Workers and non-workers in the EU: access to benefits?

Tuesday’s much-publicized European Court of Justice “Dano” judgment clarified that – on the facts of that case – Romanian single mum Ms Dano was not automatically entitled via EU Treaties or legal provisions to non-contributory benefits under German social security rules. We thought it might help PRIME readers to understand the situation better if we set out the relevant EU Treaty provisions, and summarised the key points of the case. In reality, the case is more about EU legislation than the Treaties themselves.  And while the European Court in effect decided that the claimant was not entitled to the benefit on this occasion, this depended on the German court’s finding that she  was not seeking work.

The EU Treaty provisions

There are two distinct but inter-twining sets of provision, set out in the Treaty on the Functioning of the European Union (TFEU). We set out or summarize most of the key provisions; the parts marked in bold shows our emphasis.

(a) Rights that arise from EU citizenship

The concept of EU citizenship was first introduced in the Treaty of Maastricht which came into effect in 1993.

Under the heading “non-discrimination and citizenship of the Union”, we find

Article 18

Within the scope of application of the Treaties, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited.  The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may adopt rules designed to prohibit such discrimination.

And Article 20:

1. Citizenship of the Union is hereby established. Every person holding the nationality of a Member State shall be a citizen of the Union. Citizenship of the Union shall be additional to and not replace national citizenship.

2. Citizens of the Union shall enjoy the rights and be subject to the duties provided for in the Treaties. They shall have, inter alia: 
(a) the right to move and reside freely within the territory of the Member States;..
These rights shall be exercised in accordance with the conditions and limits defined by the Treaties and by the measures adopted thereunder.

Article 21:

1. Every citizen of the Union shall have the right to move and reside freely within the territory of the Member States, subject to the limitations and conditions laid down in the Treaties and by the measures adopted to give them effect…

3. For the same purposes as those referred to in paragraph 1 … the Council, acting in accordance with a special legislative procedure, may adopt measures concerning social security or social protection. The Council shall act unanimously after consulting the European Parliament.

(b) The Treaty’s economic “freedoms”

Since the Treaty of Rome in 1957, the “four freedoms” – of movement of goods, capital, services and workers – have been at the heart of the concept of, first, the common market, and later the internal market of the EU. They are currently set out in Title IV of the TFEU.

The way the freedom of movement for workers is provided in Title IV is odd, since the heading in the Treaty refers to freedom of movement of “persons”, but the substantive provisions refer just to “workers”, and does not deal with persons other than workers:

“TITLE IV – FREE MOVEMENT OF PERSONS, SERVICES AND CAPITAL
CHAPTER 1 – WORKERS

Article 45

1. Freedom of movement for workers shall be secured within the Union.
2. Such freedom of movement shall entail the abolition of any discrimination based on nationalitybetween workers of the Member States as regards employment, remuneration and other conditions of work and employment.
3. It shall entail the right, subject to limitations justified on grounds of public policy, public security or public health:
(a) to accept offers of employment actually made;
(b) to move freely within the territory of Member States for this purpose;
(c) to stay in a Member State for the purpose of employment in accordance with the provisions governing the employment of nationals of that State laid down by law, regulation or administrative action;
(d) to remain in the territory of a Member State after having been employed in that State, subject to conditions which shall be embodied in regulations to be drawn up by the Commission.
4. The provisions of this Article shall not apply to employment in the public service.

Article 46

The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure…issue directives or make regulations setting out the measures required to bring about freedom of movement for workers…

Article 48

The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure, adopt such measures in the field of social security as are necessary to provide freedom of movement for workers…

In a separate part of the treaty, under “Social policy”, the link to work is maintained. Thus Article 153 provides that the EU will support and complement the activities of the Member States in the following fields:

(a) workers’ health and safety;
(b) working conditions;
(c) social security and social protection of workers;
(d) protection of workers where their employment contract is terminate

Therefore, we may conclude that the EU Treaties provide explicitly for a freedom of citizens to move freely and reside where they will within the EU’s borders, but nowhere is there laid down in the Treaties a right for non-nationals of a Member State to receive basic social assistance in that state if you are not a “worker”, a term that covers those looking for work and those who have been in work there. However, the EU’s legislation (which can be changed or repealed) provides the detailed rules, and the European Court of Justice, acting as the longstop interpreter of the interplay of Treaties and EU legilsatoin, has generally tended to expand the scope of freedom of movement, at least till now when the political pressure is on it to be more careful of the consequences.

