In this Tried & Tested, yacht bedding specialist Sea Design conducts a review into the best duvets, quilts and pillows on the market. It tests a series of leading products to work out the best yacht bedding money can buy.
We spoke to crew management company CESG about the French social security measures coming into force July 1st. Since decree no.2017-307 was announced in the official journal of the French Republic on 9th March 2017, there have been a lot of questions on what exactly these changes mean specifically for the superyacht industry and yacht management. CESG shared with us their expertise.
Some yacht crew and owners have heard about the issues, but are confused about what the French social security measures entail. What is happening?
There have been a great many rumours flying around about how the new law will work, whom will be affected and suggested methods (of varying degrees of potential efficacy) to minimise liabilities.
Those who attended the meeting at the Monaco Yacht Club on 17th May and others who heard about it will be aware that even the French authorities themselves cannot yet answer all of the questions and potential scenarios put to them.
What we do know is that according to the law, seafarers who are:
must be enrolled in the French social security scheme, administered by ENIM.
This law will apply to both private and commercial vessels, as well as to crew working in dockyards.
How does it work?
Employers will have to register with ENIM and pay contributions (both employers’ and employees’) along with filing regular reports. Non-resident employers will be required to post six to twelve months of estimated liabilities (depending on whether in the form of a deposit or a bank guarantee) as security.
The contributions are calculated using a fixed day rate for the mariner, determined by reference to their rank as defined in another section of the French social security law and applying a contribution percentage determined by reference to the vessel’s characteristics.
How is it different to other social security schemes?
This is unlike many other social security schemes and has already been criticised for its complexity amongst other things.
Regardless of the specific rates finally settled upon, the costs of the contributions involved are likely to be comparatively high for both employees and employers.
Though it could be argued that the benefits of French social security membership are also considered generous by some, there are also potential problems of obtaining full benefits, discussed further below.
What is classed as ‘French Residency’?
The French authorities talk about residence as being within France in a “stable, regular manner”. Three months has been stated as a threshold period of residence (it should be noted that this was initially stated to be a six month period before ENIM announced in mid-May that this would be three months).
The authorities have made public statements that mariners who “live aboard foreign flagged vessels” will not be affected. However, no further information has been received as to how this will be defined. It is also entirely possible that there will, by the time of the decree’s coming into force, be no such exemption.
An important factor in determining residence is the “centre of interests. It is clear that, though other factors will be taken into account, a mariner whose home is in France (e.g. their principal home is there, their dependents and/or partner reside there etc.) has a higher likelihood of being deemed resident than if it were otherwise.
Are there any exceptions?
Payment of mandatory contributions to an EEA State
The treaty EC 883/2004 contains a basic principle of “paying where you work”.
The signatory countries (the EU member states plus Iceland, Lichtenstein, Norway and Switzerland) agree that a mariner resident in one EEA state who works on a vessel flying the flag of another EEA state should pay in the country of the vessel's flag, unless they are paid from their home country and so stay in their home scheme.
However, although most states have now removed legal barriers to non-resident EEA nationals paying in, to comply with European law, in practice paying contributions to another EU state can still be extremely challenging.
Payment of a mandatory contribution to an agreement country
France also has many reciprocal agreements and where a mariner is paying to another country under such an agreement, there should be no liability in France.
However, some of these agreements may have the same issues of de facto compliance as seen in the past with EEA countries.
Further, some of these treaties also specifically state there is no liability for non-residents and that they should pay in their country of residence regardless of the flag state.
In either case, there may once again be a liability in France.
Voluntary contributions or voluntary insurance
It has been suggested by some that the payment of voluntary contributions, for example, Class 2 and/or Class 3 NICs in the United Kingdom, would create an exemption from the French legislation.
ENIM have now confirmed that mariners who are resident in France and who are not paying into a mandatory social security scheme will not be considered to be exempt from enrollment into French social security.
This means that voluntary Class 2 NICs paid in the UK will not take away a liability to France. Only membership of a compulsory EU Treaty or Reciprocal Agreement country’s contribution scheme will be enough.
This seems extremely unlikely. Article 14.2 of EEC 883/2004 specifically states that although a voluntary contribution may be made to one EEA state in addition to a mandatory contribution in another, the voluntary contribution cannot replace the mandatory one.
So there is a very clear path for the French authorities to challenge such a claim for exemption.
As for a voluntary insurance or cover provided under a private policy, at present, the decree specifically rules this out and so there is no exemption in the law to be had from taking out a private policy with equivalent cover to the French mandatory scheme.
Any there any other potential problems?
In addition to the main points noted above, there are some further matters that are problematic.
It could be possible for a national of one of these countries to fall into the “French resident” criteria but to then face difficulties transferring benefits of cover to their home state, or to build sufficient contributions in either state to gain entitlement to a meaningful (or any) pension.
Whilst we are sure that the French authorities will proceed with common sense in dealing with complex cases, it is also likely that many will have to be addressed on a case-by-case basis. This will clearly result in more administration and a headache for all involved.
Is it likely to go ahead?
The law firm Ince & Co. has, on behalf of several crew employers, lodged an appeal against the law and asked for an emergency suspension of the regulations whilst that appeal is processed.
We await further developments and although fully in support of this claim we continue to work with our clients to prepare for the planned implementation of the decree from 1st July 2017.
Will other countries follow?
We have seen developments of this in the UK in previous years and the Netherlands appears to be adopting similar legislation. We continue to monitor events to ensure our clients are fully up to date.
For further information, consult a local yacht management specialist.
In this Tried & Tested, yacht cleaning expert Marine 16 Ltd and cleaning expert Judith Shaw rate and review some of the best cleaning products available to buy. Find out which product was crowned the best following rigorous testing.
Specialist yacht finishing company Absolute Boat Care is celebrating 20 years of service in the marine industry. The hig...
The state-of-the-art LANA superyacht, one of the most luxurious superyachts in the world, has been anchored at Ayia Napa...