Wednesday 20 June 2018

Fair movement of people: equal treatment? (Part Two)

Catherine Barnard and Sarah Fraser Butlin*

*The authors are both at the University of Cambridge and funded by the ESRC’s UK in a Changing Europe programme


In the first blog (here), we argued that a future UK/EU migration policy should be based around the notion of fair – not free – movement. One element of this would be a work permit scheme dependent on having genuine employed or self-employed activity (or sufficient resources for migrants and their families), accompanied by a simplified registration scheme, based on the scheme already used for Croatian migrants.

A second element of our scheme would include possible restrictions on the principle of equal treatment in respect of both work and access to benefits.  We suggest that the UK needs to utilise the restrictions on equal treatment that already exist in the Citizens’ Rights Directive 2004/38 while developing the restrictions on the equal treatment principle contained in the Brussels New Settlement Agreement negotiated by David Cameron in February 2016.  We suggest that this may (eventually) be acceptable to the EU because it reflects both the origins of the free movement provisions in the EU and a political realisation that free movement is less popular than it was for Western EU states. Anything negotiated for the UK might offer a path for Austria, Denmark, Germany and other Member States to restrict access to benefits to EU migrants in the first years of their arrival.

II Origins of Free Movement and the equal treatment principle

The 1948 Paris Treaty saw free movement as a way of optimising a natural resource, namely labour, but one which was subsidiary to the objective of seeking full employment for national workers. However, it was also clear that where host States chose to use migrant workers, they had to ensure that migrants enjoyed satisfactory conditions, albeit not necessarily equal treatment. Nevertheless within a year, the five signatory States (Belgium, France, Luxembourg, the Netherlands and the UK) of the Brussels Treaty recognised the need for equal treatment of migrant workers in relation to social security and concluded the Multilateral Convention on Social Security. 

In 1951, the Treaty founding the European Community for Coal and Steel (ECSC) made provision, by way of Article 69(1), for non-discrimination on the grounds of nationality in the coal and steel industries of workers of proven qualifications, subject to the “limitations imposed by the fundamental needs of health and public order”. 

Thus, even before formal discussions about the establishment of the Common, now Single, Market, had begun, ideas of equal treatment of migrant workers and the interrelationship between free movement of labour and social security provision were already in play as a means of facilitating the free movement of labour. In the proposals of the Inter-Governmental Conference (IGC) in June 1956, free movement was to be defined as ‘the right to present oneself in any country of the Community to the posts advertised and to remain in that country if a job is actually obtained’ and this was without ‘any restriction which does not apply to national workers themselves’ i.e. they had to enjoy the principle of non-discrimination which was delivered by Article 45(2) TFEU.

Scroll forward through the ensuing half century and the principle of equal treatment is extended to those EU migrants who were not fully economically active (students, the retired and persons of independent means (PIMs)), and even those without resources by a combination of the Citizens’ Rights Directive 2004/38 (CRD) and the Treaty provisions including those on EU citizenship.

The CRD already contains limits on the right to equal treatment. For those who are not economically active, they are not entitled to equal treatment in respect of social assistance (benefits for the very poor) for the first three months, nor are they entitled to equal treatment in respect of student grants and loans until they have been in the host country for 5 years. The five year restriction on students grants and loans also applies to those who are economically and semi-economically active. Nevertheless, those who are economically active enjoy equal treatment from day one in respect of all other matters. However, the principle of equal treatment has always allowed states to impose, say, a one-year residence requirement before receiving a benefit although only if the residence requirement can be objectively justified and is proportionate.

Notwithstanding the possibilities open to the UK to restrict equal treatment, these limitations were not sufficient for many UK voters. In the run-up to the referendum in the UK there were concerns about EU workers claiming equal treatment in respect of in work benefits such as tax credits. There was particular concern about equal treatment for those who were not economically active. The EU ‘benefit scrounger’ became the bogeyman of the UK’s referendum.

III Recent Court of Justice jurisprudence on citizenship

There were signs that the Court of Justice (CJEU) had started to listen to these concerns, especially about equal treatment for those not economically active. For example, in Collins the CJEU held that a habitual residence requirement prior to claiming a benefit could be objectively justified by the need to ensure that there was a genuine link between the applicant for an allowance and the geographic employment market in question. This decision chimed with a broader recognition by both the Tory and Labour parties that there was a need for “fair contribution” before benefits should be paid.

In Dano (discussed here) the Court suggested that, in the case of a person who was not economically active, the right of lawful residence, acquired by demonstrating possession of comprehensive sickness insurance and sufficient resources, as required by the CRD, was a precondition to the enjoyment of the principle of equal treatment. The Court held expressly that benefit tourism would not be encouraged. 

