Crew contract confusion
Yacht managers were instructed by the owners to terminate the employment of two crew members. Both crew members were French nationals employed by the owners. The managers gave the crew a month’s notice as required by their contracts which were said to be subject to “United Kingdom law”.
Subsequently lawyers representing the former crew members alleged that owners terminated the contracts without any consideration for the procedures that must be followed under French law. They commenced litigation against both the owners and the managers and arrested the yacht (which was in French waters) to obtain security for their claim.
The owners complained that while they, as the employer of the crew, had issued instructions to terminate the employment contracts the managers had not obtained any advice or guidance as to the procedural requirements under French employment law. The owners alleged this was negligent and had left them exposed to a claim under France’s strict employment laws.
French lawyers advised that should thematter go to litigation, the former crew member’s claims stood a good chance of succeeding as, despite the contract’s provisions, French law would apply. This was because the two individuals had been in France at the time of their employment. Technically there is no “United Kingdom law” as England and Wales, Scotland and Northern Ireland have separate legal systems. The claims came to a total of EUR194,680 and included damages for loss of earnings and compensation pursuant to French mandatory employment law.
In view of the advice the owners settled the crew claims for about EUR75,000. The managers denied that they were responsible for obtaining employment advice but ultimately agreed to contribute a third of the settlement.