Yacht Crew Contracts

The phone rings and it's your soon-to-be new captain telling you that you got the job! In most cases, your employment contract is the last thing on your mind when you accept.

However, whether you will work on an MLC compliant vessel with a Seafarers' Employment Agreement or a private yacht under a Crew Agreement, a valid contract is vital and the devil is in the detail. If ever you have a dispute with your employer, your contract is the first thing you'll need to refer to.

Yacht crew agents are obliged to verify that the correct contract is being used, and this is achieved via the agent having sight of an in-date copy of the yacht's MLC certificate. Ultimately you yourself must be sure, before signing, that your contract is valid and recognized by the relevant legal jurisdiction.

Nobody ever plans to fall out with their boss but, if you do and there's a dispute, you need to know your rights and be able to protect yourself. 

We often see posts on yachting Facebook groups from disgruntled crew members asking for advice on how to impound a yacht that has not paid their wages. Sometimes it emerges that employment contracts were never issued and the crewmember is in a very weak position. Verbal agreements can be recognized as legally binding, but there always needs to be some form of evidence. 

Many years ago while I was working for a team in the Volvo Ocean Race, new management took over and I refused to board my flight to Brazil until I was issued with a new contract. It didn't make me very popular but, within days of arriving, my colleagues were informed that their holiday pay would not be honoured. I was the only member of the team who received holiday pay as I had a contract where it was written in black and white.   

In recent months there have also been accounts of yacht crew being employed as contractors, effectively making them self-employed. This might be advantageous for UK employers who would no longer be required to pay National Insurance contributions on your behalf. However, more importantly, and something you might not be aware of, is that you may not be able to claim tax relief on your earnings if you are self-employed (See HMRC Helpsheet 205 on the Seafarers' Earnings Deduction). 

We therefore advise all clients to avoid signing contracts as a contractor or, at the very least, to have them checked by a tax advisor or lawyer and make the necessary amendments. 

If you have concerns about your contract and whether you are able to claim the Seafarers Earnings Deduction we would be happy to review it for you from a tax compliance point of view.

For advice, please feel free to contact me by email: pat.maflin@marineaccounts.com 

Related article:
MCA Clarification: SEAs and Crew Agreements - MGN 474(M)

Any tax advice in this publication is not intended or written by Marine Accounts to be used by a client or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party matters herein.