Please enter your email address to receive a password reminder.
Log into Tax-News+
As emphasised by the International Labour Organizations (ILO), seafarers are frequently exposed to difficult working conditions and particular occupational risks. In fact, since working far from home, they may be vulnerable to exploitation and abuse, non-payment of wages, non-compliance with employment agreements, exposure to poor diet and living conditions.
Moreover, given that seafarers and ship owners are often of different nationalities, the same seafarers may operate within and across different national jurisdictions. Therefore, they may be subject to different international and national laws and be in doubt as to which law would be applicable in matters pertaining to them.
Employment of seafarers working on Maltese vessels is regulated by legal sources other than the ones which are applied to other employees, and therefore the said employment falls outside the scope of the Employment and Industrial Relations Act (Chap. 452 of the Laws of Malta, EIRA) and its Subsidiary Legislation.
As evidenced by Article 39 of the EIRA, seafarers' employment is regulated by the Merchant Shipping Act (CAP 234 of the Laws of Malta, hereinafter referred to as "MSA") and the Merchant Shipping Rules (Subsidiary Legislation 234.51, hereinafter referred to as "MSR") which in principle have incorporated all the seafarers' working and social conditions listed in the ILO.
Employment of seafarers employed or engaged on board a ship is also governed by the Seamen Wages Council Wage Regulation Order (Subsidiary Legislation 452.51, hereinafter referred to as "WRO"), as last amended by Legal Notice 482 of 2014, which regulates wages to be paid to seafarers, their working time and leave.
Based on the fact that, in terms of law, 'ship' is defined as any vessel used in navigation, it may be presumed that WRO also applies to seamen working on yachts.
Moreover, seafarers' employment falls under the Maritime Labour Convention (MLC), 2006 which has been heralded as a monumental step towards protecting seafarers' rights on a formal level. The Convention applies, subject to certain exclusions, to all seafarers who are employed or engaged or work in any capacity on board Maltese registered vessels involved in commercial activities.
Before being employed on board a Maltese flagged vessel, a seafarer must provide the master of the vessel with a certificate issued by a qualified medical practitioner certifying that he/she is fit to perform his/her duties.
A master of a vessel who sails on the high seas and flies a Malta flag, must enter into an employment agreement with every seafarer whom he carries to sea as one of his crew from any port. This employment agreement must state the place where said agreement is signed, the seaman's surname and name, his/her birthplace, and his/her age or date of birth.
Moreover, the same employment agreement must, amongst other, include the following:
The said employment agreement has to be:
In this respect, it is important to keep in mind that the employment agreement has to be easy to understand from the seafarers end, and also comply with the minimum employment conditions in terms of law, in order to be legally enforceable.
Seafarers are entitled to be paid wages before or at the end of the engagement, when they leave the vessel.
Seafarers' working time is as follows:
Therefore, part-time seafarers are those seafarers who work less than forty hours weekly.
All whole-time seafarers, other than watchmen, are allowed adequate intervals for meals, and rest of one hour in the aggregate of any day on which the hours of work exceed six and a half.
In addition to the minimum weekly rest, whole-time seafarers are also entitled to:
After six months of continuous service, a whole-time seafarer is also entitled to fifteen days as sick leave on full pay in every calendar year, less the amount equal to the sum set for sickness benefit entitlement at the rate established under the Social Security Act (SSA), where applicable.
Seafarers are also entitled to two days paid leave on the occasion of death of their spouse, parents or legal guardian, children, and siblings (also known as bereavement leave).
Whole-time seafarers are also entitled to special leave with full pay, as follows:
(i) three days' leave on the occasion of marriage;
(ii) two days' leave on the birth of a child; and
(iii) up to ten days study leave yearly in order to obtain a certificate in their trade.
Furthermore, whole-time seafarers who reside in Malta and whose name is included in the electoral register, are entitled to time off as necessary with full pay if called upon to serve as a juror (jury service leave) and one year injury leave on full pay, less the full amount of any injury benefit to which such seafarers may be entitled under the SSA, where applicable, in respect of any injury suffered during the actual discharge of their duty but not due to any contributory negligence on their part.
Apart from a few exceptions, seafarers who work on a part-time basis are entitled to avail pro rata of all of the same above-mentioned rights.
Seafarers' employment agreement can be terminated:
In terms of MSR, should the employment agreement be made for an indefinite period of time, the said employment agreement can be terminated by either party, by giving notice to the other party.
In this respect, it is important to note that, the conditions entitling either party to terminate the said agreement, and the required notice period must be the same for both the ship-owner and the seafarer. In particular, any termination to the seafarer's employment agreement can in no circumstances be shorter than seven days, if notice of this termination is given by the ship-owner. On the other hand, the seafarer is entitled to terminate the employment agreement by giving less than seven days or without notice, if the termination is due to compassionate or urgent reasons, as it may be approved through Merchant Shipping Notices, from time to time.
In terms of law, should the termination of the seafarer's employment agreement be unfair and therefore, without any fault on the seafarer's part justifying that termination, the said seafarer is entitled to receive compensation for any damage caused to him/her which is treated as if it were wages duly earned. The seafarer is also entitled to be paid all the wages earned until the last day of work.
In this respect, it is important to note that there is no legal provision with respect to criteria to be taken into account when determining the amount of the said compensation.
