(First draft) UK s welfare reforms: re-shaping the paradigm of social solidarity in the EU. Dr Rufat Babayev

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1 (First draft) UK s welfare reforms: re-shaping the paradigm of social solidarity in the EU 1. Introduction Dr Rufat Babayev Labour migration has turned into a major issue on the political agenda of several EU Member States. New legislation is being introduced that impacts on the position of EU migrants. 1 The British government, for instance, has enacted a package of welfare reforms concerning nationals of other EU Member States who are employed or seeking employment in the UK. This includes, first, significant changes made to the determination and retention of the status of worker and job-seeker under Union law. Second, they also encompass new criteria for the entitlement of Union citizens to benefits such as Job-seeker s Allowance, Housing Benefit, Universal Credit, Child Benefit and Child Tax Credit. This contribution aims to explore these welfare reforms in light of the relevant Union primary and secondary law. The main question addressed here is whether such a national initiative complies with Union law, according to which Union citizens have a fundamental right to seek and engage in work, both in an employed and selfemployed capacity, anywhere in the European Union on the basis of equality and non-discrimination on grounds of nationality. Drawing upon the Court s recent rulings, 2 it is argued that while some of the changes introduced by the British government are, in fact, in line with Union law, it is yet difficult to formulate this conclusion in general terms. There are aspects of the reforms that either contradict Union law or their compliance requires further judicial clarification. Underpinned by manifestly restrictive interpretation, they delimit the extent of rights and principles by means of which the notion of social solidarity is effectively manifested at Union level. Considered in a much wider context, these welfare reforms play a part in re-shaping and transformation of the Union model of social solidarity that is also currently occurring at Union level. From a political perspective, this is reflected in the compromise reached by the European Council on the resettlement of the UK s EU membership, which includes a number of limitations of Union citizens rights residing in other Member States. 3 Although the European Council Conclusions specifically refer to the UK, the arrangements envisaged equally encompass all Member States. 4 In a similar vein, from a judicial point of view, there seems to be an on-going retreat from the traditional general purposive interpretation of the Treaty provisions to the 1 Blauberger, M. and Schmidt, S.K. (2014), Welfare Migration? Free Movement of EU Citizens and Access to Social Benefits, Research and Politics, 1. 2 Judgment of 11 November 2014, Case C-333/13 Dano, nyr; Judgment of 15 September 2015, Case C-67/14 Alimanovic, nyr; Judgment of 25 February 2016, Case C 299/14 García-Nieto, nyr. 3 European Council Meeting Conclusions 18 and 19 February 2016, EUCO 1/16, Brussels, 19 February See also, Spaventa, E, Striving for Equality: who deserves' to be a Union citizen? in Scritti in onore di Giuseppe Tesauro (Napoli: Editoriale Scientifica 3), p

2 more subdued reasoning confined to the restrictive reading of Union secondary legislation. 5 Although this may provide much needed clarity as to the extent of rights granted to Union citizens, it nevertheless narrowly frames the Union model of social solidarity than one could construe from the Court s early jurisprudence. The analysis in this contribution starts in Section 2 that briefly outlines the contours of the national and Union models of social solidarity. Section 3 then examines the compliance of the UK s welfare reforms with Union law. This section is divided into two parts. Part One concerns the category of workers. It involves the analysis of the so-called Minimum Earning Threshold test introduced as a means to determine the status of worker and the temporal limitations imposed on its retention. Part Two, in turn, focuses on the category of job-seekers by examining the amendments made to the eligibility criteria for Job-seeker s Allowance and other types of welfare benefits. This is followed by Section 4 that places these policy changes in a wider context of the recent political and judicial developments in the EU. This contribution concludes in Section 5 by arguing that the full compliance of the UK s welfare reforms with Union law is questionable, as some limit the extent of rights granted under Union law. The prospect of this being remedied by means of judicial review, in turn, seems remote at present considering the recent developments taking place at Union level. 2. National and Union models of social solidarity at crossroads The EU constitutes a multi-level welfare system characterised by a complex combination of local, national and [Union] policies. 6 At its core inherently lies the idea of social solidarity, 7 which is a key principle laying the foundation of a welfare state system - a form of a community whose members collectively choose to meet certain social objectives that cannot be achieved within a private market setting. 8 This, in general, includes the assurance for all community members the level of decent existence 9 in a range of eventualities involving, but not limited to disability, unemployment, dismissal or retirement. 10 The primary catalyst here is the act of involuntary subsidisation, 11 whereby the wealth obtained by some community members is directed to meet the needs of others through the medium of public institutions. 12 The effective realisation of such redistribution of wealth rests on two strands. First, it is the existence of a common identity, forged through shared social 5 See also, Peers, S, The final UK renegotiation deal: immigration issues (last accessed 21 April 2016). 6 Dougan, M. and Spaventa, E. (2005), Wish You Weren t Here : New Models of Social Security in the European Union in Spaventa, E. and Dougan, M. (eds.), Social Welfare and EU Law, Oxford Hart Publishing, p Ottmann, J. (2008), The Concept of Solidarity in National and European Law: The Welfare State and the European Social Model, Vienna Online Journal on International Constitutional Law 2, p Van Der Mei, A.P. (2003), Free Movement of Persons Within the European Community, Oxford, Hart Publishing, p Schuyt, K. (1998), The Sharing of Risks and the Risks of Sharing: Solidarity and Social Justice in the Welfare State, Ethical Theory and Moral Practice, 1, p Van Der Mei, supra, n. 8, p Opinion of AG Fennelly in Case C-70/95 Sodemare, [1997] ECR I-03395, para Lenaerts, K. (2011), European Union Citizenship, National Welfare Systems and Social Solidarity, Jurisprudence, 18, p

