Unemployment indemnity on a ship's loss and the two-month cap (MLC Regulation 2.6)

Say the ship founders. The crew make it home, but the ship they worked on is gone. What happens to their employment and how far does the money run. MLC, 2006 Regulation 2.6 answers, but half the answer sits in a mandatory provision and half sits in a guideline that is not mandatory. This article looks at that line.

What the mandatory provision requires is the payment itself

1. Each Member shall make rules ensuring that, in every case of loss or foundering of any ship, the shipowner shall pay to each seafarer on board an indemnity against unemployment resulting from such loss or foundering.

Three places to read. First, the obligation takes the form of a flag State making rules. Second, the payer is the shipowner. Third, the recipient is each seafarer on board. No split by rank or by form of contract: everyone who was on that ship.

What it compensates is narrowed too. indemnity against unemployment, that is, compensation for the unemployment caused by the ship being gone. Not injury compensation, not compensation for lost belongings, but for the job that disappeared.

That is the whole of Standard A2.6. How much, and for how long, is not in it.

The amount and the duration sit in a guideline, not in a mandatory provision

1. The indemnity against unemployment resulting from a ship’s foundering or loss should be paid for the days during which the seafarer remains in fact unemployed at the same rate as the wages payable under the employment agreement, but the total indemnity payable to any one seafarer may be limited to two months’ wages.

Here is the formula. Pay for the days the seafarer in fact remains unemployed, at the same rate as the wages payable under the employment agreement, and the total to any one seafarer may be limited to two months of wages.

But the verb in that sentence is should. The verb in the previous one was shall. Guideline B2.6.1 is a guideline, and guidelines are not mandatory. The two-month cap is not a limit the Convention sets; it is a method of calculation recommended for the flag State to consider when making its rules.

The condition in fact unemployed has to be read alongside it. The payable period is not the period the ship is gone but the period that seafarer is actually unemployed. Assignment to another ship stops the count at that point.

What weight a guideline carries is set by Article VI

1. The Regulations and the provisions of Part A of the Code are mandatory. The provisions of Part B of the Code are not mandatory.

One line splits them. The Regulations and Part A of the Code are mandatory; Part B is not. That does not make Part B ignorable.

In addition, the Member shall give due consideration to implementing its responsibilities in the manner provided for in Part B of the Code.

give due consideration is the status of Part B. There is no duty to follow it as written, but it has to be considered, and where it was not followed something stands in its place. So the route by which the two-month figure reaches practice is not the Convention but flag State law or a collective agreement. Whether that instrument adopted two months, or set a longer period, is what produces the actual amount.

This indemnity does not displace other claims

2. The rules referred to in paragraph 1 of this Standard shall be without prejudice to any other rights a seafarer may have under the national law of the Member concerned for losses or injuries arising from a ship’s loss or foundering.

without prejudice allows the overlap. Having received the unemployment indemnity does not bar a claim under national law for injury or for lost belongings arising from the same casualty. There is more than one account open.

Repatriation is separate as well. The cost of getting seafarers home when the ship is gone is dealt with by Regulation 2.5; what this provision deals with is compensation for the job that disappeared. Both arise from the same casualty at the same time.

Worth confirming

The passages above come from printed pages 41 and 6 of the consolidated MLC, 2006 (including the 2022 amendments). Standard A2.6 is mandatory, but the amount and the duration live in a guideline, and how that guideline was taken up is set by flag State law. Whether the flag State kept the two-month cap, which wage components the rate is built from, and what proves the crew list at the moment of the casualty are where the actual judgement starts.