Upper Tribunal (Administrative Appeals Chamber)

Decision of the Upper Tribunal
(Administrative Appeals Chamber)

As the decision of the First-tier Tribunal (held at Birmingham on 24 September 2009 under reference 024/09/04609) involved the making of an error in point of law, it is SET ASIDE under section 12(2)(a) and (b)(i) of the Tribunals, Courts and Enforcement Act 2007 and the case is REMITTED to a differently constituted First-tier Tribunal (Social Entitlement Chamber).

DIRECTIONS:

A.          The tribunal must undertake a complete reconsideration of the issues that are raised by the appeal and, subject to the tribunal’s discretion under section 12(8)(a) of the Social Security Act 1998, any other issues that merit consideration.

B.          In particular, the tribunal must investigate and decide whether the claimant remained self-employed at the time of her claim for income support. In doing so, the tribunal must not take account of circumstances that were not obtaining during the period from the date of claim (31 October 2008) to the date of the decision under appeal (11 February 2009)): see section 12(8)(b) of the Social Security Act 1998. Later evidence is admissible, provided that it relates to the time of the decision: R(DLA) 2 and 3/01.

Reasons for Decision

A.          The issue

1.           The issue for the First-tier Tribunal was whether the claimant was self-employed at the time of her claim for income support. If she was, she had a right to reside by virtue of Article 7(1)(a) of Directive 2004/38/EC and regulations 6(1)(c) and 14(1) of the Immigration (European Economic Area) Regulations 2006. And if she had a right to reside, she was not a person from abroad who was barred from entitlement to income support.

B.          History and background

2.           The claimant is Polish. Piecing together her various statements in the papers produces this history. She came to the United Kingdom in 2004 and worked from July to December of that year. She then went back to Poland, returning to the United Kingdom in July 2005. She married here in September 2005 and the couple had a child, who was born on 13 January 2008. She left her husband on 31 October 2008 and claimed income support on the same date. According to the documentation on her claim, she still had an ongoing business but had reduced her hours from 7 January 2008 (page 17). The latter date was shortly before her child was born. According to her letter of appeal, she worked from January 2006 to December 2008, when she had to stop (page 11). Her fullest account was given to the tribunal (page 78 to 81). After a period of voluntary work, she used her language skills to support Polish and Slovak children in various schools, being paid on invoices for each hour of work. Towards the end, she worked for a single school. That work ended in February 2009 through lack of funding. She was able to produce details of her income from one school for the period August 2007 to March 2008 (page 50). She had not been able to obtain evidence from other schools, because they were closed for the summer. She said she had sent in bank statements, but they were not in the papers. She did not say to whom she had sent them.

3.           On that evidence, the tribunal decided that the claimant was still self-employed at the time of the claim. The Secretary of State applied for permission to appeal, arguing that a claimant who is not working cannot be self-employed and that there is no concept of retained status as a self-employed person. I gave permission. In response to the appeal, the claimant’s representative argued that the tribunal was entitled to accept the claimant’s oral evidence of her work and that this was sufficient to show continuing self-employment.

Analysis

4.           I accept that there is no concept of retained self-employed status while a person is looking for work. It is possible to retain worker status in those circumstances, but not self-employed status. See Article 7(3) of Directive 2004/38/EC and regulation 6(2) and (3) of the Immigration (European Economic Area) Regulations 2006.

5.           I do not accept that a claimant who is for the moment doing no work is necessarily no longer self-employed. There will commonly be periods in a person’s self-employment when no work is done. Weekends and holiday periods are obvious examples. There may also be periods when there is no work to do. The concept of self-employment encompasses periods of both feast and famine. During the latter, the person may be engaged in a variety of tasks that are properly seen as part of continuing self-employment: administrative work, such as maintaining the accounts; in marketing to generate more work; or developing the business in new directions. Self-employment is not confined to periods of actual work. It includes natural periods of rest and the vicissitudes of business life. This does not mean that self-employment survives regardless of how little work arrives. It does mean that the issue can only be decided in the context of the facts at any particular time. The amount of work is one factor. Whether the claimant is taking any other steps in the course of self-employment is also relevant. The claimant’s motives and intentions must also be taken into account, although they will not necessarily be decisive.

6.           The European Court of Justice has developed a body of caselaw on worker status. There is no equivalent caselaw on self-employment. The claimant’s representative has assumed that the worker caselaw applies equally to the self-employed.

7.           I summarised some of the caselaw on worker status in CIS/1793/2007:

‘11. Worker is a European concept. That means that it is defined by European law, through the decisions of the European Court of Justice. Member States cannot adopt their own definitions of the concept for European purposes. See Hoekstra v Bestuur der Bedrijfsvereniging voor Dertailhandel en Ambachten [1964] ECR 177.

…

13. Work means the performance of services under the direction of another for remuneration. See Lawrie-Blum v Land Baden-Wurttemberg [1986] ECR 2121, paragraph 17. The services must be in pursuit of an economic activity. See Levin v Staatssecretaris van Justitie [1982] ECR 1035, paragraph 17. The evidence of the few jobs that the claimant had been 2001 and 2004 suggests that they satisfied these conditions.

14. The temporary nature of the jobs is relevant. In Lawrie-Blum, the Court included in its definition of work that it should be for a certain period of time. However, the Court has held that work for any given period is not essential. See Lair v Universitat Hannover [1988] ECR 3161, paragraph 42. The Court has applied the same test whether the activity undertaken is part-time, irregular or intermittent: does it represent the pursuit of an effective and genuine economic activity? See Levin paragraph 11. Activities which are on such a small scale as to be purely marginal and ancillary do not amount to work. See Levin paragraph 17. In Raulin v Minister van Onderwijs en Wetenschappen [1992] ECR I-1027, the work that was irregular and intermittent. It held (at paragraphs 14 and 15) that, in determining whether activities are purely marginal and ancillary, regard may be had to their irregular nature and limited duration. I consider that the same test is appropriate if the activity undertaken is temporary. The Court’s reference to the ‘very limited number of hours in a labour relationship’ shows that the test applied to temporary work.’

8.           That cannot all apply to the self-employed. The notion of acting under the direction of another is certainly not an essential feature of self-employment. However, most of it can safely be applied. It is, though, difficult to apply when there is a significant change. Is the claimant experiencing a temporary lull in work until more can be found, with self-employment surviving? Or is there a change to occasional and isolated pieces of work, which is insufficient to amount to continuing self-employment? So much depends on the circumstances and, therefore, on the evidence. This is the error that I find in the tribunal’s reasoning. It did not have sufficient, detailed information about the amount of work that the claimant was doing in the period from October 2008 to February 2009. There was a problem with lack of evidence from the schools, but the claimant could have given oral evidence. Likewise, she could have given oral evidence of what was in her bank statements. She could have explained what she did to find more work and told the tribunal of her intentions. She could have told the tribunal of her other circumstances at the time, which must have been one of uncertainty and upheaval for her following her separation. That was important background that might be relevant to whether she was in a position to continue self-employment. It was only possible for the tribunal to make a sound decision on self-employment when it had that sort of information. (I do not intend my list to be exhaustive.) Its decision was based on inadequate inquiry and information. That is why I have set it aside and why a rehearing is appropriate.

9.           There is also this factor. An analysis of whether the claimant remained self-employed requires not just facts but explanation. The tribunal’s reasons are short on explanation, which was particularly important in respect of a period in the claimant’s life that might have represented a transition. It is, though, not necessary to set the tribunal’s decision aside on that ground also.