the British flag, would move abroad. That would have a serious effect on maritime London, which is under threat already, particularly from nations such as Singapore, which only recently offered tax incentives to arbitrators to move there. Maritime London has been the world centre for shipping for many years-not only ship owners, but law, finance, shipbroking and insurance. We should be very careful before making changes to the Bill at this late stage when, as the noble Earl, Lord Attlee, said, consultation is still ongoing with regard to the draft regulations.

Lord Clinton-Davis: Does the noble Lord agree with my assertion that, whatever may be included-

Baroness Crawley: With respect, my Lords, this is Report and interventions should be kept to a minimum. I ask noble Lords to respect that.

Lord Greenway: My Lords, I had virtually finished what I was going to say anyway. The small company with which I work is a tenant of a big Taiwanese shipping company and I know full well that it has been looking seriously at moving its ships to the Singapore registry.

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Baroness Thornton: My Lords, I feel that we ought to have strong-armed my noble friend Lord Adonis into dealing with this question, given the new cast of noble Lords who have spoken. I turn to Amendments 28 and 29, which were tabled by my noble friend Lord Rosser. I warn him that I am about to disappoint him, but I will also outline some of the progress that has been made on this issue.

Given the nature of shipping, it is necessary to specify how, when and where the provisions in Part 5 apply to work on ships and hovercraft. It is the Government's intention to do so, through regulations which have already been drafted and were published on 30 November 2009. These amendments, however, remove the regulation-making power and seek to replicate the drafted regulations in the Bill, as the noble Earl, Lord Attlee, recognised. The Government would therefore not agree with this approach.

It is common practice globally for seafarers' pay to reflect the country where they are based and where their wages are likely to be spent, as was also mentioned by the noble Earl, Lord Attlee. This practice of pay differentiation is currently lawful in the UK by virtue of the Race Relations Act 1976. While there are economic arguments supporting the practice, many people clearly find it unacceptable. The draft regulations, and my noble friend's amendment, make no reference to differential pay and would make the practice unlawful. The difference is that the regulation-making power allows the legal position to be established, following full consideration of all economic and equity arguments. Secondary legislation also provides greater flexibility, allowing, if necessary, for further regulations to be made as the law develops.

My noble friend Lord Clinton-Davis asked whether the shipping Minister regularly meets industry and unions. I can reassure him that the Minister is meeting the RMT tomorrow to discuss a range of issues, including those that are relevant to the Equality Bill.

The Government must carefully consider the implications of ending the practice of differential pay, including the economic impact. There is no question of any form of differential pay for citizens of the EU, EEA or other designated states, but the possibility of putting UK employers at a significant commercial disadvantage against other employers, and leading them to consider deflagging their ships, has to be given serious consideration.

I appreciate that further delay in reaching a final decision is very frustrating, but following publication of draft regulations in November, the Government called for evidence from stakeholders and received a number of responses. Full consideration must be given to this evidence, so the Department for Transport is commissioning a review. This will allow the Government to make a well informed decision on this issue very soon. They will then be in a position to introduce the regulations for approval as soon as possible after Royal Assent, to ensure that they come into force at the same time as Part 5 of the Bill. These regulations will be subject to the affirmative procedure and will undergo full parliamentary scrutiny.

Amendment 30 would extend eligibility for the national minimum wage to seafarers on a ship of any flag trading solely between UK ports, anchorages,

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roadsteads or offshore installations. The Government have investigated this issue on numerous occasions, each time concluding that extension of the national minimum wage in this way would conflict with international law. The UN Convention on the Law of the Sea, to which the UK is party, grants foreign-flagged vessels the right to innocent passage through states' territorial waters, and limits the ability of states to apply their laws to foreign-flagged vessels. Travel between UK ports, anchorages, roadsteads or offshore installations can require passage through UK territorial waters and in some cases even the high seas. To be clear, applying the national minimum wage, as provided for in the amendment, would breach this international agreement, so my noble friend rightly understood that there is a problem here.

The Government have agreed to meet the RMT parliamentary group on 16 March. This meeting will allow the Government and the RMT to share their respective legal advice on this issue, and perhaps to reach a better mutual understanding. On this basis, I urge my noble friend to withdraw his amendment.

Lord Rosser: I find it a little depressing that immediately somebody stands up and seeks to apply the provisions of the national minimum wage on an equitable basis-in this case in respect of seafarers-or makes submissions that the exemptions that apply to foreign seafarers in relation to the Race Relations Act should no longer apply, such a degree of opposition is then expressed. Frankly, one would have thought, on the basis of fairness and justice, that such proposals ought to be implemented.

I am aware of the views of the Chamber of Shipping, but if my amendments had been accepted, or are accepted at some stage, one effect would be that the ease with which more responsible shipping companies-of which there are some-can be undermined by low-cost operations would be minimised around the UK coast. The measures contained in my amendments will, at a minimum, help to stabilise UK seafaring ratings employment; noble Lords have already referred to the significant reduction that has taken place over a number of years. I suppose it depends on your stance, and on the importance you attach to applying the provisions of the national minimum wage and of the Race Relations Act.

