Clarification on French Social Security from Sarnia

The French social security decree (No 2017-307 of 9 March 2017) has been a hot topic for much of 2017.

The implementation has not been smooth, creating confusion, uncertainty, alienating French and non-EU crew and resulting in a significant loss of business across the French maritime regions and further afield.

Background to the Decree

In December 2015, the Government of France enacted new legislation implementing the Maritime Labour Convention (MLC) provisions on social security for seafarers.

The legislation (article L5551-1 2° of the Code des transports) requires certain seafarers and their employers to register with the French seafarers' social security body ENIM. The seafarers affected are:

1. Seafarers working on board a vessel flying the French flag operating in trade, fishing and marine culture or for pleasure, and;

2. Seafarers employed on board a vessel flying a non-French flag and pursuing an activity relating to the operation of the vessel under the Maritime Labour Convention (2006) and residing in France in a stable and regular manner, provided that they are not subject to the social security legislation of another EU country or a country with a reciprocal social security agreement with France.

The legislation came into force on 1st July 2017, with social security contribution calculations backdated to 1st January 2017.

ENIM published a news release on the 30th June 2017 which was welcomed by most of the yachting industry as pleasure yachts were excluded from the decree, unless they were voluntarily complying with the Maritime Labour Convention, 2006 (MLC).

ENIM has subsequently made an unexpected u-turn on this interpretation and issued a further news release on 12th September 2017 stating that pleasure yachts, as well as commercial yachts, are affected by the decree.

Suspension & Modification of the Decree

On the 8th September 2017, a meeting was held between senior members of the French Government and representatives of the yachting industry. It is understood that as a result of the meeting the French Prime Minister, Edouard Philippe, decided in principle to modify the decree to reduce the negative impact on the French maritime industry that has been witnessed in 2017.

On the 11th of September news broke about a suspension to the decree, unfortunately, this news was premature and incorrect.

Some sources claim the French Government will issue an official statement in late September confirming a suspension to the decree to allow modifications to be made. Other sources have gone as far as to say that yachts may be exempt from the decree.

The modifications to the decree will most likely allow seafarers affected by the decree to make a choice between which social security system to be affiliated with, rather than being obliged to register with ENIM if they are not already affiliated with a recognised system.

Effect on the Yachting Industry

Sarnia has been working with French law firms and other management companies to help clarify the decree’s impact on the yachting industry.

Based on the advice received and the current information published by ENIM we understand that a yacht - commercial or pleasure - will be affected by the decree if both of the conditions below are met:

1. The yacht flies a non-EU/EEA or Swiss flag which does not have a reciprocal social security agreement with France.

2. Crew residing in France for more than three (3) months a year are employed on board the yacht.

Examples of flags affected by the decree include:

• The British Virgin Islands, the Cayman Islands and the Marshall Islands.

Examples of flags not affected by the decree include:

• Malta, UK, Guernsey*, Jersey*, Isle of Man* and the USA*.

*These flags have reciprocal social security agreements with France. If the seafarers are adequately covered by the reciprocal social security legislation in place, they should not be affected by the decree.

Employers employing seafarers on yachts affected by the decree should review their current position. If French resident seafarers or deemed French resident seafarers (e.g. if the yacht spends more than three (3) months in French waters) are employed, the employer and employee must either:

• Be able to evidence social security contributions to another EU country or a country with a reciprocal social security agreement with France, or;

• Register with ENIM and make appropriate employer and employee social security contributions.

There is still a lot of confusion about the decree’s impact on the yacht industry. Commercial and pleasure yachts flying an EU/EEA flag or a non-EU/EEA flag with a reciprocal social security agreement with France may still come under scrutiny from the French authorities. If French resident seafarers, deemed or otherwise, are employed on board such yachts and are not contributing to a social security system in the EU or with a reciprocal agreement with France, the seafarers and the employer may need to register with ENIM.

What Next?

We expect the French Government to issue an official statement in late September acknowledging that modifications to the decree need to be made.

We hope the same statement will also confirm a suspension to the decree to allow the proposed modifications to be discussed and agreed with industry representatives. 

It should be noted that this legislation is driven by the International Labour Organisation (ILO) and was introduced in France due to a legal dispute between seafarers and the operator of a passenger ship in northern France.

We expect Italy, Spain and other EU countries to introduce similar legislation in the next few years. So while this article is focused on the current situation in France, it should be expected that the same may apply in other EU countries in the not too distant future.