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Maritime Labour Convention 2006

SSM Roundel

Steamship Mutual

Published: July 01, 2014

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The practicalities of implementation and MLC Q&A from a Yacht Perspective

Following the implementation of the Maritime Labour Convention 2006 (MLC) in August last year, questions remain in relation to who is ultimately liable for its compliance.  The ‘shipowner’ will be the party in the firing line for non-compliance – but the management of a vessel is often a complex operation with many different entities involved.  Some of these entities, including those who hold a Document of Compliance (DOC) for the vessel, will wish to distance themselves from the definition of, and having the responsibilities of being, a ‘shipowner’ under the MLC.  

There is also the issue of where the direct obligations of being the employer of the crew on a vessel lie: the registered owner, the bare boat charterer or the technical manager.  

In practice, all entities involved in a vessel’s ownership, manning and management matrix will have their role to play to ensure that the ship is certified MLC compliant by her Flag State.

The MLC came into force on 20 August 2013 following ratification on the same date in 2012.  In order to take effect, the Convention required ratification by at least 30 Member States with a total minimum share of 33% of the world’s gross tonnage of ships.  As of 11 April 2014, 57 Member States representing more than 80% of the world’s tonnage have ratified the MLC.

The MLC created a single, coherent instrument embodying, so far as possible, all up-to-date standards contained in existing international maritime labour conventions and recommendations, as well as the fundamental principles to be found in other international labour conventions, see 'New "Bill of Rights" for Seafarers' article. The aim is to bring the system of protection contained in existing labour standards closer to the workers concerned and to improve the applicability of the system so that shipowners and governments share equally in taking the measures to ensure that protection.

The MLC expressly replaces a long list of conventions dating back to the Minimum Age (Sea) Convention (No. 7) and the Unemployment Indemnity (Shipwreck) Convention (No. 8) of 1920 to the more recent 1996 conventions on inspection, recruitment and manning.

The MLC is structured in three parts: the Articles, the Regulations and the Code.  The Articles and Regulations set out the core rights and principles and the basic obligations of Member States ratifying the Convention, while the Code contains the details for the implementation of the Regulations comprising Part A (mandatory Standards) and Part B (non-mandatory Guidelines).  The Regulations and the Code are further organised into general areas under five Titles:

Title 1: Minimum requirements for seafarers to work on a ship

Title 2: Conditions of employment

Title 3: Accommodation, recreational facilities, food and catering

Title 4: Health protection, medical care, welfare and social security protection

Title 5: Compliance and enforcement

While the provisions relating to Flag State and Port State Control inspections in Title 5 are based on existing maritime labour conventions, the MLC offers what is hoped will be a more effective approach to ensure standards are maintained in relation to, for example, safety, security and protection of the marine environment.

However, it is the compliance aspects of the MLC that are designed to strengthen the enforcement of the adopted standards by setting out mechanisms that are intended to operate at all levels – from seafarer, to vessel, to owner, to authoritative body.  Such mechanisms include:

  • complaints procedures being made available to seafarers;
  • owners’ and masters’ supervision of conditions on their ships;
  • Flag States’ jurisdiction and control over their ships;
  • Port State inspections of foreign ships.

Furthermore, by requiring ratification, the International Labour Organisation (ILO) has ensured that Member States are required, not only to implement the MLC in their national laws, but also to document that implementation.  It is here that questions arise as to exactly how and to whom some of the provisions will apply.

The MLC appears at pains to define just who the ‘shipowner’ is.  The MLC sees the term ‘shipowner’ to include, not only the owner of the vessel, but also any “other organisation or person, such as the manager, agent or bareboat charterer, who has assumed the responsibility for the operation of the ship from the owner and who, on assuming such responsibility, has agreed to take over the duties and responsibilities imposed on shipowners in accordance with this Convention, regardless of whether any other organisation or persons fulfil certain of the duties or responsibilities on behalf of the shipowner.”

The MLC therefore assumes that the ‘shipowner’, whether owner, bare boat charterer or technical manager, is the employer of the crew.  

Ordinarily, that would make sense as one would expect the entity holding the DOC, pursuant to the ISM Code, to be the employer.  However, where this is not the case, and the employer is the crew manager, then they will have the contractual obligations and liabilities arising.  This is an especially important consideration in those sectors of the industry where the third party employment of seafarers is customary; a common example being the yacht sector, where, in addition, contracts of employment have generally not always been as detailed / extensive as compared to traditional contracts within the commercial shipping industry. 

In short, the MLC’s obligations regarding the receipt, issue and signing of the crew agreement (or ‘Seafarer’s Employment Agreement’ (SEA) in the language of the MLC), are clearly the responsibility of the shipowner under the MLC.  As such, in practical terms, the shipowner needs to ensure these terms are met by the actual employer of the seafarer(s) concerned. 

The same applies to the insurance arrangement in relation to traditional P&I risks and contractual benefits.  

As set out in Club Circular B.599 the difficult issue of financial security for repatriation in the event of insolvency of the shipowner, and therefore stranding of the crew, has been dealt with by International Group of P&I clubs.  Of course, where the crew are employed by crewing managers, the latter would still have the contractual obligation to repatriate, though they may not necessarily have the advance funds from owners or bare boat charterers to do so.

A further difficult issue is the security for termination wages on insolvency.  Again, where the employer is not the shipowner, the crew are entitled to their wages from the actual employer. 

