Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Case No.  CH/3733/2007

ADMINISTRATIVE APPEALS CHAMBER

 

Before: Upper Tribunal Judge Rowland

 

Attendances:

 

For the Appellant: Mr James Medhurst of the Free Representation Unit

 

For the First Respondent Ms Jane Smith, presenting officer of Slough Borough Council

 

For the Second Respondent: Mr Denis Edwards of counsel, instructed by the Solicitor to the Department of Health and the Department for Work and Pensions

 

 

Decision:  The claimant’s appeal is allowed.  The decision of the Reading appeal tribunal dated 12 July 2007 is set aside and there is substituted a decision that the claimant is not a “person from abroad”.  The local authority must calculate her housing benefit and council tax benefit on that basis.

 

 

REASONS FOR DECISION

 

1. The claimant is a Dutch national who came to the United Kingdom on 3 January 2005.  She was a single parent with two young children but quickly managed to secure a part-time cleaning job, working for 13 hours a week at £5 per hour from 3 March 2005.  She lived with friends for over a year but on 3 July 2006, while still in that employment, she moved into a three-bedroom semi-detached house in respect of which she had agreed to pay £875 p m rent.  Although it appears that she applied for a couple of jobs at around that time, the appeal tribunal found that she was not a jobseeker seeking either additional or alternative employment and that finding is not, and could not be, challenged on this appeal.  Apart from her earnings of £65 p.w., her income consisted of child benefit of £28.40 p.w. and child tax credit of £72.38 p.w.

 

2. When she moved to her new home, the claimant claimed housing benefit and council tax benefit.  Her claims were disallowed on the ground that she had no right of residence in Great Britain, the Channel Islands, the Isle of Man or the Republic of Ireland (see regulation 10 of the Housing Benefit Regulations 2006 (SI 2006/213) and regulation 7 of the Council Tax Benefit Regulations 2006 (SI 2006/215)). Her appeal to the Reading appeal tribunal was dismissed and she now appeals on a point of law against the tribunal’s decision.  Meanwhile, she was awarded housing benefit and council tax benefit from 13 February 2007 because she had by then become a jobseeker, claiming jobseeker’s allowance.  The present appeal therefore covers only the period from 3 July 2006 to 12 February 2007.

 

3. It is common ground that the issue in this case is whether the claimant was a “worker” within the meaning of Article 39 of the Treaty establishing the European Community, so as to enjoy a right of residence under the Immigration (European Economic Area) Regulations 2006 (SI 2006/1003) which implement Directive 2004/38/EC.

 

4. I have considered this issue in CH/3314/2005 to which the appeal tribunal referred.  However, the claimant submits that my approach in that case was wrong, the Secretary of State does not support my approach and even the local authority is not entirely uncritical.  Moreover, my approach has expressly been disapproved in CIS/4144/2007.  Plainly I need to look at the issues afresh.

 

5. There are many decisions of the European Court of Justice in which it has been held that, in order to be treated as a worker, a person must pursue an activity which is effective and genuine, to the exclusion of activities on such a small scale as to be regarded as purely marginal and ancillary, see in particular Levin v. Staatssecretaris van Justice (Case 53/81) [1982] ECR 1035 (para 17), Kempf v. Staatssecretaris van Justice (Case 139/85) [1986] ECR 1741 and Ninni-Orasche v Bundesminister für Wissenschaft, Verkehr und Kunst (Case C-413/01) [2003] ECR I-13187.  What has been argued by the local authority and the Secretary of State is that, in this case, the claimant’s employment is not “effective” because it does not provide her with anything approaching sufficient income to meet her needs.  What, however, is argued by Mr Medhurst on behalf of the claimant is that her employment is genuine and effective because it provides a genuine and effective service for her employer for which she receives appropriate remuneration.

