A twelve-month legal battle has clarified how companies should treat peripatetic workers, Margaret Taylor explains

What happened? 

Following a 12-month legal battle the judiciary has given its first-ever guidance on how the term ‘ordinarily working in the UK’ should be interpreted when it comes to the auto-enrolment of peripatetic workers.

Tech briefing

Shipping company Fleet Maritime Services had asked the High Court to decide whether it should comply with a demand from The Pensions Regulator (TPR) to automatically enrol its UK-resident employees in a pension scheme.

TPR had argued that the company’s UK-domiciled employees should be assessed as ordinarily working in the UK. Fleet Maritime, which is owned by P&O Cruises operator Carnival, disputed this, arguing that as its staff work on ships that spend all or most of their time outside the UK the legislation should not apply.

In his ruling Mr Justice Leggatt agreed with TPR’s contention that UK-resident workers who join and leave a vessel from a UK port should be auto-enrolled in a pension, even if they spend several weeks at a time working in foreign waters.

However, the judge found in favour of Fleet Maritime in respect of UK-resident employees who begin and end their tour of duty outside the UK, ruling that such employees could not be said to be based in the UK and so had no right to the benefits of automatic enrolment.

What does it mean?

Essentially, Leggatt J has said that to be classed as ordinarily working in the UK a worker must be seen as being based here, with Ashurst partner Rachel Rawnsley noting that “the concept of a base is that of a place from which a worker sets off at the start and to which the worker returns at the end of a period when the worker is travelling in the course of his work”.

Understandably, TPR has hailed the judgment as a victory, with chief executive Lesley Titcomb stating that “the judge confirmed that our approach in this particular case, and our guidance on how to assess peripatetic workers for the purpose of automatic enrolment, is correct”.

For any employer whose business is focused on international transportation or whose employees split their time between the UK and other jurisdictions the implication is clear: if your employees meet the ‘based in the UK’ standard then they must be automatically enrolled in a pension scheme.

What’s next?

Fleet Maritime can also claim partial victory in the case, with Leggatt J finding that even though the company paid its UK-domiciled employees to travel to a foreign port to begin their tour of duty that travel should be considered as commuting rather than working.

However, Rawnsley at Ashurst notes that “it appears this decision was based on specific wording in the relevant [employee] contracts, which provided that tours of duty started and ended respectively on joining and leaving the cruise ship”.

In other words, anyone else looking to challenge TPR’s stance on similar grounds should check the wording of their contracts first.