IN THE UPPER TRIBUNAL Case No CIS/339/2009

ADMINISTRATIVE APPEALS CHAMBER

 

Before UPPER TRIBUNAL JUDGE WARD

 

Attendances:

 

For the Appellant: Mr Denis Edwards, instructed by Solicitor, Department for Work and Pensions

 

For the Respondent: Mr Richard Drabble QC, instructed by Ms Sarah Clarke, Child Poverty Action Group

 

Decision: The appeal by the Secretary of State is allowed. The decision of the appeal tribunal sitting at Fox Court on 4 September 2008 under reference 242/08/07122 involved the making of an error of law and is set aside.

 

Acting under section 12(2)(b) of the Tribunals, Courts and Enforcement Act 2007, I remake the decision in the following terms:

 

The claimant’s appeal against the Secretary of State’s decision of 4 May 2008 is dismissed. The claimant is not treated as habitually resident in the UK for the purposes of her claim to income support made on 18 March 2008 because she did not at the material time have a right to reside in the United Kingdom. Therefore for those purposes she was a “person from abroad”, with an Income Support applicable amount of nil.

 

REASONS FOR DECISION

 

1. This appeal principally concerns what impact (if any) the law of the European Union has in relation to a national of a Member State who comes to the UK, works, begins a course of study, becomes pregnant, works again and who then, finding that in the later stages of her pregnancy she is unable to continue working, claims income support. I am grateful to both Counsel for their written and oral submissions.

 

2. Mr Drabble QC did not seek to support a substantial element within the appeal tribunal’s reasoning, which he accepted was in error of law. This is briefly discussed further at [12] – [13].

 

3. The areas of law on which Mr Drabble invited me to uphold the tribunal’s decision in the result are primarily:

 

(a) Article 7 of Council Regulation (EEC) No 1612/68 on Freedom of Movement for Workers within the Community, as amended most recently by Directive 2004/38/EC (“the Directive”) (see especially [14] to [31]); and

 

(b) Article 10a of Council Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community (as amended) (see especially [32] to [38]).

 

4. There were several other arguments which Mr Drabble wished to reserve the right to raise, should this case proceed to a higher level, while recognising that at Upper Tribunal level they would have to be determined against him. These are set out at [42].

 

The facts

 

5. The claimant is a French national who came to the UK on 10 July 2006. She worked in various jobs in the UK from 1 September 2006 to 1 August 2007, most or all of which were as a teaching assistant. She enrolled on a Post-Graduate Certificate in Education (PGCE) course for modern languages at the Institute of Education, University of London, the envisaged period of study being 17 September 2007 to 27 June 2008. The tuition fees were funded by a student loan and she was supported by a bursary. She became pregnant, the expected date of confinement being 2 June 2008. Realising that she would have given birth prior to the end of her course she withdrew from her studies as of 1 February 2008. Her bursary payments ceased. She undertook agency work from 22 January 2008, hoping to find teaching assistant positions in secondary schools. None was available so she took agency positions working in nursery schools. By 12 March 2008 the demands of caring for nursery school children while some 6 months pregnant were proving too much and she stopped such work. The claimant looked unsuccessfully for lighter work for a few days before giving up doing so and on 18 March 2008 claiming income support, which was refused.

 

6. Her baby was born on 21 May 2008. Some three months later, the claimant resumed employment. Sadly, in May 2009, the baby died from a heart condition.

 

7. It is not in dispute that the posts that she held and the period of study were sufficient to make the claimant a “worker” for EU purposes as long as she held them, i.e. until 12 March 2008. Her claim of 18 March 2008 was rejected by a decision on 4 May 2008 on the basis that she lacked the right to reside and so her “applicable amount” for income support purposes was nil: see paragraph 17 of Schedule 7 to the Income Support (General) Regulations 1987/1967 (“the 1987 Regulations”). Her appeal to the appeal tribunal succeeded and the Secretary of State now appeals, with my permission.

 

Key legislation

 

8. Regulation 21AA of the 1987 Regulations makes provision for “persons from abroad”. By paragraph (1), such persons are those who are not habitually resident in the common travel area. By paragraph (2), a person may not be treated as habitually resident unless he has a right to reside (other than an excluded right to reside). Certain rights to reside are excluded by paragraph (3), but as they are not relevant to this decision I say no more about them. Paragraph (4) cuts across that which has gone before, providing, amongst other matters, that a person who is a worker for the purposes of the Directive or a person who retains such status pursuant to Article 7(3) of the Directive is not a “person from abroad”. As a matter of the structure of regulation 21AA therefore, a person who is a worker or who retains that status pursuant to the Directive is not a person from abroad by virtue of paragraph (4), but it is conceptually possible for a person whose right arises otherwise to avoid being a “person from abroad” by relying on paragraph (2).

