The government has submitted a bill on Norwegian pay and working conditions for crews on ships in Norwegian waters and on the Norwegian shelf. Here are the main points and the practical significance of them.

Wiersholm has in a previous newsletter discussed the Norwegian government’s wish to introduce Norwegian pay and working conditions on all vessels operating in Norwegian waters and on the Norwegian continental shelf, and whether such regulation will be possible in light of Norwegian obligations under international law. We concluded there that such a Bill would imply a clear Norwegian position regarding an extension of the coastal state’s jurisdiction at the expense of the flag state, but that it is unclear whether such extension can be categorised as contrary to international law or only as a “political breach” of existing state practice.

The Government, represented by the Ministry of Trade, Industry and Fisheries, has now concluded that such a regulation is possible under international law and has recently sent a Bill for consultation. In the following, we will explain the main points of the Bill, which in all essentials is based on the recommendations of the Holmefjord Committee.

The background of the Bill

The background of the Bill is a wish to ensure equal treatment of Norwegian employees by establishing certain standards that are to apply to all seafarers, irrespective of nationality and flag state, as well as to counter low-wage competition and to eliminate unacceptably low wages as a possible competitive advantage. The stated purpose of the Act is to “promote a fair and decent working life” in Norwegian waters, on the Norwegian continental shelf and in the Norwegian economic zone.

The Ministry proposes through section 4 of the Bill that everyone working on board vessels covered by the Act shall have “Norwegian pay and working conditions”. This term is defined in the second paragraph of the provision, as “provisions on wages, including overtime supplement, shift and rota supplements and inconvenience supplement that follow from the law and nationwide collective bargaining agreements for NOR-registered vessels engaged in the same kind of activities”.

Although the Ministry proposes to use the term “pay and working conditions”, the Act in its proposed form will in reality only relate to wages. This is because pay is a dynamic matter that can be easily adjusted according to whether or not a vessel in the relevant period is covered by the Act (as opposed to provisions on, for example, holidays, time off in lieu arrangements or accommodation). The Ministry also assumes that provisions on, for example, work and rest time, travel, use of temporary employment agencies, rules on equal treatment, etc. will be difficult to enforce or already regulated through other (partly international) sets of rules.

The Ministry envisages that the regulation in practice is to be implemented by establishing Regulations on  minimum wage for the various job categories on vessels covered by the Act, based on a corresponding regulation in the collective bargaining agreements that apply to vessels that are already covered by Norwegian pay and working conditions.

According to the draft, Norwegian pay and working conditions will be implemented for:

  • Vessels in cabotage
  • Cruise vessels
  • Vessels offering other services in Norwegian waters
  • Vessels on the Norwegian continental shelf and in the Norwegian economic zone
Vessels in cabotage

Pursuant to section 5 of the Act, the Ministry wants to implement Norwegian pay and working conditions for vessels carrying goods or passengers along the Norwegian coast. These are vessels carrying passengers or goods between two or more Norwegian ports, i.e. classical cabotage.

For vessels coming from or going to a foreign port, the requirement applies from the vessel leaves the first Norwegian port until it arrives at the last Norwegian port. The requirement is drafted in this way to ensure that the requirements of Norwegian pay and working conditions only apply to vessels when they are actually operating in cabotage.

The main target area of the provision is freighters, as most vessels carrying passengers in cabotage are already covered by existing rules and regulations with associated requirements for pay and working conditions. Cruise vessels are not covered by this provision, as these are regulated separately in section 6 of the Bill.

An exemption from the main rule in section 5 is proposed to be included in the second paragraph of the provision for vessels that “sail from one Norwegian port to another solely to unload inbound cargo or to land passengers from abroad, or to take on board outgoing cargo or passengers going to other countries”.

The exemption is made because one does not want to affect vessels in international service that solely carry import and export products to and from Norway, but vessels that call at several ports and thus do not have any special connection to Norwegian domestic services.

The Holmefjord Committee proposed that also vessels carrying inbound or outbound cargo in exceptional cases should be allowed to carry cabotage cargo without being affected by the Act. This has not been followed up by the Ministry. However, it follows from the provision that the Ministry may set out Regulations on exemptions from the requirement of Norwegian conditions in such cases if this is necessary to maintain a satisfactory transport service. The Ministry also proposes a regulatory authority for exemptions from the requirement of Norwegian conditions for “other vessels” when “Norwegian supply security” so requires.

Cruise vessels

It is proposed through section 6 that employees on cruise vessels sailing between Norwegian ports shall have Norwegian pay and working conditions. This also applies to cruise vessels operating solely from one Norwegian port.

In the Bill, cruise vessels are thus separated as a distinct group, defined as vessels carrying persons for tourist purposes to offer them adventures, as opposed to ordinary transport of passengers, which is covered by section 5.

For cruise vessels operating internationally, it is the time spent in Norwegian waters that decide whether Norwegian conditions shall apply. These vessels are subject to the rules if “more than half of the voyage measured in time takes place in Norwegian territorial waters”. In such cases, Norway will, in the Ministry’s opinion, be the main destination of the cruise, and there will consequently be sufficient connection for Norwegian pay and working conditions to apply. The pay and working conditions shall then apply from the time when the vessel leaves the first Norwegian port until it arrives at its last port in Norwegian waters.

