Gratuities in the industry have always been a bit of a grey area and the subject has been discussed many times in the yachting media (and in the crew bars) in relation to the ethics and distribution of gratuities, crew being sold jobs at lower salaries on the basis that a yacht is for charter etc.

With regard to the management and legalities of gratuities, charter yachting, like most other service industries, has an unwritten rule that services provided to guests will be rewarded with a gratuity, and the industry generally supports this. The Mediterranean Yacht Brokers Association (MYBA) advise in their Guidelines for Charter Yacht Captains & Crew (2018 revision):

Crew Gratuities
Gratuities are left solely at the Charterer’s discretion. Brokers generally suggest to Charterers that a gratuity calculated between 5% and 15% of the contracted gross Charter Fee only is appropriate if the crew has given excellent service. However, it is important to understand that a Charterer is under no obligation to leave a gratuity and at no time should a gratuity be solicited, either verbally or in written form when settling the final account.

The MYBA charter agreement is a commonly used agreement in the charter sector of the industry and the Agreement may reference gratuities under the Special Conditions section but this is not mandatory and is at the discretion of the charter broker when composing the terms of the agreement. Generally, the following advice is commonly added to the Special Conditions section:

“A crew gratuity is customary but is given at the Charterer’s discretion.”

From experience, gratuities are not a given (they should always be treated as a bonus) and a lot depends on the relationship between the charter broker, the charter client and the captain. If all goes well and the client is happy with the charter the broker will advise a suitable percentage gratuity and generally the advice is followed. Fortunately, I have mostly dealt with professional charter brokers who only work with reputable clients but of course there are the exceptions where charter brokers have little to do with their clients once the Agreement has been signed, provide little or no assistance to the captain and only get involved if there are any issues. If the charter broker does not advise the client about gratuities it puts the captain in a difficult position to try to advise the client with regard to gratuities. Personally, I abhor this situation as the pressure is on you, not them as the MYBA guidelines state, to negotiate a suitable reward for the crew, especially if it has been a difficult charter, which these generally tend to be.

Regardless of this and the ethics regarding gratuities most yacht crew do not know (including myself until a few years ago) that unless it is stated in the Seafarers Employment Agreement (SEA) there are no legal standings regarding gratuities, meaning that any gratuity can be retained by the owner in whole or in part for no reason. Also, there are no industry guidelines or legal rules as to the distribution of any gratuity, so it may be split unevenly between the captain, officers and crew. The industry is rife with stories of gratuities being unfairly distributed or retained by the owner, and most are true, but crew do not have a legal leg to stand on to argue their case unless it’s included in their SEA.

I strongly recommend that crew check their SEAs very carefully before signing them –
or have someone check them on their behalf.

To give a personal example that occurred a while back: we had a two-week extremely busy and challenging charter at a high cost that turned in to three weeks that turned into five weeks, at which point the crew, including myself, had put everything into making the charter a success and were completely burnt out but eventually were justifiably rewarded with a very large gratuity. I was very proud of the crew holding it all together under all the changes and stress, so the gratuity was very well deserved and the intention was to split it evenly between all the crew. The charter finished in the early hours and before I had a chance to give the good news to the crew I was informed that the owner, after hearing of the size of the gratuity, wanted to retain part of it (over a quarter of a million euros) due to “damages” done by the crew. Bear in mind he had just received an extra three weeks’ charter fee at a million euros a week due to the charterer enjoying the yacht and crew so much. Instead of being jubilant after a very hard and successful charter I now had to deal with the fallout of the news from the owner and how to manage it without loss of morale among the crew as we were heading to the Med for a busy summer charter season. In fact, only a few key personnel ever knew about the situation in order to avoid a mutiny happening on board.

The management company initially was not able to assist as the owner was their client so I approached MYBA as they had written the guidelines regarding gratuities, but they had no information regarding the legalities of gratuities. So, in turn, I approached Nautilus, the maritime union of which I am a member, who were very helpful, and after reviewing our SEAs stated that as there was nothing referencing gratuities in the SEAs that possibly the only way was to claim a misappropriation of funds but this would require a lengthy legal process. The situation dragged on for several months until after lengthy negotiations the management company persuaded the owner so that the crew eventually received most of the outstanding gratuity that they had well earned. This is not an isolated incident and sometimes it can take months before the owner releases the funds to the crew. Unfortunately, these incidents left a dark cloud over the yacht, so much so I left at the end of a very busy summer season after lacking any respect for the owner.

In conclusion, having worked in both the cruise and yachting industries for three decades, gratuities will forever be part of the business, but as they are currently unregulated within the yachting industry with regard to SEAs,  which are approved by the yacht’s flag state, there is no guarantee that any crew member will be given an even share (or any share) of a gratuity unless it is part of their SEA. Gone are the days of crew being given purple €500 notes left right and centre but on any good yacht any cash gratuities received on charter were pooled and split evenly at the end.

Until that incident, I always felt euphoric at the end of a successful charter informing everyone about the gratuity and seeing their happy faces if it was successful, knowing full well that we had all earned it. I have accepted million-plus euro gratuities from amazing, generous (and very challenging) charter clients, so why should anyone take that from those of us who have worked hard for such a justifiable reward?

Note: I strongly recommend that crew check their SEAs very carefully before signing them – or have someone check them on their behalf. The incident where the owner claimed part of the gratuity for damages started after a crew member damaged a tender while on the charter. The SEA stated that should crew damage a tender due to negligence then they have to cover the cost of the damages not covered by insurance. As the value of the tender was high and the owner was quite ‘thrifty’ with regards insurance coverage, the excess value was also high, so contractually the crew involved did have to cover the costs of the damages. I and the senior officers decided that it was unfair that the crew be punished as such and we agreed to cover the cost of the damages from the gratuity. I have since ensured that no such clauses are included in SEAs for yachts that I command.

P.S. Beware of any income tax on gratuities – sometimes cash is king … 

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