 

9. As it was raised in the written submmissions, I should record that paragraph 14 of schedule 1B of the 1987 Regulations, which makes a pregnant woman potentially eligible for income support from the 11^th week before her expected week of confinement (whether or not she is incapable of work) does not in my view assist the claimant, as there is no reason why this provision should prevail over the provisions setting her applicable amount at nil by virtue of being a person from abroad. Rather, schedule 1B, and schedule 7 and regulation 21AA, create conditions both of which have to be satisfied.

 

10. Returning to regulation 21AA and the legislation to which it refers, Article 7 of the Directive provides:

 

“1. All Union citizens shall have the right of residence on the territory of another Member State for a period of longer than three months if they:

(a) are workers or self-employed persons in the host Member State;

(b) – (d) [not material]

 

2. [not material]

 

3. For the purposes of paragraph 1(a), a Union citizen who is no longer a worker … shall retain the status of worker …in the following circumstances:

(a) he/she is temporarily unable to work as the result of an illness or accident;

(b) – (d) [not material]

 

4. [not material].”

 

11. The Immigration (European Economic Area) Regulations 2006/1003 (“the 2006 Regulations”), implementing the Directive, are in this regard not materially different.

 

Deeming provisions of Social Security (Incapacity for Work) (General) Regulations 1976 inapplicable

 

12. It was a substantial part of the reasoning of the appeal tribunal that as from 7 April 2008 the claimant could rely on the provisions of regulation 14 of the Social Security (Incapacity for Work) (General) Regulations 1995 (“the 1995 Regulations”), which is in the following terms:

 

“A pregnant woman shall be treated as incapable of work-

(a) …;

(b) in the case of a woman whose expected or actual date of confinement has been certified in accordance with the Social Security (Medical Evidence) Regulations 1976, on any day in the period-

(i) beginning with the first day of the 6th week before the expected week of her confinement or the actual date of her confinement, whichever is earlier; and

(ii) ending on the 14th day after the actual date of her confinement,

if she would have no entitlement to a maternity allowance or statutory maternity pay were she to make a claim in respect of that period.”

 

13. In the present appeal, it is common ground that that regulation cannot apply so as to assist the claimant. It was accepted on behalf of the claimant:

 

“that insofar as the appeal tribunal found that a UK social security law deeming provision could impact on the meaning of temporarily unable to work as a result of illness the Tribunal erred in law. “Temporarily unable to work as a result of illness or accident” in Article 7(3)(a) is an EC law concept and consequently must be interpreted consistently throughout the EU.”

 

I consider that the concession was properly made. Consequently, I conclude that the claimant did not on the grounds put forward by the tribunal retain her worker status from 7 April 2008 onwards. The tribunal erred in law in its view of the applicability of regulation 14 of the 1995 Regulations.

 

Regulation 1612/68

 

14. In respect of the period from the date of claim on 18 March 2008 until the date of decision on her claim, it was not in dispute that the claimant was not looking for work. Due to her pregnancy, she considered she was not in a position to accept any offers of work the agency might have made her.

 

15. Mr Drabble, consistently with authority, does not seek to argue that the wording of Article 7(3)(a) applied to the claimant. She could not be said by reason of pregnancy alone to be “unable to work as the result of an illness”, nor was the inclusion of pregnancy to be implied. Rather, he relies on Article 7 of Regulation 1612/68 which, so far as relevant, provides as follows:

 

“1. A worker who is a national of a Member State may not, in the territory of another Member State, be treated differently from national workers by reason of his nationality in respect of any conditions of employment and work, in particular as regards remuneration, dismissal, and should he become unemployed, reinstatement or reemployment.

 

2. He shall enjoy the same social and tax advantages as national workers.”

 

16. Directive 2004/38 was intended (though not exclusively) as a codification. As its recitals record:

 

“(3) Union citizenship should be the fundamental status of nationals of the Member States when they exercise their right of free movement and residence. It is therefore necessary to codify and review the existing Community instruments dealing separately with workers, self- employed persons, as well as students and other inactive persons in order to simplify and strengthen the right of free movement and residence of all Union citizens.

