Perhaps the most immediate impact of the COVID-19 crisis within the superyacht industry is likely to be felt by crew who find themselves a foreign country and facing unprecedented personal and professional challenges.
Owners, captains and managers will, understandably, want to ensure they are fully compliant with their legal and regulatory obligations regarding the health and well-being of their crew and that all necessary steps are being taken to ensure their safety during these extraordinary times.
It appears unavoidable however that for some, the broader financial outlook will mean that difficult decisions must be taken regarding the ongoing employment of crew or continuing to maintain current levels of crew remuneration.
Whist the global situation currently appears fluid and fast-moving, owners and managers should be aware that decisions taken during this time may be subject to scrutiny many months from now and against the backdrop of a calmer and more considered landscape.
On a worst case basis, decisions taken in haste have the potential to result in claims for unpaid wages as well as penalties for wrongful dismissal (where employment contracts are terminated without due cause) or unfair dismissal (where employment contracts are rightfully terminated but the wrong procedure is followed, such as notice periods). This in turn can lead to a claim against the owner and also the yacht itself, which can mean costly and disruptive interruptions to the yacht's ordinary cruising programme.
For commercially operating yachts, the provisions of the Maritime Labour Convention (MLC) will continue to apply. As with any widely adopted international convention, how the MLC is adopted and implemented will differ across Flag states.
Uniformly, however, compulsory standard A4.2.1 of the MLC obliges an owner to pay the costs of any medical care required by crew members in respect of any sickness contracted during their employment onboard. This will include instances of COVID-19.
In the context of the MLC, is understood to include both the costs of any medicines and treatment that might be required. These obligations extend to the provision of accommodation and sustenance for crew members ashore, if required. Such accommodation is required to be provided where a sick crew member must remain away from work and until they are repatriated, up to a maximum period of 16 weeks. The obligation to provide medical care to sick crew members will end on the sooner of 16 weeks, once the crew member is fully recovered or once an illness is found to be of a permanent nature.
For yachts to which MLC does not apply, owners and managers should be mindful that their yacht's flag, as well as jurisdictions visited by the yacht, are likely to impose domestic laws which oblige owners to provide a safe place of work. Such laws and regulations are rapidly being enhanced with all-encompassing emergency provisions designed to deal with the current crisis. Italy, France and Spain are typical examples.
Conventional understandings of the extent to which local authorities are prepared to enforce local regulations against foreign flagged yachts are being challenged as a result.
A less obvious concern is the risk of criminal enforcement proceedings resulting from a failure of crew to observe emergency public health regulations there is an increased risk to owners of work-based or personal injury claims arising from a perceived failure to provide adequate health protection measures in line with enhanced local requirements.
Given an increased visibility of foreign flagged yachts, owners and managers would be well advised to adhere to any additional or emergency, local regulations to the fullest extent possible. Where such regulations may be unclear or where a yacht continues to transit between jurisdictions, we would advise that at a minimum, captains and managers seek to adopt the most recent World Health Organisation measures, including, if necessary the complete self-isolation of a yachts crew.
Against a backdrop of increased visibility, it not unreasonable to assume that local courts will now be more willing to take up potential claims of crew members where a dispute has arisen with an owner. This may be as a result of a conventional employment dispute (for example, in relation to pay or wrongful dismissal) or as a result of a sickness caught whilst serving on board.
Such a risk appears especially high for yachts that do not operate within the confines of MLC or where a crew member may not automatically be entitled to an equivalent standard of health or medical care. In such circumstances a crew member may feel they have no recourse but to seek recompense for any losses suffered through the most immediately available local forum.
Insufficient attention given by owners or managers to these concerns may result in an increased risk of costly and time-consuming foreign litigation in a jurisdiction that has little connection to the yacht and its ordinary operations.
Should it be necessary for owners or managers to seek wholesale changes to crew members conditions of employment, for example by way of redundancies or reductions in salary, sufficient care should be taken to ensure that any such changes continue to be carried out in accordance with any employment agreement in place but also within the confines of the relevant employment law.
The UK Government has been clear that the continued operation of conventional employment law will remain unaffected by recent emergency legislation brought forward to provide financial relief to employers. It is anticipated that a similar approach will be adopted in European (and other) jurisdictions where emergency employment legislation has recently been adopted.
This is a clear signal that, in the UK at least, owners should not seek to rely on the mere presence of the current pandemic as justification for unliterally terminating or adjusting their crew conditions of employment if this would otherwise be prevented by the ordinary operation of employment law.
This is of particular significance to English practitioners who will be aware of a number of recent English Employment Tribunal hearings in which the Tribunal determined that English law represented an appropriate jurisdiction for the litigation of employment disputes between a yacht crew and owners, despite the presence of a non-UK flag and an offshore employment structure.
If wholesale changes to crew employment conditions appear unavoidable, then appropriate advice should be sought in advance of any changes being undertaken. Depending on the employment arrangements in place, this may include the need for collective barging agreements to be reached with the yacht's crew in advance of any changes being implemented.
When it comes to the business of crew employment, as with every other walk of life, sometimes difficult decisions must be taken.
It remains to be seen whether the Superyacht industry will resume with business as usual , and with crew employment largely unaffected, or whether wholesale changes are inevitable.
To the extent yacht owners and managers do need to make changes, the key is to follow the correct legal and regulatory processes. These need not be arduous our overly complicated, but they will certainly save huge amounts of time and resources in the long run.
This briefing note is prepared for our friends and clients within the Superyacht market, in response to the unprecedented effects of the coronavirus known as COVID-19.
It is deliberately broad in its nature and whilst it is not in itself to be construed as legal advice, we do invite readers to contact us at Enquiries@Jaffa-Co.com.
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