Unemployment, residence rights, social benefits at three crossroads in the Tarola ruling

Francesca Strumia, Senior Lecturer, University of Sheffield School of Law*

*This post draws in part on research supported by a Research Fellowship at the Collegio Carlo Alberto in Torino

Overview

Last week’s CJEU ruling in Tarola, responding to a preliminary reference from the Irish Court of Appeal, interprets yet another cryptic provision of the Citizenship Directive, art. 7(3) on retention of worker status. The ruling sits at the intersection of EU law on free movement of workers, and on free movement of citizens. It is about rights descending from the status of worker. Yet it concerns the situation of unemployed persons at the periphery of workers’ status, whose condition stretches into citizenship territory. For these reasons, the case provided an opportunity for the Court to blend the assertive approach of its case law on workers with the cautious attitude it has adopted in its recent case law on non-economically active citizens. The resulting judgment adds yet another chapter to the tormented story of access to social benefits in the context of free movement.

Analysis

Mr. Tarola, a Romanian national, worked in Ireland in either an employed or self-employed capacity for several periods of a few weeks each in 2007, 2013 and 2014. In 2013 and 2014 he applied there for jobseeker’s and welfare allowances. His applications were refused on the ground that absent proof of ability for self-support and absent a sufficiently long employment record he had not demonstrated habitual residence in Ireland. In the resulting litigation, Mr. Tarola argued that he had the right to reside in Ireland for the six months following a two-week period of employment in July 2014 under art. 7(3)(c) of the Citizenship Directive. The argument did not convince the High Court, however it raised attention at the Court of Appeals that referred to the CJEU.

The referred question revolved around the interpretation of article 7(3)(c). More precisely, paraphrasing Advocate General Szpunar, the question was whether a Union citizen who works in another Member States for two weeks otherwise than on a fixed-term contract and then becomes involuntarily unemployed retains the status of worker and the right to residence that comes with that status.

Article 7(3)(c) of the Citizenship Directive is particularly convoluted. It provides for the retention of the status of worker for no less than six months in two hypotheses not clearly distinguished until yesterday’s ruling. The first situation is fairly straightforward: duly recorded unemployment following termination of a fixed-term contract of less than a year in duration. The second is more nebulous. The text refers in this respect to a person having ‘become involuntarily unemployed during the first twelve months’ and having registered as a job-seeker. The court found in particular that the text left two aspects undetermined: (i)  the type of activity or contract in whose context a person became involuntarily unemployed and 2) the context of the ‘first twelve months’ phrase, whether first twelve months of any employment contract, of a fixed-term contract, of residence in the host Member State, or else (par. 35). 

The court’s solution was that the provision allows retention of the status for workers “in all situations in which a worker has been obliged, for reasons beyond his control, to stop working in the host Member State before one year has elapsed, regardless of the nature of the activity or the type of employment contract entered into for that purpose”. (par 48) This interpretation was drawn from the context, purpose and origin of the provision of art. 7(3)(c).

With regard to context, the court noted that the provision sits within article 7, providing overall for the right of residence, and its retention, for all those who have exercise an activity in an employed or self-employed capacity. As affirmed in Prefeta, retention of that right is granted on the assumption that the citizen is available and able to re-enter the labor market within a reasonable period. (par 39-40) The court added that, within the broader context of the gradation of the right to residence that the Citizenship Directive operates, article 7(3) establishes a gradation also for retention of the status of worker. This gradation is based among others on reasons for inability to work and on the initial duration of the period of activity. On the top grade are those citizens who are unable to work because of accident or illness, because of undertaking vocational training, and because of having remained involuntarily unemployed after having worked for at least one year. All of these retain the status without time limits. On a lower grade are those who have worked for less than one year and who can retain the status for as long as the Member States like, provided this is not less than six months. (par 43-45)

In terms of purpose, the court observed that the offered interpretation of art. 7(3)(c) satisfied the general objective of the EU Citizenship Directive, namely strengthening the right of movement and residence, without undermining its further objective of protecting the Member States’ finances from undue burdens. The interpretation was also consistent with the specific objective of article 7(3) of the Directive, described in previous case law (e.g. Gusa) as that of protecting the right of residence of persons “who are in the absence of work due to circumstances beyond their control”. (par 49-50)

Finally as to the origins of art. 7(3)(c) the court found that its reading of the provision mirrored the intention of the drafters. The travaux preparatoires indicated indeed that the second part of art. 7(3)(c) had been added in the draft directive so as to extend protection to workers in involuntary unemployment after less than a year regardless of the type of contract covering their activity. (par 53)

The ruling concluded with a dictum inspired by the AG opinion and with a note to the referring court.  The dictum is that persons residing on the basis of the Citizenship Directive, including those retaining the right to reside under art 7(3), are entitled to equal treatment with nationals. Hence if national workers who have worked only for a short period of time are excluded from social benefits, the exclusion applies also to migrant EU citizen workers. The note to the referring court was that it was accordingly for it to determine, in light of national law, whether Mr Tarola was entitled, under the principle of equal treatment, to the social benefits he was seeking.

