- Australia can impose substantial fines on foreign shipowners if they fail to pay additional ‘top up’ crew wages when a ship carries cargo between ports in Australia.
- Australian law requires a copy of the license to be displayed on board, but this can be difficult to comply with if sub-charterers have not informed the owner that such a license has been obtained.
As Gard P&I Club informs, Australia can impose substantial fines on foreign shipowners if they fail to pay additional ‘top up’ crew wages when a ship carries cargo between ports in Australia.
According to Gard, the additional crew wages required during cabotage in Australia, known as a “Top Up”, are payable on the third and subsequent ‘Coastal Voyage’ conducted by a foreign ship within a 12-month period. To calculate the top up amount to be paid to each seafarer, it is necessary to calculate the ‘raw’ total amount (based on amounts payable per Australian working day, over time, holiday pay and public holidays) and then subtract the seafarer’s usual pay. However, Gard advises that calculation is best done using a spreadsheet or software because there are five calculations to be made for each individual seafarer’s circumstances.
What is cabotage?
As explained by Gard, in a shipping context, cabotage refers to transporting goods/passengers between two ports or places within the same country by a vessel registered in another country. While the definition is the same around the world, specific cabotage laws and regulations can vary significantly between different countries.
Ensuring compliance in Australia
Owners are required to have records on the ship for inspection that show 1) the amount of ‘top up’ wages paid to each crew member, and 2) evidence to show the ‘top up’ was actually paid. They must also provide each crew member with paperwork to show that the ‘top up’ has been paid.
Australian law requires a copy of the license to be displayed on board, but this can be difficult to comply with if sub-charterers have not informed the owner that such a license has been obtained. More information about the licensing system can be found here.
Gard’s advice
Whether owners or charterers should bear the risk of non-compliance will turn on the charterparty wording. The clear solution is at the fixture negotiation stage to either ensure that cabotage trade is expressly excluded under the charterparty terms or permitted only with owners’ consent in return for charterers assuming all administrative and financial burdens, backed up by an express indemnity. It would be a valid question, especially in the context of a long-term charter party, whether cabotage trading is expected and in which jurisdictions, so that the parties can ensure that the regulatory requirements are met and any financial or fiscal responsibilities are allocated clearly in advance.
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Source: Gard