Vessels providing other services in Norwegian waters

Section 7 of the Bill proposes that employees working on vessels that provide services or carry out stationary activities in Norwegian waters, and that are not covered by sections 5 and 6, should have Norwegian pay and working conditions. The provision is meant to cover cases that do not fall naturally under the other alternatives, including vessels that “provide services or carry out stationary activities related to port, installation or other facilities”. Fishing vessels are not included.

The proposed section 7 is mainly intended to cover cases where the vessel has a function in the activity for which it is used, such as auxiliary vessels or workboats used in the operation of an aquaculture installation or vessels in port engaged in towing, dredging or construction tasks.

“Stationary activity” refers in particular to vessels used as hotel or restaurant ships for short periods. Vessels operating such stationary activities for longer periods will most likely be covered by the rules of the Norwegian Employment Act, as such activities are not deemed as shipping activities.

The Ministry points out that this provision may include vessels servicing new marine industries in Norwegian waters, regardless of whether they perform construction, operation or service tasks.

Vessels on the Norwegian continental shelf and in the Norwegian economic zone

The Government also proposes to implement Norwegian pay and working conditions on vessels used in the construction, operation or use of installations or facilities on the Norwegian continental shelf or in the Norwegian economic zone on behalf of a licensee or an operator, see section 8 of the draft. This provision is not a result of an agreed proposal from the Holmefjord Committee, but a result of discussions between the three seafarers’ organisations, the Norwegian Confederation of Trade Unions (LO) and the Norwegian Shipowners’ Association. They agreed that supply, emergency preparedness and anchor handling vessels should also be subject to requirements for Norwegian pay and working conditions.

The Ministry has not followed up this clean-cut definition of the vessels to be included. As in the other cases covered by the Bill, the Ministry proposes broader conditions that are meant to include vessels that for a certain duration perform tasks that do naturally belong on the Norwegian shelf.

The provision only applies if the vessel “is located in the Norwegian economic zone or on the Norwegian continental shelf for at least 30 days, or when the vessel’s total presence in the Norwegian economic zone or on the Norwegian continental shelf exceeds three months during a twelve-month period”. The reason for this provision is that the Ministry wants to include vessels operating in the term market where the contracts normally are not shorter than 30 days. The duration of spot contracts, on the other hand, may be anything from 1 to 30 days. The Ministry believes that vessels operating in the spot market do not necessarily have the necessary geographical and objective connection to the installation for Norwegian pay and working conditions to apply, with the exception of vessels exceeding the said three-month period.

Obligated parties under the Act

In order to ensure the implementation of the Act, section 9 of the Bill specifies who are obligated parties under the Act. It is primarily the employer who is obliged to ensure that its own employees have Norwegian pay and working conditions pursuant to the Act. If the shipowner is not the employer, the shipowner is obliged to ensure that the employer provides correct pay and working conditions for the individual employee, and is jointly and severally liable for satisfying the employee’s economic requirements and rights under the Act.

This duty is proposed to be implemented also for licensees and operators of vessels covered by section 8 on vessels on the Norwegian continental shelf and in the Norwegian economic zone as mentioned above.

Enforcement

According to section 10 of the Bill, the Ministry may decide who is to have supervisory authority under the Act. Today, the Norwegian Maritime Authority is responsible for the supervision of vessels and will be the supervisory authority pursuant to the Act. In practical terms, supervision pursuant to the Act will normally be carried out together with other types of control, such as port state control of international vessels and MLC supervision on Norwegian vessels. For vessels operating on the Norwegian continental shelf, this will probably be somewhat more challenging, and the Ministry mentions potential supervisory arrangements where both the Petroleum Safety Authority Norway and the Norwegian Labour Inspection Authority may become involved.

In addition to this, section 11 of the Bill proposes that the relevant trade unions should have the right to investigate whether vessels that are covered by the Act comply with Norwegian pay and working conditions. The wording of the Bill is fairly extensive, and the only limitation is that such investigations shall not be “an unnecessary obstacle to the operation of the vessel”. The consultation paper does not say how such investigations are to be carried out, and this will probably be further regulated by Regulations if the Act is adopted.

Final remarks

As mentioned initially, the Bill has now been submitted for consultation, with the deadline for response set at 31 August 2022. Thereafter, the final proposition and eventually the recommendation to the Norwegian Parliament will be prepared. During this process, amendments will probably be made to the Bill. As mentioned in our previous newsletter, there are significant differences in how legal professionals interpret the leeway to impose Norwegian pay and working conditions onto foreign-flagged vessels. The regulation further implies a breach of the existing maritime law system, and the maritime industry is expected to have both practical and industry-related objections. As pointed out by the Ministry of Foreign Affairs, there is also the risk that other coastal states will respond with equivalent regulations against Norwegian-flagged vessels.

Nevertheless, the key points of the Bill will most likely remain unamended and eventually be adopted, as the signals from the Norwegian Parliament at present indicate that there is a majority for an Act on Norwegian pay and working conditions in Norwegian waters and on the Norwegian continental shelf.

You can read the Bill here (Norwegian) and the consultation paper here (Norwegian).

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