Seafarers’ wage guarantee

The seafarers’ wage guarantee refers to a system whose purpose is to secure the payment of employment‑related claims arising from an employment relationship of an employee as defined in the Seafarers’ Employment Contracts Act (756/2011) in the event of the employer’s insolvency.
The Seafarers’ Employment Contracts Act applies when work is performed for an employer under the employer’s direction and supervision in return for wages or other remuneration on a Finnish vessel or, by order of the employer, temporarily elsewhere. As a general rule, a vessel is considered Finnish and entitled to fly the Finnish flag if more than sixty per cent of the vessel is owned by a Finnish citizen or a Finnish legal person.

Applying for pay guarantee

Seafarers apply for pay guarantee using the same form as other employees. The form must specify the vessel on which the work was performed. It is important to attach a copy of the employment contract to the pay guarantee application so that, already at an early stage of processing, it can be determined whether the Pay Guarantee Act or the Seafarers’ Wage Guarantee Act applies in the case concerned.
The pay guarantee procedure itself is the same for seafarers and other applicants. The amount and grounds of the claims are assessed, inter alia, by hearing the employer. From the pay guarantee paid to seafarers, the seafarers’ pension contribution and the seafarers’ service fee are deducted.

Differences in the seafarers’ wage guarantee

The conditions for pay guarantee applicable to seafarers differ in part due to the specific characteristics of work performed at sea. Wage claims paid as seafarers’ wage guarantee are recovered by the state by means of a maritime lien, which facilitates recovery compared to ordinary employment‑related claims. These differing conditions are intended to ensure that seafarers have equal opportunities to apply for and receive pay guarantee.

Time limit for applications

A pay guarantee application must be submitted while the maritime lien referred to in Chapter 3, Section 2(1) of the Maritime Act (674/1994) is still valid. As a general rule, the maritime lien on a vessel expires one year after the claim arose, unless the vessel has, before that time, been subject to attachment or distraint leading to a forced sale.

Maximum amount of seafarers’ wage guarantee

Under the Seafarers’ Wage Guarantee Act, there is no maximum limit for pay guarantee payable in respect of wages based on work performed. However, the maximum amount of compensation or indemnification is limited to EUR 19,000 if compensation or indemnification is applied for for the first time only after the related maritime lien has expired.