International Seafarers’ Employment and Payroll Services | Viking Crew

90% of world trade is transported by sea, with seafarers being the backbone, ensuring the safe and efficient movement of goods. However, their employment and payroll management present unique challenges due to the international nature of their work. This blog will explore the complexities of international seafarers' employment and payroll, addressing legal considerations, payroll systems, tax implications, and emerging trends.

Understanding Seafarers' Employment Contracts

Seafarers work under contracts that differ significantly from those of land-based employees. Their employment agreements must comply with the regulations the International Labour Organisation (ILO) set forth, particularly the Maritime Labour Convention (MLC) 2006. This convention sets minimum standards for almost every aspect of working conditions for seafarers, including hours of work and rest, repatriation, health protection, and wages.

Key points to consider in seafarers' employment contracts include:

• Flag State Jurisdiction: The laws of the country where the vessel is registered, known as the flag state, typically govern seafarers' employment contracts. This adds a layer of complexity, as seafarers will be working in international waters and calling into different countries.
• Employer base: For Viking Crew to employ multinational seafarers, we undertake the employment of crew from the Channel Island of Guernsey, utilising our Viking Crew Guernsey operation.
• Multinational Crew: Ships have multinational crew members, and their employment contracts may be subject to different national regulations, making standardisation challenging.
• Duration and Rotation: Seafarers usually work on a rotation basis, which involves specific periods of work followed by leave. These rotations and other particulars must be clearly defined in the contract, and provisions for overtime and rest periods must be in line with the MLC requirements.

Payroll Challenges for Seafarers

Managing payroll for international seafarers is complicated due to the global scope of their work. Here are some critical challenges:

• Payroll Processing and Banking: Due to the international nature of employing seafarers, employers need to ensure that salaries are deposited in accessible accounts. This will involve working with intermediate banks as well as the crew members' beneficiary bank or using digital payment solutions such as Brightwell.
• Social Security and Benefits: Determining social security contributions and benefits for seafarers is complex. The country of the flag state, the employer's country, and the seafarer's home country will all have different regulations. Both the seafarer and ship owner must navigate these regulations.

Tax Implications and Compliance

Taxation is a crucial consideration in the employment of seafarers. The international nature of their work often means they are subject to tax rules that vary from country to country. Key considerations include:

• Residence Status: The tax residency of a seafarer is usually determined by their home country's tax laws. If seafarers are considered tax residents in their home country, they may be liable for tax on their worldwide income, including earnings on international waters.
• Double Taxation Agreements (DTAs): Many countries have DTAs that prevent seafarers from being taxed twice on the same income. Employers must know these agreements and maintain proper documentation to claim relief.
• Flag State Tax Rules: Some flag states have specific tax rules for seafarers working on their vessels. Employers need to stay informed of these regulations to maintain compliance.

Emerging Trends in Seafarer Employment and Payroll

The maritime industry is evolving, and several trends are impacting international employment and payroll practices for seafarers:

• Digital Solutions for Payroll: Digital payment platforms and e-wallets are becoming increasingly popular for managing seafarers' payroll, which are accessible even in remote locations.
• Mental Health and Well-being: Companies are enhancing support systems, including mental health services, better communication channels, and improved working conditions.
• Sustainable Shipping: With the global push towards sustainability, there is a rising demand for "green" ships and practices. This trend affects employment as new roles and training programs emerge, focusing on eco-friendly shipping technologies.
• International Sanctions: The current global geo-political situation significantly impacts the shipping industry, particularly with international sanctions. These sanctions have a detrimental effect on employment, subsequent payroll, banking facilities, and the international trading of the industry for a number of nationalities.

Best Practices for Managing Seafarers' Employment and Payroll

To effectively manage seafarer's employment and payroll, companies should consider the following best practices:

• Compliance with International Standards: Ensure all employment contracts and payroll practices comply with international conventions such as the MLC 2006.
• Tailored Payroll Solutions: Use payroll systems designed for the maritime industry, which can handle multiple currencies, varying pay rates, and changing tax scenarios.
• Clear Communication and Transparency: Maintain clear communication with seafarers regarding their contracts, wages, and benefits. Transparency builds trust and ensures that seafarers understand their rights and obligations.
• Continuous Monitoring and Adaptation: Stay updated on changes in international labour laws, tax regulations, and industry trends. Adapt your employment and payroll practices accordingly to stay compliant and competitive.

Managing international employment and payroll for seafarers requires a thorough understanding of maritime laws, tax regulations, and payroll management systems.

The Viking Crew crewing team has the knowledge, experience, and understanding to assist in all of these areas.

If you would like to speak to someone to find out how we can help you with international seafarers' employment and payroll, please get in touch at services@vikingcrew.com