In Commission v UK (discussed here) the Court confirmed that there was nothing to prevent the grant of social benefits to Union citizens who were not economically active being made subject to the substantive condition of a right to lawfully reside in the Member State.

Thus, the recent case law puts considerable power in the hands of the host Member States: individuals can be excluded from even relying on the equal treatment principle if they do not satisfy the requirements of the CRD. Even if they do satisfy those requirements, states can still impose residence requirements as a precondition to entitlement to benefits, provided those residence requirements are justified and proportionate, and states can impose checks to verify this. There were signs that the Court was beginning to let states take back some control of its welfare states.

IV        “New Settlement” agreement

Some of the restrictions on the principle of equal treatment and benefits recognised by the Court were incorporated in David Cameron’s now defunct ‘New Settlement’ or Brussels Agreement, negotiated with the EU in February 2016. It effectively codified the CJEU’s decisions in Dano and, another case decided at much the same time, Alimanovic (discussed here): Member States could refuse to grant social benefits to people who did not have sufficient resources to claim a right of residence or who were solely entitled to reside because of their job search. 

However, more significantly the Brussels Agreement introduced the idea that there could be an emergency brake on in-work benefits. The agreement proposed amending Regulation 492/2011 ’to take account of a pull factor arising from a Member State’s in-work benefits regime‘ in order to ‘provide for an alert and safeguard mechanism that responds to situations of inflow of workers from other Member States of an exceptional magnitude over an extended period of time’. A Member State wishing to use the mechanism would notify the Commission and the Council that ‘such an exceptional situation exists on a scale that affects essential aspects of its social security system, including the primary purpose of its in-work benefits system, or which leads to difficulties which are serious and liable to persist in its employment market or are putting an excessive pressure on the proper functioning of its public services’.

The proposed mechanism was for the Commission to examine the notification and for the Council to authorise the member state, by way of an implementing act, to restrict access to in-work welfare benefits ‘to the extent necessary’ for a total period of up to four years from commencement of employment.

The rules were sophisticated but needed some careful explaining and, as anyone involved in the referendum discovered, the need to explain meant the debate was lost. However, we suggest that the Brussels agreement, which never came into force following the Leave vote, may help inform any future agreement with the EU in respect of limiting the equal treatment principle.

V. The equal treatment principle in the model of fair movement?

So what might the new scheme of equal treatment look like under our proposed immigration regime? In just the way that the founder Member States recognised that there should be some limits on equal treatment for migrants, we accept that there needs to be some limits on that equal treatment in order to respect the concerns expressed in the referendum. Following the model of the Croatian scheme, proposed in the previous blog, a Croatian national becomes entitled to social security after 12 months of authorised work. This might be the starting point for the new scheme. However, under the Croatian scheme, those in authorised work are entitled to means-tested benefits. Under any new scheme the UK might argue for no means tested benefits such as tax credits for 12 months. More radically, the UK might want to return to the model proposed in the New Settlement Agreement where in-work benefits for those on the lowest pay be phased in over four years of residence.

VI.       Conclusions

Given what was achieved by the Brussels negotiations, together with the jurisprudence of the Court of Justice, is it possible to envisage some form of evolving concept of fair movement, providing a flexible but controlled approach to migration that is strongly aligned to the needs of the labour market, as those negotiating the original version of the Treaty advocated? We are advocating the utilisation of tools already found in the CRD and possibly in the New Settlement Agreement. The rights would apply to those EU/EEA nationals in a recognised category – as a (genuine) worker (as defined in the previous blog, with minimum income thresholds and hours of work?), a self-employed person or a service provider.

EU/EEA nationals could also move as a student or a person of independent means, both needing to show comprehensive sickness insurance and sufficient resources, terms which should be more substantively defined. And they should be registered in the place of residence, with relevant documentation proving their entitlement which employers would need to check before offering work, higher education establishments would check before admission and providers of public services would need to check before offering those services. Once entitlement is established, the principle of equal treatment is applied but phased as the CRD currently provides and nuanced as in the case law of the Court of Justice and in accordance with the terms of New Settlement Agreement.  In particular, the use of residence requirements as a limitation on access to social security benefits would enable the Government to challenge criticisms of “benefit tourism”.

We would suggest that this tempering of the free movement of persons would achieve a balance between the political, social and cultural concerns about immigration with a desire for fairness to EEA migrants. It draws on some of the old thinking: the early drafters of European documents on free movement grappled with some of the issues that are now being faced in the UK. While equal treatment has been at the core, it is a notion which has long been qualified both by the EU’s secondary legislation and the case law of the Court.

Barnard & Peers: chapter 27, chapter 13

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