3 and cultural experiences, and institutional and political bond. 13 This factor draws the line between those who are considered as outsiders and those who are insiders as either contributors or, more importantly, beneficiaries in the operation of a solidaristic community. 14 Second, the effective redistribution of wealth requires realistic management of community resources through balancing revenues generated and those spent in social support. 15 A solidaristic community reflecting both aspects primarily exists at national level. The specific bond that engages one in the process of subsidisation is expressed through a shared nationality. A State s welfare system is therefore traditionally directed towards maintaining the well-being of its own nationals, 16 which is reflected in its tax and welfare policies. In contrast, a substantially different form of social solidarity has been formed at Union level. For one, the EU lacks the ability to formulate its own tax and welfare policies and, hence, the necessary redistributive competence. As a result, the sense of social solidarity manifested at Union level is effectively realised by means of national welfare systems. In particular, the Treaty provisions on the free movement of persons and Union citizenship establish rights and principles that are aimed at integrating Union citizens into the circle of contributors and, more importantly, beneficiaries of the subsidisation process at national level. 17 The actual extent of such an arrangement, however, has been at the forefront of various political and scholarly debates. 18 Given the possible risk of deranging both moral and financial underpinnings of the subsidisation process at national level, 19 the key issue here centres around delineating the actual extent of rights and principles established under Union law and, ultimately, setting the boundaries of the Union model of social solidarity. 3. Delimiting the Union model of social solidarity at national level This issue has acquired significant political prominence in the UK in the aftermath of the recent economic crisis and the adoption of an austerity-driven economic policy. Along with political debates, the British government has introduced a package of welfare reforms affecting the position of Union citizens in the UK that has led to substantial redefinition of the Union model of social solidarity Category of Union workers One aspect of the welfare reforms concerns the determination of the status of worker within the meaning of Union law and the time limit on its retention. Union citizens, engaged in an economic activity in the host Member State as workers, are entitled to a broad range of rights. Due to the fundamental nature of the free movement of workers, the criteria of who qualifies as a worker have always been broadly 13 Dougan M. and Spaventa E., supra, n. 6, p Lenaerts K., supra n Dougan M. and Spaventa E., supra, n. 6, p Van Der Mei, supra, n. 8, p Dougan M. and Spaventa E., supra, n. 6, p Verschueren, H. (2015), Preventing Benefit Tourism in the EU: A Narrow or Broad Interpretation of the Possibilities Offered by the ECJ in Dano?, Common Market Law Review, 52, p Dougan M. and Spaventa E., supra, n. 6, p

4 defined by the Court with no clear-cut de minimis conditions imposed. This is rationalised by their lawful engagement in an economic activity in the host Member State and, more importantly, their role as bona-fide contributors to financing its social policies Status of worker The British government first introduced the so-called Minimum Earning Threshold (MET) test as a means to determine the status of worker, which is based on a twotier approach. The first tier looks at whether a person s earnings have been at least 150 during the last three months. 21 This amount is equivalent to working 24 hours a week at National Minimum Wage and is set at a point at which employees pay Class 1 National Insurance contributions. 22 Union citizens who satisfy this threshold are automatically regarded as workers for the purpose of Article 45 TFEU. Those whose earnings come below it are then subject to the second tier of the assessment, which involves additional examination of whether the accomplished work is genuine and effective in accordance with the Court s jurisprudence. Taken on face value, the assessment under the MET test does not sit well with the principles established by the Court as regards the personal scope of Article 45 TFEU. 23 From the very beginning, the definition of who is regarded as a worker has been given its own independent meaning. 24 In particular, to ensure the effectiveness of Article 45 TFEU, the Court has rejected the possibility of the term worker to be interpreted in accordance with national law. Otherwise, according to the Court, the effect of Article 45 TFEU could be jeopardised, 25 as Member States, acting unilaterally, could easily modify the meaning of the term worker and exclude at will certain categories of persons from the benefit of the Treaty. 26 The definition of the term worker has, therefore, been declared to be exclusively a matter of Union law, 27 according to which, however, a person is only required to pursue an activity that is genuine and effective, and not purely marginal and ancillary. 28 Viewed in this light, a potential risk posed by the use of the MET test may not seem altogether unfounded. The assessment under the first tier is premised upon a threshold that is estimated with a reference to the national level of minimum wage, which can lead to unilateral delimitation of the personal scope of Article 45 TFEU. In fact, several Member States have proposed to use such a national standard as a criterion 20 Judgment of 13 December 2012, Case C-379/11, Caves Krier Frères Sàrl, nyr, para. 53. See also, Golynker O. (2005), Jobseekers Rights in the European Union: Challenges of Changing the Paradigm of Social Solidarity, European Law Review, 30, p Press Release of the Department for Work and Pension, 21 February 2014, (last accessed on 19 April 2016). 22 Memo DMG 1/14, JSA(IB) - Right to Reside Establishing Whether an EEA National Is/Was A Worker Or A Self- Employed Person, DMA Leeds: February See eg. Case C 212/05 Hartmann, [2007] ECR I 6303, para Case Hoekstra, [1964] ECR 347, para Ibid. 26 Case 53/81 Levin, [1982] ECR I-1035, para Case 66/85 Lawrie Blum, [1986] ECR 2121, para Case 139/85 Kempf, [1986] ECR

