Leaked document reveals some Holland America and Seabourn cruise-ship workers could take pay cuts in the coming months

Holland America Westerdam

Becky Bohrer/Associated Press

Holland America's Westerdam ship.

  • Some Holland America Line and Seabourn cruise-ship workers may receive pay cuts in the coming months, according to an internal document viewed by Business Insider.
  • Carnival Corp., which owns Holland America and Seabourn, and other cruise companies have canceled all sailings until May at the earliest, and Carnival's bookings have dropped this year.
  • Carnival said in March that it would try to minimize the financial impact on employees through the end of June.
  • Representatives for Holland America and Seabourn said the plans outlined in the document have not been finalized.
  • Do you work in the cruise industry? Do you have an opinion on how your company or the industry as a whole has handled the coronavirus? Email this reporter at mmatousek@businessinsider.com.
  • Visit Business Insider's homepage for more stories.

Holland America Line and Seabourn may cut the pay of some cruise-ship workers in the coming months as the companies handle the fallout from the novel coronavirus, which has forced much of the cruise industry to shut down until May at the earliest, according to an internal document viewed by Business Insider. The potential move comes after Carnival Corp., which owns Holland America and Seabourn, said it intended to minimize the financial impact felt by employees through the end of June.

"Now we have particularly focused on trying to make certain that all employees, and especially those at the manager and below levels, both shipboard and shoreside, during this critical time through June are financially impacted as little as possible, if at all, despite the current situation of paused operations," Carnival CEO Arnold Donald said in a video message to employees in March.Advertisement

Representatives for Holland America and Seabourn told Business Insider that the plans outlined in the document have not been finalized, and a Carnival representative said the company's senior leadership, including Donald, will not be paid in cash for the next 90 days, instead receiving stock that vests in a year.

"Our crew is an instrumental part of the success of our brands and we continue to work on plans related to our global ship operations in the coming months," the Holland America and Seabourn representatives said. "Unfortunately, some information that may have been shared recently was preliminary and does not provide the full context of our overall plans. Once our plans are finalized, we will be sharing them directly with our crew to ensure they have accurate information and can understand how it applies to them."

According to the internal document, the extent to which Holland America and Seabourn workers could see their pay reduced, if at all, would depend on their role and the details of their contract. Those with roles the companies consider "critical to ongoing operations" would continue to work and be paid as normal, according to the document. Those positions include cruise director, food-and-beverage director, guest-service manager, executive housekeeper, executive chef, human-resources manager, and all medical workers, according to the document.
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Until May 2, all crew members with active contracts who do not serve essential roles would receive what the document calls an "adjusted wage." For crew members who wouldn't normally receive tips from passengers, that means they would be paid at their normal rate. But those who rely in part on tips would receive the higher of the following two options: the minimum guaranteed pay outlined in their contract, or 70% of what they would have been expected to make between their base pay and tips.

The document says that after May 2, crew members with contracts that extend beyond that date would receive either $500 or half of what they earned in the past 30 days (that number would be adjusted if the contract ends on or before June 1), if the latter is greater than $500. Crew members would be allowed to stay on their ship and receive food, lodging, and medical care if they couldn't or didn't want to return home after May 2, but they would not be allowed to work past that date if they're in a non-essential role.Crew members who are at home but have contracts that were scheduled to begin in the coming months would receive part of their expected pay, according to the document. Those with contracts that would have started by May 2 would get 30 days of pay at the "adjusted wage" rate and an additional $500, while those with contracts scheduled to start on or after May 3 would receive $500.Advertisement

Officers with annual or "guaranteed days" contracts would receive their normal pay until their contracts end or "until a time when we provide proper notice," though the document does not describe the latter in more detail.

The coronavirus has thrown the global economy into disarray, resulting in steep job cuts and threatening to put companies out of businesses, including those in the travel and hospitality industries. Many cruise lines have canceled all sailings until May at the earliest, though some passengers and crew members have yet to return home as their ships remain at sea.

Carnival Corp. said in a March regulatory filing that, as of March 15, bookings for cruises scheduled for the rest of this year were significantly lower than in 2019 and were made at heavily discounted prices. Carnival also warned that refunds given to customers could strain the company's financial resources, but in his March message to employees, Donald said the disruptions caused by the coronavirus did not appear to pose an existential threat to the company.Advertisement

"What I can tell you is that we have charted a clear course for the next 90 days and that right now we are very encouraged that we'll be in a position to survive this, even if our operations are ceased for many months," Donald said in the video message to employees in March. "Now obviously there are no guarantees."

Meghan Morris and Becky Peterson contributed reporting to this story.

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