NIS-, and MLC guarantee may now be merged

  • Published: 20/01/2017

For ships which are or will be registered in the NIS and have employees who are not covered by Norwegian or EEA social security schemes: it is possible to merge the NIS guarantee and financial security for abandoned seafarers in cases other than bankruptcy

As from 18 January 2017, the Maritime Labour Convention (MLC, 2006) stipulates additional requirements for the financial security of employees on ships. For ships registered in the Norwegian International Ship Register (NIS), the company is also required to provide a guarantee of wages for and repatriation of employees who are not covered by Norwegian or EEA social security schemes pursuant to the Regulations of 18 February 2005 No. 146 on guarantee of remuneration for work and of passage home for employees on ships registered in the Norwegian International Ship Register.

This guarantee is only applicable in cases of bankruptcy, and is thus not as comprehensive as the guarantee required pursuant to the MLC, 2006. For ships registered in the NIS, requirements for the financial security are thus stipulated in different regulations which may overlap. However, it is entirely possible for the parties to merge these guarantees by, for example, expanding the existing guarantee for NIS ships to include financial security pursuant to the MLC, 2006, or vice versa. If one chooses to use one guarantee to cover both the MLC guarantee and the NIS guarantee, the documentation must satisfy the requirements of both guarantees.

The NIS guarantee shall be furnished by an insurance company which has a license to carry out such activities in Norway. The Ministry of Trade, Industry and Fisheries may upon application permit others to furnish a guarantee for the whole or parts of the guarantee. A list of approved guarantors and more information about the guarantee can be found here: https://www.sjofartsdir.no/en/shipping/registration-of-commercial-vessels-in-nisnor/new-registration-nis/documentation-requirements-nis/guarantee-for-wages-and-homeward-journey/   

The NMA is aware that insurance companies are offering financial security pursuant to the new MLC requirements as part of the ship's P&I insurance, and that many companies have taken advantage of this opportunity. If one chooses to expand the MLC guarantee to include the entitlements of the NIS guarantee, the guarantor is required to be either an insurance company authorised to operate in Norway, or to be approved by the Ministry of Trade, Industry and Fisheries following an application from the guarantor. Such applications will be promptly processed.

The NMA wants to prevent that companies with ships registered in the NIS have to be doubly insured, and has thus started looking into any necessary amendments to the regulations. We will also consider whether there is still a need for a separate guarantee for ships registered in the NIS.

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