Understanding and navigating these complexities is important to ensure yacht crew receive their correct pay and benefits, all within the regulatory frameworks governing maritime employment.
From the foundation of the MLC to the security of the ICC, we take a look at the process of crew payroll in the ever-changing world of yachting
MLC
The Maritime Labour Convention (MLC) stands as a pivotal international treaty designed to establish comprehensive rights and protections for seafarers worldwide.
Enacted by the International Labour Organization (ILO), the MLC addresses a spectrum of issues related to seafarers' employment, working conditions, health, and welfare.
With a primary focus on promoting fair treatment, the MLC sets standards that encompass various aspects of seafarers' lives, including contracts, working hours, wages, and benefits.
Yacht operators and management must align yacht crew payroll practices with the MLC regulations to guarantee compliance with international standards. This includes adhering to stipulations related to contracts, working hours, and other employment-related factors outlined in the MLC.
SEA
The Seafarers' Employment Agreement (SEA) is a fundamental document within the maritime industry, outlining the terms and conditions of employment for seafarers. This agreement, often referred to as a seafarer's contract, serves as a legally binding contract between the employer and the seafarer, establishing the rights, responsibilities, and conditions of service during the period of engagement.
The regulations aim to ensure transparency, fairness, and the protection of seafarers' rights in their employment agreements. Each member state is required to enact laws and regulations specifying the mandatory details to be included in these agreements.
The specified particulars include the seafarer's personal information, shipowner details, agreement initiation details, employment capacity, wages, paid leave, termination conditions, health, and social security benefits, entitlement to repatriation, and any other details mandated by national law.
A SEA then further specifies individualized details for each crew member, encompassing agreed-upon salary, working hours, leave entitlements, specifics of repatriation requirements, and provisions for related medical insurance.
PAY
Employing and compensating permanent crew aboard yachts pose challenges due to differing jurisdictions in yacht ownership, registration, and homeport. Each crew member's unique circumstances, including domicile, residency, and tax obligations, add to the complexity. Yachts frequently move between countries, compounding these issues.
Managing the complex jurisdictional issues tied to employment laws, taxation, and national insurance for onboard crew is a challenge for yacht owners. To address these intricacies, many yacht owners opt to seek assistance from specialized yacht crew payroll and employment agencies.
The specialist company's payroll team will enter crew members’ banking information into the payroll system and communicate with them directly about any wage issues, reimbursements, and additional payments when needed.
Payslips are issued that detail the amount, and any deductions for social security and tax. The payslip is a legal document.
Each seafarer must be paid at least monthly, receiving a breakdown of their payments.
The seafarer should be assisted in sending some or all of their earnings to their families or legal beneficiaries. This service should include allowing the seafarer to set aside part of their wages for regular remittances through bank transfers and ensuring these allocations are sent promptly and directly to the individuals specified.
At the end of their employment, the crew member is informed about payments and issues with a final salary statement which details the final payments; this is signed off by the captain or yacht manager.
The yacht owner receives a detailed breakdown of wages, including a detailed wage schedule, a copy of all payslips, and wage payment notifications.
In a bid to streamline, simplify, and safeguard the employment and payroll process, many custom crew payroll firms establish separate entities through which the crew are employed. This arrangement ensures that crew members are employed independently from the yacht and its owner.
These distinct entities take the form of Incorporated Cell Companies, which we explore below.
ICC
In terms of yacht crew employment, an Incorporated Cell Company (ICC) serves as a strategic tool for safeguarding yacht owners, particularly those with the world’s biggest yachts, from potential disputes and liabilities. An ICC establishes a structured framework where each crew member is employed through individual cells, providing distinct legal identities for their employment. This separation shields the yacht owner from direct liabilities associated with crew disputes or other employment-related issues.
The key advantage lies in the fact that the liabilities of one cell, representing an individual crew member, are generally confined to the assets held within that specific cell. This means that disputes, contractual issues, or claims arising from one crew member's employment do not automatically impact the yacht owner or other crew members within the ICC.
By adopting this approach, the intricacies of crew employment are navigated protecting the yacht owner from any legal entanglements and financial exposures. It's a protective layer, ensuring that the yacht owner is provided with a measure of insulation from the potential challenges associated with crew-related disputes.
