In the case of the employment of an EU seafarer, are the shipowner and seafarer free to choose the law regulating the contract?
Yes. As a general principle, in the case of the employment of a seafarer, the owner and the seafarer are free to choose the law regulating the contract.
Indeed, the international employment contract, with regards to the applicable governing law, is subject to the provisions of EC Regulation 593/2008 (the “Regulation”). Article 8 of the Regulation states that: “An individual employment contract shall be governed by the law chosen by the parties […].”
However, “such a choice of law may not have the result of depriving the employee of the protection afforded to him by provisions that cannot be derogated from by agreement under the law that, in the absence of choice, would have been applicable.”
What is the main effect of the above provision?
The main effect is that even if the owner and seafarer agree for a specific law to govern the employment contract, the seafarer remains entitled to claim any additional right or benefit arising from the mandatory rules of the law that, in the absence of choice, would have been applied to the employment contract.
Which is the law that would have been applied, in the absence of choice?
Absent an alternative choice, pursuant to the Regulation:
- the contract shall be governed by the law of the country in which or, failing that, from which the employee habitually carries out his work in performance of the contract; or
- if the law applicable cannot be determined pursuant to the above point, the contract shall be governed by the law of the country where the place of business through which the employee was engaged is situated; or
- if it appears from the circumstances that the contract is more closely connected with a country other than that indicated in the above points, the law of this other country shall apply.
How do Italian Courts interpret the above rules?
Based on the fact that maritime work is “itinerant” by definition, Italian judges take into consideration the place where the yacht is situated for the majority of its time.
If it is not possible to determine the state in which the yacht spends the most time, Italian judges consider the place of embarkment of the seafarer and his nationality.
What are the consequences of the application of Italian law?
In cases where Italian law is applied, it should be pointed out that employees are granted certain rights, such as the minimum salary provided by the applicable collective bargaining agreement, the right related to holidays not taken, social security payments and other rights that – pursuant to article 8 of the Regulation – cannot be waived, unless certain requirements are met.
Hence, the seafarer shall be entitled to claim additional amounts arising from the above rights, regardless of any different agreement with the shipowner.
In cases of employment of an EU seafarer, are the shipowner and seafarer free to choose the place where the social security should be paid to the seafarer?
In terms of social security, the general legislation to refer to is the Council Regulation (EEC) No 1408/71 of 14th June 1971 (annexes included), as subsequently supplemented and amended, on the application of social security to employees moving within the Community.
This regulation provides for a general rule under which a person carrying out his professional activity on board a vessel flying the flag of a Member State is subject to the legislation of such State.
Indeed, a person to whom the legislation of a Member State ceases to apply, without the legislation of another Member State becoming applicable to him, shall be subject to the legislation of the Member State where he is resident.
In light of the above we may conclude that, with reference to the social security applicable to a seafarer working mostly in Italy and residing in Italy, pursuant to EU Regulation 1408/71:
1) If a vessel is flying an EU flag, the seafarer will be submitted to the legislation of the EU Member State where the vessel is registered;
2) If a vessel does not fly an EU flag, the seafarer will be submitted the legislation of the EU Member State where the seafarer is resident.
What happens if the seafarer claims additional rights not provided for by his employment contract?
The main consequences which may arise from an Italian litigation with the seafarers are:
- a possible arrest of the yacht;
- a possible claim for further amounts, despite the employment agreement.
What do we suggest?
If the EU/foreign shipowner is aware of the fact that the yacht is going to spend a significant period of time in EU waters, or if he embarks a seafarer within the EU territory, or if he employs an EU citizen, we suggest to request the advice of a local lawyer who should compare the treatment contained in the contract with the one which is mandatory under the laws of the State which would have been applied pursuant to the Regulation.
In addition, in order to try to mitigate the risk related to a possible dispute between the Yacht Owner and the seafarer including social security claims, we suggest that when determining the payment of the seafarer, to take into consideration the minimum salary provided for by the law of the State which would have been applied pursuant to the Regulation, including the minimum amount to be paid as social security.
Lastly, in cases of dismissal, we suggest to request the advice of a local lawyer in order to fulfill all the local obligations required to obtain an undisputable settlement agreement.