 

6. In CH/3314/2005, I suggested that whether work was “effective” depended on whether it provided the employee with a reasonable income, which could be judged by considering his or her need to claim social assistance.  However, recent authorities show that that may not be quite the right approach.  In Barry v London Borough of Southwark [2008] EWCA Civ 1440, the Court of Appeal appears to have taken the phrase “effective and genuine” as a single criterion merely requiring that work be of actual economic value and it may be significant that the word “effective” has disappeared altogether in the English version of some recent decisions of the European Court of Justice, see Trojani v. Centre public d’aide sociale de Bruxelles (Case C-456/02) [2004] ECR I-7573 (para 18) and Vatsouras and Koupatantze v Arbeitsgemeinschaft Nürnberg 900 (Joined Cases C-22/08 and C-23/08) [2009] ECR I-4585 (para 26), where the phrase used is simply “real and genuine”, although, for instance, the French (“réelles et effectives”) and Italian (“reali ed effettive”) have remained the same. 

 

7. However, that does not really alter the practical issues that arise in the case.  The work is plainly not “ancillary” to some other relationship between the employer and the claimant and so the question that arises is whether the work is “marginal”.  In both Kempf and Barry, the respective courts appear to have taken the view that work that was marginal could not be effective and genuine.  “Marginal” therefore appears to be used as the antithesis of “effective” or “real”.

 

8. I accept that neither the number of hours worked nor the amount of the earnings can be conclusive in all circumstances but that does not prevent both the number of hours worked and the amount of the earnings from being relevant.  Although the concept of “worker” has a Community meaning, it has been acknowledged in Martinez Sala v Freistaat Bayern (Case C-85/96) E.C.R. I-2691 at paragraphs 31 and 32 that the term is not used consistently in Community law.  It takes its flavour from the context in which it is used.  The same legal questions are to be asked but the answers may be different according to the context so that what is to be considered marginal in the context of health and safety legislation or anti-discrimination legislation may not be the same as what is considered marginal when a right of residence is in issue.  It is therefore necessary to look carefully at those cases concerned with rights of residence where the claimant’s income was insufficient to fully to maintain him or her.  Other cases are of less relevance.

 

9. The two earliest cases to which I have been referred are Levin and Kempf both of which concerned claimants who had applied for a residence permit and been refused on the ground that the applicant was not a “favoured EEC citizen” within the meaning of Dutch legislation because the work she or he was doing or seeking was not enough to avoid reliance on social assistance.

 

10. In Levin, the Court considered Regulation (EEC) 1612/68 and Directive 68/360/EEC and held, at paragraph 16 –

 

“It follows that the concepts of “worker” and “activity as an employed person” must be interpreted as meaning that the rules relating to freedom of movement for workers also concern persons who pursue or wish to pursue an activity as an employed person on a part-time basis only and who, by virtue of that fact obtain or would obtain only remuneration lower than the minimum guaranteed remuneration in the sector under consideration, in this regard no distinction may be made between those who wish to make do with their income from such an activity and those who supplement that income with other income, whether the latter is derived from property or from the employment of a member of their family who accompanies them.”

 

11. Thus Mrs Levin’s employment could be considered effective and genuine and she had a right to reside in the Netherlands and could not properly be refused a residence permit.  However, it is to be noted that she did not seek social assistance and the decision was based on the supposition that she would not do so but would “make do” with her income or supplement it from other sources.  Nowadays, it is explicitly recognised that a citizen of any member state has a right to reside in any other member state if he or she is self-sufficient, just as if he or she were a worker, and so it is logical that a person who works to a limited extent to generate a small income from employment but is otherwise self-sufficient should be granted a right of residence even though he or she would be unable to maintain himself or herself either from the earnings alone or from his or her other resources alone.

 

12. In Kempf, the claimant did receive social assistance.  However, the European Court of Justice did not consider it necessary to consider whether his former part-time work could be regarded as “effective and genuine” because the national court had made a finding that it was not on such a small scale as to be purely a marginal and ancillary activity (see para 12).  The Court held –

 

“13. … exceptions to and derogations from the principle of freedom of movement for workers must be interpreted strictly.

 

14. It follows that the rules on this topic must be interpreted as meaning that a person in effective and genuine part-time employment cannot be excluded from their sphere of application merely because the remuneration he derives from it is below the level of the minimum means of subsistence and he seeks to supplement it by other lawful means of subsistence.  In that regard it is irrelevant whether those supplementary means of subsistence are derived from property or from the employment of a member of his family, as was the case in Levin, or whether, as in this instance, they are obtained from financial assistance drawn from the public funds of the member state in which he resides, provided that the effective and genuine nature of his work is established.”

