Navigating legal challenges when employing crew on super yachts

As the allure of luxury yachting increases, the demand for skilled crew (referred to throughout key legislation governing such workers as ‘seafarers’) to operate luxury and super yachts remains high. However, behind the glamour and prestige of working on a private yacht lie a myriad of legal challenges for potential employers. From international regulations and employment contracts to potentially costly disputes, navigating the increasingly regulated legal landscape of super yacht employment requires careful attention to detail and compliance.

In this article we consider what legal issues need to be considered when employing crew.

1. International Regulations and the MLC: Private yachts often operate across international waters, meaning they must adhere to various maritime laws and regulations. Aside from the separate process of choosing the most appropriate Flag State (which determines under which jurisdiction and laws the craft operates), employers must ensure that their vessels comply with safety standards set by the Maritime Labour Convention 2006 (MLC). This convention is split into different ‘Titles’ which set out the minimum requirements employers must meet in areas such as: eligibility requirements, crew training, employment conditions (ranging from wages and rest hours to accommodation facilities), and health and safety protocols.
2. Requirements and Qualifications: Crew members must be at least 16 years old (18 where they work nights), must be declared medically fit for duties, and are often required to have undertaken training, or hold specific qualifications and licences depending on their roles. For example, captains and officers must possess appropriate licences issued by relevant maritime authorities. Employers must verify the credentials of their crew members at the start of employment to ensure compliance with regulatory requirements, and, where relevant, ensure that this is checked at regular intervals.
3. Crew Agreements: Putting in place watertight employment contracts is essential for employers (and crew members). If the contracts are to be governed by UK law then the Employment Rights Act 1996 obliges employers to provide to employees a written statement of particulars. The MLC goes further and sets out prescribed terms that must be included in crew agreements. Consequently, these contracts should outline job responsibilities, salary, benefits, working hours, leave entitlements, and termination clauses, all of which must reach the minimum thresholds set out in the MLC. Crucially, in the context of yachts, contracts should address jurisdictional issues, as disputes may arise in different legal jurisdictions depending on where the vessel is registered and where the crew members are from. Previous case law has shown that where challenges around jurisdiction arise, costly unintended consequences are often borne by the employer.
4. Employment Conditions: As stated above, the rights of crew members are protected under various international conventions and national legislation. Employers must provide a safe working environment, access to medical care, access to food and catering, and adequate accommodation conditions for their crew. Additionally, crew members have minimum rights regarding rest periods (at least 10 hours’ rest in a 24-hour period, which can be split over a maximum of two periods, and at least 77 hours of rest in any 7-day period), annual leave (see below), rights of repatriation, as well as rights of career development and employment opportunities.
5. The Need for Employee Policies: The increasing popularity of luxury yachts has been coupled with a corresponding increasing trend in complaints of bullying, harassment and discrimination suffered by crew members. Luxury yacht employers should consider putting in place policies to deal with these issues, including, as a minimum, anti-harassment, bullying and discrimination policies and a formal complaints / grievance procedure in case of disputes. Again, these policies will be regulated by the MLC.
6. Pay and Holiday Pay: Crew members’ wages will be determined by national laws. However, under the MLC wages must be paid regularly (eg monthly). Monthly statements of account must be produced where any deductions are made, and crew must be allowed to transfer all or part of their wages into their home currencies (with conversion rates kept to reasonable limits). Under the MLC, crew members are entitled to paid annual leave calculated at, at least, 2.5 days per month.
7. Tax: Luxury yacht employment can involve complex tax considerations, especially where multiple jurisdictions have to be considered. Employment taxes (such as income tax) may vary depending on factors such as residency status, FlagState registration, and duration of stay in different countries, and employers must navigate these complexities to avoid costly fines or penalties.
8. Intellectual Property and Confidentiality: Crew members may have access to sensitive information and proprietary technology onboard yachts or may simply be privy to confidential conversations by guests. Employers should consider implementing measures to protect such intellectual property rights and maintain confidentiality regarding the yacht’s operations and the personal affairs of any guests.

Employee turnover and management (from a personal and financial position) is challenging in any service industry and especially with international staff, so understanding the pitfalls allows UHNWS and their service providers to protect their reputation as employers and to minimise problems.

A smooth sea never made a skilled sailor, but a skilled lawyer can help navigate the tide for employers. BDB Pitmans LLP are primed to assist.