Comment

At least three aspects in this judgment are worthy of note. A first one is the way the court treats the citizenship directive. A second one is the court’s note on entitlement to social assistance. A further one is the balancing exercise the ruling performs between protection of movement and residence rights and protection of state finances. These elements, respectively, help situate the judgment at three crossroads: the one between the law on free movement of workers, and the law on free movement of citizens; the one between EU law on equal treatment, and national law on welfare assistance; and the one between competing objectives pursued by EU free movement law.

With regard to the Citizenship Directive, the court sticks to the rule of interpretation it promises up front. The directive cannot be interpreted restrictively. And indeed the court offers a quite broad interpretation of its relevant provision. That the provisions of the Citizenship Directive require broad interpretation is no novelty. The court has repeated this rule of interpretation again and again in several cases. Yet in recent years it has not always as enthusiastically applied the same rule (a recent example is the SM case, treated here; a slightly older one is Singh and others).  The court’s approach in Tarola is the result of a special conjuncture: the court is de facto ruling on the rights of a non-economically active citizen, but it is formally dealing with a worker-it is not in question indeed that Mr. Tarola meets the EU law definition of worker (par. 25)-. This allows the court to intersect, if not the law, the interpretive approaches belonging to two different strands of its case law: the assertiveness of its case law on workers, and the caution of its recent case law on non-economically active citizens.  Echoes of the former allow the court to deliver, from a relative comfort zone, a result that bears on the social protection of Union citizens.

The caution that characterizes the case law on non-economically active returns, on the other hand, through the court’s drawing of a clear boundary between right to equal treatment and entitlement to social assistance. In the final dictum, the court emphasizes that the right attached to a worker’s, or citizen’s, right to residence, is one of equal treatment. Retention of the status of worker, and of the corresponding right to reside, does not necessarily mean entitlement to obtain social assistance. It simply means entitlement to apply for it, and obtain the same response as a national would get. This sounds as a reminder, and a word of reassurance, to the Member States that they are free to organize their welfare systems as they wish. At the same time the court gives the Member States a gentle nudge: if they do not like paying benefits to those who have worked too little, they had better say so in national law.

The gentle nudge to the Member States ultimately reflects the court’s endeavor to take into account, and balance in Tarola, two competing objectives of the Citizenship Directive. One is the objective of strengthening the right to move and reside for all Union citizens (witness to the case standing at the crossroads of workers and citizenship law, the court refers in reporting those objectives to citizens in one sentence, to workers in the next, par 49-50). The other is the objective to ensure that the Member States’ social security and social assistance systems are not placed under an undue burden. The tension between these two objectives underpins the entire case law on social benefits provision in the context of free movement. This brings the Tarola ruling closer to the line of cases that from Trojani descends to Dano and its progeny. The tension in that case law, however, is not always as clearly acknowledged and as carefully addressed as here. In this respect, Tarola might signal a further turn in a doctrine that has experienced several twists. It may be the first sign of the taking on, on the part of the court, of a more coherent role in reconciling the conflicting objectives of the law on free movement.

Barnard & Peers: chapter 13

Photo credit: BIMIreland.ie

CJEU case law on EU citizenship: normatively consistent? Unlikely! - A response to Davies’ ‘Has the Court changed, or have the cases?’

Alexander Hoogenboom, PhD, MSc. LL.M. Senior Policy Officer at the Dutch Healthcare Authority and associate researcher at the Institute for Transnational and Euregional cross border cooperation and Mobility, Faculty of law, Maastricht University. The position taken in this paper solely reflects the views of the author.

Introduction

Recent case law of the Court of Justice on EU citizens’ access to benefits has been seen by some as a restrictive turn compared to prior case law, in response to a rise in populism. However, the article by Davies in a recent special issue of the Journal of European Public Policy is to be commended for its original take on this alleged ‘turn to restrictiveness’. The goal of his article is, as I see it, questioning whether the Court has indeed recently become stricter (in the sense of more State-friendly, less Union citizen-friendly) in response to the populist turn in the European political landscape. In that vein, Davies submits, contrary to what he sees is the main thrust in the scholarship, that the court has been ‘normatively consistent’ (see also this research paper he authored) and that the perceived difference in recent litigation outcomes from the golden years of Union citizenship are due to the litigants being less ‘deserving’ of access to benefits provided by the host Member State: ‘what goes in will provide an overwhelmingly plausible explanation of the outcomes on its own’.

This argument is supported by relying on a methodology for measuring the ‘deservedness’ of the litigants based on a set of indicators: the ‘good behaviour’ of the applicant, the possibility for exceptional harm should the benefit be denied, the possible cost to society resulting from the grant of a benefit (e.g. because it is long-term or applies to a large category of persons), whether granting the benefit would mandate a particular positive outcome and whether the State was somehow at fault for the specific conundrum that the litigant finds him or herself in.  The more ‘deserving’ (high contribution to society, low cost), the greater the likelihood of a litigant-positive result.