5 to determine the status of worker. This, however, was rejected by the Court to ensure the effectiveness of Article 45 TFEU, as otherwise the meaning of the concept of worker would vary from Member State to Member State due to the difference in standards used. 29 Although, the test under the first tier alone is likely to contravene Article 45 TFEU, it does not seem problematic as such combined with the assessment under the second tier. Those whose earnings are below the set threshold are not simply denied the status of worker and the corresponding rights. Instead, the second tier envisages further examination against a broad range of criteria. 30 As pointed out by the Department of Work and Pension, this involves the assessment of each case, as a whole, taking into account of all circumstances. 31 Among factors to consider are, for instance, the period of employment, the regularity of employment, the numbers of hours worked and the level of earnings. 32 The threshold under the first tier could, thus, be deemed to simplify the administrative burden of establishing the status of worker without narrowing the personal scope of Article 45 TFEU. In particular, it could operate as a mere necessary guidance given the lack of a consistent approach in the Court s jurisprudence. It is true that a more restrictive approach being adopted under the second tier cannot altogether be discarded, particularly in case of parttime work. 33 However, from a practical point of view, the new policy does not appear to be any different from the former one. 34 As apparent from the new policy guidelines for decision-makers, each case is required to be decided on its own merits, 35 considering the principles recognised in the Court s jurisprudence. 36 This, in turn, follows the approach adopted by the Court, according to which whether or not a person is a worker for the purpose of Article 45 TFEU should only be decided based on the overall assessment of an employment relationship, as each relevant factor taken separately is not conclusive enough Retention of the status of worker The changes brought by the British government do not only concern the determination of the status of worker, but also amend the conditions for its retention. As a general rule, a Union citizen loses the status of worker, once he/she is no longer in an employment relationship. 38 However, such status is not lost immediately, but can be retained even after ceasing an economic activity. 39 The circumstances under which this is allowed are specified under Article 7 of Directive 2004/38. This, first, includes a situation when a Union citizen is temporary unable to work due to either an illness or accident. Although the Directive only explicitly mentions two reasons, 29 Levin, para Memo DMG 1/14, supra n. 20, para Ibid. 32 Housing Benefit Circular, Department for Work and Pensions, HB A3/2014, para O Brien, C. (2015), The pillory, the Precipice and the Slippery Slope: The Profound Effects of the UK s Legal Reform Programme Targeting EU Migrants, Journal of Social Welfare & Family Law, 37, p See also, Evans, M. (2015), EU migrants, abuse and access to welfare, Journal of Immigration, Asylum and Nationality Law, 29, p Memo DMG 1/14, supra n. 22, para See Annex A to Housing Benefit circular, supra n Joined Cases C-22/08 and C-23/08 Vatsouras, [2009] ECR I-04585, para Case C-85/96 Martinez Sala, [1998] ECR 02691, para Case 39/86 Lair, [1988] ECR 3161, para

6 the Court has recently extended this to include a temporary absence because of pregnancy and childbirth. 40 Second, Article 7 also allows the retention of the status of worker in case a Union citizen becomes involuntary unemployed. In this respect, the Directive distinguishes between those who have been employed for more than a year and those who have been employed for less than a year. Under Article 7(3)c, the latter category can retain the status of worker for no less than six months. Finally, Article 7 also envisages the possibility to retain the status when a Union citizen embarks on vocation training, though subject to the condition that it relates to the previous employment. 41 The recently introduced reforms primarily concern the category of Union citizens who have become involuntarily unemployed. According to the new policy, those who have in duly recorded involuntary unemployment and registered as job-seekers after having been employed in the UK for at least a year can retain the status of worker for the period of six months. 42 This can further be extended by up to two months based on compelling evidence that [a Union citizen] continuing to seek employment and has a genuine chance of being engaged. 43 The conditions for the retention of the status of worker are different for those who have been employed in the UK for less than a year. Provided that there is an in duly record of involuntary unemployment and registration as a job-seeker, this category is allowed to retain the status of worker for a maximum of six months. After the expiry of that period, they cease to have the right to reside in that capacity. As it appears from the guidance of the Department of Work and Pension, they can still be granted the right to reside as a job-seeker, but this entails substantial reduction in their welfare entitlements. 44 Unlike the MET test, it is questionable whether the new terms introduced as regards the retention of the status of worker are fully consistent with Union law. The problematic aspect of this policy change lies in the approach adopted with respect to the category of Union citizens who have been employed in the UK for more than a year. Similar to those who have been employed for less than a year, their status is also confined to six months. It is true that they can still extend it for two months, such an arrangement, however, is not in line with the wording of Article 7 of Directive 2004/38. Under this provision, only the status of those who have been employed for less than a year is subject to a temporal limitation. Article 7(3)c of Directive 2004/38 explicitly provides that this category is only entitled to retain the status of worker for no less than six months. As recently clarified by the Court in Alimanovic, they effectively loose the status at the expiry of that period. 45 In this respect, contrary to what was previously thought, 46 there is no need for any further individual-centred assessment. This is because, according to the Court, Directive 2004/38 establishing a gradual system as regards the retention of the status of 40 Judgment of 19 June 2014, Case C 507/12 Saint Prix, nyr. 41 Case C-413/01 Ninni-Orasche [2003] ECR I-13187, para Immigration (EEA) (Amendment) Regulations 2014, SI 2014/1451, 4 July Ibid, Explanatory Memorandum to Immigration (EEA) (Amendment) Regulations 2014, para. 7.2; See also, Memo DMG 15/14, Habitual Residence and Right to Reside JSA, para Ibid, para. 7. See also, Shabani [2013] UKUT 315 (IAC). 45 Alimanovic, para Judgmet of 19 September 2013, Case C-140/12, Brey, nyr. 6