I note the Minister's reply. It remains to be seen what, if any, further progress is made in the discussions to which she referred. The reality is that this issue has been around for some years. It has not suddenly been brought up in the later stages of this Bill, but has been discussed in your Lordships' House before. It is a long-standing issue which has not been resolved, where representations have been made for the national minimum wage to apply in the circumstances I have outlined, and for the exemptions from the Race Relations Act 1976 to end. Although I am obviously disappointed by the Minister's reply, in reality I have no option. I beg leave to withdraw the amendment.

Amendment 28 withdrawn.

Amendments 29 and 30 not moved.

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Schedule 9 : Work: exceptions

Amendment 31

Moved by Baroness Turner of Camden

31: Schedule 9, page 170, line 22, after "religion" insert "and that given the nature of the particular occupational activities concerned, or the context in which they are carried out, A's application of a requirement under sub-paragraph (4) in relation to the employment, constitutes a genuine and determining occupational requirement, and that the objective of this application is legitimate"

Baroness Turner of Camden: I will speak to Amendment 32 as well. This section of the Bill deals with employment and concerns the religious requirements of the employer. A faith school is an obvious example, but there could be other such employers. We had a lengthy discussion on this subject in Committee, and it is not my intention to undermine the decisions taken then. The wording of my amendment is designed not to do that. I respect the decisions taken by your Lordships in that regard, and for that reason I have drafted my amendment in the section dealing with individuals and the way in which requirements may be applied to them.

The wording aims for clarity in regard to the employment in which it would be legitimate for the employer to make requirements of the employee. The wording refers to the nature of the occupational activities and, very importantly, to the context in which these activities will be carried out. It should be a genuine and determining occupational requirement that the individual employee should comply with the religious requirement of the employer, and the objective would need to be legitimate. Of course, in all enterprises there are jobs of a routine character in which it would be unreasonable to require that the occupant should abide by the religious requirements of the employer. There are all sorts of employments of that kind, such as cleaners, gardeners, people concerned with building maintenance, and so on. Nowadays, people do not choose where to work and are only too happy to take whatever work is available.

The objective of my amendment is to make it clear that such people could not be subjected to the requirements of a religious nature, because they, too, have their rights, which should be respected. The wording does not mirror the EU directive which was discussed in Committee, and, as I said, it is not meant to undermine the decisions already taken by this House. I hope that it will therefore receive support.

The other amendment was pointed out to me by one of my colleagues. It was felt that religion and belief were originally intended to be listed among the requirements in the clause and were omitted in error, so I tabled an amendment that would write them back in again, alongside the other requirements that are standard in the Bill. I beg to move.

7 pm

Baroness Thornton: My Lords, the first amendment to paragraph 2 of Schedule 9 from my noble friend Lady Turner would add to this exception wording

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from the relevant provision of the European directive that underlies the exception: namely, Article 4(1) of the framework directive. Member states are not required to copy the wording of the directive; they have only to achieve its intended result, which is what this exception does. Its wording is not materially different from the existing exceptions that it replaces and harmonises, one of which, Regulation 7(3) of the Employment Equality (Sexual Orientation) Regulations 2003, was held to be compatible with the directive by the High Court in the Amicus case. I hope that that will help to reassure my noble friend that the additional wording is unnecessary.

Paragraph 2(6) expressly refers to the "nature" or "context" of the employment, which includes an appointment to a personal or public office but which is narrower than the expression "particular occupational activities" used in the directive. The words "genuine and determining" in the amendment would not add anything to the natural meaning of the word "requirement". The question whether being of a particular sex, for example, is or is not a requirement for a particular post will be a matter of fact to be determined in the circumstances of each case. If a requirement is not genuine, the facts will show that. If it is not determining, by definition it cannot be a requirement.

As paragraph 2(1) requires the employer to show that the employment to which a requirement is applied is,

it is not necessary to state that the requirement is "occupational".

Finally, the exception specifies in paragraph 2(5) and (6) the two narrow objectives of complying with the doctrines of the religion and avoiding conflict with a significant number of the religion's followers' strongly held religious convictions. These are both legitimate objectives, and in the Amicus case the High Court thought it clear that a requirement that meets either of the conditions pursues a legitimate aim.

Amendment 32, which is my noble friend's second amendment to paragraph 2 of Schedule 9, would add,

to the requirements to which paragraph 2(4) applies. All the requirements listed in paragraph 2(4) relate to religion or belief in that they reflect matters of religious doctrine. For example, the Roman Catholic Church requires its priests to be men and unmarried. If an organisation with a religious ethos wishes to require an employee to be of a particular religion or belief, it could seek to rely on the specific exception at paragraph 3 of Schedule 9. I therefore hope that I will be able to reassure my noble friend on this.

I also make it clear that, notwithstanding the outcome of the votes on various amendments to this exception in Committee, the law will remain as it is. As my right honourable friend the Minister for Women and Equality put it,

For all those reasons, I ask my noble friend to withdraw her amendment.

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Baroness Turner of Camden: I thank my noble friend for that explanation, which I shall study with some care when I have the opportunity. I accept what she said about the existence of the anti-discrimination law, and in the circumstances I beg leave to withdraw the amendment.

Amendment 31 withdrawn.

Amendment 32 not moved.

Amendment 33

Moved by Lord Wallace of Tankerness

33: Schedule 9, page 172, line 34, leave out paragraphs 8 and 9

Lord Wallace of Tankerness: My Lords, Amendment 33 is in my name and that of my noble friends Lord Lester of Herne Hill and Lady Northover.

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