Applying these criteria to a selection of case law, Davies proceeds to show that indeed, the Dano’s (never worked, never integrated, lacked resources for self-support) of the world seem to be less deserving of benefits than the Sala’s (long-term legal resident, child benefit denied due to a technicality by an inconsistent state). (On the Dano case – the first judgment showing the perceived turn toward a stricter approach – see the discussion here).

There are, however, a few issues one could take with this approach. In part, it is questionable whether the facts as available to scholars of EU law decisions allow one to accurately apply the proposed test – especially given that the publication of the Reports for the Hearing was abolished since 2012 (see also para 119 of the AG opinion in Breyer). This is exacerbated, as Davies admits, by the fact that a negative outcome throws its shadow forwards: one then tends to present the facts in such a way as to support the later conclusion.

In part, it is questionable whether deservedness is objectively verifiable: after all, one could also argue that the rise of populism or say an economic crisis – the ‘times we live in’ – simply provide a different kind of lens through which to view the migratory Union citizen. The same fresh-faced youth enrolling in higher education in a Member State different from the one of his nationality can be cast as a self-improving, future productive member of that society (compare to Gravier, para 24) or as a welfare-abusing, locust-like creature eating his or her fill and subsequently returning from whence he or she came (see the main arguments by Belgium and Austria in the the judgment in Bressol).

However, the main challenge I would like to level is that the methodology suggested is applied to an incomplete ‘data set’ (the cases), in part due to selection bias (the focus in the article on the cases ‘most discussed’).

Grzelczyk by another name: The curious case of Förster

The case of Grzelczyk is among those used by Davies to support his thesis: his particular circumstances ‘paint a sympathetic picture’. A hard-working young Frenchman, resident in Belgium for some time and whose claim to financial support finish his last few months of study would seem altogether reasonable. Indeed, the Court, while leaving it to the national court to make the final decision, seemed to suggest he should be so entitled.

Nonetheless, the Court was not so generous in Förster. Jacqueline Förster was a German national who grew up in a town not far from the Dutch border. She moved to and resided in the Netherlands from March 2000 onwards – partly to be with her Dutch boyfriend. There, she enrolled into a teacher training programme and later in a course on educational theory at the Hogeschool van Amsterdam. In the period 2000-2002 she undertook various part-time jobs, until she engaged in full-time paid practical training at a Dutch school providing secondary education for children with special needs (October 2002 – June 2003). After her practical training she did not engage in gainful employment until July 2004. She graduated from her course that summer.

At stake was the intermezzo period: the Dutch Student Benefit Authority (then called IB-Groep) assessed in 2005 that she had not been eligible for study maintenance assistance in the second half of 2003 and ordered her to repay the amounts received.

It would seem to me that Ms. Förster ticked practically the same as mr. Grzelczyk. Measuring her ‘deservedness’ according to the matrix suggested by Davies we find:

-       Good behaviour: self-support initially (three years), enrolled in studies and contributing to Dutch society even during her studies in her practical training period. Advocate-General Mazàk moreover made the explicit point that she did not seem to have moved with the goal of claiming benefits.

-       Exceptional harm: Although the withdrawal of the benefit was retroactive, when assessing her right to access the benefit as matters stood in 2003 one could plausibly maintain that, as with Grzelczyk, non-access to the benefit would have made the completion of the degree much more difficult.

-       The support requested covered only a limited time: at issue was a six-month period only.

-       Limited cost of the support: As with Grzelczyk, this aspect is hard to estimate.

-       Positive outcomes: the completion of the degree would enable her to contribute to Dutch society and economy as a teacher.

-       State at fault: One could make the argument that given the fact that they had initially granted her the benefit and only much later (some one and a half years) took the final decision to recover the amount, should count against the Dutch state.

Finally, in addition to these elements from Davies’ deservedness matrix, the applicant had a relationship with a Dutch national and given her work, presumably, spoke fluent Dutch – both elements that the Court in other cases has found relevant when assessing eligibility to benefits (see Prinz and Seeberger, for instance).

All in all, one would assume, from the methodology applied that this applicant should be successful, or that should have led to a ‘discretionary-result-with-a-hint-in-favour-of-the applicant’. Yet, she categorically lost her case, notwithstanding the suggestion by the Advocate-General to consider the circumstances of the case along the lines suggested above. Yes, the conclusion was (partly) mandated by the EU citizens’ Directive 2004/38, but the Court certainly did not ‘bend over backwards to find exceptions to [this] restriction’ as his matrix would predict.

The big turnaround: Commission v Austria and Commission v the Netherlands

The cases of Commission v Austria and Commission v the Netherlands are perhaps even more glaring. The issue concerned a travel benefit aimed at students attending higher education. In the Austrian case, decided in 2012, Austria argued that it could refuse access to the benefit where the Union citizen in question had not yet obtained a right to permanent residence (a five-year prior residence requirement in practice). In contrast, the Court found that all persons enrolled in higher education should have automatic access.

