Monday, 24 November 2014

Amending EU free movement law: What are the legal limits?

Steve Peers

Much public debate in recent weeks has centred upon the possible amendment of EU rules on the free movement of people. In particular, the think-tank Open Europe and the UK Labour party have set out policies on this issue, and Prime Minister David Cameron is expected to make an announcement of his views soon. While most of the discussion focuses on the political and economic aspects of these proposals, there is also an important legal dimension to the debate, because EU law determines how easy (or difficult) it would be to put any potential changes into effect.

In particular, there are three principal ways to change the EU free movement rules: (a) by changing national law, while still remaining consistent with EU law; (b) by changing EU legislation; or (c) by amending the EU Treaties. The first course of action needs only (at most) a national parliamentary majority; the second course of action needs a Commission proposal and support from the European Parliament and a qualified majority in the Council; but the third route needs unanimous support from all 28 Member States’ governments, then ratification in national parliaments.

So it’s important to know which of these categories the proposed reforms fall into. For the reasons set out in this blog post, some of the proposals of Open Europe fall into the second category (EU legislative amendment). But contrary to their arguments, the most significant proposals made by Open Europe fall into the third category (Treaty amendment), making them much more difficult to accomplish than their authors suggest.

As for the Labour party proposals, they broadly reflect the Open Europe suggestion to impose a waiting period on access to in-work benefits for EU migrants. Finally, it’s obviously not possible to comment on David Cameron’s proposals for EU policy reform (which might go beyond EU free movement law) until he makes them. So this blog will return to the issue after his forthcoming speech.

This blog post is in three parts: an analysis of the proposals on cutting back benefits for workers, job-seekers and former workers;  an examination of the other proposals made by Open Europe; and my suggested text for proposed amendments to EU legislation to implement those Open Europe proposals which are (in my view) both desirable and legally feasible.  

Cutting back workers’ benefits

The central proposal of Open Europe today is that newly-arrived EU citizens should be denied equal treatment as regards out-of-work or in-work non-contributory benefits, social housing and apprenticeship schemes for a period of between one and five years, to be negotiated. This suggestion builds upon another recent Open Europe paper which suggests further details of changes to EU legislation on these issues. My comments are mainly directed at the latter paper, which sets out the legal reasoning underpinning today’s proposal. As noted already, the Labour party proposals reflect Open Europe's suggestions, and so the following comments equally apply to those proposals.

I won’t mince words: there’s a fundamental legal problem at the core of these proposals. The Open Europe paper suggests that both in-work and out-of-work benefits could be limited simply by amending EU legislation. This is true for those EU citizens who are not workers, and who have never looked for work or held work in the host Member State, as the CJEU has recently clarified in the ‘benefit tourism’ case of Dano (see discussion here). But look at the Court’s reasoning: it deferred to the wording of EU legislation in that case because the Treaty rules on the rights of EU citizens (Articles 20 and 21 TFEU) defer to the limitations on EU citizens’ rights ‘defined by the Treaties and the measures adopted thereunder’, and ‘laid down in the Treaties and in the measures adopted to give them effect’. Equally the Court referred to Article 18 TFEU, which provides for non-discrimination against EU citizens ‘[w]ithin the scope of application of the Treaties, without prejudice to any special provisions contained therein’.

For people like Ms. Dano, there are no Treaty rules which govern their legal situation, because she was not a worker, and was not a job-seeker or former worker either. Neither was she a self-employed person, service provider or student. Therefore the Court only looked at her position under EU free movement legislation.

But the vast majority of EU citizens in another Member State do fall within one of those other categories – most notably as workers, including job-seekers and former workers. The crucial point here is that all of those other categories of EU citizens have rights not just pursuant to EU legislation, but also pursuant to the Treaties. Indeed, that point is recognised in the very wording of Articles 18, 20 and 21 TFEU: Article 18 defers to the special rules on non-discrimination in the rest of the Treaty, while Articles 20 and 21 defer equally to the Treaties and secondary legislation. The intention of the Treaty drafters is perfectly clear.

So what does this mean for the position of workers? (I’ll concentrate on them, since they are the main focus of the Open Europe proposals). The specific Treaty provision regulating workers’ free movement is Article 45 TFEU, which first specifies that ‘Freedom of movement for workers shall be secured within the Union’. Article 45(2) further specifies that free movement entails the abolition of discrimination between EU workers as regards ‘employment, remuneration and other conditions of work and employment’. Article 46 TFEU then confers powers to adopt legislation ‘setting out the measures required to bring about freedom of movement for workers’. Article 48 TFEU sets out powers to adopt rules to coordinate social security for workers.

