When the Danish High Court on September 28 opens the case between the Danish Shipowners' Association and union Danish Maritime Officers, the case could ultimately be the end of the net wage scheme currently used by Danish-flagged vessels.
The protracted dispute between navigators and their employers, which now go before the High Court following years of arguing about the need for adjusting the net wage scheme in relation to the tax reforms adopted by Denmark in the past years. The Danish Maritime Officers believes that the unions members are owed the same benefits granted to ordinary Danish employees as the income tax has been lowered.
Danish Maritime Officers to sue the government in DIS flag case
The first part of the case concerns the subpoena against DFDS, and specifically two DIS-employed seafarers, who according to Danish Maritime Officers have been cheated out of as much as USD 15,000 in wages because the net wage scheme that applies to their employment has not been adapted accordingly to the tax reforms adopted in 2010 and 2012.
Cheated seafarer on the stand
On the second day of the court case, September 29, the two DFDS witnesses will take the stand, namely first mate at DFDS and member of the board at Danish Maritime Officers, Kurt Lützhøft, who will likely present some of the arguments in his case that he has previously made available on the union's campaign website "Cheated Seafarer," which state the following:
"Kurt's DIS net wage corresponds to an annual on-land gross salary of USD 80,300. If Kurt had been a regular tax-paying citizen, he would in 2010 have received a tax credit of USD 265 per month. Like every other Danish citizen, Kurt helps to finance these tax cuts through new tariffs, lower interest deductions and reduced wellfare. Ahead of his expected retirement in 12 years, Kurt will miss out on USD 38,200."
Following his deposition, Sif Emdal, also of DFDS, will take the stand, after which Henrik Holck, executive vice president for people & ships at DFDS, and member of the Danish Shipowners' Association's business committee, will present his deposition. Speaking to ShippingWatch prior to the summer holiday season, he rejected the notion that the DIS employees were owed anything:
DFDS denies the claims
"In principle there is nothing in the DIS text, as formulated in 1988, to tie the net wage scheme to the country in which the wages are paid. And furthermore, the members are in fact compensated for the increases implemented in the Denmark in the form of higher tariffs etc. The wages paid to employees hired on net wage schemes are very high. A captain gets upwards of USD 6,000 in net wages a month. An untrained dishwasher can get as much as USD 2,800, and this latter figure is not seen anywhere else in the world. If this case ends with employers having to add ten percent to the net wages, many of the Danish-employed seafarers will not be able to keep their jobs," he said.
The court case will continue on October 5., 6., 7. and 9., thus coinciding with Danish Maritime Days.
Last part scheduled for December
Lawyer Poul Hvilsted, partner at Copenhagen-based law firm Horten, is handling the case for the Danish Maritime Officers. He believes that the EU should reevaluate its approval of the Danish net wage scheme, as the conditions of the scheme have changed following the two tax reforms:
"One should basically consider the fact that the DIS net wage scheme represents an indirect state subsidy to carriers and the maritime sector. This is done by waiving the tax that would be otherwise paid to the state. The EU has issued guidelines for this kind of state subsidy, and the EU will need to approve it," he has previously told ShippingWatch.
The final part of the DIS case concerns the subpoena issued against the state, set for December, though this part will only be relevant if the Danish Maritime Officers wins the case against the DFDS.
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