 

This does not decide that the need, or the extent of the need, to rely on social assistance is not capable of being a relevant factor when considering whether employment is marginal and therefore whether the employment is genuine and effective; it only decides that a need to rely on public funds is not capable of preventing a person from acquiring a right of residence if the work is not marginal.

 

13. Mr Medhurst, however, relies upon Ninni-Orasche to argue that it is not appropriate to compare the amount of the claimant’s income with the amount of her outgoings.  This is not a case on rights of residence.  Mrs Ninni-Orasche was an Italian national, married to an Austrian since January 1993, who had been living in Austria since November 1993 and had a residence permit valid until 1999.  Her only employment in Austria had been under a fixed-term contract from 6 July 1995 to 25 September 1995 as a waitress and cashier.  The job appears to have been full-time and Mrs Ninni-Orasche also had some responsibility for ordering and storing stock.  Having obtained in October 1995 an Italian diploma entitling her to enrol in an Austrian university, she applied unsuccessfully for various jobs until March 1996, when she began studying at an Austrian university.  In April 1996, she applied to the Austrian authorities for study finance, to which she would be entitled if Community law required her to be treated as an Austrian national, which the Verwaltungsgerichtshof considered made it necessary for it to be determined whether she was a worker.  It was argued that the duration of her employment was too short and that she was not voluntarily unemployed when that employment came to an end.  In relation to the first of those issues, the Court said –

 

“25. … it must be held that the fact that employment is of short duration cannot, in itself, exclude that employment from the scope of Article 48 of the Treaty.

 

26. In order to be treated as a worker, a person must nevertheless pursue an activity which is effective and genuine, to the exclusion of activities on such a small scale as to be regarded as purely marginal and accessory (see, in particular, Levin, cited above, paragraph 17, and Meeusen, paragraph 13).

 

27. When establishing whether that condition is satisfied, the national court must base its examination on objective criteria and assess as a whole all the circumstances of the case relating to the nature of both the activities concerned and the employment relationship at issue.

 

28. It should be stated that, with respect to the assessment whether employment is capable of conferring the status of worker within the meaning of Article 48 of the Treaty, factors relating to the conduct of the person concerned before and after the period of employment are not relevant in establishing the status of worker within the meaning of that article. Such factors are not in any way related to the objective criteria referred to in the case-law cited in paragraphs 23 and 24 of this judgment.

 

29. In particular, the three factors referred to by the national court, namely the fact that the person concerned took up employment as a waitress only several years after her entry into the host Member State, that, shortly after the end of her short term of employment, she obtained a diploma entitling her to enrol at university in that State and that, after that employment had come to an end, she attempted to find a new job, are not linked either to the possibility that the activity pursued by the appellant in the main proceedings was ancillary or to the nature of that activity or of the employment relationship.

 

30. For the same reasons, nor can the Court accept the argument put forward by the Danish Government that, in order to assess whether activities pursued as an employed person are effective and genuine, it is necessary to take account of the short term of the employment in relation to the total duration of residence by the person concerned in the host Member State, which, in the main proceedings, was two and a half years.

 

31. Finally, as regards the argument that the national court is under an obligation to examine, on the basis of the circumstances of the case, whether the appellant in the main proceedings has sought abusively to create a situation enabling her to claim the status of a worker within the meaning of Article 48 of the Treaty with the aim of acquiring advantages linked to that status, it is sufficient to state that any abusive use of the rights granted by the Community legal order under the provisions relating to freedom of movement for workers presupposes that the person concerned falls within the scope ratione personae of that Treaty because he satisfies the conditions for classification as a ‘worker’ within the meaning of that article. It follows that the issue of abuse of rights can have no bearing on the answer to the first question.”