The wording of these Treaty articles doesn’t defer to the legislation in order to set out workers’ rights, and this has long been recognised by the Court of Justice. So free movement of workers (and the associated right to equal treatment) has long been recognised in CJEU jurisprudence as a directly effective Treaty right, precisely because it is not dependent on the adoption of further measures. This also means that the CJEU controls the definition of ‘worker’, and extends it to cover also those who are former workers or job-seekers.

Indeed, as recently as this summer, in the Saint-Prix case (discussed here), the CJEU expressly asserted that the definition of former workers (and therefore the access to benefits) as defined in EU legislation didn’t matter, since the Court would determine which former workers still qualified for access to benefits. So the Court ruled that female workers who were former workers at the time when they gave birth still had access to benefits (as long as they got work soon afterward), even though the legislation did not define them as former workers.

So unless the CJEU does a U-turn on this issue, there would be little point in trying to amend the legislation in order to require former workers to wait longer for benefits. At the moment, EU citizens retain worker status, and access to benefits, if they become involuntarily unemployed after working for more than one year in a Member State. If they become unemployed before that point, they retain worker status for a maximum of six months. There are also several other cases where they retain that status.

What about job-seekers who were not formerly employed in the host State? Well, there’s no need to amend EU legislation in order to refuse them some types of benefits, since the EU citizens’ Directive expressly makes clear that they are entitled to no equal treatment as regards ‘social assistance’ at all. However, the CJEU has said (in the Collins case) that, pursuant to the Treaties, job-seekers cannot be refused equal treatment as regards benefits which are intended to facilitate access to employment. And in the Vatsouras case, it expressly distinguished this type of benefit from ‘social assistance’ benefits which job-seekers are not entitled to pursuant to the citizens’ Directive.

The CJEU will have a chance to clarify the position in the pending case of Alimanovic. It might possibly do a U-turn on this issue in its judgment on that case. If it doesn’t, then again, in order to cut back on such labour-market benefits for job-seekers, a Treaty amendment would be necessary.

Next, as regards workers, the key free movement rule, and the equal treatment right, are laid down in the Treaty itself. When ruling on workers’ equal treatment rights, the Court regularly refers to the Treaty rule and the relevant legislation, and both of these confer equal treatment as regards benefits: see the judgment in O’Flynn, for instance. Since the right to workers’ equal treatment is expressly set out in the Treaties, then removing in-work benefits for workers – the core of the Open Europe proposal – would be manifestly contrary to the Treaties, and would require a Treaty amendment.

Of course, a Treaty amendment is not impossible; it’s simply much more difficult than a legislative amendment. It would most likely take the form of a Protocol which sets out a derogation from the Treaty rules.

Other Open Europe proposals

The Open Europe paper suggests an amendment to EU legislation to specify that EU law cannot derogate from national powers as regards matters such as social assistance. It’s not possible for EU secondary legislation to limit EU powers as defined in the Treaties, but an amendment to EU secondary legislation could refer to such limits. This is my suggested amendment 1 below.

In the context of a waiting period for benefits, the Open Europe paper correctly mentions that the time period spent in detention in the home State for committing offences does not count for this purpose. This rule is set out in the case law, but it could also be added to EU legislation. This is suggested amendment 2 below.

Next, the Open Europe paper suggests a number of protections for national workers as regards unfair competition from other Member States. It is suggested here that the EU posted workers’ Directive provides such protection, but this isn’t always the case. So I suggest an amendment to that Directive in order to overturn the controversial CJEU judgment in Laval (amendment 3).

The specific suggested amendments relating to unfair recruitment standards, living wages et al can best be addressed by amendments to the specific Regulation on the free movement of workers. My suggestions to this end are set out in amendment 4.  

Finally, the Open Europe paper gets round to suggesting some protection for migrant EU workers in areas other than employment, on the grounds that the proposed three-year waiting period for equal treatment ‘might contribute to a sense of vulnerability on their part’. The report’s authors should win an award for their contribution to the great British art of understatement here. One could equally say that the Titanic’s collision with an iceberg might have contributed to a sense of dropping body temperature on the part of its passengers.

Open Europe's specific suggestion is to adopt EU legislation protecting EU migrant workers against discrimination on grounds of nationality as regards supply of goods and services. This is possibly superfluous in light of the non-discrimination rules in the Treaty. But to be on the safe side, I have suggested amendment 5, to the Regulation on migrant workers.