 

(4) With a view to remedying this sector-by-sector, piecemeal approach to the right of free movement and residence and facilitating the exercise of this right, there needs to be a single legislative act to amend Council Regulation (EEC) No 1612/68 of 15 October 1968 on freedom of movement for workers within the Community, and to repeal the following acts: Council Directive 68/360/EEC of 15 October 1968 on the abolition of restrictions on movement and residence within the Community for workers of Member States and their families, Council Directive 73/148/EEC of 21 May 1973 on the abolition of restrictions on movement and residence within the Community for nationals of Member States with regard to establishment and the provision of services, Council Directive 90/364/EEC of 28 June 1990 on the right of residence, Council Directive 90/365/EEC of 28 June 1990 on the right of residence for employees and self-employed persons who have ceased their occupational activity and Council Directive 93/96/EEC of 29 October 1993 on the right of residence for students.”

 

17. I accept that in the case of C-310/08 LB Harrow v Ibrahim it was possible for a child to assert rights under Article 12 of Regulation 1612/68 even after the coming into force of the Directive. This was not only because the Directive did not repeal Article 12 (Ibrahim, [46]), but also because Article 12 concerned a free-standing right:

 

“42.     Article 12 of Regulation No 1612/68 must therefore be applied independently of the provisions of European Union law which govern the conditions of exercise of the right to reside in another Member State. That independence of Article 12 from Article 10 of that regulation formed the basis of the judgments of the Court referred to in paragraphs 29 to 31 above, and cannot but subsist in relation to the provisions of Directive 2004/38.”

18. By contrast, I would have expected that if the draftsman of the Directive had regarded Article 7 of Regulation 1612/68 as determining who might have the right to reside as a worker, the provision would have been included within the codification exercise which was an important part of the Directive’s purpose, given that, for all the conceptual underpinning of the right of residence under EU law may to some extent have moved on, the status of worker had been, and in substantial measure still remained, at the heart of it. Family members of a worker formerly enjoyed rights by virtue of Articles 10 and 11 of Regulation 1612/68, but these were codified in the Directive. I conclude therefore that Article 7 of Regulation 1612/68 is concerned with the content of rights are which are enjoyed by those who are in any event “workers” by virtue of other provisions of European law, rather than providing an independent source of “worker” status. It follows that I am unable to accept Mr Drabble’s argument that Article 7 of the Directive is concerned with putting beyond doubt the treatment of certain situations that might arise in respect of those on whom worker status had (as he argued) been conferred in any event under Regulation 1612/68.

 

19. Rather, the test of worker status is as set out by the European Court of Justice in C-85/96 Martinez Sala [1998] ECR I-2691:

 

“The status of worker within the meaning of Article 48 of the Treaty and Regulation No 1612/68

 

32.    In the context of Article 48 of the Treaty and Regulation No 1612/68, a person who, for a certain period of time, performs services for and under the direction of another person in return for which he receives remuneration must be considered to be a worker. Once the employment relationship has ended, the person concerned as a rule loses his status of worker, although that status may produce certain effects after the relationship has ended, and a person who is genuinely seeking work must also be classified as a worker (see, in that connection, Case 66/85 Lawrie-Blum [1986] ECR 2121, paragraph 17, Case 39/86 Lair [1988] ECR 3161, paragraphs 31 to 36, and Case C-292/89 Antonissen [1991] ECR I-745, paragraphs 12 and 13). “

 

(What was then Article 48 is what is now Article 39).

 

20. One would expect, therefore, that once the claimant’s employment relationship with the latest provider of agency work to her had ended, she would have lost her worker status. One difficulty which the claimant faced was that, having been an agency worker, she was unable to point to any ongoing employment relationship conferring upon her a right to take maternity leave which, as in CIS/185/2008 and CIS/1042/2008, might have enabled her worker status to continue. Nor was she on and from 18 March 2008 seeking work, however understandable her reasons for not doing so, so it is not necessary to consider the position of workseekers further here.

 

21. As to whether the claimant can rely on her previous worker status to “produce certain effects after the relationship has ended”, the Directive collates in Article 7 the various circumstances for which the existing case law of the European Court of Justice and previous legislation provided. Thus, as Mr Drabble acknowledges, Article 7(3)(a) dealing with temporary incapacity has its origins in Article 7 of Directive 68/360; the provisions dealing with duly registered unemployment, in that provision and in Martinez Sala and in C-292/89 Antonissen; and those regarding vocational studies or training in C-39/86 Lair and C-357/89 Raulin.

 

22. Had it been desired to include pregnancy within the circumstances in which worker status is retained, there was every opportunity for the Directive to have done so. Such an inclusion would have been entirely consistent with, for instance, Recital (3). Indeed, the travaux préparatoires show that such an amendment was proposed by the Committee on Women’s Rights and Equal Opportunities in its Opinion dated 5 December 2002, but was evidently not proceeded with by the EU legislature. If the reason was that pregnant women were already covered in EU law, one would have expected in view of the importance of codification among the purposes of the Directive that it would readily have been included within the text as uncontroversial. It is more likely in my judgment that what was being proposed by seeking to include pregnancy was a change to the existing legal position which failed to command sufficient support to proceed and that the omission is therefore a deliberate one.

