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Social security now applicable to all French Resident crew members working on board foreign flagged yachts?

There has been a lot of fuss these last months about French Ministry of Labour & Employment wanting to require compulsory affiliation of crew members navigating in French waters, with either French Social Security or another National Social Security regime.

How French Authorities see things? First of all and for Seafarers residing in France, French Authorities consider their capacity as the host state that Seafarers are entitled to benefit from social protection which cannot be less favourable than the benefits enjoyed by shore workers residing in France. There is also a clear tendency lately for French Authorities and French Courts, to link the law applicable to the Contract to French Law, in the event the activity of the Seafarer is mainly carried out in France, and not to the traditional law of the flag state of registration. This is also the reason why we see an increase of Employment Disputes being heard in French Courts, yacht arrests and crew claiming mandatory application of French Law and damages.
 
Going back to social security, art 31 of the Social Security Financing Act 2016 and art L.5551-1 of the Code of Transport have already been amended in that sense. Though the Yachting Industry was still waiting for the Application Decree to enter into force. To be honest, everyone thought this was not going to be approved for a long time as it is not adapted to the needs of Yachting. We need to remember that these discussions started following Filipino crew working on board offshore registered ferries plying between France and the UK who had zero cover. For many years now this has not been the case of crew members working on yachts. They are now covered by private medical, accident and even pension covers, which are also MLC compliant for crew members working on board commercially registered and operated yachts. The OIT and similar regulations were drafted for crew working on ships and fishermen, not yachts.
 
Unfortunately the verdict fell, to everyone’s surprise, and the Application Decree n°2017-307 dated 9 March 2017 was published on 11 March 2017 in the Official Journal of the French Republic. The Application Decree concerns social security registration for Seafarers residing in France and working on vessels flying non-French flags.

The Decree is now in force, although Employers have until 1 July 2017 in order to conform to the new requirements.

What does this mean in practice? How are Yacht Owners and Owning Companies going to be affected? In brief and as we understand so far,  as once more France has published  regulations without having studied the detail of how it will work in practice, the requirements can be summarised as follows:
  • French resident crew members, working on board French registered yachts navigating in France, need to subscribe to the French Social Security regime;
  • French resident crew members, working on board foreign flagged yachts navigating in France, would have to prove that they are registered with another national social security regime, otherwise they will have to subscribe to the French Social Security regime as well;
  • Employers will have to provide a guarantee or a deposit to ENIM for the payment of the contributions.
  
There are many questions which still need to be clarified:
 
  • Are these rules applicable to all yacht or only to commercial yachts?
  • Will there be any exemption for commercial yachts operating under the FCE (French Commercial Exemption) and respecting the 70% criteria, as this has been the case for the Cabotage Declaration in line with the “Decret d’Etat d’Acceuil” rules?
  • How can Employers register, directly or through a local representative?
  • Who can be a local representative?
  • What about crew engaged through payroll companies?
  • Does this concern all the branches of social security or only retirement benefits?
  • What will be the rates applicable? Will there be any difference between private and commercial yachts? Any difference depending upon the size of the yacht? Any difference depending upon the nature of the voyages (International or local)?
 
The present position needs to be closely monitored as it will have a major impact on the yachting industry, and might lead to yachts avoiding, not only French nationals, but also French resident crew members, especially as so far, the main “yachting jurisdictions” accept that crew members be covered by proper private accident and medical insurance covers.
 
This is the new battle that ECPY will defend!
 
As member of the Board of Directors of ECPY and member of the special committee created to work on social and tax matters, Janet Xanthopoulos from Rosemont Yacht Services will keep you up dated on any evolution.

For more information or advice on legal and fiscal matters please contact Janet Xanthopoulos at j.xanthopoulos@rosemont-yacht.com

17 March 2017 

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