The country of residence principle as part of an international playing field

International shipping is, by its very nature, a global industry.  Competition takes place on a worldwide scale and the crew on a ship is often composed of seafarers from different countries. Within this international environment, the so-called country-of-residence principle has been applied for many years. In short, this principle means that, in particular, the level of pay for seafarers is partly determined by the country in which they reside. As a result, for example, Filipino or Indonesian seafarers working on a ship sailing under the Dutch flag often receive, in practice, a lower salary than their Dutch or other European colleagues performing similar duties. The underlying principle is that differences in the cost of living and labour market conditions between countries may be taken into account. The country-of-residence principle is not only applied in the Netherlands but is also standard practice in various other maritime nations.

Supporters of the system point out that this principle takes account of differences in local costs of living and helps to maintain an international level playing field in a sector subject to intense global competitive pressure. Critics, on the other hand, argue that two employees performing the same work on the same ship should also receive the same salary, regardless of their country of residence.

Following the ruling of the Dutch Commission for Human Rights, the balance appears to be shifting firmly towards the latter view. This raises questions not only about the legal sustainability of the country-of-residence principle itself, but also about the consequences that its potential abolition could have for the Dutch maritime sector. It is precisely these consequences that have become the subject of a heated debate. While some stakeholders warn of a loss of competitiveness, reflagging of vessels and economic damage, others dispute whether these effects would be as significant as suggested.

Will the Dutch flag register come under pressure?

The question increasingly being raised is not only what the ruling means for individual employers, but also what consequences it may have for the attractiveness of the Dutch flag. If labour costs for vessels sailing the Dutch flag increase substantially, shipowners may choose to register their vessels under other flags. This phenomenon, commonly referred to as "reflagging" or "flagging out", is well known within the international shipping industry. A decline in the number of vessels registered under the Dutch flag would affect more than just shipowners. Other parts of the maritime sector could also feel the impact, including ship management companies, maritime service providers, educational institutions and shore-based employment. Recent research into the Dutch ship register suggests that the debate surrounding the country-of-residence principle is therefore not merely an employment law issue but also has important economic and strategic dimensions.

From individual cases to collective claims

The ruling has also had another significant effect. Various shipowners have received requests from claim foundations seeking extensive personnel and salary information. This raises a new set of legal questions. Are such organisations entitled to request this information? How far does any potential obligation to provide information extend? And what data may be disclosed in light of applicable privacy legislation? At present, these issues remain far from settled. The same applies to the question of whether any wage claims will ultimately have a realistic prospect of success.

The court has the final say

It is important to emphasise that a ruling by the CRvdM is not a court judgement. Dutch courts are not bound by a ruling from the CRvdM and will have to assess each case independently. Although the CRvdM provides a detailed explanation of why, in its view, discrimination has taken place, judges will have to determine for themselves whether the wage agreements in question contravene the General Equal Treatment Act. Other aspects may also play a role in this, such as the consequences for the maritime sector and existing international practice within the sector. Given the scale of the interests at stake and the fundamental legal questions involved, it is likely that this matter will ultimately be referred to the highest courts.

Conclusion

The CRvdM’s ruling now extends beyond the issue of equal pay alone. The debate touches on the position of the Dutch flag, the international competitiveness of Dutch shipowners and the future of the maritime sector as a whole. For the time being, one thing is clear: the legal debate is far from settled. Only when the court rules on this matter will it become apparent whether the CRvdM’s ruling marks the beginning of a fundamental change within the sector.