 

23. Mr Drabble seeks to argue that the rights contained in Directive 2004/38 are an expression of the rights granted to workers under Article 39 and do not replace them. I accept that who is a worker is not defined by the Directive and that a person who is one has rights conferred by Article 39 and Article 7 of Regulation 1612/68. But who is to be treated as a worker, despite the fact that the employment relationship has come to an end (cf. Martinez Sala), is in my view to be determined by the terms of the Directive, bearing in mind the stated purposes of the Directive and the content of its Article 7. I respectfully agree with the observations of the Court of Appeal in Secretary of State for Work and Pensions v Dias [2009] EWCA Civ 807; [2010] 1 CMLR 4, which I consider may equally be applied to the present context:

 

“19 Prior to Directive 2004/38 the general rule was that once the employment relationship had ended the person concerned lost his or her status as a worker, but there were a limited number of situations in which that status was retained, for example when the person had lost his job and was genuinely seeking another: Martinez Sala v Freistaat Bayern (C-85/96) [1998] E.C.R. 1-2691 at [32]. Once Directive 2004/38 came into force the conditions for retention of worker status were codified in art.7(3) : broadly, temporary incapacity to work, involuntary unemployment after a qualifying period and vocational training. Mr Berry accepts that Ms Dias could not bring herself within any decision prior to Directive 2004/38 or within the conditions codified in art.7(3) . But he says that these rules are not exhaustive and should be supplemented by a ruling that a person in the position of Ms Dias who voluntarily gives up employment to care for her child but who contemplates a return in the future is similarly still to be regarded as a worker, at least where subsequently she does in fact return…

 

21 Mr Berry's proposition would be an impermissible judicial extension of rules carefully formulated in Europe, first by the courts and latterly by art.7(3) of Directive 2004/38 . The circumstances of a parent, of either sex, who gives up employment to care for a child but anticipates a return after some as yet unknown time are very common. The breadth of the concept of “worker” has to recognise a balancing of the interests of migrants and of host States and their taxpayers. The codification of the concept which has been accomplished by art.7(3) of Directive 2004/38 demonstrates where that balance has been struck. The circumstances under consideration are not analogous to those which are set out in that article, but would represent a significant departure from them. “

 

24. I do not regard this view as undermined by Ibrahim or by C-480/08 Teixeira, as they do not concern the status of a worker. Nor do I regard it as inconsistent with the ability, following the decision in C-413/99 Baumbast [2002]ECR I-7091, of a person to assert rights relying directly on Article 18 of the EU Treaty. That Article, which confers upon every citizen of the Union the right to move freely within the territory of the Member States, does so only with the important qualification that it is “subject to the limitations and conditions laid down in this Treaty and by the measures adopted to give it effect”, of which the Directive is clearly an example. As regards the role of the Directive as a benchmark of proportionality in such a context, see Kaczmarek v Secretary of State for Work and Pensions [2008] EWCA Civ 1310; [2009] 2 CMLR 3. While Mr Drabble reserved his position as to the correctness of that decision (see [39] below), no attempt was made to argue that I could consistently with applying Kaczmarek, find that there was any lack of proportionality in relation to the exclusion of someone in the claimant’s position from the right to reside.

 

25. Mr Drabble argues that it cannot have been intended that an agency worker who falls sick should lose his or her worker status. They do not do so, not because of Regulation 1612/68 but because Article 7(3)(a) of the Directive provides for such status to be retained in those circumstances. But it does not so, in my judgment deliberately, for those who are pregnant.

 

26. Mr Drabble relies heavily on the decision in C-138/02 Collins. Mr Collins, who had dual Irish and US nationality, had last worked in the United Kingdom 17 years before he returned to it to look for work. He lost, because the 17 year gap meant that his position was to be equated with that of a person looking for his first job in another member State, who would not be able to rely on Article 7 of Regulation 1612/68 (which falls within Title II of Part I.) The Court said:

 

 

“26. In accordance with the Court’s case-law, the concept of ‘worker’, within the meaning of Article 48 of the Treaty and of Regulation No 1612/68, has a specific Community meaning and must not be interpreted narrowly. Any person who pursues activities which are real and genuine, to the exclusion of activities on such a small scale as to be regarded as purely marginal and ancillary, must be regarded as a ‘worker’. The essential feature of an employment relationship is, according to that case-law, that for a certain period of time a person performs services for and under the direction of another person in return for which he receives remuneration (see, in particular, Case 66/85 Lawrie-Blum [1986] ECR 2121, paragraphs 16 and 17, Martínez Sala, paragraph 32, and Case C-337/97 Meeusen [1999] ECR I‑3289, paragraph 13).

