Georgina Beechinor: Home is where the start is in pensions auto-enrolment case

Georgina BEECHINOR

One qualifying criteria for pensions auto-enrolment is that, under their contract, an individual is a “worker”, “who is working or ordinarily works in Great Britain”. The UK Pensions Regulator (TPR) has power to issue compliance notices to employers that fail to comply with this requirement.

In the case of The Queen on the application of Fleet Maritime Services (Bermuda) (FMS) vs The Pensions Regulator, which is relevant to all employers with a peripatetic workforce, the High Court found that where an individual ordinarily works depends on where tours of duty begin and end.

FMS is a Bermuda-incorporated shipping firm; it has no place of business in the UK and its ships spend most of their time outside UK territorial waters. The crew live on board the ships they are assigned to for any particular tour of duty. Some, but not all, of the crew reside in the UK.

TPR issued a compliance notice to FMS in 2014, explaining why it considered certain categories of the FMS workforce to be ‘workers’ for automatic-enrolment. When FMS had its challenge of the notice rejected, it sought judicial review.

The key issue was whether a seafarer engaged to work on a ship that spends all, or most, of its time outside Great Britain, can be said to be ordinarily working in Great Britain. The court found that a seafarer will count as ordinarily working in Great Britain if they work from a base in Great Britain or they live in, and work on a ship that habitually begins and ends its voyage in Great Britain.

In contrast to TPR, the court found that those whose tours of duty do not begin and end in Great Britain will not count as ordinarily working there, even where they are paid for time spent commuting. Assessments will need to be made on a case-by-case basis, particularly for those whose starting points vary between tours.

The court otherwise generally endorsed TPR’s approach, finding that for automatic-enrolment the key is to establish whether an individual ordinarily works in Great Britain, rather than identify a particular country in which they work.

This contrasts with the position in unfair dismissal cases, where policy considerations “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”.

There are also potential tax exemptions for seafarers who reside in the UK of working wholly or mainly outside the UK, and the judge saw no inherent reason to assume that Parliament must have intended such seafarers to have the benefit both of those exemptions and of automatic enrolment.

Georgina Beechinor is senior associate at Sacker and Partners