French Social Security - What You Need to Know

Following the announcement of changes to the French Social Security system for seafarers, several packed seminars and endless discussions, for many yacht crew the implications remain as clear as mud.

Having scrutinized every point, I thought it would be useful to cut through the confusion and summarize exactly what you need to know if you are working as crew on a yacht in French, or any other waters.

This information article is divided into the following sections:

• Background to Seafarer social security

• Social Security in the EU

• Social Security in the rest of the world

• Bi-Lateral and Reciprocal Agreements

• MLC, 2006 and its impact on social security

• Social security, private and commercial yachts

• The French social security Decree
  
  

Background to Seafarer Social Security

Social Security for Seafarers has been around for decades and is nothing new. Most developed countries have had Social Security provisions in place for over 60 years, with some going back even further. I will use UK terminology to explain what circumstances give rise to employee and employer contributions, however social security is considered in the same way all over the world.

Generally social security for Seafarers works on the basis of an employment relationship between Seafarer and the Employer. The employee has a “primary” liability to pay social security and an employer has a “secondary” liability. The primary liability of the Seafarer is either active or inactive.

So a Maltese National or Resident working on a Malta flagged yacht would pay social security to Malta. In such a case the employee has an active primary liability. If the employer is also based in Malta, the primary liability of the Seafarer creates a secondary liability. It then becomes the responsibility of the employer to deduct and pay employee and employer social security to the social security agency in Malta.

Each country also has Bi-lateral or Reciprocal Agreements in place that deal with where social security contributions will be paid in the event of an employee from one country worked in another country. Very often there is a special clause in these agreements that deal specifically with Seafarers working on the other country’s flagged yacht.

As I have stated above Social Security systems usually worked on the basis of a connection between the Seafarer and the Flag State however MLC, 2006 added a further dimension and I will deal with this later in this article.

There is a common misconception amongst Seafarer’s working in yachts that social security is something that does not apply to them. Social security has always been payable by Seafarer’s working in yachts based on the above and will be enhanced further under the MLC, 2006 obligations on ILO member states. 

As the mixture of national and EU legislation is complex when considering whether employee and employer contributions are payable this article will not go into too much detail. However as a general rule if a yacht is flagged in one country covered by this legislation and the Seafarers are employed by an entity (company, individual, trust, etc) from another country subject to this legislation, both employee and employer contributions will be payable to the country where the employing entity is based, for those Seafarers that have a connection to that same country.

Social Security in the EU

Social security in the EU can be complicated as there are two sets of laws that need to be taken into account. The first is the national legislation of the flag state relating to Seafarers working on yachts flagged in its territory. The second is the EU regulations, which is currently EU Regulation 883/2004, which superseded the original 1408/1971 EU regulation. There are then further complications when Bi-lateral agreements are taken into account.

All EEA member states, which are all the EU member states plus Norway, Lichtenstein, Iceland Switzerland and Gibraltar, are subject to EU Regulation 883/2004. Some of the named countries have special conditions that apply to aspects of the way in which social security is applied, so advice will need to be sought where these countries are involved.

Social Security in the Rest of the World

Most countries around the world that have a coastline have social security in place for Seafarers. There are too many countries to go into too much detail in this article, the USA has its own legislation as does the Philippines, Canada, India etc, I am sure you get the picture.

A great number of these countries also have Bi-lateral agreements in place as mentioned above, so it is extremely important that Seafarers know if they have a connection to a country other than their country of birth when working on any flagged yacht.

Screenshot: MarineTraffic.com

Bi-lateral and Reciprocal Agreements

Social security agreements between countries are referred to as Bi-lateral or Reciprocal Agreements and they often add a further layer of regulation to consider when determining where and whether a Seafarer or their employer are liable to social security contributions.

The Isle of Man is an interesting example of how these agreements can complicate matters. The Isle of Man is not part of the EU regulations as described above, however this UK crown dependency is subject to the individual Bi-lateral/Reciprocal Agreements signed by the UK with another country.

The above example demonstrates the extent and reach of social security legislation that is already in place. This is really a very difficult aspect of social security to take account of and advice should be taken at all times.

MLC, 2006 and its Impact on Social Security

Prior to the ratification of MLC, 2006 on the 20th August 2013, social security was as described in the Background to social security section above. Title 4 and 5 of the convention deal with, amongst other things the obligations of ILO member states on social security for Seafarers.

As I stated above Seafarer social security was based primarily on the Seafarer having a connection by way of nationality or residence to the flag state of the yacht. The MLC, 2006 however obliges those members that have ratified the convention to put in place a system of social security for Seafarers that are resident in its territory. I have paraphrased the wording in this article; however it is an accurate reflection of the requirement.

What this wording does is to add a further dimension and complication to social security and has resulted in most members of the ILO to review their existing legislation at the very least. Some ILO members have changed their existing social security legislation whilst others have had to introduce new legislation altogether. There are other countries that have yet to take any action at all.

The effect of this obligation, when all the ILO member states have made the changes to their social security laws will be that most Seafarers working in yachts will have to pay social security to one country or another.

Social Security, Private and Commercial Yachts

This section will not be long or complicated at all. Irrespective of whether Seafarers are working on private or commercial yachts, social security is applicable. The status of the yacht has nothing to do with social security. The payment of social security is about the employment of the Seafarer and nothing else.

The French Social Security Decree

Please see the previous summary article and flow charts I published with the PYA and Onboard online magazine to see how the Decree may affect each Seafarer.

Following the seminar held at the Monaco Yacht Club on the 17th May 2017, it is clear that the yacht sector will be the most affected within the wider maritime industry by this Decree. What is also clear is that none of the speakers that were representing various government departments had the authority to make any decisions on the evening.

There were a number of very well put statements and questions from the audience, most of which could not be answered by the panel of speakers.

One important fact did emerge, and it is one that I have previously stated. France, or any country for that matter, does not have authority over a company not based and operating from its own territory. There are complications where a company is based and operating from another EU member state. See the Social security in the EU section above. Not only will this make it difficult to apply the Decree in its current format it will also mean any Seafarers resident in France will not be able to make employee only contributions.

On the surface this may sound like good news for those who are resident in France and employed by a company outside of France, (and the EU), however a liability still remains as long as the Decree remains in force. Furthermore if France does manage to amend the Decree to accept employee contributions only, unless a contribution is being made under the exemptions within the legislation, Seafarers resident in France will have to pay contributions from the date specified in the Decree.

At this stage the best we can hope for is that the Decree is suspended whilst further research is carried out into how the Decree should be applied and implemented.

NOTE: All of the above is a guide only and its contents do not constitute legal or tax advice.

About Lesia Employment Services
Based in Guernsey, Lesia Employment Services (Lesia), is a non-Fiduciary company specialising in yacht crew employment, management, HR and payroll services. Lesia also offers in-house expertise to assess the social security liabilities for owners and crew, having personnel certified by the ILO to provide training at a National level on the MLC 2006. 

 

 

 

*Images: Chris Potter via Flikr; Screenshot MarineTraffic.com; Nick Youngson via creative commons CC BY-SA 3.0.