Second Standing Committee on Statutory Instruments, &c.


Wednesday 18 July 1990


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The Committee consisted of the following Members:

Chairman: Mr. Geraint Howells

Brown, Mr. Michael (Brigg and Cleethorpes)

Chapman, Mr. Sydney (Chipping Barnet)

Clay, Mr. Bob (Sunderland, North)

Dickens, Mr. Geoffrey (Littleborough and Saddleworth

Evans, Mr. David (Welwyn Hatfield)

Fenner, Dame Peggy (Medway)

Field, Mr. Barry (Isle of Wight)

Fields, Mr. Terry (Liverpool, Broadgreen)

Griffiths, Mr. Peter (Portsmouth, North)

Hannam, Mr.John (Exeter)

Hayes, Mr. Jerry (Harlow)

Lloyd, Mr. Tony (Stretford)

Loyden, Mr. Eddie (Liverpool, Garston)

Nicholls, Mr. Patrick (Parliamentary Under-Secretary of State for Employment)

Parry, Mr. Robert (Liverpool, Riverside)

Ross, Mr. Ernie (Dundee, West)

Townend, Mr. John (Bridlington)

Wallace, Mr. James (Orkney and Shetland)

Dr. M. R. Jack, Committee Clerk

3 Second Standing Committee on Statutory Instruments, &c. Wednesday 18 July 1990

[MR. GERAINT HOWELLS in the Chair]

Draft Redundancy (Merchant Seamen Exclusion) Order 1973 (Revocation) Order 1990

10.30 am

The Parliamentary Under-Secretary of State for Employment (Mr. Patrick Nicholls): I beg to move, That the Committee has considered the draft Redundancy (Merchant Seamen Exclusion) Order 1973 (Revocation) Order 1990. This somewhat unusually entitled order is intended to achieve a very simple purpose. It repeals with effect from 30 September 1990 a small piece of legislation relating to redundancy arrangements in the merchant navy which are no longer necessary. Statutory provisions for redundancy payments date from 1965 and give employees a right to compensation according to a fixed formula is they are made redundant after working for an employer for at least two years. The legislation relates to the work force as a whole, but it was recognised at the outset that there might be a few cases where working arrangements within an industry made the statutory scheme inappropriate, and that it would make good industrial relations sense to allow that industry to continue with its own arrangements. There is therefore a power in the redundancy legislation for Parliament to make an order excluding particular groups of workers from the statutory scheme on the basis that they are covered by redundancy arrangements at least as favourable as in their own industry. Such an exclusion order was made in respect of merchant seamen in 1968 and renewed in 1973. It affected seamen whose terms of employment were covered by National Maritime Board agreements and a few special categories such as radio operators. Under these agreements redundancy entitlement is based on continuous employment under the established service scheme, not necessarily with one employer or one vessel, so that employees may qualify who might not have satisfied the two-years service requirement of the general state scheme. That is the historical position, but conditions have changed greatly in merchant shipping in recent years and the industry has decided that its collective arrangements are no longer relevant or useful. The work force in the merchant marine is contracted for a variety of reasons and the vast majority of its members are now employed on company contracts which typically run for more than two years. In these circumstances the employers' side of the industry has given notice that it proposes to end its established service scheme and proceed on the basis of contracts negotiated within companies. I understand that that effectively acknowledges a state of affairs which already exists in practice. 4 These changes are not of course matters for Government. They are for the industry. It is, however, a logical consequence of the ending of the established service scheme that the exclusion from the statutory redundancy provisions is no longer required. When the industry-wide scheme ceases, the seamen concerned will once again be entitled to the benefits of the Employment Protection (Consolidation) Act 1978, like all other employees, supplemented of course by such contractual severance payments as apply in particular companies. This revocation order is a necessary consequence of the ending of the shipping industry's special arrangements. It is not for me to justify the course the industry has adopted, though I believe it to be sensible. My concern is to ensure that by the making of this order, our merchant seamen are returned to the protection of the statutory redundancy scheme on the same footing as the rest of the work force.

10.34 am

Mr. Tony Lloyd (Stretford): I shall place on record briefly a number of observations that arise from the order and the reasons for it coming before the Committee this morning. The order seeks to provide protection for those in the industry which they would not otherwise have. To that extent I cannot complain about the Government's actions. The Minister said, however, that it was not for him to judge the decisions of the industry, but that they seemed to make sense. That sense is not so obvious to those who will be beneficiaries of the order and no longer have the protection offered by the merchant navy establishment scheme, which has been terminated. When the Minister said that the industry had decided to terminate the scheme, that was not strictly true. The employers' side gave notice that it intended to terminate the 1973 scheme, which caused regret. That came after a massive decline in the British merchant fleet. The number of British flag ships has decreased to an all-time low of about 300, and the number of people in the industry has halved. The merchant shipping industry has operated on the basis of casual labour and the scheme came into being to recognise the pecularities in the working practices of those who worked in the industry. For example an individual rating would not work for one given company for long enough to benefit from the statutory redundancy scheme provided in the 1968 legislation. For that reason, the industry recognised that there were particular problems and both sides made a commitment to establish a scheme to provide an industry basis for protection against redundancy. The industry took on responsibility for the potential redundancy of ratings or officers from any one company within the industry. That sort of collective agreement made sense and it guaranteed a pool of labour for the benefit of all companies operating within the industry. One consequence of terminating the agreement will be a strong incentive for those working in merchant shipping to stay with one company. Ironically, that is not necessarily what the industry wants. In the past, employers have benefited 5 from the ability of individual ratings to move from company to company. We are concerned also about those who move from the British industry to flags of convenience and what protection they will be given under the new scheme as negotiated between the new employer and the National Union of Seamen. Opposition Members have no intention of dividing on the order.

Mr. Nicholls: Is the hon. Gentleman sure about that?

Mr. Lloyd: I can speak with a degree of certainty that that is our unanimous position. We recognise that the order provides protections that would not otherwise exist. I want to place on record the regret of Her Majesty's Opposition that employers have decided to terminate a collective agreement that has served the industry well for over 17 years. That is not acting in the best interests of the British merchant shipping industry.

10.39 am

Mr. Nicholls: I do not think it is the Committee's wish for me to prolong the proceedings unduly. However, in fairness to the hon. Member for Stretford (Mr. 6 Lloyd) I shall respond briefly to one or two of his remarks. My understanding is that both sides of the industry are content, although I am not saying that the order comes before the Committee as a joint bed on behalf of both sides of the industry. There has been the fullest possible consultation and no discontent has been voiced over the action taken in restoring a protection which would otherwise not exist. I am sure the hon. Gentleman will know, although it may not be obvious to those who read our proceedings, that it is already law for seamen who work for at least two years with the same company. More importantly, there are transitional arrangements to ensure that periods of service pass on which have accumulated before the order comes into effect. Therefore, there is no question that someone who has qualifying time under one scheme will find that he does not also have qualifying time under the other. If that point concerned the hon. Gentleman and anyone else, 1 hope that I have put their minds at rest.

Question put and agreed to.

Resolved, That the Committee has considered the draft Redundancy (Merchant Seamen Exclusion) Order 1973 (Revocation) Order 1990.

Committee rose at nineteen minutes to Eleven o'clock.


Howells, Mr. Geraint (Chairman)

Brown, Mr. Michael

Chapman, Mr.

Dickens, Mr.

Fenner, Dame Peggy

Field, Mr. Barry

Griffiths, Mr. Peter

Hayes, Mr.

Lloyd, Mr. Tony

Nicholls, Mr.

Townend, Mr. John