7 worker ( ) itself takes into consideration various factors characterising the individual situation of each applicant for social assistance and, in particular, the duration of the exercise of any economic activity. 47 Unlike this category, however, Article 7(3)b of Directive 2004/38 does not envisage a similar or any other temporal constraint imposed on those who have been employed for more than a year. 48 The combination of Articles 7(3)c and 7(3)b could, in fact, be construed to establish a threshold for the retention of the status of worker in the form of completion of a year of employment. 49 Accordingly, any genuine and effective employment below that threshold only entitles to retain the status of worker for the period of six months. Reaching that threshold, however, means that a Union citizen can retain the status of worker for a significantly longer period. This is what constitutes the very the gradual system of the retention of the status of worker referred to by the Court in Alimanovic, the level of protection afforded under which is meant to be progressive. 50 Union citizens employed for more than a year should, therefore, be clearly distinguished from those who have been in employment for less than a year. The length of the status of worker granted to them is meant to reflect the fact that they are more likely to establish a sufficient link of integration with the society of [the host Member State] by paying taxes and contributing to financing [its] social policy. 51 That said, this is not to suggest that those who have been employed for more than a year can retain the status of worker indefinitely. Although this issue has not been extensively covered in the Court s jurisprudence, it is nevertheless possible to draw a few contours. It appears that the retention of the status of worker by this category can be subject to two interrelated conditions. First, in accordance with the wording of Article 7(3)b, a Union citizen has to in duly record involuntary unemployment and register as a job-seekers. Second, pursuant to Martinez Sala, 52 they must also remain in the labour market of the host Member State and continue to seek employment. 53 This is because, as clarified by the Court in Collins, 54 there must be a link between previous employment and the search of another job Category of Union job-seekers Similar to workers, job-seekers are also covered by Article 45 TFEU, due to the inherent significance of the ability to seek employment in the process of engagement in an economic activity as an employed capacity. 56 The extent of rights 47 Alimanovic, para See also the conclusion of Judge R.C.A. White in Secretary of State for Work and Pensions v MM (IS) [2015] UKUT 0128 (AAC), para Mantu, S. (2014), Retaining EU worker status judicial approaches, Nijmegen Migration Law Working Papers Series, 1, p Barnard, C. (2005), EU Citizenship and the Principle of Solidarity, in Spaventa, E. and Dougan, supra n. 6, p Caves Krier Frères Sàrl, para Case C-85/96 Martinez Sala, [1998] ECR I Martinez Sala, paras Case C-138/02 Collins, [2004] ECR I Ibid, para Case C-292/89 Antonissen, [1991] ECR I-00745, para

8 granted to them, however, is limited. As regards this category, the recent reforms primarily focus on their entitlement to a range of welfare benefits Entitlement to Job-seeker s Allowance Starting January 2014, the British government has adopted a number of measures aimed at restricting access to Job-seeker s Allowance by Union citizen seeking employment in the UK. This includes the introduction of new conditions for the entitlement to this welfare benefit and the time limits set for its receipt Three-month residence requirement The first step taken by the British government involved the amendment of the socalled Habitual Residence test. Introduced as a means to quell public anxiety over benefit tourism, 57 this test has been part of the UK welfare system since 1994 and is applied to Job-seeker s Allowance since Pursuant to it, access to a rage of welfare benefits, including Job-seekers Allowance, was made conditional upon habitual residence in the UK. While Union citizens engaged in an economic activity as workers or in a self-employed capacity were exempt from it, those seeking employment, however, were required to be habitually resident in the UK. 59 What constitutes habitual residence was not clearly defined in the legislation. 60 There was no fixed period set. Usually, a residence period from one to three months was held to be sufficient to establish a person s habitual residence. 61 In the original format of the test, a residence period was, thus, one of the factors to be taken account in assessing habitual residence. 62 This method of assessment of habitual residence has been subject to a change. Under the new policy, the eligibility for Job-seeker s Allowance is conditional upon the completion of a fixed period of residence. 63 Whether it is a British national or a national of another Member State, the claimant is required to be habitually resident in the UK for a continuous period of three months. Thus, the entitlement to Job-seeker s Allowance arises only after living in the UK for the past three months before making a claim. According to the explanation provided by the British government, this policy change is intended to reduce claims by those who have not established a genuine link with the [UK] labour market. 64 To a large extent, the three-month residence requirement has been the target of criticism owing to its applicability to returning British nationals. 65 From the perspective of nationals of other Member States alone, however, the new Habitual Resident 57 Harris, N. S. (2000), The Shape and Characteristics of Social Security Today, in Harris, N. S. (eds.), Social Security Law in Context, Oxford, Oxford University Press, p Kennedy, S. (2011), Habitual Residence Test, Library of House of Commons, SN/SP/416, (last accessed 20 April 2016), p Adler, M. (1995), The habitual residence test: a critical analysis, Journal of Social Security Law, 2, p. 182, 60 See Decisions in eg. R(IS) 6/96, para 17; CIS/13498, para 7. For some relevant factors, see eg. Nessa v Chief Adjudication Officer [1999] 1 WLR 1937 (HL) See Decision in CIS , para See Case C-90/97 Swaddling, [1999] ECR I The Jobseeker s Allowance (HR) Amendment Regulations 2013, No. 3196, para Impact assessment, The Jobseeker's Allowance (HR) Amendment Regulations 2013, 16 December 2013, p see O Brien, supra n. 33, p