The case is somewhat hard to fit into the matrix, but intuitively one could argue that the Court was not swayed by the hypothetical good behaviour of potential beneficiaries (no prior residence requirements, no integration), nor was the benefit for a limited time (it could last the entire study period), all persons enrolled in higher education persons were eligible (no ‘limited costs’) and it is hard to imagine an ‘exceptional harm’ had the benefit been denied to the hypothetical applicant. Notwithstanding this apparent lack of deservedness, however, a positive outcome for the hypothetical beneficiaries.

In 2016, in Commission v the Netherlands, the Court reached the opposite conclusion. The benefit at issue was in all respects the same as at stake in Commission v Austria (Table taken from A. Hoogenboom, Balancing Student Mobility Rights and National Higher Education Autonomy in the European Union (BRILL, 2017)):

	Austria	The Netherlands
Nature of the benefit	Fee reduction for the use of public transport (grant)	Free use of public transport on some days of the week; reduced fees on the other days (conditional grant)
Apparent purpose	To facilitate access to education	To facilitate access to education
Provision	Commercial public transport operators	Commercial public transport operators
Financing	The individual governments of several Länder	Central Dutch government
Recipient	Student	Student
Eligibility	Enrolment higher education Parents in receipt of Austrian family allowances	Enrolment in higher education. Student in receipt of Dutch studiefinanciering

Here the Court decided that the Netherlands could restrict the benefit along the terms suggested by Austria in the earlier case. It stretched the limits of consistency by trying to distinguish the latter case with a bizarre reference to the difference in national classification of the benefit, despite it being settled case law that such classifications are irrelevant - a point the Court itself made in Commission v Austria.

So here we initially have a judgment against the State and in favour of the Union citizen, whereas the matrix would likely predict a judgment in favour of the State. Four years later the Court came, on largely the same facts, to the opposite conclusion. This should not be seen as a (late) vindication of the matrix however, since the Court formally distinguished the latter case from the former, meaning that both cases continue to be good law.

Conclusion

Whereas the line of inquiry presented in Davies’ paper is an interesting one, it cannot account adequately account for the existence of Förster and the Commission v Austria/Netherlands saga. Apparently deserving applicants get rejected, and the same benefit with a similar hypothetical user base gets a different legal treatment in the space of a few years. Two possible explanations suggest themselves:

-       The Court is not consistent. This would mean that Davies’ hypothesis is disproven.

-       The matrix presented, by which the court supposedly measures deservedness, is flawed. This goes to the methodology used and means that we simply haven’t found calculus that the Court uses.

It would seem to me that the existence of both Commission v Austria and Commission v the Netherlands as ‘good law’ seems to hint at the former. In any case, however, to argue that the Court of Justice is normatively consistent, on the basis of the analysis carried out by Davies, is a bridge too far.

Barnard & Peers: chapter 13

Photo credit: i newspaper

EU citizens’ access to benefits: the CJEU clarifies the position of former workers

Steve Peers

Today’s CJEU judgment in Alimanovic clarifies again the meaning of the EU law rules on the thorny issue of EU citizens’ access to benefits in another Member State. Like last year’s judgment in Dano (discussed here), it takes a more restrictive approach than suggested by the Court’s prior case law. However, like that prior judgment, today’s ruling leaves some issues open. I will discuss in turn the judgment itself, the impact on EU citizens' access to benefits, and the UK government's plans to renegotiate the country's EU membership. 

As a starting point, on the issue of EU citizens’ access to benefits, it is important to make distinctions as regards three issues: (a) the status of the person applying for the benefit ((i) not economically active; (ii) first-time job-seeker in the host State; (iii) previously employed in the host State; (iv) currently in work; (v) permanent resident); (b) the type of benefit at issue (social assistance, or concerning access to the labour market); and (c) whether the dispute concerns access to benefits or expulsion of the person concerned.

The judgment

The Alimanovic case concerns a Swedish woman and her daughter who had worked in Germany briefly, then lost their jobs. They sought a particular benefit in Germany, and the national court asked the CJEU if they were entitled to it.

First of all, the Court reiterated and expanded on what it had said in Dano: the benefit in question was a ‘social assistance’ benefit, not a benefit relating to labour market access. This distinction is important because the EU citizens’ Directive states that access to ‘social assistance’ benefits can be denied to first-time job-seekers, for as long as they are seeking work, and to all EU citizens during their first three months of residence. Furthermore, the Court’s previous case law (interpreting the Treaty rules on free movement of workers) states that first time job-seekers were entitled to benefits relating to labour market access, but not to social assistance benefits. The Court references that case law obliquely in the Alimanovic judgment, but does not either reaffirm or denounce it; it should be noted that a case about job-seekers’ access to this same benefit is pending (Garcia-Nieto: see the Advocate-General’s opinion in that case here).

Secondly, the Court then turned to the question of whether EU citizens who were previously briefly employed in the host State could be denied social assistance benefits. The previously employed are not one of the two categories of people specifically excluded from equal treatment to social assistance benefits by the citizens’ Directive; but that does not necessarily mean that they have access to those benefits.

