In the recent case of Pensionsversicherungsanstalt v Peter Brey  EUECJ C-140/12 (19 September 2013), the Court of Justice of the European Union (‘CJEU’) ruled that welfare benefit legislation which automatically bars benefit to an EEA national from another Member State based on the right to reside requirement is contrary to EU law as it means the competent authorities lack the ability to consider the proportionality of the refusal by reference to the claimant’s personal circumstances.
This represents a significant development in the law and means that domestic law on the right to reside and welfare benefits will need to be revisited in the light of the new learning in Brey.
Proportionality in Domestic Case-Law
Under the law as it stood prior to the ruling in Brey, EEA nationals were barred from claiming certain benefits due to the right to reside requirement, which was introduced into national legislation from April 2004 onwards. Domestic case-law has consistently held that EU law does not require an individual consideration of a claimant’s circumstances in order to decide whether a social security benefit should be payable (Lloyd LJ at para  in Abdirahman v Secretary of State for Work and Pensions  EWCA Civ 657). Accordingly, if an EEA national cannot bring themselves within the right to reside requirement, they will automatically be excluded from benefits on the basis that they will become an unreasonable burden on the public finances of the United Kingdom.
A Social Security Commissioner in R (IS) 4/09 acknowledged that Article 18 (now 21) of the Treaty can in exceptional circumstances confer a right of residence in addition to those conferred by directives based by reference to the approach in Baumbast and R v Secretary of State for the Home Department (case C-413/99)  ECR I-7091. However, the Commissioner reasoned that if a directive has been deliberately drawn so as to exclude a class of persons then in those circumstances, a national court was not entitled to undermine the directive. The Commissioner therefore held that a person could only be found to have a right of residence if the principle of proportionality required that a lacuna in Directive 2004/38 needed to be filled. This approach was subsequently approved by the Court of Appeal in Kaczmarek v Secretary of State for Work and Pensions  EWCA Civ 1310). The principle of proportionality has therefore had a very limited role in welfare benefit case-law and the courts have consistently rejected appeals in which the claimant has argued that the refusal of benefit must be regarded as disproportionate given the particular circumstances in their case. If benefit was refused based on the right to reside requirement, then, according to case-law, an EEA national’s options were limited to:
- seeking emergency relief provided under domestic law, such as the National Assistance Act 1948, Children Act 1989 or the Mental Health Act 1983 (CIS/3891/2007, para );
- returning to their own Member State in order to receive social assistance there (in CIS/3182/2005, para  RM v Secretary of State for Work and Pensions (IS)  UKUT 238, para ); or
- applying to the Home Office for leave to remain where arguments based upon the right to family life and/or fundamental rights could be employed (R (IS) 6/08, paras  and Secretary of State for Work and Pensions v SW (IS)  UKUT 508 (AAC), para ).
Applying to the Home Office however, is not a realistic option for most EEA nationals for the reasons discussed in RM v Secretary of State for Work and Pensions (IS)  UKUT 238 (AAC):
The problem is that the United Kingdom’s legislation does not really make adequate provision, now that entitlement to benefits depends on a person having a right of residence, and the problem appears to be exacerbated by the practice of the immigration authorities. Domestic immigration legislation does not expressly recognise the concept of a right of residence except in the 2006 Regulations, which implement Directive 2004/38/EC. However, leave to enter or remain, granted under the Immigration Act 1971, amounts to recognition of a right of residence. Unfortunately, the immigration authorities regard decisions under the 1971 Act as being matters of immigration “control”, not applicable to most European Union citizens who are free to enter the United Kingdom under regulation 11 of the 2006 Regulations. They do not seem to appreciate that, since 2004, it has been important for European Union citizens to have decisions that establish not merely a right to be present in the United Kingdom but also a right of residence and that decisions under the 1971 Act are not concerned only with lawful presence but also with lawful residence. As I have observed in R(IS) 6/08, claimants who do not fall within the Directives but who have an arguable case for being allowed to claim benefits in the United Kingdom may need to put pressure on the immigration authorities to make decisions under the 1971 Act, if only so that they are not worse off than people from outside the European Union. It cannot be assumed that, so far as rights of residence are concerned, European Community law is always at least as generous as domestic law. However, there is no express provision for decisions under the 1971 Act to be made retrospective to the date of a relevant claim for benefit and such decisions are not usually treated as retrospective. It seems to me that there is a clear need for the benefit authorities to be able to refer arguable cases to the immigration authorities for a decision that will be effective from the date from which benefit was claimed or else for the benefit authorities themselves to be able to exercise an element of discretion in meritorious cases based on personal circumstances falling outside the strict limits of the Directive and the 2006 Regulations. In my view, the current legislation and practice shows a lack of “joined-up thinking” between the Department for Work and Pensions and the Home Office. (At para ).
Mirga v SSWP
In Mirga v Secretary of State for Work and Pensions  EWCA Civ 1952, the claimant tried to challenge the restrictive approach taken to proportionality in welfare benefits case-law and submitted that the refusal to recognise a right of residence in a case where a 17 year old Accession State National from Poland, who was refused Income Support in the late stages of her pregnancy, was disproportionate and “offensive to EU law”. The claimant also sought to rely on fundamental rights under EU law, submitting that if she was required to return to Poland in order to access social assistance, then this would be a breach of Article 7 of the European Charter of Fundamental Rights (respect for private and family life), by virtue of having her life in the UK, together with that of her small child, disrupted after so long a period of residence here (she had come to the UK when she was 10).
