Compared to domestic crew members, domestic shipowners are often unfamiliar with the compensation issues concerning injuries, illnesses, and deaths of foreign crew members. How to handle accidents, what issues to pay attention to during the process, how to avoid disputes, and how to handle arbitration/litigation if encountered - these are the questions that shipowners must consider before hiring foreign crew members. Currently, the majority of foreign crew members employed by domestic shipowners are from the Philippines, Vietnam, and Myanmar. According to incomplete statistics, arbitration/litigation involving Filipino crew members is the most common. This article will briefly introduce the shipowner's responsibilities regarding injuries, illnesses, and deaths of Filipino crew members, as well as the issues to consider when handling related claims, in order to assist shipowners in handling claims for injuries, illnesses, and deaths of Filipino crew members in a fair and reasonable manner.

According to the Philippines correspondent PANDIMAN PHILIPPINES INC, all Filipino seafarers working onboard ocean-going ships are entitled to rights under the Philippines Overseas Employment Administration (POEA) Standard Employment Contract (SEC), which basically include:

medical treatment – until the seafarer is declared fit or the degree of his disability has been established;

sickness allowance – equivalent to the seafarer’s basic wage, and the period shall not exceed 120 days;

disability allowance – compensated in accordance with the 1-14 impediment grade, US$60,000 top;

compensation for death – US$50,000, and an additional amount of US$7,000 to each child under the age of 21 but not exceeding 4 children;

burial expenses – US$1,000.

Simple as it may seem, we have noticed a number of issues in claim handling.

I. Work-related illness

Although crew illness claims under the POEA-SEC have to be work-related, most Filipino seafarer’s claims fall into the category as the SEC offers a comprehensive list of work-related illness in Section 32.A and Section 20.A.4 further provides that “those illness not listed in Section 32 of this Contract are disputably presumed as work-related”. Hence, the owner may be held liable for an illness claim that does not appear to be work-related unless the owner can prove it.

A timely and accurate claim investigation is then particularly important. Upon repatriation of a crew member, arrangements should be made for the crew member to be promptly diagnosed at a designated hospital to ascertain whether the injury or illness is work-related, and to ensure that the crew member get effective treatment for early recovery.

II. The 120/240-day rule

Although the SEC Section 20.A.6 provides that the disability shall not be measured by the number of days a seafarer is under treatment, the Philippine Labor Code concept of permanent disability was applied in some early cases where seafarers are entitled to compensation benefits if they are unable to perform their work for more than 120 days and are deemed totally and permanently disabled (even if they get recovered on the 121^st day). The Supreme Court later extended the 120-day treating period to 240 days if the seafarer requires further medical attention and clarified that where the SEC contract before 2010 is applied, “a seafarer who is unable to work for more than 120 days shall be considered totally and permanently disabled unless the company doctor, before the end of the 120 days, states that he needs further treatment. If the company doctor states that the seafarer needs such further treatment, the period to determine total and permanent disability shall be extended to 240 days”.

Consequently, there is a great need to report immediately to the Association and monitor closely the treatment of seafarers as some may take advantage of the rule and delay the period of disability determination for as long as possible in order to get the maximum amount of allowance. When the period of treatment is expected to be beyond 120 days, a clear declaration of further treatment should be provided in a timely manner.

The degree of disability should be assessed by the company-designated physician, and if a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the employer and the seafarer. The third doctor’s decision shall be final and binding on both parties (SEC Section 20.A.3).

III. CBA/SEC choices

Some shipowners may apply the Collective Bargaining Agreement (CBA) for Filipino crews, who get to file a claim based on the more beneficial clauses, for example, if the CBA provides for high death benefits but no funeral expenses, the crew’s family may choose to apply both the death benefits under the CBA and the funeral expenses under the SEC. Or the CBA often provides for higher disability compensation but only applies in the case of work-related injuries and not in the case of seafaring diseases. Most Filipino crews will choose to claim disability compensation under the SEC, and some may be encouraged by local lawyers to claim higher disability compensation under the CBA (even though the CBA does not apply). Where the wording of a contract is vague and subject to several interpretations, the local judiciary tends to interpret it in favour of the crew. Clear and unambiguous contractual wording is therefore essential, and it is recommended that key terms in the contract be defined.

IV. Judicial approaches for Filipino crew claims

As a result of local policies on labour protection, it costs very little for Filipino crews to bring a charge, and with local lawyers fanning the flames and the prevalence of contingency fees, abusive litigation has become a problem that is not uncommon.

Where the seafarer’s POEA contract has no CBA cover, the seafarer may file a claim with the National Labour Relations Commission (NLRC). The Labor Arbiter (LA) will initiate a mandatory conciliation-mediation process to effect settlement among the contending parties and if no possibility of a settlement will be agreed, the LA will issue a decision. Either party can appeal the decision to the NLRC Commission Commissioners. As both the LA and the Commissioners are employed by the NLRC, the Commissioners rarely change the LA decision in practice. The losing party may subsequently appeal to the Court of Appeals or even the Supreme Court.

Although shipowners have the right to appeal to the Supreme Court, the Commissioner's decision is already executory, which means that the seafarer is entitled to payment of the award of damages unless the Court of Appeals issues a Temporary Restraining Order (TRO). However, the TRO is hardly ever granted to shipowners in practice. Even if the Supreme Court subsequently rules in favour of the shipowner, it is often difficult for the shipowner to recover the award that is previously paid out to the seafarer. The amount of unrecoverable award may be as small as a few tens of thousands of dollars for a single claim, but it can add up to a considerable amount. It is learnt that about US$40 million of restitution to which shipowners are entitled due to the court's revised decision has not yet been returned to the shipowners/clubs.

Where the seafarer’s POEA contract has an overriding CBA cover, he has the option of filing a claim with the National Conciliation and Mediation Board (NCMB). It is noted that the NCMB is more inclined to rule in favour of the crew than the NLRC. Some may find it not as economic to hire a Filipino seafarer as it appears.

V. Conclusions

Shipowners are encouraged to report to the Association immediately in the event of injury, illness, or death of Filipino seafarers so that we can find out about the shipowner’s liability and provide reasonable compensation accordingly or appoint lawyers to assist members through the arbitration.

From the loss prevention perspective and for the benefits of seafarers, it is important to arrange pre-employment health examination as medical treatment is not always easily available while working at sea.

References: https://www.dmw.gov.ph/archives/memorandumcirculars/2010/10.pdf Last time to visit: June 6, 2023

https://www.delrosariolaw.com/en/e-library/philippines-shipping-update/543-company-designated-physicial-should-give-valid-justification-for-extension-of-treatment-for-240-day-rule-to-apply, Last time to visit: June 6, 2023.

For more information, please contact Managers of the Association.