The Dano case judgment

The ECJ’s judgment says this about the facts:

“Ms Dano, who was born in 1989, and her son Florin, who was born on 2 July 2009 in Sarrbrücken (Germany), are both Romanian nationals. According to the findings of the referring court, Ms Dano last entered Germany on 10 November 2010.

On 19 July 2011, the city of Leipzig issued Ms Dano with a residence certificate of unlimited duration for EU nationals, establishing 27 June 2011 as the date of entry into German territory.

Since their arrival in Leipzig, Ms Dano and her son have been living in the apartment of Ms Dano’s sister, who provides for them materially. Ms Dano receives child benefit (‘Kindergeld’) for her son Florin, which is paid by the Leipzig family benefits office on behalf of the Federal Employment Agency and amounts to EUR 184 per month. The Leipzig social assistance service for children and young people also pays an advance on maintenance payments of EUR 133 per month for that child, whose father’s identity is not known.

Ms Dano attended school for three years in Romania, but did not obtain any leaving certificate. She understands German orally and can express herself simply in German. On the other hand, she cannot write in German and her ability to read texts in that language is only limited. She has not been trained in a profession and, to date, has not worked in Germany or Romania. Although her ability to work is not in dispute, there is nothing to indicate that she has looked for a job.”

The Leipzig Jobcentre twice refused her application for benefits, and she in du course appealed to the courts against the second refusal in July 2012, on the grounds that this breached her rights under EU law, Articles 18 and 45 TFEU and related case law. The Leipzig Social Court referred the matter to the ECJ for a preliminary legal decision on European law aspects.

The German court found, importantly, that the proceedings “concern persons who cannot claim a right of residence in the host State by virtue of Directive 2004/38.”

Issues under the 2004 Directive on residence

Directive 2004/38 deals with “the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States” including benefits issues.

Under its Article 6, EU citizens have an almost absolute right of residence in another Member State without formal conditions other than an ID card or passport for up to 3 months.

Under Article 7 of the Directive,

“1. All Union citizens shall have the right of residence on the territory of another Member State for
a period of longer than three months if they:
(a) are workers or self-employed persons in the host Member State; or
(b) have sufficient resources for themselves and their family members not to become a burden on
the social assistance system of the host Member State during their period of residence and
have comprehensive sickness insurance cover in the host Member State; or
(c) [are enrolled at an approved course of study]; or
(d) are family members accompanying or joining a Union citizen who satisfies the conditions referred to in points (a), (b) or (c).

And under Article 14,

“1. Union citizens and their family members shall have the right of residence provided for in
Article 6, as long as they do not become an unreasonable burden on the social assistance system of
the host Member State.”

Moreover, under Article 14(4)(b), no expulsion order may be made if

“(a) the Union citizens are workers or self-employed persons, or
(b) the Union citizens entered the territory of the host Member State in order to seek employment.
In this case, the Union citizens and their family members may not be expelled for as long as the Union citizens can provide evidence that they are continuing to seek employment and that they have a genuine chance of being engaged.”

The Directive has its own non-discrimination on grounds of nationality (equal treatment) clause in Article 24, but this contains the following limitation on the general:

“By way of derogation from paragraph 1, the host Member State shall not be obliged to confer entitlement to social assistance during the first three months of residence or, where appropriate, the longer period provided for in Article 14(4)(b), nor shall it be obliged, prior to acquisition of the right of permanent residence, to grant maintenance aid for studies, including vocational training..”

However, Ms Dano did not enter Germany with a view to seek employment, so the ECJ decided that Article 24(2) did not apply to her situation. It had to consider whether she could claim the benefit of the equal treatment provision of 24(1). The Court decided not (paragraphs 71-74) :

“…for periods of residence longer than three months, the right of residence is subject to the conditionsset out in Article 7(1) of Directive 2004/38 and, under Article 14(2), that right is retained only if the Union citizen and his family members satisfy those conditions. It is apparent from recital 10 in the preamble to the directive in particular that those conditions are intended, inter alia, to prevent such persons from becoming an unreasonable burden on the social assistance system of the host Member State…

…Union citizens acquire the right of permanent residence after residing legally for a continuous period of five years in the host Member State…once obtained, the right of permanent residence is not to be subject to any conditions, with the aim of it being a genuine vehicle for integration into the society of that State…

In order to determine whether economically inactive Union citizens, in the situation of the applicants in the main proceedings, whose period of residence in the host Member State has been longer than three months but shorter than five years, can claim equal treatment with nationals of that Member State so far as concerns entitlement to social benefits, it must therefore be examined whether the residence of those citizens complies with the conditions in Article 7(1)(b) of Directive 2004/38. Those conditions include the requirement that the economically inactive Union citizen must have sufficient resources for himself and his family members.

