EU migrants and benefits: frequently (and some less frequently) asked questions

Last Friday the Prime Minister delivered his long-awaited speech on immigration. He set out ambitious plans to secure agreement on changes to European law on free movement in order to allow the UK to, among other things, deny EU migrants in-work benefits for four years and prevent Child Benefit being paid for children living abroad. Proposals to restrict EU migrants’ access to benefits have also been put forward by Labour and by the Liberal Democrats.

EU immigration has been at the top of the political agenda in the UK almost continuously for the past twelve months. There has been intense, and not always well-informed, debate about what EU law requires Member States to do as regards migrants’ access to welfare, about what might be done to limit who gets what, and how it might be achieved. In this blog, I look at some of the more frequently asked questions about EU migrants’ access to benefits. I also touch upon a couple of areas that have not, as yet, received much attention.

What’s been done already to limit migrants’ access to benefits?

Quite a lot. Since the beginning of the year a number of measures have been introduced limiting access to benefits for EU migrants. People arriving in the UK looking for work now have to wait three months before they can claim Jobseeker’s Allowance, Child Benefit and Child Tax Credit. EU jobseekers and former workers must now satisfy a new, strict “genuine prospect of work” test in order to continue to receive their benefits. For new jobseekers, the test is applied after only three months on JSA. And EU jobseekers can no longer access Housing Benefit, even if they are in receipt of JSA.

The Government expects that the overall package will save around £125 million a year by 2018-19. The impact on the number of EU migrants coming to the UK is however unclear. Many of the respondents to the Social Security Advisory Committee’s Spring 2014 consultation on the Housing Benefit changes questioned whether they would be an effective disincentive, since in their experience EU migrants didn’t come to the UK in order to claim benefits, but wanted to work and expected to find it quickly. Given the relatively buoyant state of the UK economy (compared with other EU countries), they thought the number of migrants arriving in the UK was unlikely to fall. The benefits changes could however mean that a greater proportion are single men working temporarily and sending their earnings home, rather than families intending to settle in the UK (because of the greater risk of destitution).

Hasn’t the European Court of Justice recently outlawed benefit tourism?

This is the Dano case. On 11 November the Court of Justice of the European Union (CJEU) found that a Jobcenter in Leipzig, Germany, hadn’t breached EU law when refusing to grant certain welfare benefits to a Romanian national, Elisabeta Dano, and her son Florin. Ms Dano had attended school in Romania for only three years, and had not obtained any leaving certificate. She had only a basic understanding of German, had no training in any profession, and had never worked in Romania. She hadn’t entered Germany in order to work, had done no work since her arrival, and was not looking for work.

The Court ruled that for the purposes of accessing certain benefits, EU migrants can only claim equal treatment with nationals of the host Member State if their residence complies with the conditions in the Free Movement Directive (2004/38). Economically inactive persons, the Directive states, have a right of residence if they have “sufficient resources for themselves and their family not to become a burden on the social assistance system of the host Member State.”

The Court found that Ms Dano and her son did not have sufficient resources of their own and couldn’t therefore claim a right of residence in Germany. Consequently, they couldn’t invoke the principle of non-discrimination to gain access to benefits. The Court stated-

A Member State must therefore have the possibility …of refusing to grant social benefits to economically inactive Union citizens who exercise their right to freedom of movement solely in order to obtain another Member State’s social assistance although they do not have sufficient resources to claim a right of residence.

The judgment has been widely welcomed as a clear statement that Member States can take action to tackle “benefit tourism.” The Prime Minister has described the decision as “simple common sense.” It may also indicate a change of tack for the CJEU, which in previous judgments has tended to interpret free movement rights broadly.

The full implications of Dano are not yet clear – further case law may be needed – but headlines suggesting that the judgment lends support to those seeking to limit migrants’ access to benefits more generally may have overstated its significance. While the judgment confirms that Member States have powers to deal with more obvious cases of “benefit tourism” – where migrants have no connection with the labour market, are not looking for work, and have moved from one country to another solely in order to claim benefits – it doesn’t necessarily give further scope to limit access to benefits in other situations, eg where migrants are in work or looking for work.

Barrister Desmond Rutledge looks at the wider implications of the Dano judgment in this blog of 19 November.

Can Member States limit migrants’ access to in-work benefits?

The Treaty on the Functioning of the European Union (TFEU) provides comprehensive protections against discrimination for those choosing to exercise their right of free movement in order to work in other Member States. A key provision is Article 45 TFEU which provides that “Freedom of movement of workers shall be secured within the Union.” This entails the right not to be discriminated against on the grounds of nationality as regards access to employment, remuneration and other conditions of work. The application of the equal treatment rule means that such persons will be entitled to in-work benefits in the same way as nationals of the host Member State.

