MLC standards for wage payment intervals, statements, exchange rates and overtime

Take a ship that pays a monthly wage of USD 2,500 in Korean won. The company applies its internal figure of 1,350 won to the dollar, but the published rate that day was 1,390 won. The seafarer receives 100,000 won less every month. Over a nine-month tour that is 900,000 won.

Where that difference has to be written down, and what standard the rate has to meet, is set by the MLC, 2006. This article puts the sentences of Standard A2.2 (mandatory) and Guideline B2.2 side by side and sorts out what attaches to each of the four things a payroll officer does every month: paying, issuing the statement, remitting, and deducting.

Wages cannot wait longer than a month, and neither can the statement

The wording of Standard A2.2, paragraph 1 is at no greater than monthly intervals. Monthly is not the custom; it is the ceiling. A contract or collective agreement cannot set payment every two months.

The statement is a separate obligation from the payment itself.

2. Seafarers shall be given a monthly account of the payments due and the amounts paid, including wages, additional payments and the rate of exchange used where payment has been made in a currency or at a rate different from the one agreed to.

Three things go in: the amounts due, the amounts actually paid with any additional payments, and, where payment was made in a currency or at a rate different from the one agreed, the rate of exchange used. That the exchange rate is a statement item is the starting point of the next section.

Captivity is no exception either. Wages and allotments continue to be paid for the whole period a seafarer is held captive by piracy or armed robbery (paragraph 7, added by the 2018 amendments).

The rate on the statement is not a figure the company picks

5. Any charge for the service under paragraphs 3 and 4 of this Standard shall be reasonable in amount, and the rate of currency exchange, unless otherwise provided, shall, in accordance with national laws or regulations, be at the prevailing market rate or the official published rate and not unfavourable to the seafarer.

The rate has two permissible sources: the prevailing market rate or the official published rate. And whichever is used, it must not be unfavourable to the seafarer.

Back to the opening example. If 1,350 won matches no published figure for that day and is simply the company’s internal number, it fits neither branch of paragraph 5. And because paragraph 2 requires that rate to be written on the statement, the statement becomes its own evidence. What figure was applied is on record every month.

The same paragraph also holds the charge for the remittance service to a reasonable amount. It is the sentence that blocks complying on the rate and clawing it back on fees.

The remittance channel is for the shipowner to provide, not the seafarer

Paragraphs 3 and 4 of Standard A2.2 require the shipowner to provide the means for seafarers to send all or part of their earnings to their families. On entering employment or during it, a seafarer who wishes must be able to allot a proportion of wages for remittance at regular intervals, and allotments must be remitted in due time and directly to the person the seafarer nominated.

It is not the seafarer’s job to find a way; it is the company’s obligation to have a system. A late allotment, or one sent to someone other than the nominated person, falls short of paragraph 4 by itself.

From here on it is guidance. But that is where all the numbers are

Everything above is mandatory Part A. What follows (overtime, consolidated wages, deductions) sits in Guideline B2.2. A Guideline is not binding by itself, but a Member that adopts national wage laws must give it due consideration (Standard A2.2, paragraph 6), and the hours and multipliers all live on the Guideline side. Once a flag State’s law or a collective agreement takes those values in, they bind.

The overtime floor is 1.25 times the hourly basic pay

First, the definition of basic pay.

(b) basic pay or wages means the pay, however composed, for normal hours of work; it does not include payments for overtime worked, bonuses, allowances, paid leave or any other additional remuneration;

Overtime, bonuses, allowances and paid leave are not basic pay. The base that the 1.25 multiplier applies to is calculated after taking those items out.

Guideline B2.2.2, paragraph 1 sets the frame for the calculation. For calculating wages, normal hours at sea and in port should not exceed eight hours per day, and the weekly hours covered by basic pay should not exceed 48. Then comes the multiplier.

(c) the rate or rates of compensation for overtime, which should be not less than one and one-quarter times the basic pay or wages per hour, should be prescribed by national laws or regulations or by collective agreements, if applicable; and

If the hourly basic pay is USD 6.00, the overtime floor is USD 7.50. A contract printed with USD 7.00 falls short of the Guideline on its face.

The record requirement is in the same paragraph. Overtime records are kept by the master or a person the master assigns, and endorsed by the seafarer at no greater than monthly intervals. It is the same structure as rest-hour records: a record without the seafarer’s endorsement does not meet the requirement.

A consolidated wage does not make the floors disappear

The Guideline also covers wages that fold overtime into a single figure (consolidated wages) in B2.2.2, paragraph 2. Three things attach.

• The employment agreement should state clearly how many hours of work are expected in return for that pay
• Hours worked beyond those covered carry the same 1.25 principle, and the same principle applies to the overtime hours folded into the consolidated wage
• The portion corresponding to normal hours should be no less than the applicable minimum wage

Folding the figures together does not remove the arithmetic. It means each part must still clear its floor when unfolded. And where the wage is only partially consolidated, the overtime record obligation remains as it is.

Deductions need a basis and notice first, and two lines are prohibited outright

Guideline B2.2.2, paragraph 4(h) sets the conditions for deductions: an express basis in national laws, regulations or an applicable collective agreement; the seafarer informed of the conditions; and a total that stays within any established limit.

The prohibitions are two lines.

(i) no deductions should be made from a seafarer’s remuneration in respect of obtaining or retaining employment;

No deduction for obtaining or keeping the job. Recovering a recruitment fee out of wages is what this catches. The following line (j) prohibits monetary fines other than those authorized by national laws, regulations or collective agreements.

The payment-side principles sit in the same paragraph. On termination of engagement, all remuneration due should be paid without undue delay (d), and wages should be paid directly to the seafarer’s designated bank account unless the seafarer requests otherwise in writing (f).

What to check

The quotations are from the consolidated text of the MLC, 2006 (including the 2022 amendments), printed pages 27 to 31. A2.2 is a mandatory Standard and B2.2 is a Guideline, so the figures that actually bind are the ones in the flag State’s legislation and the applicable collective agreement. A separate Guideline (B2.2.4) points the monthly basic pay floor for able seafarers at the amount periodically set by the ILO Joint Maritime Commission, so the latest published figure belongs on the same checklist.