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HMRC internal manual

National Insurance Manual

Special cases: Class 1 - mariners: DL offshore contracts

For many years the UK shipping industry has transferred significant numbers of employment contracts either to non-UK members of shipping groups or unconnected offshore employers. This was to remain competitive with operators in other jurisdictions by avoiding the payment of secondary contributions (by not being resident or having a place of business in GB).

A strong indication that there is a place of business in GB is where a company is registered under the Companies Act 1985. But, whether there is a place of business in GB will be a question of fact based on the individual case.

Where an entity which is not resident or does not have a place of business in GB pays mariners, evidence will be needed to decide whether that entity is the employer. Such evidence may come from :

  • contracts of employments
  • agreements with shipping unions
  • disciplinary agreements, payroll procedures
  • establishing who remains liable for the payment of earnings if the ship owner or cruise operator was to default on fees due to the offshore entity
  • establishing who holds employers’ liability insurance