Auto-enrolment legislation upheld

Auto-enrolment

The Pensions Regulator had the High Court upheld it on auto-enrolment of peripatetic workers

Auto-enrolment legislation covers UK-based peripatetic employees who work across international locations, a High Court judgment has ruled.

The decision, which affects workers such as seafarers and airline pilots, follows a 12-month legal case resulting from a challenge to The Pensions Regulator (TPR) by Fleet Maritime Services (FMSB), which employs staff for ships owned by Carnival Plc, such as P&O Cruises and Cunard.

The employer had argued its UK workers were not covered by auto-enrolment legislation as they worked in international waters and so should not be considered to “ordinarily work in the UK”.

However, TPR maintained the seafarers employed by FMBS fell within the terms of the Pensions Act 2008 and therefore qualified for auto-enrolment.

High Court ruling

In the High Court judgment, Mr Justice Leggatt ruled that TPR’s approach on UK-resident peripatetic workers was correct and that the worker’s base was the appropriate test, rather than the worker’s contract.

The judge concluded that if a seafarer lives in Great Britain and works on a ship that begins and ends its voyage at a port in this country, they should be regarded as a British worker with a British contract. However, if a seafarer works on a ship whose tours of duty do not begin and end in Great Britain, they cannot be deemed to have a British contract.

Lesley Titcomb, TPR chief executive, welcomed the judgment. She said: “The judge confirmed that our approach in this particular case, and our guidance on how to assess peripatetic workers for the purpose of auto-enrolment, is correct.

“He also made clear that decisions of the regulator based on the assessment of particular facts are not ordinarily suitable for judicial review. In addition, this case demonstrates that where appropriate we are prepared to defend against judicial reviews and our commitment to upholding the principles of auto-enrolment.”

Background

In July 2014 TPR issued FMSB with a compliance notice setting out the employer duties that FMSB needed to comply with and those categories of workers TPR considered were covered by the legislation.

The employer requested a review and in September 2014, TPR affirmed its decision to issue a compliance notice, prompting the employer to seek a judicial review of the decision.

TPR defended the challenge by arguing that the location of the peripatetic worker’s base is the primary consideration when deciding if a worker falls within the definition of a jobholder under the Pensions Act 2008, not, as FMSB argued, the worker’s contract.

In relation to those workers who regularly begin and end their tours of duty in non-UK ports, the court found in favour of the employer and revoked the compliance notice to enable TPR to look again at these workers in light of the judgment. TPR says it will now be in touch with FMSB to discuss its pension duties going forward.

This is the first case where TPR’s approach in relation to auto-enrolment has been subject to a judicial review.

Key information to identify whether auto-enrolment applies

 

  • Workers base is primary consideration
  • Where they start their tour of duty
  • Where they end their tour of duty