In fact, the MSA only states that, should the seafarer's employment be terminated before the commencement of the voyage or before one month's wages are earned, the seafarer concerned is entitled to receive due compensation for any damage caused to him which cannot exceed one month's wages, and this compensation is treated as if it were wages duly earned.
However, there is no Regulation with respect to cases of termination of seafarers' employment other than the above-mentioned cases.
On the other hand, with respect to Maltese employees other than seafarers, EIRA expressly states that the amount of compensation has to be determined by the Industrial Tribunal, on a case-by-case basis, taking into account several circumstances, including the employee's age and his/her skills, the behaviour by the employee during the employment, the amount of his/her salary, etc.
Prior to Malta's accession in the European Union (EU), MSA and the Social Security Act (SSA) exempted foreign seafarers employed on board Maltese flagged ships from the payment of social security contributions in Malta.
However, upon Malta's accession into EU, European Legislation has superseded national legislation. Therefore, EU Regulation No. 883/2004, 29th April 2004 (which came into force in 2010) regulating the application of social security schemes to mariners employed on board vessels flying the flag of an EU Member State applies.
In terms of EU Regulation 883/2004, crew on board vessels can be subject only to the social security system of one EU Member State. In virtue of this principle, seafarers resident in an EU Member State (including Third Country Nationals) have to pay social security contributions in their own country of residence and therefore Malta if they reside in Malta.
In view of the above, it is also sufficiently clear that Third Country Nationals who do not reside in Malta, do not have any duty to pay social security contributions in Malta.
Moreover, in terms of MSA, the owner of the ship has the duty to maintain an insurance policy issued by an insurer or class of insurers approved by the Registrar-General of Shipping and Seamen, in respect of every member of the crew. In terms of the MSA the insurance policy has to cover the following:
(a) liability to pay hospital, medical, maintenance, funeral and other expenses incurred in relation to the injury to, or illness or death of, a member of the crew;
(b) liability to repatriate and to compensate a member of the crew for the loss of his employment caused in consequence of the actual or constructive total loss of the ship or of a major casualty rendering the ship unseaworthy and necessitating the signing off of the crew;
(c) liability to pay compensation or damages in accordance with Maltese Law and practice in relation to the injury to, or illness or death of, a member of the crew;
(d) liability for wages payable to an injured or sick member of the crew or on death to his estate;
(e) liability in respect of loss of or damage to the personal effects of a crew member.
The salary received by non-Maltese seafarers resident in Malta is likely to not be chargeable to income tax in Malta, where employment activities are carried out outside Malta.
According to International Tax Conventions and specific Malta Double Tax Treaties with sixty-plus jurisdictions, crew members of ships owned by entities that are effectively managed from Malta are subject to taxation in Malta as follows:
(i) members who are resident and domiciled in Malta are taxed on worldwide income; and
(ii) members who are either resident or domiciled in Malta are taxed on any Malta sourced income and on any foreign source income to the extent received in Malta.
In this respect, it has to also be pointed out that, in terms of Maltese law, the place of effective management is the place where key management and commercial decisions which are necessary for the conduct of the entity's business are in substance made.
Since the local and international Regulations allow for a certain amount of flexibility with respect to seafarers' employment, the same employment seems to be essentially based on the contractual agreement entered into between the ship-owner and seafarers and, therefore, more flexible than the employment of other categories of employees working in Malta.
In this respect, it should be made clear that, in terms of the said flexibility:
(i) the ship-owner is only entitled to apply conditions of employment more favourable, but not less, than the ones provided by the above-mentioned Legislation; and
(ii) should the employment agreement provide conditions of employment less favourable than the ones provided by the said Legislation, the respective contractual clauses will not be legally enforceable.
Seafarers should also be clearly informed of their right to freedom of association and therefore their right to join a Trade Union of their choice. As members of a Trade Union, seafarers:
(i) can demand the application of those conditions of employment which have been negotiated between the said Trade Union and the employer; and
(ii) in case of breach of the same employment conditions by the ship-owner, seafarers can also refer to the Trade Union in order to address the issue (for instance, the Trade Union may request the competent authorities to conduct inspections onboard the vessel).
Moreover, several aspects relating to seafarers' employment need to be regulated in terms of Maltese Law. This is the case for wages, since there is no legal definition as to the amount of wages which need to be paid by ship-owners to seafarers. In this respect, The MSA only states that wages include emoluments and what the minimum weekly wage is with respect to several categories of seafarers (i.e.: Eur170 around per week), however, the said emoluments are not listed. Therefore, making reference to the Regulations which apply to employees other than seafarers, we can only presume that these emoluments should include salary, sums for overtime worked, paid leave, bonuses and any further allowances paid by ship-owners to seafarers.
Additionally, seafarers should be provided with clear and full-detailed local regulations with respect to the payment of social security contributions and their rights in terms of social security system, such as sickness benefit, unemployment benefit, old-age benefit, employment injury benefit, family benefit, maternity benefit and invalidity benefit, amongst others.
By implementing the above-mentioned measures, this could be considered as a significant step in order to guarantee adequate protection for seafarers.
IMPORTANT NOTICE: Wolters Kluwer TAA Limited has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
All rights reserved. © 2017 Wolters Kluwer