 

14. Mr Medhurst refers specifically to paragraph 30 and argues that, if regard could not be had in that case to the proportion of the total period of residence during which the applicant had worked, regard cannot be had in the present case to the proportion of the claimant’s needs that she was able to meet from her earnings.  I do not accept that submission.  The length of the fixed-term contract could have been relevant to whether or not Mrs Ninni-Orasche was a worker while the contract subsisted and afterwards but it is impossible to see what relevance there could be in the fact that she had not previously worked when she had not claimed to be a worker before she started her employment.  Paragraph 30 does not exclude reference to a claimant’s needs during the period for which he or she is actually working.  Nor was there any suggestion in that case that Mrs Ninni-Orasche was not able to maintain herself while working and therefore the absence of any reference to that as a consideration is not significant.

 

15. In relation to the question of abuse raised in paragraph 31, it is important to look at the way the Court answered the second question before it, concerned with whether Mrs Ninni-Orasche’s subsequent unemployment was voluntary.  It did not confine itself only to that question.  Having pointed out that migrant workers were guaranteed certain rights linked to the status of worker even when no longer in an employment relationship but that, in relation to the rights of students, there had to be some continuity between such employment and university education except where the worker was involuntarily unemployed and was obliged by labour market conditions to undergo retraining, it said –

 

 “36. However, that finding cannot give rise to a situation whereby a national of a Member State may enter another Member State for the sole purpose of enjoying, after a very short period of occupational activity, the benefit of the student assistance system in that State. Such an abuse is not covered by the Community provisions in question (see, to that effect, Lair, paragraph 43).

 

…

 

41. First of all, it is for the national court to conduct the examinations of fact necessary to determine, in accordance with the case-law referred to in paragraphs 34 to 36 of this judgment, whether there is continuity between the activity as an employed person previously performed by the appellant in the main proceedings and the course of studies subsequently undertaken, whether the appellant became unemployed involuntarily and whether she was obliged by conditions on the labour market to undertake occupational retraining or whether she performed that activity with the sole aim of benefiting from the system of student assistance in the host Member State.”

 

16. The Court held that the coming to end of a fixed-term contract did not necessarily mean that the employee became involuntarily unemployed but it also pointed out that, when considering whether she had worked with the sole aim of benefiting from the Austrian system of student finance, regard had to be had to the facts that Mrs Ninni-Orasche appeared to have entered Austria to live with her husband and that she was lawfully resident in Austria.

 

17. Thus, the question of possible abuse was to be addressed by the national court making detailed findings of fact on the legal issues raised by the Community legislation relating to students and was not relevant to the question whether Mrs Ninni-Orasche had or had not been a worker while her contract was subsisting, it not having been suggested that the whole contract was a sham and not genuine.

 

18. What must follow is that the present case cannot be approached on the basis that the claimant was acting abusively in seeking social assistance on the basis of her limited work.  The question is simply whether, in the context in which the question arises, the work was marginal.  Nonetheless, Ninni-Orasche does not decide that, in considering that question, a need to rely on social assistance is totally irrelevant, although such a need cannot be conclusive.

 

19. However, what is absolutely clear from the decisions of the European Court of Justice is that the question whether employment is genuine and effective, rather than marginal or ancillary, is a question for the national court.  This has been emphasised recently in Genc v Land Berlin (Case 14/09), in which the Verwaltungsgericht Berlin referred to the Court the question whether a person working only 5.5 hours a week (by comparison with a normal working week of 39 hours) and earning only EUR 7.87 per hour could be a worker.  The Court, having decided that it was not necessary to obtain an opinion from the Advocate General, said –

 

“21 Having established that Ms Genc performs services for and under the direction of an employer in return for remuneration, the national court has ipso facto established the existence of the constituent elements of any employment relationship, namely subordination and the payment of remuneration in return for services rendered (see, to that effect, Case C‑456/02 Trojani [2004] ECR I‑7573, paragraph 22).

22       The national court is, however, uncertain whether, in view of the particularly low number of hours of work performed by the person concerned and of her remuneration, which covers only partially the minimum necessary for subsistence, a minor activity such as that performed by Ms Genc is capable of entitling her to the status of worker within the meaning of the Court’s case-law.

23       In that regard, it should be borne in mind that, in Case C-444/93 Megner and Scheffel [1995] ECR I-4741, the Court was called on to decide, inter alia, whether two European Union nationals employed in Germany as cleaners with a 10‑hour working week and remuneration not exceeding, per month, one seventh of the monthly reference amount belonged to the working population within the meaning of Council Directive 79/7/EEC of 19 December 1978 on the progressive implementation of the principle of equal treatment for men and women in matters of social security (OJ 1979 L 6, p. 24).