27. The Court has also held that migrant workers are guaranteed certain rights linked to the status as a worker even when they are no longer in an employment relationship (Case C-35/97 Commission v France [1998] ECR I-5325, paragraph 41, and Case C-413/01 Ninni-Orasche [2003] ECR I-0000, paragraph 34).

 

28. As is apparent from the documents sent to the Court by the Social Security Commissioner, Mr Collins performed casual work in the United Kingdom, in pubs and bars and in sales, during a 10-month stay there in 1981. However, even if such occupational activity satisfies the conditions as set out in paragraph 26 of this judgment for it to be accepted that during that stay the appellant in the main proceedings had the status of a worker, no link can be established between that activity and the search for another job more than 17 years after it came to an end.

29. In the absence of a sufficiently close connection with the United Kingdom employment market, Mr Collins’ position in 1998 must therefore be compared with that of any national of a Member State looking for his first job in another Member State.

30. In this connection, it is to be remembered that the Court’s case-law draws a distinction between Member State nationals who have not yet entered into an employment relationship in the host Member State where they are looking for work and those who are already working in that State or who, having worked there but no longer being in an employment relationship, are nevertheless considered to be workers (see Case 39/86 Lair [1988] ECR 3161, paragraphs 32 and 33).

31. While Member State nationals who move in search for work benefit from the principle of equal treatment only as regards access to employment, those who have already entered the employment market may, on the basis of Article 7(2) of Regulation No 1612/68, claim the same social and tax advantages as national workers (see in particular, Lebon, [Case 316/85], paragraph 26, and Case C-278/94 Commission v Belgium [1996] ECR I-4307, paragraphs 39 and 40).

32. The concept of ‘worker’ is thus not used in Regulation No 1612/68 in a uniform manner. While in Title II of Part I of the regulation this term covers only persons who have already entered the employment market, in other parts of the same regulation the concept of ‘worker’ must be understood in a broader sense.

 

33. Accordingly, the answer to the first question must be that a person in the circumstances of the appellant in the main proceedings is not a worker for the purposes of Title II of Part I of Regulation No 1612/68. It is, however, for the national court or tribunal to establish whether the term ‘worker’ as referred to by the national legislation at issue is to be understood in that sense. “

 

 

27. Mr Drabble says that the mere fact of not being actually working at the time was not what was fatal to Mr Collins’s case. I accept that in Collins the Court was prepared to acknowledge that certain persons not actually in employment might in limited circumstances be “workers”. So much is uncontroversial, but I am unable to derive from Collins support for any generalised proposition that a person not in work may nonetheless be a worker. Rather, the case reiterated existing specific extensions made by the cases decided by the Court and which are now codified in the Directive (without any attempt having been made to convert them into any more generalised principle.) In my view none of the cases cited in Collins assists the claimant. In C-35/97 Commission v France [1998] ECR I-5325, the ex-employee was held to retain his worker status for the purpose of asserting a right to equal treatment with national workers as regards dismissal, without which the right conferred by Article 7(1) of Regulation 1612/68 would have been illusory. As described in C-43/99 Leclere at [57], the concern there was with:

 

“benefits the payment of which is dependent on the prior existence of an employment relationship which has come to an end and is intrinsically linked to the recipients’ objective status as workers.”

 

C-413/01 Ninni-Orasche [2003] merely builds on a principle established by earlier case law such as Lair to the effect that a person who has been a worker in a member State may be entitled to access student funding on the same footing as nationals of that member State, if the course concerned has a sufficient link to the work the person was doing or if he or she has become involuntarily unemployed. Both are illustrations of well-defined situations where the status of “worker" is held to continue and do not provide any warrant for extending the retention of worker status more generally and specifically not in the context of a person who has given up her job because of pregnancy. Lebon concerned whether an adult non-dependent could rely on Article 7(2) based on her retired father’s worker status. The source of the father’s worker status was not discussed at length, but appears to have been Regulation 1251/70. Rights under that regulation were expressly preserved by the Directive (see Recital (19)) and the case thus provides no support for an extension of the categories of those who preserve worker status beyond what is in the Directive. Commission v Belgium C-278/94 [1996] ECR I-4307 merely assumes that the hypothetical claimants of the Belgian tideover allowance will be the children of workers and there is no consideration of how such status arises.