To determine whether they had access to those benefits, the Court interpreted the equal treatment rule in the Directive, which states that equal treatment applies to all those EU citizens ‘residing on the basis of this Directive’ and their family members (leaving aside the exclusions which were already mentioned, as well as other exclusions in the Treaties or other EU legislation). So were the two benefit claimants residing on the basis of the Directive?

The Court ruled that they were not still covered by the Directive as former workers, since the Directive says that those who work in the host State for less than one year (as in their case) retain ‘worker’ status for at least six months after becoming unemployed. After that point, a Member State can (as Germany did) terminate their worker status, which means (unless they have another basis to stay, which was not relevant in this case) they are no longer covered by the equal treatment rule, and lose access to social assistance benefits. The national court also took the view that they could be classified as first-time job-seekers, although the Court pointed out that in that case, the Directive expressly permits Germany to refuse access to social assistance benefits.

Next, the Court distinguished prior case law which requires an individual assessment of whether an EU citizen could be expelled or is an ‘unreasonable burden’ on the social assistance system of the host State. In this case, no such assessment was needed, because the citizens’ Directive already took account of the individual position of workers. The specific period of retaining worker status set out in the Directive and national law ensured legal certainty, while ‘while complying with the principle of proportionality’. Finally, when considering whether there was an ‘unreasonable burden’ on national systems, the individual claim did not count: rather the total of all claims would be ‘bound to’ constitute such a burden.

Comments

As in Dano, the CJEU does not expressly overturn prior case law, but makes it easier for Member States to justify refusal of benefits than might otherwise have been the case under prior case law. (See by analogy the comparison of Dano with prior case law here). It’s unsurprising that the benefit at issue is ‘social assistance’, as the Court previously assumed in Dano, although this postpones any further clarification of the questions of access to labour-market related benefits for the various categories of EU citizens.

However, it’s rather more surprising that the Court simply applies the Directive’s definition of former workers. As recently as last year, in its judgment in Saint-Prix (discussed here), the Court insisted that the concept of ‘worker’ was set out in the Treaties, not secondary legislation, and so it fell mainly to be defined by the Court. In that ruling, the Court asserted that a woman who gave up work just before giving birth retained ‘worker’ status (and so access to benefits) under certain conditions. Yet in today’s judgment, the Court simply follows the Directive’s definition of former worker, without overruling or distinguishing (or even mentioning) the prior judgment. Certainly, as the Court said, following the precise wording of the Directive on this point promotes legal certainty; but it hardly promotes legal certainty to simply ignore apparently conflicting lines of case law.

For the record, the other circumstances in which the Directive requires ‘worker’ status to be retained are where: the worker is ‘temporarily unable to work’ due to illness or accident (the words ‘temporarily unable’ are not further defined); the worker is unemployed after more than one year’s work, if he or she is ‘registered as a job-seeker with the relevant employment office’; or the worker has begun vocational training, although this must be linked to the worker’s prior employment unless the worker is involuntarily unemployed.

Equally, it’s surprising that the Court ruled out a requirement for an individual assessment of the former worker’s position, which the Advocate-General had advocated (see discussion here). The Court draws a distinction between the individual assessment which the Directive implicitly requires as regards expulsion (more on expulsion of the unemployed after the Dano judgment here) and the issue of access to benefits. And the protection of the right of residence which the EU legislature expressly set out for beneficiaries of social assistance in the Directive has effectively been removed by the Court’s interpretation in today’s judgment, which seems to set out an irrebuttable presumption that any individual application for social assistance constitutes an ‘unreasonable burden’ on national systems, due to the applications made by other people in the same situation.

EU citizens’ access to benefits and expulsion: where do we stand?

It’s useful to summarise where we stand after this judgment as regards various categories of EU citizens’ access to benefits and expulsion.

(i) not seeking work: not entitled to social assistance, or labour market benefits; no automatic expulsion;

(ii) first-time job-seeker in the host State: not entitled to social assistance, entitled to labour market benefits; no expulsion as long as they can show evidence of job-seeking and genuine chance of employment;

(iii) previously employed in the host State: retain worker status on conditions set out in the Directive, or during break from employment due to maternity on conditions set out in Saint-Prix; therefore still entitled to social assistance or labour market benefits; no expulsion; if they do not meet the conditions to retain worker status, Alimanovic assumes that the rules on first-time job-seekers apply by analogy;

(iv) currently in work: entitled to social assistance or labour market benefits; no expulsion.

(v) permanent residents (those resident for more than five years legally): full equal treatment regarding benefits and their status is no longer dependent on not applying for social assistance; no expulsion.

   

Of course, any EU citizen can be expelled on grounds of public policy, public security or public health, subject to the detailed rules in the Directive; the references to expulsion above refer to expulsion on other grounds. Permanent residents have enhanced protection against expulsion on grounds of public policy, public security or public health.

Implications for the UK’s renegotiation of EU membership

Finally, this brings us to the elephant in the room: does today’s judgment have any implications for David Cameron’s renegotiation of the UK’s EU membership? Last year, Cameron outlined nine objectives specifically related to the free movement of EU citizens (he also has objectives on other issues, as discussed here).

