Compensation clauses in seafarer employment agreements

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To all Members,

The Club has recently been in discussions with the ITF about the wording of Seafarer Employment Agreements (SEAs). The ITF expressed particular concern about clauses used by some of our Members that provide for injury or death compensation to be paid ‘in accordance with P&I Club Rules’.

The Club generally advises Members against the use of any compensation clause which refers directly to the Club Rules. The Rules provide no scales, or other mechanism, to determine what amount of compensation should be paid and merely respond to Members’ liability under the employment contract. The result is that, where a SEA provides for compensation in line with the Club Rules, it really provides the seafarer with no additional compensation at all; the seafarer will only have the basic rights they already had under local law.

The ITF feel that compensation clauses drafted in this way potentially mislead seafarers, who may believe that the P&I Club Rules contain lump sum amounts in respect of compensation and benefits, which they in fact do not. The use of such clauses is also problematic for the Club and our Members. In the event of a claim, instead of following the provisions of the SEA, the Club has to obtain advice on local law, in order to inform Members of their degree of liability in the matter.

We would therefore ask that Members do not include any reference to the P&I Club Rules in their SEAs. Instead, they should set out clear compensation provisions in the contract, or provide that the contract is subject to an overriding CBA or legal regime which itself provides clear compensation provisions. Members can of course submit their amended SEAs to their underwriter at the Club for review and approval in the normal way.