Crew contracts vital, no guarantee of rights

Aug 22, 2017 by Dorie Cox

By Dorie Cox

At the start of a new job, many crew are asked to sign a contract that defines wages, scope of work, leave and more. For charter vessels, the commercial status of the yacht requires these contracts in most cases. Such a detailed legal document is designed to prevent problems, clearly spelling out what should happen when crew are fired or resign.

Capt. Rusty Allen and the crew of the 216-foot Oceanco M/Y Natita found that not to be the case when they were let go at the end of January.

While their wages had been paid, their contracts provided for severance payment, as well as earned vacation pay. But the owner was in financial difficulties and did not make those payments, neither to the crew nor to the bank. (See “Clearing up a few facts around Natita seizure“.)

“All crew think, ‘I have a contract, so I’m protected,’” Capt. Allen said. “Problem is, that’s not true. When an owner decides not to pay, bam, nothing you can do. The only way to do anything is to go to court, get an attorney – and that’s not cheap.”

Capt. Allen had decades of experience running vessels, even serving as general manager of the owner’s fleet of yachts, including M/Y Natita II, M/Y Bad Girl and M/Y Mystere. He never thought he would have employment contract issues.

Neither did Capt. Janz Staats, who is navigating nonpayment of wages by a yacht owner. He asked that the vessel not be named because of ongoing legal issues. Both captains said they have learned lessons about crew contracts the hard way.

Considerations for employment contracts

There are several types of crew employment agreements. For commercial or voluntarily compliant yachts using the Maritime Labour Convention (MLC), there are a number of requirements for a crew contract, known as a seafarers employment agreement (SEA), according to James Hatcher, shipping master for the Cayman Islands Shipping Registry. A SEA must include – but is not limited to – sick pay, medical expenses, annual leave, notice periods and repatriation.

The Cayman registry offers a model of a compliant agreement on its website, (click on Forms and Technical Compliance). Most yachts tailor that model to meet specific needs. Hatcher explained in an email that, “it is quite unusual (though not unheard of) for vessels to simply use the model SEA. … It can be changed, or added to, however it reflects the minimum requirements for MLC compliance and therefore all the requirements of the model need to be in there. Any additions would also need to comply with the law.”

Once created by the yacht’s captain, owner or manager, the SEA is submitted to the registry before an MLC inspection and is checked by the flag for compliance with laws and the MLC.

“If found to be in compliance, it will be stamped as accepted and the vessel can have its MLC inspection, where it will be checked again by the flag surveyor, who will check to ensure that the stamped accepted SEA is the one in use,” Hatcher wrote.

Private yachts would typically use letters of employment (LOE) that voluntarily include similar components, according to Alan Dale, fleet manager of Burgess in London.

“There are plenty of private yachts operating on LOEs,” Dale wrote in an email. “The crew member should read carefully any contract they are about to sign. If necessary, they should seek legal advice if they are unsure about the implications of any of the content.”

Capt. DesVergers, deputy registrar for the Maritime Authority of Jamaica, that country’s flag registry, agreed. He said that when reading a contract, a crew member should consider his or her personal protection, since the owner is considering his.

“The contract may not be created in the best way for the crew,” Capt. DesVergers said. “I often explain to crew that the MLC is the minimum standard. An owner can throw in whatever he wants, it is still a contract. He can add that all crew must wear red shirts and high heels as conditions of employment. Crew always have the option of not signing the contract and finding a different job.”

Capt. Staats, who continues to deal with the legal complexities following the breach of his contract, recommends crew be prepared for the possibility of legal recourse.

“When you are hired on a vessel with a contract, be sure to add in attorney fees,” Capt. Staats said. “Add a clause that any fees required to recover lost wages will be covered by the vessel, the management company or owner, but be sure to state in the contract that attorney fees are recoverable.”

Solving contract disputes

Although there is nothing to stop an owner from breaching a contract, having an SEA is still vital for yacht crew seeking mediation with a flag state or a court of law, said Capt. DesVergers, who notes that recourse can be more complicated than most might think.

“Crew expect a team of lawyers to jump in to handle their case,” he said. “It doesn’t work that way.”

In the event that crew find their flag-state-compliant yacht contract is not being honored, they do have options.

“Each flag state has a department that takes care of seafarers, and there are formal procedures that are followed,” Capt. DesVergers said.

But the flag state is not the first go-to, he said.

“About 95 percent of complaints are, ‘I left the boat and have not been paid,”” he said. “We ask if you have called the owner to see if accounting has an issue. Don’t escalate to the flag state at that level.”

Flag states will usually wait a month or two before they begin to communicate with the owner or help to mediate toward a solution, he said.

“Very seldom does something go to litigation; it usually does get settled,” he said. “Patience on all sides is needed. I would say 90 percent of the complaints get resolved by themselves.”

If there is a contract breach that gets to flag-state level, the contracts and process will be provided in the onboard complaints procedure, which all MLC-compliant vessels must have, Hatcher, of the Caymans, wrote.

“In addition, however, on MLC-compliant vessels, as many of the requirements of the contract are governed by the law, there might be cases where action can be taken under the law for breach of MLC if the contract is not being respected,” he wrote.

Another option for support is a group such as Nautilus, a global trade union and professional organization that provides specialists and legal support to its members. The group was active in the development of the MLC and can assist with contract issues such as unpaid wages, according to strategic organizer Danny McGowan.

“Trade unions in the U.K. work differently than in the U.S.,” Andy Linington, director of campaigns and communications said. “Often you need a union membership to find a job, but in the U.K. you can use a union to have contracts negotiated, like the IOMMP (International Organization of Masters, Mates and Pilots).

“Yachting has not caught up with rest of the maritime industry, but it is changing with the MLC,” he said. “Since the implementation of the MLC, we have seen a booming industry. It can continue to boom, but not at the expense of the crew.”

When contracts are breached, Capt. Staats said, crew in similar circumstances should work together to fight an issue such as nonpayment of wages.

“Filing is a pretty simple process, but it requires crew to put money down,” he said. “If the whole crew can each contribute – maybe an amount according to what they will recover – it may be easier.”

Yacht crew should keep their own records to be prepared in the event of a contract breach.

“One thing that surprises us is that crew don’t keep a copy of their contract,” Capt. DesVergers said. “They call us with an issue and we say, ‘Send a copy of your contract,’ and they don’t have it.”

Often crew will say the yacht hasn’t given them a copy of their contract.

“If you have worked and received pay, that can be what is called tacit acceptance,” he said. “You can’t complain now.”

The boat is in violation not to have supplied it, but the crew still has some responsibility to request it, he said.

Things can still go wrong, even when crew do everything right. A breach of contract can become a complex legal situation that takes time and money, and even then may not be resolved in yacht crew’s favor. If crew are not being paid, it pays to research options.

“Crew need to know what it entails to seize a boat,” Capt. Staats said. “If crew are owed money, they have to decide if it is worth spending the money to seize it or just to be wiser and move on. It’s not a cheap process, most people won’t do it, or are intimidated.”

Capt. Allen said his case is an example of that: The attorney will receive 35 percent of the judgment. That is, if he and his crew ever get paid. At press time, although a judge had ruled in their favor, none had received any money.

“I’m waiting,” Capt. Allen said. “We were awarded the judgment for $90,000 for the three of us, but that doesn’t mean we have collected a dime.”

Click for more on the Maritime Labour Convention (MLC) complaint procedure.

Dorie Cox is editor of The Triton. Comments on this story are welcome below.

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About Dorie Cox

Dorie Cox is a writer with Triton News.

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