I examined those nine objectives in detail at the time (see here). Let’s look at those nine objectives again, in light of today’s judgment. I have underlined the impact which the judgment might have on certain issues (I haven’t copied all of the prior analysis, but only those parts which might be affected by the judgment). As we can see, in general the judgment makes it easier to achieve the negotiation objectives of curtailing the benefits of former workers who are now unemployed, but it reaffirms the difficulty of changing rules relating to expulsion of job-seekers.

1. No access to tax credits, housing benefits and social housing for four years for EU citizens

For EU citizens who are not workers, work-seekers or former workers, this confirms the status quo, as set out in Dano.

For EU citizens who are work-seekers, the free movement of workers in the Treaties (as interpreted by the CJEU) requires Member States to give them access to benefits linked to labour-market participation. These benefits would probably not be covered by that rule. So this confirms the status quo.

For EU citizens who are workers (as defined by the Treaties and CJEU interpretation) or former workers (as defined by EU legislation, and the CJEU interpretation of the Treaties), there is a right to equal treatment.  As regards workers, changing this rule would require a Treaty amendment. However, as regards former workers, the Alimanovic judgment implicitly suggests that it is generally up the EU legislature to determine when they retain the status of ‘worker’. So potentially access to benefits could be curtailed for former workers by means of amending secondary law – although the CJEU did refer to the principle of proportionality in this context.

2. Removal if job-seekers do not find a job within six months

For EU job-seekers, the EU legislation states that they cannot be expelled as long as they ‘can provide evidence that they are continuing to seek employment and that they have a genuine chance of being engaged’. This reflects the case law of the CJEU, interpreting the Treaties (Antonissen judgment). Therefore this change would require a Treaty amendment. The Alimanovic judgment reaffirms this rule in the legislation.

3. Ending the entry of non-EU family members without restrictions

Not relevant to the Alimanovic judgment.

4. Tougher and longer re-entry bans for foreign rough sleepers, beggars and fraudsters

Not relevant to the Alimanovic judgment. But note that re-entry bans are not possible at the moment for rough sleepers and beggars: Article 15(3) of the EU citizens’ Directive states unambiguously that a ban on entry cannot be imposed where a person was expelled for grounds other than public policy, public security and public health; and Article 27(1) states clearly that such grounds ‘cannot be invoked to service economic ends’. This rule could possibly be overturned by EU legislative amendment, but it is possible that the CJEU would find that this would constitute a disproportionate restriction on free movement for those who were entering to obtain work later. So a Treaty amendment might be needed.

5. Stronger measures to deport EU criminals

Not relevant to the Alimanovic judgment.

6. Longer waiting periods for free movement of persons from new Member States

Not relevant to the Alimanovic judgment.

7. EU citizens to have a job offer before entry

Not relevant to the Alimanovic judgment. But the CJEU reiterated the current rule in EU legislation that EU citizens can stay if they are a job-seeker, subject to the proviso that they have a genuine chance of getting work. So this proposal would require a legislative amendment and a Treaty amendment, since the CJEU has said (in Antonissen) that the Treaty right to free movement of workers also applies to job-seekers, giving them the right to enter and stay in a Member State to look for work.

8. No taxpayer support for job-seekers

The EU legislation already rules out social assistance for job-seekers, so this reflects the status quo. However, the CJEU has said that job-seekers have a right to access benefits linked to labour market participation, if they have a link already with the labour market in question. While David Cameron suggested that the UK’s future Universal Credit would not fall within the scope of the CJEU’s case law, that would likely be challenged in practice. So a Treaty amendment is likely necessary as regards current rules, and possibly necessary as regards universal credit. As regards job-seekers who are former workers, the Alimanovic judgment makes it easier to deny them social assistance, and to tighten the rules to this end by means of amending secondary EU law, as discussed above.

9. Payment of child benefit to children abroad

Not relevant to the Alimanovic judgment. But note that there is a case pending before the CJEU on the separate question of the UK’s restrictions on payment of child benefit to children of some EU citizens living in the UK (the ‘habitual residence’ test).

Barnard & Peers: chapter 13

Benefits for unemployed EU citizens: the CJEU may complicate David Cameron’s renegotiation strategy

 

Steve Peers

The issue of the free movement (or ‘immigration’) of EU citizens between Member States has become highly controversial politically, especially in the UK. In particular, their access to benefits remains highly contentious. The CJEU has the chance to clarify some key issues on this point, in the pending case of Alimanovic, in which an Advocate-General issued an opinion today.

Today’s opinion is not binding, so we must wait to see if the CJEU is willing to follow it. But if it does, the Court will complicate the Conservative party’s strategy to renegotiate the UK’s EU membership. Even if the result of the upcoming UK general election means that the Conservative party’s plans are moot, the judgment will still be relevant to the Labour party’s less far-reaching plans to restrict EU citizens’ access to benefits.