The Court dismissed both of the claimant’s proportionality arguments. First, as she was an A8 national, her argument could not withstand the ruling in Zalewska v Department of Social Development  UKSC 11, where it was held that the Workers Registration Scheme was proportionate, even if the consequences of applying the regime would be very harsh in an individual case. Secondly, while the Court was prepared to accept that if the claimant had been subject to an immigration decision requiring her to leave the UK, she would have been entitled to raise arguments based on her fundamental rights under EU law, however, those considerations were simply immaterial to the question of whether she satisfied the right of residence for benefit purposes.
C-140/12 Brey and Proportionality
The argument that there should be an individual proportionality review in cases where benefit is refused based on the right to reside ground has now been endorsed by the Court of Justice in Brey C-140/12. The case was a reference from Austria in proceedings between the Pensionsversicherungsanstalt (the Austrian Pensions Insurance Institution) and Peter Brey. It concerned Mr Brey’s entitlement to a compensatory supplement intended to augment his retirement pension – as provided for in paragraph 292(1) of the Federal Act on General Social Insurance (ASVG). The compensatory supplement is only payable to those who have a right to reside in Austria. In March 2011, Mr Brey and his wife, who are both German nationals, moved to Austria. On 22 March 2011, Mr Brey and his wife were issued with EEA citizen registration certificate under the Settlement and Residence Act (NAG). However, on 2 March 2011, Mr Brey was also issued with a decision denying him the compensatory supplement to his retirement pension on the basis that he would become a burden on the “social assistance system” within the meaning of article 7(1)(b) of Directive 2004/38.
Having decided that the compensatory supplement came within the ‘social assistance system’ for the purposes of Directive 2004/38 (notwithstanding that it is a ‘special non-contributory benefit’ under Regulation No 883/2004), the Court addressed the substantive issue raised by the referral, namely, whether an EEA national from another Member State who is not economically active can receive benefit in the host Member State where the legislation automatically excludes entitlement to that benefit if the EEA national does not have sufficient resources to avoid becoming an unreasonable burden on the social assistance system of the host Member State for the purposes of Article 7(1)(b) of Directive 2004/38. The Court held that a failure to meet a right to reside condition by itself should not result in the EEA national being excluded from social assistance in every case, regardless of their circumstances. The CJEU reasoning in broad terms was that:
- On a proper analysis of the Directive and the principle of proportionality, the competent authorities must have the ability to carry out an overall assessment of the specific burden which granting that benefit would place on the social assistance system as a whole by reference to the personal circumstances characterising the individual situation of the person concerned before making a decision to refuse benefit (paras  to ).
- The mere fact that a national of another Member State receives social assistance is not sufficient to show that he/she constitutes an unreasonable burden on the social assistance system of the host Member State. The terms of the legislation in Mr Brey’s case, however, had precisely this effect, as the mere fact that he had applied for the compensatory supplement was sufficient to preclude him from receiving it, regardless of: (i) the duration of his residence; (ii) the amount of the benefit he would receive; and (iii) the period for which the benefit would be available. In other words, the legislation did not enable the competent authorities to carry out an assessment of the specific burden which granting the benefit would place on the social assistance system as a whole by reference to Mr Brey’s personal circumstances (paras -).
In the light of the above, the CJEU ruled:
EU law – in particular, as it results from Article 7(1)(b), Article 8(4) and Article 24(1) and (2) of Directive 2004/38/EC … must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which, even as regards the period following the first three months of residence, automatically – whatever the circumstances – bars the grant of a benefit, such as the compensatory supplement … to a national of another Member State who is not economically active, on the grounds that, … he does not meet the necessary requirements for obtaining the legal right to reside on the territory of the first Member State for a period of longer than three months, since obtaining that right of residence is conditional upon that national having sufficient resources not to apply for the benefit.
The effect of the ruling in Brey is that in cases where the claimant has been refused benefit based on a failure to satisfy the right to reside condition, the First-tier Tribunal on appeal will be required to carry out an overall assessment of the specific burden that granting benefit to the claimant would place on the social assistance system of the United Kingdom as a whole, by reference to the personal circumstances of the claimant.
In its judgment the CJEU indicated that factors that are likely to be relevant when the national court makes its assessment include: the length and nature of the claimant’s residence in the UK prior to claiming benefit; the circumstances in which the claim for social assistance has been made; the amount of benefit; and the length of time it is likely to be in payment. It may also be relevant to consider the proportion of EEA nationals who are in receipt of that type of benefit in another Member State. Brey is therefore going to be relevant in every case where the claimant is economically inactive and thereby unable to satisfy the right to reside condition. This will include cases where the claimant is pregnant; the claimant has childcare responsibilities; the claimant is providing full-time care for a disabled person or the claimant has reached pensionable age – and therefore regarded as inactive for benefit purposes.