Insight: exploring the complexities of insurance with Pantaenius

Day workers are always a contentious point with regards to insurance. All too often, no employment contracts are signed and in the event of a claim, the process becomes complicated in trying to prove whether the owner is liable for the day worker's injuries or death. Further complications can arise depending on the flag state and the labour laws of the country where the accident happened. Some yacht managers and crew employers are managing this by making all day workers sign a simplified version of a crew employment contract.

First of all we need to clearly define what status a day worker has on a yacht. This depends on the flag of the vessel, its use and the tonnage of the vessel (MLC). If the day worker is to be considered a crew member, all insurance arrangements should be made as per the rest of the crew, according to the flag state requirements of the yacht and applicable legislation: Contract, Medical insurance, Maritime Labour Convention, etc.

If, however, the day worker is not considered a crewmember or seafarer, where does that leave them? Are they a subcontractor? Are they a temporary employee? And how does an owner protect themselves against possible liabilities towards these. Important to note: in insurance it is an implied warranty that all activities are lawful. Here local labour legislation comes into play, making things a little bit more complicated. Most insurers will only cover liabilities towards day workers if they are in compliance with all local legal requirements. In the event of a serious claim questions such as the following could be asked and unless full legal compliance is warranted, insurers could turn around and refuse a claim:

• Is there a contract between the parties?

• Are they fit for work?

• How many hours do they work a day?

• Do they pay their corresponding taxes?

• Do they have a work permit in the country?

In order to not find yourself in this situation we recommend you:

Check with your flag state whether, on your vessel, day workers are considered crew or not.

Check local labour legislation with regards to temporary work.

Make sure your day worker complies with the above before hiring them.

Create a day worker contract to define the labour relationship.

This all sounds complicated, but with an often unregulated work relationship between a day worker and ship owner, it is our duty as insurance providers to advise on the possible risks and to navigate our clients through this terrain, maintaining full scope of cover where possible.

Be aware that as soon as you place a subcontractor on a crew list, these may automatically acquire seafarer status and as such the ship-owner acquires all legal liabilities towards these new crew members. This issue has been specifically put to the MCA and under British registry this is the case, so to all Captains: Beware of the liabilities you are acquiring by placing anybody on your crew list that is not strictly a crew member of the yacht. In respect of the P&I Clubs, liability to day workers should be insured by the policy and it does not matter to them if classed as seafarers or third parties. If the policyholder has a liability to them, the Clubs will meet the claim, providing none of the policy exclusions apply.

As highlighted in this article, from an owner’s point of view, it does matter whether they are classed as one or the other. Being a seafarer brings a number of obligations as we know. To summarise, there is no firm guidance on how they would be treated, as each flag state is free to apply substantial equivalencies when implementing the Maritime Labour Convention, which means that there are different approaches allowed and the owner must check with their flag to understand their individual approach.

For more information, please visit www.pantaenius.com

Sponsored content: article by Michelle van der Merwe, Pantaenius Monaco

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