The Dano Effect: The restriction on benefits paid to EU citizens who are former workers

Desmond Rutledge examines the recent decision in Alimanovic (C-67/14) which holds that it is lawful for a Member State to restrict the period a former worker from another Member State can access benefits upon becoming involuntarily unemployed based on Dano (C-333/12). This post was originally published on the Garden Court Chambers Blog.

Introduction

In the landmark case of Dano v Jobcenter Leipzig (C-333/12) the Court of Justice of the European Union established that Member States may refuse to grant social assistance to EU citizens who enter their territory without intending to find a job and without being able to support themselves by their own means (FM write up: Dano and the exclusion of inactive EU citizens from certain non-contributory social benefits).

The question that arose in Jobcenter Berlin Neukölln v Alimanovic (C-67/14) is whether, and to what extent, this principle applies in the case of an EU citizen who is a former worker in a Member State of which s/he is not a national, who, after becoming unemployed, applies for subsistence benefits in the host State.

The facts

Ms Alimanovic and her elder daughter had worked in Germany between June 2010 and May 2011 in temporary jobs lasting less than a year. After she became unemployed, Ms Alimanovic was paid family allowances for her two younger children and, along with her elder daughter, subsistence allowances for the long-term unemployed. These benefits were withdrawn in May 2012, following a change in German legislation to the effect that payments of benefit to EU citizens who were not German nationals should cease after they had been unemployed for more than six months. Consequently, Ms Alimanovic was re-classified as a first-time jobseeker who was not eligible to claim any social assistance.

The Alimanovic family appealed against the decision on the basis that they were entitled to the benefits at issue which applied to them under, inter alia, Article 4 of Regulation No 883/2004, which prohibits any discrimination against EU citizens in relation to the nationals of the Member State concerned, read in conjunction with Article 70 of that regulation, which concerns special non-contributory cash benefits (which is how the benefits at issue had been classified).

The Decision

The Court held that Dano does apply to these facts and that Germany was not precluded from refusing to grant Ms Alimanovic social assistance after she had been unemployed for more than six months. The Court’s reasoning was as follows:

Despite being a ‘special non-contributory cash benefit’ under Article 70 of Regulation No 883/2004, as the predominant function of the benefits at issue is to cover Ms Alimanovic’s minimum subsistence costs, rather than to facilitate access to the labour market, it is nevertheless a ‘social assistance’ within the meaning of Article 24(2) of the Citizens’ Directive 2004/38; the reasoning in Brey (C-140/12) applied.
An EU citizen can only rely on the principle of equal treatment in order to access social assistance on the same basis as nationals of the host State if his or her residence in the territory of the host Member State complies with the conditions of Directive 2004/38; the reasoning in Dano applied.
Article 7(3)(c) of the Directive provides that if an EU citizen becomes involuntarily unemployed after working for less than 12 months in a host State, he or she will retain the status of a worker for “no less than six months”. However, after this period has ended, the EU citizen no longer enjoys that status and can therefore be refused entitlement to social assistance by the host Member State.
The benefit can be refused automatically to an EU citizen in this situation without the need for an individual assessment (contrary to the view expressed by the Advocate General in his Opinion, at paras 106, 110-11).
The Directive has established a “gradual system” for the retention of worker status. Thus, the legislation itself can be regarded as having taken into consideration the relevant individual factors Brey (C-140/12) distinguished.
This approach has the advantage of “legal certainty and transparency” as it enables those who wish to access social assistance to know what their rights and obligations are.

Commentary

The decision is an example of ‘the Dano effect’ and confirms that Member States can limit access to benefits for former workers who have worked for less than one year in the host State. The decision provides support for at least one of the restrictions the UK Government has introduced for EEA jobseekers by way of the amendments to regulation 6 of the EEA (Immigration) Regulations 2006, SI 2006/1003. Namely, that where the EEA national has been employed in the United Kingdom for less than one year, then the period they can retain the status of a worker is now limited to a maximum period of six months (reg 6(2)(ba)(2A)).

The decision also suggests that the Court is taking a more literal approach to the rights under the Directive. In situations where the rules are clear cut, the Court will apply that rule even if this means that a class of EU citizens is thereby automatically excluded from social assistance. In cases of this type – where the rules are clear – the need for “legal certainty” should override any need for an individual assessment which would give the EU citizen concerned an opportunity to demonstrate that they have a real link with that State in order to prevent their automatic exclusion from benefits.

The decision leaves unanswered the question of what the position would be if Ms Alimanovic had worked for at least one year, given that the provision applicable to a former worker who has become involuntarily unemployed having worked for at least one year in the host state (Article 7(3)(b)) does not contain any limit on how long that status can be retained.