Another matter for debate is what exactly constitutes a ‘seafarer’ within the scope of the MLC.  For example, are entertainers or concessionaires employed on a cruise ship seafarers?  

The MLC definition would seem to be unequivocal: “seafarer means any person who is employed or engaged or works in any capacity onboard a ship to which this Convention applies”.  Indeed, the ILO FAQs state (at page 22) that concessionaires would need to have a contract signed by the shipowner.  

However, arguably this may not accurately reflect the position: the intended focus should in fact be on the employment contract, rather than the identity of the contracting parties themselves, i.e. the concessionaire’s employer (whoever that may be) must sign the contract and it is that contract which must be MLC compliant.

The practical effect is that shipowners must seek to ensure that their crew or the employees of others on board their ships have MLC compliant SEAs (within the ambit of MLC Regulation 2.1). 

Generally, and thus far, if a ship complies with the MLC and the SEAs are compliant, the Flag State will issue the necessary documentation.  However, whether that will continue to be the case as the practicalities of MLC implementation become more familiar to Flag States remains to be seen.

Aside from the issues of Flag State accreditation, how Port State Control will view compliance has been a particular topic of interest, as has the contractual and delay disputes that arise as a consequence.  The Paris MOU reported in October that seven ships were detained (equating to 10 per cent of the total detentions for the Paris MOU area)  in the first month following MLC implementation for MLC related deficiencies alone.

This is an area all owners and ship managers will doubtless be watching with a keen weather eye as the implications of the MLC evolve further. 

In summary, the key point to remember is not to assume that, just because the certificates are issued to the ship, only one entity has legal obligations under MLC.  The MLC requires the co-operation of all the ‘shipowners’ and the employer (if different from the shipowner) to deliver these uniform and basic standards.   Accordingly, all entities involved in the management of the vessel should not seek to distance themselves, whether by way of contract or otherwise, from the responsibilities imposed by the MLC.  On the contrary, the MLC “shipowner” should consider its responsibility to ensure that all the various parties have not only contracted to deliver their obligations under the MLC, but that they actually do deliver them.  The indemnities in favour of the shipowner can only go so far.

MLC Q&A from a Yacht Perspective

Do all yachts have to comply with the MLC?

Under Article II of the MLC, effectively, the MLC applies to virtually any ship including any yacht of any size which engages in any form of commercial activity on international voyages, unless the flag state stipulates otherwise.  As such, Members need to consult the yacht’s flag state to determine whether the MLC 2006 has been applied in those countries to yachts.

Notwithstanding the above, the Large Commercial Yacht Code (LY3) includes many elements of the MLC.  All flag states under the Red Ensign require and many others recommend that pleasure yachts not engaged in trade comply fully with LY3.   Therefore, to all intents and purposes, LY3 incorporates MLC compliance into the Code.  This means that to maintain full compliance with LY3 a pleasure yacht not engaged in trade must be fully MLC compliant as appropriate. 

Is the MLC now in operation? 

The MLC came into force internationally on 20 August 2013 for the 30 original ratifying states.  However, since the UK ratified the MLC on 7 August 2013, it will enter into force for the UK on 7 August 2014.  The MLC is technically therefore not yet in operation in the UK.

Do owners now need to comply with the MLC obligations and pay sickness wages and medical care for no less than 16 weeks?

Whilst not yet in operation in the UK, the UK has already implemented the Convention by passing The Merchant Shipping (Maritime Labour Convention) (Survey and Certification) Regulations 2013 (“the Regulations”), which came into force on 15 August 2013.

The Regulations implement the survey and certification requirements of the MLC with reference to the standards in Merchant Shipping Notice 1848 (MSN 1848).  MSN 1848 lists the mandatory standards that ships must comply with in order to receive a UK Maritime Labour Certificate, which include the sickness wages and medical care obligations under the MLC.  Whilst the Regulations do not apply to “pleasure vessels”, they do apply to any vessel which operates commercially (including pleasure vessels operating commercially) and to which the LY3 applies.  Therefore, if a yacht is flying the UK flag and is operated commercially, owners do need to comply with the MLC obligations and pay sickness wages and medical care for no less than 16 weeks.

What happens if the contract is silent in relation to contractual entitlement to medical or sickness wages?

If the contract is silent, it is not MLC compliant and a Maritime Labour Certificate will not be issued.  The contract also has to include the seafarer’s maximum entitlement (which must be above 16 weeks).  Initially such matters will be dealt by the provision of advice for compliance.  On-going non-compliance following this advice may result in the possibility of prosecution and/or the vessel concerned being detained. 

Do temporary and/or day workers fall into the MLC definition of a ‘seafarer’?

In the UK implementing legislation, the definition of ‘seafarer’ is given as any person, including a master, who is employed or engaged or works in any capacity on board a ship and whose normal place of work is on a ship.  Under this legislation ‘seafarer’ does not apply to those persons whose work is not part of the routine business of the ship and whose principal place of work is ashore: for example, marine professionals such as harbour pilots, inspectors, or superintendents, scientists researchers, divers, specialist offshore technicians – and possibly temporary and/or day workers.

Current UK Guidance - MGN 471 - is that any individual who works on board for less than three nights is probably not a “seafarer”.  However, the flag state of the yacht concerned should be consulted to see whether they adopt a similar approach.  

 

We are grateful to Maria Pittordis and Jack Hatcher for this article, and Zoe Triantafyllou for the above Q&A all of Hill Dickinson LLP. 

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