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  • MLC – financial security

    Shipowner shall take out insurance or provide other similar financial security for covering the shipowner’s liability towards seafarers and the masters in case of breach of the employment agreement

    An Executive Order will come into force on 18 January 2017 with effect on all ships registered in FAS. The Executive Order is based on the amendments made on the MLC-Agreement on 11 April 2014, which will come into effect on 18 January 2017. The purpose is to create a fast and efficient safety system to benefit seafarers and masters, which have been left behind, in a foreign country.

    The Executive Order establishes that the shipowner has to take out an insurance or other similar financial security covering claims by employees, which have been left behind, against the shipowner or the employer, if they are not the same. The insurance shall amongst others cover expenses for repatriation and subsistence as well as outstanding wage demands and other entitlements of the employee.

    The shipowner shall not later than 17 January 2017 have taken out the necessary insurance or other similar financial security covering the demands stipulated above.

    Furthermore, a certificate issued by the insurer or the provider of the other financial security shall be available to the seafarers and masters on board the ship.

    In the future it will be seen in the MLC-certificate whether the necessary insurances have been taken out, and this will also be a part of the regular MLS-inspection. Up to the coming MLC-inspection it will be sufficient if the above mentioned insurance documents are available on board.

     Requirements

    Parts of the requirement covered by Regulation 2.5, are covered by the Act on the Employees’ Guarantee Fund, which is a statutory scheme covering masters and seafarers on board Faroese Ships if the general requirements to the Act are met. The coverage of the Fund is independent on whether the employer has paid the mandatory contribution.

    Parts of the requirements covered by Standard A 2.5.2, are furthermore, covered by the following Faroese public social security schemes covering masters and seafarers on board Faroese ships: the health insurance scheme for seafarers as well as the sickness benefit and maternity/paternity benefit schemes for seafarers.

    The owner of a Faroese ship is required to take out insurance or provide other similar security meeting the requirements of regulation 2.5, Standard A2.5.2. Requirements covered by the Employees’ Guarantee Fund or the above mentioned public social security schemes can, however, be exempted from the insurance or other similar security.

    Proof of financial security under regulation 2.5.is, therefore, as regards Faroese ships, constituted partly by a declaration from an insurance company or another provider of a guarantee that meets annex A 2.1 of the Convention. If this declaration makes reservations as regards requirements covered by the Employees’ Guarantee Fund or the above mentioned social security schemes, attached declarations from Employees’ Guarantee Fund and the Faroese Maritime Authority must also be carried on board the ship.

    Seafarers on board Faroese ships are covered by the Faroese Parliamentary Act on Industrial Injury Insurance on an equal footing with persons working in the Faroe Islands.

    For confirmation of the protection of the seafarers and the master pursuant to the Faroese Parliamentary Act on Industrial Injury Insurance (Arbeiðsskaðalógin) a declaration shall be available to the seafarers on board the ship. The declaration shall be in the working language of the ship or in English. If the ship is engaged in international trade, it shall be in English or a translation to English shall be attached.

    Please note that the Executive Order is not yet final, and that changes may still occur.

    For more information, please contact the Faroese Marine Authority (Jógvan Hentze) at: + 298 35 56 00

    22. December 2016

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