Yacht Manager Lodges Legal Action Against French Authorities

In a bid to protect the rights of superyacht owners and crew yacht managers Hill Robinson have instructed the London law firm Ince & Co to lodge a legal action in the French Supreme Court against the French authorities.

The move follows new legislation in France.

The French Social Security legislation ‘Décret no 2017-307’, effective from the 1 July 2017 demands that any professional yacht crew member residing in France, for more than 3 months in any year, and working on a vessel flying any flag must be enrolled under the French social security regime. The alternative being they are able to enrol under the regime of another EU state or a country with a reciprocal agreement with France.

Company founder Nick Hill explains, “This legislation is being brought in to broaden the social security (medical and pension) coverage for mariners from France, which we applaud. However, the serious concern is that it could lead to a large-scale enrolment of all other nationality crew members, particularly on commercial yachts, into the French system with severe penalties possible for employers, owners and crew who do not comply”. The decree will effect a large number of yacht crew working part of the year in the South of France, but actually resident elsewhere.

ENIM, the French agency responsible for collecting social security payments from French seafarers has tried to explain the implication procedures and costs to the superyacht industry, with little appreciation or understanding of non-French speaking crew, who happen to spend 3 months or more cruising or chartering on The Cote D’Azur.

When this enforced enlistment starts to take place, all crew and their employers will be liable to pay social security contributions into the French system, if a crew member cannot substantiate registration elsewhere. In addition, foreign employers will be required to provide a bank guarantee, or deposit funds with the French authorities to cover potential liability. At six months of the anticipated employer’s liability in the case of a deposit and twelve months of the expected liability as a guarantee, this would be a significant amount for a 50m yacht with a crew of twelve or more at industry average salaries.

“The reaction and outcome of this poorly conceived legislation is that 99% of the superyacht fleet (non French flagged yachts) will be deterred from visiting French waters for any significant time, and certainly not more than 3 months. So this will result in less private cruising and commercial chartering in the South of France, and no long winter refits in French shipyards. This not only affects the yachts themselves, but also the whole infrastructure built around the superyacht industry, suppliers, contractors, shipyards, brokers, agencies etc.,” states Nick Hill, “A detrimental outcome that nobody wants to see, including we assume, the new Macron French Government”.

In an attempt to clarify the facts and inform the industry, a seminar was organised by the Monaco Yacht Club on 17 May, with PYA, GEPY and ItalianYachtMasters, along with representatives from the French government and ENIM to explain and defend the new decree. With increasing concern that nothing was being co-ordinated by the industry to postpone or block this legislation being implemented – Hill Robinson, representing 3 yacht owners, alongside MYBA, ECPY, Vauban 21 and Composite Works Shipyard had decided on more direct action demanding that the French authorities postpone, review and amend the decree”.

ENIM has agreed that where EU social security regulations or the provision of a bi-lateral agreement is evident, this places the contribution liability outside France, taking away any contribution liability in France. And so it has been suggested that UK resident mariners would be exempt from the French liability, if they were to pay a voluntary UK NI Class 2 contribution in the UK. However, this concept does not replace mandatory French contributions. HMRC has stated that they will not issue A1 certificates where contributions are paid to the UK on a voluntary basis. That being the case it will not be possible to provide ENIM with the proof that contributions are being paid elsewhere.

Neil Carrington from Crew Employment Services adds, “Whilst many UK individuals would be able to pay this voluntary contribution, Article 14.2 of EC Social Security Regulations 883/2004 states that a voluntary contribution can be paid in addition to a mandatory contribution but cannot replace it, thereby qualifying for pension rights in both jurisdictions”.

The outcome of the legal action is uncertain, so we must therefore urgently proceed on the basis that this Decree will come into effect on 1 July 2017, and to ensure that all parties are compliant with the law in their jurisdiction. This is for the protection as employer, for the crew and ultimately for the Owner of the vessel. Neil continues, “If any owner is unsure of their situation as regards social security and for the crew employed aboard their vessel, we are available to determine the current position and present some basic potential solutions if required”.