To accept that persons who do not have a right of residence under Directive 2004/38 may claim entitlement to social benefits under the same conditions as those applicable to nationals of the host Member State would run counter to an objective of the directive, set out in recital 10 in its preamble, namely preventing Union citizens who are nationals of other Member States from becoming an unreasonable burden on the social assistance system of the host Member State.

A Member State must therefore have the possibility, pursuant to Article 7…, 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.”

Since Article 7 in effect created its own basis for discriminating on this basis, the general non-discrimination Article 24 could not apply.

Issues under the 2004 Regulation on social security

The other relevant EU legislation in this case is Regulation 883/2004 on the coordination of social security systems. The Court held that the social security benefits claimed by Ms Dano fell within the Regulation’s definition of ‘special non-contributory cash benefits’, thus the Regulation could apply.  And Article 4 of the Regulation provides another form of equal treatment clause which the ECJ had to consider:

“Unless otherwise provided for by this Regulation, persons to whom this Regulation applies shall enjoy the same benefits and be subject to the same obligations under the legislation of any Member State as the nationals thereof.”

However, the Court dealt with this issue (paragraph 83) very economically:

“The same conclusion must be reached in respect of the interpretation of Article 4 of Regulation No 883/2004. The benefits at issue in the main proceedings, which constitute ‘special non-contributory cash benefits’ within the meaning of Article 70(2) of the regulation, are, under Article 70(4), to be provided exclusively in the Member State in which the persons concerned reside, in accordance with its legislation. It follows that there is nothing to prevent the grant of such benefits to Union citizens who are not economically active from being made subject to the requirement that those citizens fulfil the conditions for obtaining a right of residence under Directive 2004/38 in the host Member State.”

Conclusion

The European Union, through its Treaties and laws, contains a mix of economic rights and duties and broader citizenship rights, without conceptually clarifying how they come together.

Thus the right of EU citizens to move freely across the EU’s territory, and from state to state, and their right to reside in whatever state they will, is laid down in clear language in the Treaties, but always subject to conditions, limitations and measures which may be imposed “thereunder”.

There is a separate freedom of movement granted to “workers”, even though the headline in the Treaty refers to the freedom of movement of “persons”, before clarifying that the only “persons” dealt with at this point are “workers”.

This right of freedom of movement of workers applies to: moving freely within the EU; staying in a Member State for the purpose of employment; and remaining in the territory of a Member State after having been employed in that State, “subject to conditions which shall be embodied in regulations to be drawn up by the Commission”.

Since there is a long EU legislative history and ECJ jurisprudence giving a broad interpretation to the status and rights of workers and their families, we can be confident that there will be no major drawing back by the EU, its legislature or the Court ,in terms of limiting actual or would-be workers’ rights. Therefore, if say a Bulgarian person come to the UK genuinely seeking work, the Dano case in no way affects his/her right to be considered for benefits alongside UK.

On the other hand, the Dano case shows that the political sensitivity to migrant claimants from other EU countries who are not genuinely seeking work is not restricted to the UK, and the ECJ’s decision in Dano indicates that the Court is sensitive to these pressures, in case of persons who are unconnected to the labour market.

The Dano case also shows that it is not necessarily the EU Treaties that need to be looked at if it comes to issues of perceived excessive vulnerability of national social security systems to alleged “benefits tourism” (even if finding genuine tourists of this kind is pretty hard). There are detailed Regulations and Directives – that is, legislation – which can be changed if the shared political will is there, and far more easily than getting 27 countries to agree unanimously on Treaty changes.

Of course, any legislation passed can be challenged before the Court of Justice as being in breach of the principles of the EU Treaties, so any changes to social security laws, or to laws of residence, would need careful drafting to Treaty-proof them. But the legislation route appears to me to be a far more achievable political strategy than trying to secure major Treaty changes, followed by an in-out EU referendum. Unless of course, leaving the EU is your main political goal.