24       In that judgment, the Court rejected the argument of the German Government that persons in minor employment are not part of the working population because the small earnings which they receive from such employment are not sufficient to satisfy their needs (Megner and Scheffel, paragraphs 17 and 18).

25       The Court held that the fact that a worker’s earnings do not cover all his needs cannot preclude him from being a member of the working population and that employment which yields an income lower than the minimum required for subsistence or normally does not exceed even 10 hours a week does not prevent the person in such employment from being regarded as a worker within the meaning of Article 39 EC (see, to that effect, Case C‑213/05 Geven [2007] ECR I‑6347, paragraph 27, and Megner and Scheffel, paragraph 18).

26       Although the fact that a person works for only a very limited number of hours in the context of an employment relationship may be an indication that the activities performed are marginal and ancillary (Case C‑357/89 Raulin [1992] ECR I-1027, paragraph 14), the fact remains that, independently of the limited amount of the remuneration for and the number of hours of the activity in question, the possibility cannot be ruled out that, following an overall assessment of the employment relationship in question, that activity may be considered by the national authorities to be real and genuine, thereby allowing its holder to be granted the status of ‘worker’ within the meaning of Article 39 EC.

27       The overall assessment of Ms Genc’s employment relationship makes it necessary to take into account factors relating not only to the number of working hours and the level of remuneration but also to the right to 28 days of paid leave, to the continued payment of wages in the event of sickness, and to a contract of employment which is subject to the relevant collective agreement, in conjunction with the fact that her contractual relationship with the same undertaking has lasted for almost four years.

28       Those factors are capable of constituting an indication that the professional activity in question is real and genuine.

29       The national court states, however, that, in the field of the interpretation of the concept of ‘worker’, the Court’s case‑law does not contain a threshold, determined on the basis of working time and level of remuneration, below which an activity would have to be regarded as being marginal and ancillary, and that this contributes to a lack of precision in the concept of marginal and ancillary activity.

30       In that regard, it should be borne in mind that the procedure for referring questions for a preliminary ruling under Article 234 EC establishes a relationship of close cooperation between the national courts and the Court of Justice, based on the assignment to each of different functions, and constitutes an instrument by means of which the Court provides the national courts with the criteria for the interpretation of European Union law which they require in order to dispose of disputes which they are called upon to resolve (Joined Cases C‑260/00 to C-263/00 Lohmann and Medi Bayreuth [2002] ECR I‑10045, paragraph 27, and Case C‑259/05 Omni Metal Service [2007] ECR I‑4945, paragraph 16).

31       It is one of the essential characteristics of the system of judicial cooperation established under Article 234 EC that the Court replies in rather abstract and general terms to a question on the interpretation of European Union law referred to it, while it is for the referring court to give a ruling in the dispute before it, taking into account the Court’s reply (Case C‑162/06 International Mail Spain [2007] ECR I‑9911, paragraph 24).

32       The analysis of the consequences which all those factors which characterise an employment relationship, in particular those set out in paragraph 27 above, may have for the finding as to whether Ms Genc’s employment is real and genuine and, therefore, for her status as a worker is a matter coming within the jurisdiction of the national court. The national court alone has direct knowledge of the facts giving rise to the dispute and is, consequently, best placed to make the necessary determinations.

33       Having regard to the foregoing considerations, the answer to the first question is that a person in a situation such as that of the applicant in the main proceedings is a worker within the meaning of Article 6(1) of Decision No 1/80, provided that the employment in question is real and genuine. It is for the national court to carry out the examinations of fact necessary to determine whether that is so in the case pending before it.”

20. It seems to me to be of some significance that, although the Court was prepared to rule in Megner and Scheffel v Innungskrankenkasse Vorderpfalz (Case C-444/93) [1995] I-4741 that the claimants fell within the scope of Directive 79/7/EEC, concerned with equal treatment in social security matters, it was not prepared to make any ruling one way or the other in Genc.  This reinforces my view that what is to be regarded as marginal where a right of residence is in issue may not necessarily be the same as what is marginal in equal treatment and employment rights cases.  It also suggests that national courts may reasonably take different views on the facts of such cases.