9 test appears to be in line with the jurisprudence of the Court and Union secondary law. Although the status of job-seeker was initially confined to the right to seek employment in other Member States, 66 it however saw a substantial change with the introduction of Union citizenship. Starting with the ruling in Collins, the Court reconsidered its approach in light of Article 20 TFEU taken in conjunction with Article 18 TFEU. It found that in view of the establishment of Union citizenship it was no longer possible to exclude job-seekers from a benefit of a financial nature intended to facilitate access to employment in the labour market of a Member State. 67 The hybrid status created out of the cumulative effect of, on the one hand, Article 45 TFEU and, on the other, Articles 18 and 20 TFEU meant that Union citizens were also required to be treated equally with the nationals of the host Member State with respect to entitlement to such benefit. 68 Despite broadening the extent of the right to equal treatment granted to this category of Union citizens, the Court also gave effect to the legitimate interests of Member States to protect their welfare systems from abuse. As a result, the entitlement to an unemployment benefit can be made conditional upon the existence of a genuine link ( ) between the person seeking work and the employment market of [a Member State]. 69 To this end, it is legitimate for Member States to impose a residence requirement. In particular, according to the Court, the presence of a genuine link can be determined by establishing that the person concerned has, for a reasonable period, genuinely sought work in the host Member State. 70 This requirement, however, must comply with the principle of proportionality Time-limit on claims and its extension The second step taken by the British government as regards the category of Union citizens seeking employment involved the introduction of a time limit on the period within which Job-seeker s Allowance can be claimed and conditions for its possible extension. Accordingly, starting early 2014, a statutory presumption was created whereby after six months a Union citizen would loose the status of job-seeker and the right to claim Job-seeker s Allowance. 72 This temporal limitation, however, is not absolute. It can be extended for a short period of time upon displaying compelling evidence that a person is continuing to seek employment and has a genuine chance of being engaged. 73 The legislation itself does not shed light on the meaning of compelling evidence, though according to the guidelines provided to decisionmakers, it can take two forms. First, the evidence is considered as compelling if the claimant has a genuine job offer involving genuine and effective work. 74 Second, it will be also be deemed compelling if the claimant has a proof that a change of circumstances has given him/her a genuine prospect of employment and 66 Case C-278/94 Commission v Belgium, [1996] ECR I-04307, paras Collins, para Nic Shuibhne, N. (2013), The Coherence of EU Free Movement Law: Constitutional Responsibility and the Court of Justice, Oxford, Oxford University Press, p Case C-224/98 D Hoop, [2002] ECR I-06191, para. 38; Case C-258/04 Ioannidis, [2005] ECR I , para Collins, para Ibid, para Immigration speech by the Prime Minister, (last accessed 20 April 2016). 73 The Immigration (EEA) (Amendment) (No. 2) Regulations 2013, No. 3032, para Memo DMG 15/14, supra n. 43, paras