Background

The CJEU ruled in November 2014 in the well-known Dano judgment (discussed here) that unemployed EU citizens who moved to another Member State could not access social benefits there, if they were not looking for work. This ruling did not apply to other categories of unemployed EU citizens: those who moved to another Member State and were looking for work there, and those who had worked there already and become unemployed. Today’s opinion concerns both of these categories.

According to the EU citizens’ Directive, unemployed EU citizens looking for work in another Member State cannot obtain social assistance benefits from another Member State if they have not worked in that State. However, the case law of the CJEU states that those citizens can rely on the free movement of workers rules in the EU Treaty in order to claim benefits related to the labour market.

As for those EU citizens who have worked in that Member State and become unemployed, the Directive says that they retain worker status (and therefore access to benefits, including social assistance) if they have worked there more than one year. They also retain worker status if they have worked there for less than that period, although in that case they only keep that status for six months. However, again relying on the Treaty free movement rules, the CJEU has ruled that worker status can be retained in other cases too, for instance by women who have stopped work briefly due to maternity (see discussion here).

The Conservative party position is that EU citizens working in a Member State should have to wait four years to get access to tax credits, social housing and housing benefits, as well as no taxpayer support for job-seekers. As I discussed before, these are the first and eighth of Cameron’s nine objectives in the planned renegotiation of EU membership (in so far as it concerns ‘migration’ from the rest of the EU). The Labour party position is that EU citizens should have to wait two years for benefits.

The case concerns Swedish citizens (a mother and her children) who had lived in Germany before, left for a number of years, and then returned there. The mother and oldest child then worked in Germany briefly, but became unemployed. Do they have access to benefits?

The Opinion

The Advocate-General first clarifies that the benefits are social assistance, not labour-market related. So job-seekers in general do not have access to them; only former workers do. But as part of this analysis, he reaffirms the current rule that the Treaty gives job-seekers access to labour-market related benefits.

Then he examines whether people who become unemployed after short periods of work in a host Member State can be considered former workers – and therefore retain access to social assistance benefits – in cases besides those listed in the Directive. He argues that they can, in part on the basis of the EU Treaties, and that any Member State which refuses to extend such benefits to them automatically breaches EU law. Instead, a Member State must consider the benefit request on a case-by-case basis, assessing whether there is a sufficient link with the labour market of that State.

Comments

If it is followed by the CJEU, the Opinion makes both the Conservative and Labour plans to renegotiate UK membership as regards EU citizens’ access to benefits harder to achieve. The crucial point is the extent to which renegotiation concerns a Treaty amendment, which is far harder to achieve (unanimous agreement of all Member States, and national ratification) than an amendment to EU legislation, like the citizens’ Directive (qualified majority of Member States, proposal from Commission and agreement of European Parliament).

First of all, the Opinion reaffirms that the Treaty requires that all job-seekers get access to labour-market related benefits. So only a Treaty amendment could overturn that rule.

Secondly, the Opinion asserts that the Treaty requires that former workers might have access to benefits, on a case-by-case basis, if they have stopped work in circumstances other than those listed in the Directive. This goes further than the status quo, since the CJEU has only established this point as regards women interrupting work for maternity. The workers concerned have only been employed in Germany for short periods, well below the four-year waiting period that the Conservatives want, or even the two-year period that Labour supports.

It remains to be seen whether the Court will accept today’s opinion, or instead opt for a judgment that more obviously reflects the political sensitivities surrounding unemployed EU citizens’ access to benefits – as it plainly did in the Dano judgment.

 

Barnard & Peers: chapter 13

The beginning of the end for the Euro? EU Law constraints on leaving EMU or defaulting on debts

 

Steve Peers

After a couple of years without any (apparent) crisis, the future of Economic and Monetary Union (EMU) is threatened again, following the decision to call snap Greek elections in January. What would be the consequences if the anti-austerity party Syriza becomes the government?

First of all, such an outcome is not yet certain. As Open Europe’s analysis points out, Syriza has only a modest lead in the polls, and even if it becomes the largest party, it may well fall short of having a majority of seats, in which case it would have to form a coalition with another party.

Secondly, it’s necessary to realise that Syriza has, in principle, relatively modest ambitions. Its policy is not to leave the EU or even the single currency, but rather to renegotiate Greece’s debts and the related austerity obligations. Even in previous elections, it sought to default on the debt, rather than leave the EU or EMU.

Having said that, it is possible that Syriza might decide to threaten more decisive action if renegotiation does not go well. Or that party’s more radical elements might take charge.  Or, in the view of some (see this Washington Post commentary), Greece might be forced out of the euro by other Member States, particularly Germany.

While the main issues arising from this situation are political and economic, there are also legal constraints that cannot be overlooked. Some key measures taken to save the euro in recent years were litigated before national courts (particularly in Germany and Ireland), as well as in the CJEU, notably the Pringle case (concerning the treaty establishing the European Stabilisation Mechanism) and the pending Gauweiler case (discussed here), concerning the European Central Bank policy of buying government bonds. The Advocate-General’s opinion in the latter case is due in mid-January – in the midst of the Greek election campaign.