 

21. Did the appeal tribunal err in law in the present case?

 

22. Mr Medhust submitted that the appeal tribunal erred because it had regard to whether or not the claimant had been seeking work.  I accept, as did Ms Smith, that that question was irrelevant to the question whether the claimant was a worker, but I do not accept that the appeal tribunal erred in addressing the question because it was highly relevant to the prior question before the appeal tribunal which was whether the claimant had a right of residence.  A person in minor part-time employment who is seeking alternative or additional employment may have a right of residence as a workseeker, even if he or she is not, and never has been, a worker.  The appeal tribunal was right, in my judgment, to consider both whether the claimant was a worker and whether she was a workseeker.

 

23. Mr Medhurst also submitted that the appeal tribunal erred simply because it followed my decision in CH/3314/2005.  Recognising that mere dependence on social assistance was not enough to exclude a person from being a worker and recognising also that neither the amount of hours worked nor the amount of earnings could be conclusive, I suggested in that decision a formulaic approach based on the structure of the British social assistance scheme.  Under that formula, the claimant in the present case would be unsuccessful.  During the course of the proceedings before me, I suggested an alternative formula under which she would have been successful. 

 

24. Ms Smith said that she thought different local authorities might have arrived at different answers in the present case.  She submits that it is very unsatisfactory not having a clear test that decision-makers could apply consistently but is doubtful as to whether a formula is consistent with the decisions of the European Court of Justice.  Mr Edwards submits that a formula is inappropriate and regard should simply be had to the principle of proportionality, which enables regard to be had to all the circumstances of the case in the context of the legal issue before the tribunal or court.  Mr Medhurst, submits that regard cannot be had to anything outside the employment relationship and that the formulae I have suggested are unlawful on that ground.

 

25. I am prepared to accept that a formulaic approach is apt to raise as many questions as it answers.  However, I do not accept that no regard can be had to matters outside the employment relationship when determining whether a person is a worker for the purpose of obtaining a right of residence.  In Trojani, the Advocate General pointed out that there is no obligation of member states to provide social assistance to those without a right of residence and it was held that Member States can require of nationals of other states who wish to reside within their territory that they have sufficient resources to avoid becoming a burden on their social assistance systems during their period of residence.  It is true that, as Mr Medhurst submits, in both that case and in Grzelczyk v. Centre public d’aide sociale d’Ottignes-Louvain-la-Neuve (Case C-184/99) [2001] ECR I-6193, the Court was concerned with people who were not economically active.  However, Article 39 of the Treaty guaranteed freedom of movement for workers and not for those who intended to be reliant on social assistance and it seems to me that it is perfectly proper in the present context to consider whether work is “marginal” having regard to the extent of a person’s need or intention to claim social assistance while accepting that a need or intention to claim social assistance cannot be conclusive.

 

26. I therefore prefer the approach suggested by Mr Edwards of simply considering what is proportionate.  It is fair and gives effect to one of the overarching principles of Community law.  Moreover, proportionality is an approach that enables all possibly relevant matters to be taken into consideration.  One such matter is that refusing to accept that a person is a worker is not fatal to his or her right of residence if that person is prepared to seek further employment and can accordingly qualify for a right of residence as a workseeker.  Whether or not that would have been an option for Mrs Genc, given the legislation in issue in her case, is not clear from the Court’s judgment. I am not aware of any case in which the terms of the reference to the Court have enabled the Court to consider whether a part-time worker in minor employment could have had a right of residence as a workseeker rather than as a worker.  As I have indicated above, it seems plain that that is possible in principle but the appeal tribunal addressed that issue in the present case and decided that the claimant was not in fact seeking work.