10 as a result he/she is awaiting the outcome of interviews. 75 The examples provided in this regard include a recent change of location or recent completion of vocational training. 76 This legislative change was followed by a further amendment limiting the right to hold the status of job-seekers to three months. 77 Union citizens who enter the UK to seek employment are, thus, granted the right to reside for a total length of six months. 78 This period first consists of the initial three-month condition-free residence, which is conferred on all Union citizens under Article 6 of Directive 2004/38. During that period, those who are engaged in employment search cannot bring a claim for Job-seeker s Allowance, as they are required to be habitually resident in the UK for three months. Their eligibility to receive this benefit, in principle, therefore, only arises after the expiry of the initial three-month period. 79 This is when they acquire the status of job-seeker, which is limited to the period of three months. At the end of that period, such status and the rights associated with it do not cease automatically but can be extended for a short period. As mentioned earlier, this, in turn, remains conditional upon presenting compelling evidence of continuing to seek employment and having a genuine chance of being engaged. The implications of this policy change are twofold. On the one hand, it has limited the time frame during which the rights to welfare benefits associated with the status of job-seeker can be enforced by Union citizens. Despite it now being less generous, such a temporal limitation on its own, however, is in conformity with the Court s jurisprudence and Union secondary law. In Antonissen, the Court broadened the scope of Article 45 TFEU to include the right to seek employment in other Member States, though without actually setting a minimum period in this regard. Taking into account the fact that Union law was silent on this very matter, the Court held that Member States were free to set a period during which Union citizens could stay on its territory to seek employment, 80 though on the condition that the time period allocated was reasonable. 81 That is to say, one that enables Union citizens to apprise themselves ( ) of offers of employment corresponding to their occupational qualifications and to take, where appropriate, the necessary steps in order to be engaged. 82 Thus, the Court found that a six-month period did not appear insufficient and did not jeopardise the effectiveness of the principle of free movement. In light of the Court s reasoning in Commission v Belgium, this also holds true as regards a three-month period. 83 As a result, it appears that the period from three to six months combined with the initial three-month condition-free residence under Directive 2004/38 is likely to be reasonable. On the other hand, in addition to limiting the time frame, the policy change has also amended the condition for the possible extension of the right to hold the status of 75 Ibid. 76 Ibid. 77 The Immigration (EEA) (Amendment) (No. 3) Regulations 2014, No Ibid, Explanatory Memorandum to it, para Ibid. 80 Antonissen, para Ibid, para Ibid. 83 Case C-344/95 Commission v Belgium, [1997] I-1035, paras

11 job-seeker. It has been made contingent upon presenting compelling evidence of continuing to seek employment and having a genuine chance of being engaged. The compliance of this requirement with Union law, however, is questionable. Not only does it impose a condition that is stricter than what is stipulated under Union law, but it could also be construed to go beyond what it is actually aimed to achieve. In Antonissen, the Court held that Union citizens seeking employment cannot be required to leave the host Member State at the expiry of the reasonable period, if they provide evidence of continuing to seek employment and having a genuine chance of being engaged. This finding, which is also enshrined in Article 14 (4) of Directive 2004/38, is in fact given effect within the new policy adopted by the British government. 84 The possibility to extent the status of job-seeker is not ruled out. However, unlike the wording in Antonissen, for such an extension to be granted, it is not sufficient to provide evidence of continuing to seek employment and having a genuine chance of being engaged. It must actually be compelling. The problematic aspect here lies in the kind of evidence that would be considered as such. As clarified by the Department for Work and Pension, this includes either a genuine job offer with its start in three months or a change of location or recent completion of vocational training that have led to job interviews. 85 This could be construed to mean that the form of evidence within the meaning of Antonissen would not in fact be sufficient for an extension to be granted. The references, for instance, to a genuine job offer or the outcome of job interviews that have already taken place seem to suggest that decision-makers would require not the submitted evidence but the actual chances of employment to be compelling. 86 This, in turn, goes beyond the Antonissen conditions Entitlement to other welfare benefits The reform brought by the British government also concern other types of welfare benefits. Similar to Job-seeker s Allowance, job-seekers right to claim Child Benefit or Child Tax Credit has been made conditional upon three-month habitual residence in the UK. 87 According to the Government, this is aimed to protect the benefit system by requiring to have a reasonable connection with the UK before becoming eligible. 88 With this policy change, the eligibility conditions for Child Benefit and Child Tax Credit were, thus, aligned with those prescribed for Job-seeker s Allowance. More drastic measures, however, have been adopted with respect to the entitlement of Union citizens to Housing Benefit and Universal Credit. Both are means-tested benefit and are provided to those whose income is below specified limits. In particular, Housing Benefit is aimed to assist its recipients to meet the costs of rented accommodation. 89 Universal Credit, in turn, is a new type of a welfare benefit introduced to replace several other existing ones and is designed to 84 See eg. Explanatory Memorandum to the Immigration (EEA) (Amendment) (No. 3) Regulations 2014, supra n. 77, para Memo DMG 15/14, supra n. 43, paras Williams, M. (2015), Kapow to the GPOW: the Genuine Prospect of Work Test - (1) as a cause of homelessness for EEA migrants (2) arguments against the test, (last accessed), para The Child Benefit (General) and the Tax Credits (Residence) (Amendment) Regulations 2014, No. 1511, para Ibid, Explanatory Memorandum to it, para Housing Benefit, (last accessed 20 April 2016). 11

