In the Netherlands, all employers, whether Dutch or foreign, must comply with the obligations under the Minimum Wage and Minimum Holiday Allowance Act (Wet minimumloon en minimumvakantiebijslag or, WML). The WML stipulates, among other things, that employers must pay at least the full legal minimum wage and the legal minimum holiday allowance. The Dutch Inspectorate SZW checks whether employers comply with the WML and can impose fines on employers who underpay their employees.
In a recent case (Court of The Hague 13 July 2016), it was discussed whether the WML is applicable to employment relationships between employers and employees on board foreign ships in a Dutch port. The facts were as follows. Due to financial problems, two ships of a Cyprian shipping company were moored for four months in the port of Rotterdam. During that period, twelve employees from the Philippines, Poland and the Ukraine worked on the ship while the ship did not leave port. Following a check carried out by the Inspectorate SZW, the shipping company was fined € 96,750.00 for several violations of the WML.
The court ruled that when a shipping company is not established in the Netherlands and its seagoing vessels do not have a Dutch home port, the WML is only applicable if the employment relationship is fulfilled in the Netherlands. In the light of the specific circumstances, the court ruled that the employees were not deemed to have fulfilled their employment relationship in the Netherlands. The following circumstances were considered relevant: the vessels sailed under the Cypriot flag, the employees received wages in accordance with the international collective labour agreement which the shipping company had concluded with a trade union for seagoing personnel; the wages were paid in US dollars; the seagoing vessels were temporarily moored in the Netherlands awaiting a new (international) assignment; due to circumstances over which the shipping company had no influence, the seagoing vessels were located at the port for more than a few days; the employees stayed on board to keep the seagoing vessels ready for sailing and never left the seagoing vessels; the shipping company supported the employees, and the employees were on leave outside the Netherlands. Moreover, as the employees did not leave the seagoing vessels and the shipping company supported the employees, the employees were not faced with the Dutch atmosphere of wealth (i.e. they did not have to contend with the high cost of living in the Netherlands). Therefore, the court concluded that the SZW Inspectorate was not authorised to impose a fine on the shipping company.
On the basis of this case, it can be concluded that where a seagoing vessel does not have a Dutch homeport, the Dutch minimum wage is only payable if the employment relationship is fulfilled in the Netherlands. Where a seagoing vessel does have a Dutch homeport, the employer must pay its employees the Dutch minimum wage, even if the work is carried out outside the Netherlands. This is, however, a very specific case since it is, of course, quite exceptional for a ship to stay in port for four months during which time the employees never leave the ship.