Finally, a number of specific statements in the Open Europe paper need correction or clarification. On page 3, there are more than two ‘important protections’ (for States) as regards exceptions from equal treatment for benefits. Nor is sickness insurance a requirement for all EU citizens, only those who are not workers or self-employed. The Brey judgment (text at note 6) has been effectively overturned by Dano, which was delivered after this paper was published. Equal treatment applies only to those EU citizens who are legally resident. Former workers are entitled to benefits not just in the cases referred to in note 9. On page 9, the CJEU has yet to rule whether Article 31 of the EU Charter of Fundamental Rights creates justiciable rights; this issue is the subject of the pending Fenoll case. It’s an overstatement to say that national law giving effect to Charter social rights is always protected by EU law, as the CJEU judgments in Laval, Viking Line and Alemo-Herron make clear.

Proposed amendments

Amendment 1

Add a new Article 1(2) to the citizens’ Directive:

This Directive shall not affect Member States’ competence to define national rules on social assistance and social security (including pensions), public health, public education and employment policies, in accordance with the Treaties.

Amendment 2

Add a new sentence to Article 21 of the citizens’ Directive:

Periods spent in prison as the consequence of a conviction for a criminal offence shall not be taken into account.

Amendment 3

Add a new sentence to Article 2(10) of the posted workers’ directive:

In particular, equality of treatment as regards pay shall be assured as regards all collective agreements, whether or not they are covered by the definition set out in paragraph 8.  

Amendment 4

Regulation 492/2011 on the free movement of workers should be amended to add a new Section 1a, ‘Equal treatment of host State workers’, consisting of a new Article 6a:

Member States shall not permit recruitment of or advertising for employment to nationals of other Member States only.

A new sentence should be added to Article 7(1):

The principle of equal treatment in working conditions applies in particular to any rule relating to wages, including a minimum wage or living wage requirement in the host Member State, as well as any rules relating to health and safety.

A new Article 7(5) should be added:

In order to ensure a dignified standard of living for workers exercising free movement rights, Member States may prohibit bonded agreements or tied housing.

Amendment 5

A new Article 7(6) should be added to Regulation 492/2011:

Workers shall enjoy equal treatment without discrimination on grounds of nationality as regards access to and supply of goods and services which are available to the public.

*Note: This would be enforceable in the way that the Open Europe paper suggests, by means of the Directive on enforcement of migrant workers’ rights, adopted in 2014.


Barnard & Peers: chapter 13


  1. Wouldn't the easiest way to bring about the desired changes be to amend national law to only allow out-of-work benefits, and in-work benefits to only be claimed by persons (UK citizens or otherwise) once they had been resident in the UK (or maybe the Common Travel Area) for a period of 5 years? In that way UK nationals returning from living overseas would be treated the same as other EEA nationals arriving in the UK for the first time. So basically only EEA nationals who are permanent residents, non-EEA nationals who are permanent residents, and UK nationals who have been living in the UK for the previous 5 years (and thus could be considered permanently resident) would have access to these benefits. In that way there is no legal discrimination and equal treatment for all, but the net effect would be to ensure that all migrants have to wait 5 years to access these benefits.....

    1. The UK already has a rule like that for some benefits, known as the 'habitual residence' test. The Commission is challenging it. Undoubtedly it is not directly discriminatory, but it is indirectly discriminatory, because a residence condition affects more non-nationals than nationals. The CJEU has ruled against such residence conditions in a number of cases involving migrant EU workers' access to benefits.

    2. Indeed, but then the Habitual Residence Test (HRT) is only applied to to non-UK EEA nationals and some UK nationals who are returning from living abroad, while UK nationals having an automatic right of residence don't have the test applied to them.

      On the surface that's more discriminatory than what I was suggesting which was that the laws should be amended so that anyone applying for the benefits in question (out-of-work and in-work) must provide proof of residence (perhaps for any five out of the past six or seven years) within the Common Travel Area (or perhaps the UK more exclusively)...with no exceptions for "returning residents/nationals" or anything like that. A straightforward criteria. Either you were resident in the UK for 5 years or you weren't. In that way, all EU citizens, indeed all persons legally permanently resident within the CTA (or maybe just the UK) would be treated equally.

      Sure it would be indirectly discriminatory but then so is that road tax the Germans plan on introducing in 2016 which would tax all road user but provide Germans with a rebate. If the Germans craft the law right, then it would probably only apply to road users who are not residing in Germany regardless of nationality.

      Otherwise, if such a 5 year residency requirement is deemed to be illegal by the CJEU even if applied to all persons including UK nationals, then if the UK really is keen on reducing migration from other EU countries and restricting the benefits they can get then the UK should just leave the EU.