12 support people who are on low income or out of work. 90 Unlike Child Benefit and Child Tax Credit, the recent reforms did not just introduce a new temporal precondition, but altogether disqualified those seeking employment from claiming them. 91 Prior to the reforms, although ordinarily excluded from Housing Benefit due to the absence of habitual residence, 92 job-seekers from other Member States could still claim it if they were in receipt of Job-seeker s Allowance. 93 This, however, has been amended by removing a link between the two welfare benefits. Thus, the eligibility to receive Housing Benefit now no longer automatically arises when a person is receiving Job-seeker s Allowance. In contrast to Housing Benefit, the entitlement to Universal Credit was not, from the outset, extended to encompass jobseekers from other Member States Extent of job-seekers right to equal treatment Whether this aspect of the new welfare policy complies with Union law rests on the actual extent of the right to equal treatment provided to the category of job-seekers under Union law. In particular, the question that needs to be addressed here is whether they are in fact entitled to claim the welfare benefits at issue pursuant to either Union primary or secondary law. A possible answer was not entirely clear until recently. Given the hybrid status of job-seekers created out of the cumulative effect of Articles 18, 20 and 45 TFEU, 94 one could well be tempted to broadly interpret their right to equal treatment. At the same time, however, the Court has often clearly distinguished the status of this category of Union citizens from workers in terms of the extent of their entitlements in the host Member State. 95 This aspect, in turn, seems to underpin the recent welfare reforms rolled out by the British government. In the context of Housing Benefit, for instance, the Department of Work and Pension, having acknowledged the right of job-seekers from other Member States, has also pointed out the existence of a greater scope for their access to benefits to be restricted. 96 Initially, as mentioned earlier, job-seekers were only required, pursuant to Article 45 TFEU, to be treated equally as a regards access to employment in the host Member State. 97 In Collins, however, the Court extended this to welfare benefits that facilitate such access, though conditional upon residence in the host Member State. Even with this precondition, the finding in Collins stood at odds with Directive 2004/38 that shortly came into force. Although the Directive enshrines a specific enunciation of the principle of equal treatment under Article 24(1), it also explicitly excludes under Article 24(2) any obligation of Member States to confer social assistance on Union citizens during the first three months of stay or longer if they are seeking employment. There was, thus, a clear discrepancy between the Court s 90 This includes Employment and Support Allowance, Income Support and Working Tax Credit. 91 The Housing Benefit (Habitual Residence) Amendment Regulations 2014, No. 539, para. 2; The Universal Credit (EEA Jobseekers) Amendment Regulations 2015, No. 546, para Article 10 (3) Housing Benefit Regulations 2006, No. 213, 6 March Job-seekers from other Member States were not treated as habitually resident for the purpose of Housing Benefit. 93 Ibid, Schedule 4, para. 12 and Schedule 5, para Nic Shuibhne, N., supra n. 68, p See, Opinion of AG Wathelet in Alimanovic, para HB Circular A6/2014, The Housing Benefit (HR) Amendment Regulations 2014, 16 March 2014, para Case 316/85 Lebon, [1987] ECR 2811, para

13 interpretation in Collins of several Treaty provisions taken in conjunction and the wording of Directive 2004/38. The Court reconciled this in Vatsouras, where it held that benefits of a financial nature intended to facilitate access to employment, independent of their status under national law, did not constitute social assistance within the meaning of Article 24 (2) of Directive 2004/ As a result, not only did the Court confirm its finding in Collins, but also implicitly upheld the compliance of Article 24 (2) of Directive 2004/38 with Union primary law. The extent to which Union citizens seeking employment can rely upon the right to equal treatment in the host Member State, thus, varies based on the type of a welfare benefit at issue. In particular, whilst they are entitled under Article 45 TFEU to claim benefits that are aimed to facilitate access to the employment market in a Member State, this does not encompass those that are social assistance in nature pursuant to Article 24(2) of Directive 2004/38. The primary factor in the classification of welfare benefits into either category lies in the very objective they are intended to achieve. What is important here, according to the Court, is the results of a welfare benefit, rather than its formal structure. 99 The entitlement to welfare benefits, therefore, is not contingent upon the way they are officially framed at national level. This resonates with the effet utile principle that requires Union law provisions to be given autonomous and uniform interpretation throughout the European Union. 100 Otherwise, for instance, Union citizens seeking employment can easily be barred by Member States from claiming a welfare benefit within the meaning of Collins/Vatsouras by merely removing any reference in the national legislation to its function of facilitating access to employment. 101 That said, however, national authorities retain the freedom to assess the constituent elements of [a welfare] benefit, in particular its purposes and the conditions subject to which it is granted. 102 In addition, as the recent rulings demonstrate, the definition given to a welfare benefit by a national court is also taken into consideration. 103 In this context, each category of welfare benefits has been attributed, to a certain extent, with its own characterisation. For instance, to distinguish a welfare benefit that facilitates access to employment in a Member State, the Court has highlighted the factor that its recipients must be capable of earning a living. 104 The concept of social assistance within the meaning of Directive 2004/38, in turn, has been declared by the Court in Brey to have an autonomous meaning and not to be affected by a similar term used in other Union secondary legislative acts, 105 such as Regulation 883/2004, 106 due to their distinct objectives. 107 In this light, the Court defined 98 Vatsouras, para Vatsouras, para Case C 204/09 Flachglas Torgau [2012] ECR, para. 37; Case C 260/11 Edwards and Pallikaropoulos [2013] ECR, para Opinion of AG Ruiz-Jarabo Colomer in Vatsouras, para Vatsouras, para See eg, Alimanovic, para Vatsouras, para Brey, para, 60. See eg, Directive 2003/86/EC of 22 September 2003 on the right to family reunification, OJ L 251; Directive 2003/109/EC of 25 November 2003 concerning the status of thirdcountry nationals who are long-term residents, OJ L Regulation 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems, L Brey, paras