 

27. The argument of the local authority and Secretary of State is that it is an unreasonable burden on the public finances of the United Kingdom for the claimant in the present case to be found to have a right of residence on the basis of earnings of only £65 p.w. when, on the tribunal’s finding, she was unwilling to seek further work and the cost of topping up her earnings to a basic subsistence level would be of the order of £300 p.w.  That was the argument put to the appeal tribunal by the local authority and Ms Smith and Mr Edwards submit that the appeal tribunal did not err in accepting it.  Mr Medhurst submits that, if a formula is inappropriate, the appeal tribunal erred in following CH/3314/2005.  However, although it was kind enough to describe my decision as “helpful”, it seems to me to have gone back to the test to be found in the decisions of the European Court of Justice and reached its own conclusion without reference to my formula, finding the work carried on by the claimant to be “marginal and ineffective in terms of her family” and deciding on that ground that she was not a worker.  If the claimant had only just started working, I would dismiss this appeal.

 

28. However, in the course of his arguments that a person’s needs are irrelevant to the question whether employment is marginal, Mr Medhurst made the point that it would be unsatisfactory to have a position where a person who had been a worker ceased to be a worker through a change of personal circumstances unrelated to his or her employment.  That is certainly a point that has to be borne in mind and it seems to me that it required the appeal tribunal to consider not only the claimant’s position after she had moved to her new accommodation but also her position immediately before that move.  The appeal tribunal did not do so.  The claimant needed only £100 p.w. from public funds while living rent-free, compared to £300 p.w. if she was to pay her rent in her new accommodation.  It would still have been open to the appeal tribunal to decide that the claimant’s work had been marginal and she had not been a worker but such a decision was not inevitable.  Accordingly, I allow this appeal and set aside the appeal tribunal’s decision.

 

29. I can substitute my own decision.  It may well be that the present case is a particularly unusual one.  Certainly, the position has been complicated by decisions of HMRC awarding child benefit and child tax credit which imply that HMRC was satisfied that the claimant did have a right to reside in the United Kingdom (see regulation 23(4) of the Child Benefit (General) Regulations 2006 (SI 2006/223, re-enacting earlier legislation which was to the same effect from 1 May 2004) and regulation 3(5) of the Tax Credits (Residence) Regulations 2003 (SI 2003/654, as amended)).  Had those awards not been made, the present case might not have arisen as the claimant would probably have been pressurised into either claiming jobseeker’s allowance or returning to Holland. 

 

30. Once awarded those benefits – child benefit was awarded from 25 July 2005 but I do not know when child tax credit was awarded – the claimant’s earnings were sufficient to enable her basic needs (as measured by the “applicable amount” for income-related benefits) to be met while she and her children were living in free accommodation.  Consequently, the incentive to seek other employment and claim jobseeker’s allowance was reduced, although she could, I think, have claimed a small amount of jobseeker’s allowance because part of her earnings would have been disregarded when her income was assessed.  The most significant feature of this case is the length of time for which the claimant was living in rent-free accommodation and either making do or else surviving quite satisfactorily on benefits lawfully provided by another organ of the State.   There is nothing before me to suggest that HMRC failed to consider whether the claimant had a right of residence and, although I might well have taken a different view had I been considering this case in 2005, it cannot be said that it was wholly unreasonable to consider that the claimant had a right of residence.  One cannot retrospectively apply pressure to seek further work.

 

31. Against that background and having regard to Levin, I feel constrained to find that the claimant’s work had not been marginal and that she was a worker.  Accordingly, I give the decisions set out above.

 

32. It may be that this case indicates a need for local authorities to work more closely with HMRC.  Where a claimant receives an income-related benefit administered by the Secretary of State, a local authority is not required to consider whether the claimant has a right of residence because the Secretary of State is taken to have decided that issue when making the relevant award.  There is no equivalent provision in relation to decisions of HMRC.  It is not satisfactory for different public authorities to reach different conclusions on the same issue and, in this context, that is not just because the result is administratively untidy but also because a claimant awarded benefits on a seemingly proper basis can be misled into not acting in the way he or she would if deprived of those benefits.  Notwithstanding that second consideration, local authorities are not bound to follow decisions of HMRC but it seems to me that, if there are good reasons for thinking that a decision of HMRC is wrong, there should be a mechanism enabling a local authority to draw that matter to HMRC’s attention so that HMRC can consider whether it wishes to maintain its decision and it can properly be considered whether a common approach should be taken.

 

 

 

 

 

 

 

Mark Rowland

18 March 2011