 

28. I conclude that:

 

a. as regards any category of person other than the unemployed, Collins provides no basis for extending the category of those who retain “worker” status beyond those for whom the Directive provides

 

b. specifically, Lebon and Commission v Belgium are not authority for a looser test based on having entered the employment market, in circumstances where other provisions of Community law do not operate so as to confer worker status

 

c. as regards the unemployed, the Court in Collins was readily able to conclude that Mr Collins, on the basis of 17 years’ absence, lacked the necessary connection to the United Kingdom employment market and so it did not need to rule on the degree of such connection more specifically

 

d .the decision in Collins is not inconsistent with the position of unemployed people now having been codified in Article 7 of the Directive

 

e. the decision therefore does not assist the claimant in establishing an argument that there is room within EU law for a person who is pregnant, but not in employment and not looking for work, to retain worker status.

 

29. In C-122/84 Scrivner [1985] ECR 1027, on which Mr Drabble also relies, the Court had to consider whether the Belgian minimex was a social advantage for the purposes of Article 7 of Regulation 1612/68. What the referring Court raised was the categorisation of the benefit rather than the issue of the applicability of the regulation to someone in Mr Scrivner’s position and the European Court of Justice accordingly did not deal with it. While the case clearly proceeds on the assumption that it was not fatal to reliance on Article 7(2) that Mr Scrivner was merely looking for work, it does not provide any authority for a view that worker status attaches to a person who is not seeking work.

 

30.In Leclere, a person receiving invalidity pension from a state other than that in which he resided did not thereby have worker status. He would only have been able to assert such status for the purpose of protecting him against discrimination affecting rights acquired during his former employment relationship. As a result he could not rely on Article 7 of Regulation 1612/68

 

“to claim the benefit of allowances provided for workers on the birth of a child by the legislation of the Member State responsible for paying his pension, to which he would not be entitled under regulation 1408/71.”

 

Although the situations are not identical, the case provides an instructive analogy.

 

31. I therefore conclude that Article 7(2) of Regulation 1612/68 (whether alone or taken together with Article 39) does not play any part in defining who retains worker status after the coming into force of the Directive and in any event as interpreted by the European Court of Justice provides no basis for any implication that a woman who is not working because she is pregnant and who is not in an employment relationship is either a worker or retains worker status. The retention of worker status is codified in Article 7(3) of the Directive. Pregnancy does not fall within any of the grounds there set out which permit worker status to be retained.

 

Regulation 1408/71

 

32. Mr Drabble’s alternative argument concerned Regulation 1408/71. Under Article 10a:

 

“1. The provisions of Article 10 and of Title III shall not apply to the special non-contributory cash benefits referred to in Article 4(2a). The persons to whom this Regulation applies shall receive these benefits exclusively in the territory of the Member State in which they reside and under the legislation of that State, in so far as these benefits are mentioned in Annex IIa. Benefits shall be paid by, and at the expense of, the institution of the place of residence.”

 

Article 10 and Title III are not relevant for our purposes. It is common ground that income support is a special non-contributory cash benefit. By Article 1(h), the term “residence” means habitual residence.

 

33. In Perry v Chief Adjudication Officer (reported as R(IS)4/99), Mr Perry, who regularly spent time in Portugal, had made a series of claims to income support, each of which had been refused in respect of any period after he had been absent from the United Kingdom for 4 weeks. As a matter of domestic law, the refusal was correct. Mummery LJ, with whom the other Lords Justices agreed, said (at 485):

 

“In my judgment Mr. Drabble’s submissions should be rejected for these reasons:-

(1) Article 10a does not confer on Mr. Perry a positive right to income support claimed by him so as to displace the requirement of presence under the domestic income support system. The language of Article 10a recognises that special non-contributory benefits are granted “in accordance with the legislation of that state” i.e. the territory of the Member State in which the relevant person resides. The legislation of the United Kingdom expressly provides for the withholding of income support during periods of the claimant's temporary absence from Great Britain. Article 10a does not override or displace the conditions of entitlement to income support. On the contrary, it provides that the right to the special non-contributory benefit is determined in accordance with the domestic law of the Member State. This is reinforced by the preamble to Regulation 1247/92 which states

“Whereas benefits should be granted, in respect of persons falling within the scope of Regulation (EEC) No. 1408/71, solely in accordance with the legislation of the country of residence of the person concerned or of the members of his or her family, with such aggregation of periods of residence completed in any other Member State as is necessary and without discrimination on grounds of nationality;”

(2) This result is consistent with the purpose of the Regulation, which is to co-ordinate and not to harmonise the systems of social security, and with the purpose of a special non-contributory benefit, such as income support, which is to provide assistance in the form of an addition to income which is linked to the cost of living in that Member State.