14 it, and later confirmed in Dano, 108 as encompassing all assistance introduced by the public authorities, whether at national, regional or local level, that can be claimed by an individual who does not have resources sufficient to meet his own basic needs and the needs of [his/her] family. 109 Given the breadth of this definition, either Child Benefit, Housing Benefit or Universal Credit could be construed to fall within the category of social assistance for the purpose of Directive 2004/ This means that the eligibility to claim them can be limited. This is, in fact, how they are characterised by the British government. 111 Such conclusion, however, is not without reservations Classification of welfare benefits Child Benefit, for instance, is a social security benefit, forming part of the larger category of family benefits, 112 and, as such, falls within the scope of Regulation 883/2004. According to the system established under this Regulation, an economically inactive person is subject to the legislation of the Member State of his/her habitual residence. This is determined against a wide range of purely factual circumstances. Although this includes the length of residence in a Member State, 113 it is not possible to require a certain minimum period of residence. 114 This factor raises several interrelated queries. On the one hand, it is not clear whether the threemonth habitual residence requirement for the entitlement to Child Benefit complies with Regulation 883/2004, as it adds an extra condition to the habitual residence test established under it. 115 On the other hand, one could also question the extent to which the relevant provisions of Directive 2004/38 should be given effect in this regard and whether the social security nature of a welfare benefit should play any role. Although AG Villalón has recently held that Directive 2004/38 remains fully effective within the framework of Regulation 883/2004, the Court is yet to rule on this matter. 116 In a similar vein, the unequivocal categorisation of Housing Benefit and particularly Universal Credit as a social assistance benefit pursuant to the Collins/Vatsouras distinction is also questionable, as their potential roles in facilitating access to employment cannot altogether be discarded. In the context of Housing Benefit, such a role seems to be expressed in its intrinsic relatedness to Job-seeker s Allowance. In particular, Housing Benefit could be construed to constitute a necessary supplement 108 Dano, para Brey, para Thym, D. (2015), The Elusive Limits of Solidarity: Residence Rights of and Social Benefits for Economically Inactive Union Citizens, Common Market Law Review, 52, p See eg, Report of the Social Security Advisory Committee on Universal Credit and Housing Benefit Cap, December 2012, (last accessed 20 April 2016), para. 2.13; See also Footnote 50 of Legal Annex, (accessed on 19th March 2016). 112 Pieters, D. (2006), Social Security: An Introduction to the Basic Principles, Alphen aan den Rijn, Kluwer Law International, p Practical guide on the applicable legislation in the European Union (EU), the European Economic Area (EEA) and in Switzerland, (last accessed), p Ibid, footnote This is one of the Commission s arguments in the pending Case C-308/14 Commission v UK. 116 Opinion of AG Villalón in pending Case C-308/14 Commission v UK. 14

15 for those seeking employment. 117 Given the rates of Job-seeker s Allowance, it enables many to pay for rented accommodation while looking for work and, in general, maintain residence in order to secure a job. 118 More importantly, the existence of an inherent link between these two welfare benefits is further reinforced by the so-called passporting arrangement. A recipient of Job-seeker s Allowance is considered to automatically satisfy the income related requirements to be able claim Housing Benefit. 119 Prior to the recent reforms, such an arrangement used to apply to job-seekers who were nationals of other Member States, 120 though this is now no longer the case. In the case of Universal Credit, its possible facilitative role in terms of access to employment emanates from its constituting features. It is true that the entitlement to this welfare benefit is dependent upon meeting certain basic and financial conditions, which do not make any reference to seeking employment. 121 A potential recipient is only required, among others, to be between 18 years and 60 years and six months; be resident in the UK; not to be in education or any training course; not to have a capital greater than prescribed amount. 122 At the same time, however, a different picture emerges if one looks at the aim of Universal Credit and how its to be reached. Universal Credit is intended to smooth the transition of its claimants into work by reducing the support they receive at a consistent rate as their earnings increase. 123 Such transition involves commitments undertaken by the recipients of this welfare benefit to engage with various employability activities. 124 In particular, based on an allocated group, the claimant can be required to take not only certain actions in preparation for work in the future, 125 but also those that can actually secure employment. Among others, this includes carrying out work searches, making job applications, creating and maintaining an online profile, registering with an employment agency and seeking references. 126 Viewed from this angle, the characterisation of Universal Credit as a social assistance benefit within the meaning of the Collins/Vatsouras distinction seems rather questionable. This further finds support in the fact that Universal Credit is aimed to replace several welfare benefits, 127 which themselves are classified as not social assistance, but social security or special non-contributory benefits. 128 As a result, even if not as a whole, certain components of Universal Credit could indeed 117 O Brien, supra n. 33, p Ibid. 119 See, Schedule 4, para. 12 and Schedule 5, para. 4 of Housing Benefit Regulations 2006, No. 213, 6 March 2006; See also, R v Penwith District Council ex parte Menear [1991] 24 HLR 115, QBD. 120 Impact Assessment: The removal of Housing Benefit from EEA jobseekers, 27 February Williams, M., Universal Credit & Jobseekers in the UK, (last accessed 20 April 2016). 122 Universal Credit FAQ, (accessed on 20 April 2016), pp Explanatory Notes, Welfare Reform Act 2012, para Welfare Reform Act 2012, Section 4(1) E and Section Ibid, Section Ibid, Section 17(3). 127 See, however, Alhashem [2016] EWCA Civ 395, where Employment and Support Allowance, which has been replaced by Universal Credit, was categorised as a social assistance benefit. 128 Report of the SSAC, supra, n. 111, para