Those with the resources to purchase a yacht large probably already know a thing or two about employing people, but employing seafarers is not as straightforward as taking on shore-based staff.
Given the size and complexity of today's larger yachts, sailing one without an experienced, professional crew is not an option. Most owners are not sufficiently qualified to take the wheel of their own vessel. In fact, to do so could lead to insurance cover being withdrawn if there is an accident. Employing experienced crew is not cheap, and payroll usually forms the largest proportion of a yacht's running costs. Crew agencies can provide suitable candidates, normally taking a month's salary as commission, but do not normally act as employer.
Crew employment contracts
While crew members on private yachts may be employed or taken on as self-employed contractors, the presumption in law is that they are employees, unless the contract under which they serve states otherwise.
Given the degree of seafarer regulation, however, the only practical difference such status makes is with regard to liability to pay taxes (if any) and the law relating to leave and dismissal.
The Maritime Labour Convention 2006 (MLC) covers all chartered yachts, and does not make the distinction between those employed and self-employed. The Convention mandates all kinds of contract terms, including hours of work, leave entitlement and repatriation. Crew conduct is also governed by the captain's standing orders.
However, seafarers' employment contracts differ from those used ashore and taking specialist advice is imperative.
Crew rights to payment
Crew services are usually seen as being supplied not only to the employer, whoever that may be, but also to the yacht itself. This principle, widely recognised in international law, usually gives crew a right to arrest the vessel they have been working on if their wages aren't paid. Whether they actually can depends both on the yacht's flag and the location of the yacht at any given time. Other yachts in the same ownership can also sometimes be arrested.
The captain's position is unenviable. Once taken on they, and not the owner or charter guests, are in charge and responsible for the behaviour of all on board. Standing orders can and should cover not only crew but, diplomatically, the owner and guests as well.
As an employer you owe your staff a duty of care, notwithstanding that they might be better qualified and more experienced than you. It is also difficult to know whether what you propose to pay is reasonable and whether you have found the right people for the job(s).
These issues are often sidestepped by contracting with a captain on a self-employed basis and leaving all other hirings to the captain, with funds being provided as required.
The Captain's role as manager
The captain of a yacht, for which shore-based management is not compulsory, is often employed as both the master and manager of the vessel.
Many captains incorporate themselves into companies for this purpose. This can provide a neat solution but there must be stringent provisions in place to ensure that the captain accounts accurately for all expenditures.
The nature of the contract between owner and captain becomes key to ensuring that regulatory obligations are fulfilled. It is not wise, however, to assume that your captain will know everything there is to know about the regulation of your yacht.
A minority take a cavalier attitude towards 'paperwork' and don't see the need to keep pace with sometimes rapidly changing regulations. Particularly where the yacht is chartered, to ask a captain alone to keep up with safety regulations, which are second in volume only to aviation, can be unreasonable.
There will always need to be at least some form of shore-side assistance. By law, lists of crew must normally be lodged ashore so that if the yacht is involved in a serious incident, rescue services will know how many people to look for. In spite of the need to maintain confidentiality, guests should also be included.
Engaging crew does not lessen an owner's responsibilities. Since logistical shore support is often needed anyway, it makes sense to use a shore-based manager to handle the management of the yacht, allowing the captain to concentrate on his or her duties on board.
Saving costs is no excuse for non-compliance, yet there are still many smaller crewed yachts that fail to adhere to regulations distilled from years of best practice and incident analysis. These yachts are also likely to be off-cover as far as their insurers are concerned.
Accident prevention
By and large, it is human error that causes accidents. The amended International Convention on Standards of Training, Certification & Watch Keeping for Seafarers (STCW), helps to ensure worldwide uniformity of crewmembers' qualifications. The emphasis is on competence more than knowledge.
An important feature of this convention is that it applies to yachts of countries which haven't adopted it when visiting the ports of countries which have.
Crew working hours
Fatigue at sea is particularly dangerous. Owners or managers must ensure that manning levels are sufficient to avoid the need to work excessive hours.
Minimum hours of rest apply, although given that work patterns on yachts can be unusual, exceptions can be made provided that the crewmember agrees and his or her health and safety, and the safety of the vessel, is never compromised.
While it is obvious when crewmembers are working hard, it is harder to distinguish between being on and off duty when there is waiting and hanging around involved. Working hours are those when the crewmember is at the disposal of his or her employer and carrying out duties or activities.
A Schedule of Duties should be drawn up setting out duties, working hours and rest periods, and records of working hours must be kept.
Long hours are not just a safety issue but also affect crewmembers' quality of life. Their welfare is largely governed by international conventions, and must also be adhered to when visiting other signatory states.
While yachts are unlikely to be in breach of those relating to, for example, water quality, those relating to repatriation and hours of work are often ignored.
Port officials do inspect yachts from time to time and can fine the owner and/or detain the yacht.
Crew contracts are necessary
From the owner's point of view, yachting is about fun, not paperwork. In the past some owners see this as an excuse not to bother with a formal contract of employment. (Now, with the ratification of MLC 2006, ships' masters are required to give all crew contracts.) Unfortunately, the only sort of captains and crew likely to be happy with not having contracts are those who take a relaxed attitude to regulations generally, including those relating to safety.
Given the highly involved nature of the various roles on board especially the captain's there must be no scope for confusion over the amount of notice which must be given by both parties.
The flag state or agreed contractual law may give minimums, but practical aspects should also be stipulated, including the obligation to assist in finding a replacement and ensure that he or she is fully familiarised with the yacht prior to taking over.
Some captains consider that an annual bonus and severance pay is a given, but by definition these should be discretionary in order to encourage better service.
In addition to a contract, the captain needs a Letter of Authority, sometimes known as a Letter of Appointment, to show to suppliers and port authorities that he has the owner's permission to hold his post and purchase goods and services accordingly.
This needs to be worded with care as the captain is the owner's legal agent and has the power to bind the owner, within reason, to contracts with third parties.
Whichever arrangement is settled on, the captain will need some form of expert support: he or she should not be left to handle every aspect of a yacht's management.
Benjamin Maltby is an English barrister with consultants matrixLloyd, providing impartial guidance on all aspects of large yacht purchase, building, ownership and operation.
Originally published: August 2007. Updated August 2012.