Social Security Contributions for Seafarers
Authors: Ann Bugeja & Aleandro Mifsud
Authors: Ann Bugeja & Aleandro Mifsud
Malta has long played a significant part in the Mediterranean’s economic activity so much so that it is highly regarded as a point of confluence for commerce between Europe and Africa. Inarguably, Malta’s reputation has continued to excel through its rise in becoming one of the world’s most dependable marine service centres. Whilst there are many factors which have elevated Malta’s ranking in recent decades, it is common knowledge that seafarers and what they bring to the table, are often overlooked. The Maltese maritime industry has invested heavily in the well-being of seafarers, and this is made apparent mostly vis-à-vis the social security legislation applicable to seafarers in Malta.
Unlike most shore-based employees, seafarers operate within and beyond national borders and are thus governed by a variety of international and national regulations. This may at times, bring about certain difficulties relative to the applicability and enforceability of certain clauses in a seafarer’s employment agreement as well as a whole Pandora’s box in relation to a plethora of conflict of law issues which may arise.
The Employment and Industrial Relations Act (“EIRA“) and its supplementary regulations govern employment law in Malta.
Article 39 of the EIRA stipulates that the Merchant Shipping Act (Chapter 234 of the Laws of Malta, “MSA“) and any of its subsidiary legislation including but not limited to the Merchant Shipping (Maritime Labour Convention) Rules (S.L. 234.51, “MSR“) shall regulate the employment of seafarers, as it clearly delineates that the EIRA shall not apply to “seamen employed on ships under the provisions of the MSA.” Furthermore, it goes on to say that in the event of any conflict between any of the provisions of the MSA and any of the provisions of the EIRA, it is the former that shall apply. Employment of seafarers engaged on board a ship is also governed by the Seamen Wages Council Wage Regulation Order (S.L. 452.51, “WRO“) as last amended by Legal Notice 464 of 2021, which regulates wages to be paid to seafarers, their working time and leave. These provisions apply to all employees on board ships regularly operating within the territorial waters of Malta, but do not apply to employees working on board fishing vessels or foreign going ships.
Furthermore, the Maritime Labour Convention of 2006 governs the aspects of seafarers’ labour, which instrument has been praised as a key milestone in the formal protection of seafarers’ rights. Subject to specific exceptions, the Convention applies to all seafarers who are employed, engaged, or work in any capacity on board Maltese-registered commercial vessels.
These Rules specifically do not apply to:
- Fishing vessels;
- Ships of traditional build;
- Small ships;
- Yachts in non-commercial use; and
- Warships or naval auxiliaries.
Whilst Malta’s accession to the EU meant that European law became part and parcel of our local law, this was not the case with social security since there is no single social security regulation or directive that harmonises the position for all EU Member States (“MS“). Each MS has its own system of contributions, benefits, and eligibility requirements. EU Regulations (EC) Nos. 883/2004 and 987/2009 (the latter providing clear rules for incorporating the former) went into effect on the 1 May 2010, replacing previous Regulations (EC) Nos. 1408/71 and 574/72, respectively, and coordinating the various EU MSs’ social security systems, including Malta’s.
Ships registered in Malta may benefit from a variety of advantages while operating under the flag of an EU MS:
- Seafarers who are EU/EEA/Switzerland nationals or residents must be insured by the legislation of EU flag State of the vessel. The sole exemption for EU/EEA/Switzerland nationals is if the employer and employee both are residents in the same MS and the seafarer is registered for social security in that MS;
- People insured in Malta, including their dependents and spouses (if not working), can obtain a European Health Insurance Card (EHIC), whereas those residing in another MS can obtain an S1 form upon the production of the wage slips reflecting the social security contributions made;
- Pension is guaranteed by any EU/EEA MS or Switzerland at a benefit rate depending on the length of the employees’/ claimant’s insurance in their system. The Regulation (EC/883/2004) developed the notion of portability of rights. This implies that if a person has performed his duties in two or more EU/EEA MSs or Switzerland, the Regulation compels each of these jurisdictions to pay a benefit rate equivalent to the duration of insurance periods in those MS or Switzerland.
In line with Article 1 of EU Regulation 1231/2010, it appears that the scope of Regulation 883/2004 is being expanded to include third-country nationals (“TCNs“) and their close relatives, given that the following two requirements are met:
- The TCN is lawfully resident in a MS; AND
- The TCN is in a situation that is not entirely confined to a single MS.
If the EU Regulation does not apply to TCNs because one of the two prerequisites is not met, Malta would have to rely on bilateral agreements with other nations. The Social Security Department affirms that in such cases, the TCN would be able to decide whether to pay his or her social security contributions in Malta, or his or her home country and would thus apply for an Exemption Certificate exempting him or her from paying social security in Malta.
Moreover, social security for UK seafarers on Malta-flagged vessels used to be governed by EU Regulation 883/2004. In view of the Withdrawal Agreement, if the UK seafarers who were enrolled in the Maltese social security system before the 31st December 2020 kept working on board without interruption after the said date, they remained eligible for the benefits set out in Regulation 883/2004, but they are now required to pay social security contributions in Malta.
All crew members aboard Maltese-flagged ships should think about how they document their payments to the EU Social Security system. Such proof is required to gain access to benefits, which until recently, the employer in Malta was solely responsible for the documentation. This obligation moved from the employer to the employee when an EU state joins the Electronic Exchange of Social Security Information (EESSI) system. The employer will continue to provide the Al form, but the crew member will be responsible for obtaining their S1 form (or similar) in their home country.
 Seaman is defined as every person (except masters, pilots and apprentices) employed or engaged in any capacity on board a ship.
 As defined in the Small Ships Regulations, i.e. S.L. 499.52 and that navigate exclusively in internal waters or waters closely adjacent to Malta.
 For further information on the EHIC, please refer to the SchengenVisaInfo.com website.
 An S1 form shows your state healthcare.
 Brexit Withdrawal Agreement signed January 2020
 An Al certificate is used to confirm the country in which an employee or visitor currently pays for their social security contribution