EU Regulation 492/2011 gives further details of free movement rights of workers and defines specific areas where discrimination on grounds of nationality is prohibited. Article 7(2) guarantees workers access to the same “social and tax advantages” as nationals of that Member State, and the Court of Justice has ruled that “social advantages” must be interpreted to cover “welfare benefits” – whether financial or non-financial – in their broadest sense.

Furthermore, Member States can’t unilaterally redefine who is a “worker” in order to exclude persons who would be a worker under EU law. The Court of Justice has made it clear that the definition of worker is a matter for EU law, rather than national law. CJEU case law states that a person is a worker if the work they do is “genuine and effective” (see further below).

Could we limit who gets in-work benefits by raising the earnings threshold?

Under current EU law, no.

An EU migrant has a right of residence as a “worker” or as a “self-employed person” – and with it access to in-work benefits such as Housing Benefit and tax credits – if the work they do is “genuine and effective.” There is no minimum hours or earnings threshold as such; hours worked or earnings may be relevant, but other factors – such as the duration of the employment and regularity of the work – may also be considered. Worker status can in some situations be retained if the person is no longer working, eg if the person is temporarily unable to work because of illness.

From 1 March this year, a new “minimum earnings threshold” was introduced to help determine whether an EU migrant is in genuine and effective work. It is set at the level of earnings where employees start to pay National Insurance contributions – currently £153 a week.

The minimum earnings threshold does not mean that those with earnings below it cannot have worker or self-employed person status. It is merely a mechanism for focusing on cases where there is likely to be greater doubt about whether the person satisfies the criteria. Individuals earning less than the threshold face a more in-depth assessment of their circumstances in order to determine whether the work they do (or did) was “genuine and effective.” But as noted above, who is and who is not a worker is a matter for EU law rather than national law. The UK cannot adopt its own definition of “worker”; it has to follow the case law of the CJEU.

Therefore, the UK couldn’t limit entitlement to in-work benefits by raising the minimum earnings threshold. Raising the threshold would, under the current arrangements, merely mean that the authorities would have to assess the circumstances of a larger group. The criteria by which they are assessed would however remain the same.

Can we stop migrants claiming Child Benefit for children not living in the UK?

One of the most controversial aspects of EU law in the area of social security is the provision under which a migrant may claim “family benefits” from the state in which they reside in respect of dependent children resident in another Member State. The provisions are in Regulation 883/2004 on the coordination of social security systems for people moving between Member States.  Member States cannot unilaterally “opt out” of EU Regulations.

This means that, if an EU migrant in the United Kingdom is covered by the UK social security system, they can claim Child Benefit and Child Tax Credit for their dependent children even if they are not resident in the UK.  Where family benefits are already being paid, “overlapping benefits” provisions apply to ensure that the family is not paid twice (the total amount they receive will not exceed the amount payable by the state with the higher entitlement).

All three main parties have said that they want to see the rules changed to prevent Child Benefit and Child Tax Credit being sent abroad.   An amendment to Regulation 883/2004 could be achieved via the Ordinary Legislative Procedure – it would require a proposal by the European Commission and would be subject to co-decision with the European Parliament and Council adoption by a qualified majority.  However, Professor Steve Peers of the University of Essex argues that stopping family benefits for children in other Member States is arguably indirectly discriminatory and, given provisions on equal treatment of workers in the Treaties, a Treaty amendment would therefore probably also be necessary.

Whether a Member State could find some way within existing EU law of restricting family benefits for children in other countries, short of stopping payments altogether, is unclear.  Announcing a package of measures intended to tackle abuse of freedom of movement, the German Government announced at the end of August that amendments to the law to adjust child benefit amounts to the cost of living where the child lives were also being considered in Germany.

Will migrants be able to claim Universal Credit?

Universal Credit is to replace a range of existing means-tested benefits and tax credits for people of working age. It can be claimed by individuals and families whether in or out of work.

The unique features of Universal Credit mean that it is not entirely clear how it should be classified under EU law – there is no precedent. The Government has however said on a number of occasions that it considers Universal Credit to be a “social assistance” benefit. This is important, since under EU law Member States are not obliged to pay social assistance to migrants who are looking for work. In his speech last week the Prime Minister was quite clear – the legal status of Universal Credit meant that the UK could regain control over who should receive it:

So as Universal Credit is introduced we will pass a new law that means EU jobseekers will not be able to claim it. And we will do this within existing EU law.

However, the CJEU has held that benefits “of a financial nature intended to facilitate access to employment in the labour market of a Member State” cannot be regarded as “social assistance” and should be granted to a person who has a “genuine link” with the employment market of the host Member State. So it seems likely that domestic legislation preventing EU jobseekers from claiming Universal Credit would be challenged.

Steven Kennedy

Picture Credit: PM’s speech on immigration by Number 10, Creative Commons Attribution 2.0 Generic (CC by 2.0)