(3) There is clearly no incompatibility between article 10a and the provisions in the United Kingdom legislation which disentitle Mr. Perry to income support during a period of temporary absence in another Member State. The Regulation requires the benefits to be granted “in accordance with the legislation of that State.” That State is the one in which the person resides. In the case of Mr. Perry that State is the United Kingdom. The legislation of the United Kingdom does not entitle Mr. Perry to income support if he is out of Great Britain for more than four weeks. As there is clearly no incompatibility, there is no question to be referred to the European Court of Justice under Article 177.”

34. However, that, in Mr Drabble’s submission, is not determinative of the outcome under Article 10a in the present case, as he argues that the case of C-90/97 Swaddling [1999] ECR I-1075 demonstrates that the aspect of the legislation at issue in the present claimant’s situation can be distinguished from that in issue in Perry. However, I am not persuaded that the impact of Swaddling is as great as Mr Drabble contends.

 

35. As noted in [32] above, Article 10a, taken together with Article 1(h), is concerned with habitual residence. Being used in European legislation, what constitutes habitual residence is a matter of European law. Mr Swaddling had worked in both the United Kingdom and France, but latterly in France. He was made redundant in late 1994 and in January 1995 returned to the United Kingdom, declaring that he no longer wished to take a job which entailed spending long periods of time abroad, and on 9 January 1995 claimed income support. The relevant domestic legislation for income support at the time included a definition of “person from abroad” (who then, as now, had an applicable amount of nil) as “a claimant who is not habitually resident in the United Kingdom….” The Secretary of State argued that for the purposes of domestic law, “habitual residence” presupposed an appreciable period of residence in the United Kingdom in addition to the settled intention of residing there. The European Court of Justice held that:

 

“28 Pursuant to Article 1(h) of Regulation No 1408/71, the term `residence' for the purposes of that regulation `means habitual residence' and therefore has a Community-wide meaning.

29 The phrase `the Member State in which they reside' in Article 10a of Regulation No 1408/71 refers to the State in which the persons concerned habitually reside and where the habitual centre of their interests is to be found. In that context, account should be taken in particular of the employed person's family situation; the reasons which have led him to move; the length and continuity of his residence; the fact (where this is the case) that he is in stable employment; and his intention as it appears from all the circumstances (see, mutatis mutandis, concerning Article 71(1)(b)(ii) of Regulation No 1408/71, Case 76/76 Di Paolo [1977] ECR 315, paragraphs 17 to 20, and Case C-102/91 Knoch [1992] ECR I-4341, paragraphs 21 and 23).

30 For the purposes of that assessment, however, the length of residence in the Member State in which payment of the benefit at issue is sought cannot be regarded as an intrinsic element of the concept of residence within the meaning of Article 10a of Regulation No 1408/71. In particular, when, as in the present case, an employed person, on returning to his State of origin after exercising his right to freedom of movement, has made it clear at the time of applying for income support that he intends to remain in his State of origin, where his close relatives live - whilst expressing his readiness, should the need arise in the context of some future employment, to travel from time to time to other Member States - he cannot be deemed not to satisfy the condition concerning residence within the meaning of Article 10a merely because the period of residence completed in his State of origin is too short.”

36. Further guidance can be obtained from the opinion of Advocate General Saggio, who observed:

“13 Since income support may be counted as one of the special non-contributory benefits referred to in Article 10a of the regulation, it must be determined whether Mr Swaddling met the requirements laid down in the relevant provision which refers, moreover, to those laid down in the legislation of the Member State of residence. According to the order for reference, Mr Swaddling meets all the requirements set by United Kingdom legislation except for that concerning `habitual residence' which, as already indicated, requires not only the settled purpose of establishing residence in the territory of the United Kingdom, but also completion of an appreciable period of residence, assessed, in the circumstances, as of eight weeks' duration.

14 The requirement that the claimant reside in the State of the competent institution, far from being a condition imposed solely by national law, derives directly from the Community rule precluding the special non-contributory benefits listed in Annex IIa from being exported and leaving responsibility for such benefits exclusively with the State of residence.

15 In that legislative context, the claimant's residence becomes the crucial factor underpinning coordination of the national legislative arrangements in the field of social security, which is the fundamental objective of Article 10a of Regulation No 1408/71, the instrument intended to safeguard the interests of migrant workers in accordance with Article 51 of the Treaty. If there were marked differences in the meaning ascribed by the various national systems to the concept of residence, migrant workers would be in danger of losing insurance cover in respect of non-exportable benefits.