Let’s start with the most radical outcome. Every Member State has an option to leave the EU, set out in Article 50 TEU. It would be unwise to invoke that provision unless a Member State genuinely wants to leave (see my earlier blog post on that provision). Conversely, however, it’s entirely impossible to force a Member State out of the EU against its will. The most that the other Member States can do is to suspend its membership in the event of a ‘serious and persistent breach’ of EU values, in particular human rights and democracy (Article 7 TEU).

What about departure from EMU? The Treaties contain detailed rules on signing up to the euro, which apply to every Member State except Denmark and the UK. Those countries have special protocols giving them an opt-out from the obligation to join EMU that applies to all other Member States. But there are no explicit rules whatsoever on a Member State leaving the euro, either of its own volition or unwillingly, at the behest of other Member States.  There’s an obvious reason for this: the drafters of the Maastricht Treaty wanted to ensure that monetary union went ahead, and express rules on leaving EMU would have destabilised it from the outset. Put simply, legally speaking, Greece can’t jump or be pushed from the single currency.

But other currency unions have fallen apart in history, despite any legal prohibitions that may have existed against it. So it’s important to consider also the practical constraints: it’s not realistic to imagine forcing Greece to leave or to stay in EMU against its will, short of invading and occupying the country. How would Greece be forced out exactly? By printing drachmas in Frankfurt, dropping them from the air over Greece and hoping that Greeks use them?

In the event that Greece did choose to leave EMU in practice, EU law would have to be amended (probably with retroactive effect) to regulate the position. Although there are no express provisions on this issue, arguably Article 352 TFEU (the default power to regulate issues not expressly mentioned in the Treaties) could be used. This would require a unanimous vote of all Member States: it wouldn’t be possible to use the EU’s ‘enhanced cooperation’ rules (allowing a group of Member States to go ahead without the others), since those rules can’t be used where an issue falls within the scope of the EU’s exclusive competence, and the single currency falls within the scope of the exclusive competence over monetary policy. If Article 352 was not legally possible (someone might bring a successful legal challenge if it was used, or one or more Member States might have purely legal objections), it would be necessary to amend the Treaties.

The least radical outcome is that Greece’s debt and austerity obligations are simply renegotiated. But there are legal constraints here too. Most significantly, Article 136(3) TFEU states that any financial assistance must be subject to ‘strict conditionality’, consistent with the CJEU ruling in Pringle. The CJEU also made clear in that judgment that the ‘no-bailout’ rule in the EU Treaties (Article 125 TFEU) allowed Member States to offer each other financial assistance on the condition that it took the form of loans, rather than a direct assumption of Greek government debt by other Member States. Moreover, the CJEU pointed out, the ESM Treaty required that in the event of non-payment, the loans would remain payable, and had to be charged an appropriate level of interest.

So it’s not possible for Member States to drop all conditionality as regards loans to Greece, to forgive debt as such or to loan money interest-free. But it is open in principle to reduce the stringency of the conditions somewhat, to reduce the interest rates payable and to lengthen the repayment period – although there is always the risk that some litigant will try to convince a national court or the CJEU that this is going too far. Moreover, the rules in the EU Treaties only bind EU institutions and Member States, not private parties, third States or international organisations (although it might be argued that Member States are constrained as members of the IMF not to violate the no-bailout rule indirectly). So any renegotiation or default as regards such creditors is not subject to EU law rules in principle, although of course other legal rules might be applicable.  

Whether such fairly modest renegotiation would do enough to reduce Greece’s mountain of debt significantly, or to satisfy the voters which supported a Syriza-led government, remains to be seen. The greater impact may be longer-term, in the event that a Podemos-led government comes to power in Spain, or that new or current governments in other Member States which have been bailed out demand a similar renegotiation.

Finally, it should be recalled that renegotiation of loans might not be the only possibility to help out Greece. For example, arguably the Treaties do not rule out a form of (supplementary) unemployment insurance system as between Eurozone Member States, since it would not take the form of paying off another State’s debts as such. Admittedly, such a system would provide indirect financial support to another State, since it would reduce costs which that Member State might otherwise have. But the same might be said of loaning money to that Member State, at interest rates far lower than it would be offered on the free market, via means of the ESM Treaty – and the CJEU has already found that this didn’t violate the no-bailout rule. Moreover, the previous Commission has already done a lot of preparatory work on this issue (see the fuller discussion here). Such a scheme could probably be launched either inside the EU legal framework, or outside it.  

It’s up to Greek citizens to decide if they want to vote for Syriza or not, and the EU institutions and other Member States should leave them alone to make their choice. But if Greeks do decide to vote for that party, it would be tiresome and counter-productive to react with bluster and threats. Why not take this opportunity to re-engage with the millions of EU citizens who are affected or angered by austerity, and re-orient the EU towards ending that austerity, instead of generating more of it? That’s more easily said than done, of course. But an unemployment insurance system would not only have an economic rationale (as an automatic stabiliser) but also a political one, demonstrating that the EU can assist those who have suffered from the economic downturn directly.

 

Barnard & Peers: chapter 19
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