16 Aware of that danger, the Community legislature took it upon itself to provide a definition of residence in the regulation. Thus, Article 1(h) thereof states that `"residence" means habitual residence'. The significance of that definition is not so much that it serves to enlighten - in fact, as a guide to interpretation its usefulness is negligible because it engenders speculation as to what is meant by `habitual' - as that it makes it clear that the concept of residence is a Community notion and as such its meaning cannot be adapted to suit the unilateral and uncoordinated preferences of the various national systems.“

37. It appears therefore that the Court’s decision was based on it being incompatible with European law that domestic law, when needing to apply the test of habitual residence, a crucial part of the scheme of Article 10a, for the purposes of Regulation 1408/71, should apply a test of habitual residence containing a further requirement not required (or permitted) by European law.

38. It seems to me that Mr Drabble’s argument can only arise because of the particular form taken by regulation 21AA of the 1987 Regulations. Who has the right to reside for European law purposes is set out by the Directive and, to a limited extent, other provisions of EU law, as set out above. By 18 March 2008, when she was no longer looking for work, the claimant had ceased to have the right to reside. Like the appellants she entered the United Kingdom lawfully and remained here without any breach of immigration law. She was entitled to remain here, in residence, unless and until action was taken against her to change that position, by removal pursuant to regulation 21 of the 2006 Regulations. There are detailed provisions of European law to regulate the entitlement to social advantages of those with various forms of the right to reside. A two stage legislative test which consisted of (a) does the claimant have the right to reside? and (b) is she habitually resident as defined in Swaddling? would, on authorities binding on the Upper Tribunal and subject to issues of proportionality, be lawful. What regulation 21AA of the 1987 Regulations does (see [8] above) is partially to elide the tests as a matter of drafting so that having the right to reside is a necessary precondition to whether a person can be habitually resident, but both elements remain. For all the particular quirks of the drafting of the UK domestic legislation, the two stage test is in substance what it creates. The particular form of the UK legislation should not be permitted to invalidate provisions which are in substance compatible with European law. It follows therefore that I respectfully agree with the conclusion reached by Mr Commissioner Rowland in CIS/3182/2005. As any right under Article 10a could only be to benefits “in accordance with the legislation of that State” i.e. that in which a claimant is habitually resident, and as I do not consider the relevant UK legislation to be in conflict with European law for the reasons given, it follows that this ground for upholding the decision of the appeal tribunal in the result must likewise fail.

Equalities and discrimination

39. While I accept that there are passages in the EU Treaty, such as Articles 2 and 3, which contain references to, among other matters, the promotion of equality between men and women and a variety of other legislative provisions aimed at addressing the position of those who are pregnant, none of them assist the claimant. Articles 2 and 3 are not enforceable of themselves. Effectively the Community legislature has had to strike a balance between these aims and other established principles. To hold otherwise than I have done would in my view be impermissibly to re-write the legislation.

40. I agree with Mr Edwards that any discrimination there may be is not on the grounds of sex, as the United Kingdom pays income support to pregnant women who have worker status and thus the right to reside. If there be discrimination, it is on the grounds of nationality, at which point Mr Drabble comes up against the areas where he has reserved his position, as set out at [42] below.

41. If I am wrong in my conclusions in the previous paragraph, it does not help the claimant in relation to Article 7(2) of Regulation 1612/68. Mr Drabble argues that I should construe that provision in a non-discriminatory way, but as I do not consider that that provision creates – or preserves – worker status, to do so would not assist him.

Reserved points

42. Mr Drabble reserves his position, lest he may wish to argue them before a higher Court, in respect of the following:

a. whether the refusal of income support to the claimant amounts to unlawful discrimination on the grounds of nationality, contrary to Article 3 of Regulation 1408/71 (as argued unsuccessfully in Patmalniece v Secretary of State for Work and Pensions [2009] EWCA Civ 621 before the Court of Appeal and in respect of which it is understood that permission to appeal to the Supreme Court has been granted)

b. whether such refusal involved unlawful discrimination on grounds of nationality contrary to Article 12 of the EU Treaty, (a route not open to him before the Upper Tribunal because of the decision of the Court of Appeal in Abdirahman)

c. whether Kaczmarek is rightly decided

d. whether Article 7(3) of the Directive is contrary to European law on as amounting to unlawful sex discrimination.

Concluding observations

43. The particularly vulnerable position of agency workers has to some extent been addressed by Directive 2008/104/EC, but its implementation falls too late to assist the claimant in the present appeal. For the present, a person in the claimant’s position is dependent on claims based on her contribution record (either in the UK or, perhaps, in her country of origin or other country in which she may have worked) and/or, where she qualifies for it, on maternity allowance, which is subject to conditions which do not include the right to reside test.

44. The Secretary of State’s appeal is accordingly allowed.

 

 

 

(signed)

C.G.Ward

Judge of the Upper Tribunal

7 May 2010