Current problems and
latest developments in
EU social security
coordination
Warsaw,
14 June 2013
Sasha Trevelyan
Rob Cornelissen
Structure of presentation
• I. Recent case-law Court : Format, Hudzinski, Wecel
• II. Residence issues
•
•
•
•
•
•
•
Directive 2004/38 (Residence Directive); notion 'social assistance'
Separate coordination system Reg 883 for 'special non-contributory
benefits'
Relationship Directive 2004/38 and Reg 883/2004
Does 'social assistance' within meaning of Residence Directive include
'special non-contributory benefits' within meaning of Reg 883?Conclusions Adv-Gen Brey case (29 May 2013)
Is right to reside test compatible with Union law? Infringment UK
Ad-hoc Group on habitual residence
The importance of having facts and figures
• III. External dimension EU social security coordination
• IV. EESSI
I. Recent case-law of European Court of
Justice
• Format judgment (C-115/11), 4 October 2012
• Format: Polish company operating in several Member states. Does
not usually carry out significant activities in Poland. 3 consecutive
contracts with Mr Kita, residing in Poland. According to terms of
contract, place of employment for Mr Kita: "operations and building
sites in Poland and within the territory of EU (Ireland, France, UK,
Germany, Finland) as instructed by employer". In fact, Mr Kita
worked under first two contracts exclusively in France; under third
contract exclusively in Finland. Between contracts: unpaid leave and
termination of contract.
• Format: Mr Kita is person "normally employed in territory of two
or more Member States".
Format judgment
• Art. 14 (2) (b) Reg 1408/71: A person normally employed in two
or more MS is subject to legislation of MS in whose territory he
resides, if he pursues his activity partially in that territory.
• ZUS, after having issued E 101, contested that Mr Kita was "a
person normally employed in territory of two or more MS".
• Court: since it is not disputed that Format does not carry out
significant activities in Poland: no posting (Art. 14 (1) Reg 1408/71)
• Court: facts show that employment in territory of a single MS
constituted the normal arrangement for Mr Kita. Therefore, he is not
a person who normally is employed in territory of two or more MS.
• Court: divergence between terms of contract and practice
Format judgment
• Court: institution which issues E 101 is required to carry out
proper assessment of facts relevant for application of Reg 1408/71
and to ensure correctness of information contained in certificate
• Generally, E 101 certificate is issued before or at start of period it
covers. When assessing facts, institution has to take into account not
only words of contract but also other factors such as: how were
contracts implemented in past, circumstances surrounding conclusion
of contracts, characteristics of work performed by company. It is
incumbent on institution to base its findings on employed person's
actual situation.
Format judgment
• Moreover, institution has to reconsider grounds for issuing
certificate if institution of host State expresses doubts on
correctness of facts on which certificate is based
• Not an easy task for institutions!
Hudzinski judgment - joined cases C- 611/10
and 612/10 (12 June 2012)
• Background: Art. 13 (1) Reg 1408/71: "persons to whom this
Regulation applies shall be subject to legislation of a single MS only"
• Bosmann judgment (2008). Ms Bosmann lives with children (20
and 21 years) in D. Started to work in NL. Request for family
benefits in NL refused(in NL only until 18 years). D legislation: all
residents are entitled to family benefits for their children, when
studying until 25years. Request for D family benefits refused. D
institution: you are subject to NL legislation. D: Art. 13 (2) (a) Reg
1408/71 has exclusive effect. So: you cannot be subject to D
legislation.
Hudzinski judgment
• Court in Bosmann: all provisions of Reg 1408/71 must be
interpreted in light of objective pursued: prevent that workers would
be penalised in field of social security for reason of having moved.
• Therefore, Art. 13 (2) (a) Reg 1408/71 does not require D
institution to grant family benefits, but it does not deprive D of the
right to grant family benefits to those resident on its territory.
• Bosmann judgment confirmed in Hudzinski,a self-employed
farmer covered by PL social security system. Temporary employed as
seasonal worker (in agricultural area)in D and continued to be
subject to PL legislation during temporary work in D. As seasonal
worker he was subject to unlimited income tax in D. D legislation:
non-residents who are subject to unlimited income tax are entitled to
family benefits
Hudzinski
• Mr Wawrzyniak is Polish national residing with family in Poland.
Insured in Poland. Posted by employer to Germany for 1 year.
Subject to unlimited income tax in Germany.
• Mr Hudzinski and Mr Wawrzyniak, referring to Bosmann judgment,
claimed family benefits for their children in Pl from D institution.
Court: confirms Bosmann and goes even further.
• In fact, Huzinski case differed from Bosmann in two
aspects:
• Mr Hudzinski and Mr Wawrzyniak continued to receive for their
children family benefits from PL
• The children did not reside in D, like in Bosmann, but in PL
Hudzinski
• Court: even under these circumstances, D cannot be deprived of
the right to grant family benefits to Mr Hudzinski and Mr
Wawrzyniak.
• Connecting factor with D: Any person who, not having residence
in D, has been made subject to unlimited income tax, is entitled to
family benefits for his children
• Court: this means that D is entitled to grant family benefits to Mr
Hudzinski, even when he has not suffered any legal disadvantage for
having moved to another MS and even when neither the child nor the
worker resides in D.
Hudzinski
• Court goes even further! D legislation: D legislation excludes
entitlement to family benefits in cases where a comparable benefit is
paid in another State. Court: application of this rule would treat
migrant workers less favorably than non- migrant workers. D is
entitled to reduce PL family benefits from its amounts, but not
entitled to exclude them from this right for the sole reason that they
receive a comparable benefit from another MS
Wencel judgment, C- 589/10, 16 May 2013
• Legal position assessed by the Court on the basis of Regulation
1408/71 and not the 1975 German – Polish Convention
• Judgement confirms that for the application of Regulation (EEC) No
1408/71, Article 10 is to be interpreted as meaning a person cannot
simultaneously have two habitual residences in two different Member
States.
• Reiterates that the Member State in which a person resides is the
State in which that person habitually resides and where the habitual
centre of his interests is to be found
Wencel
• In the circumstances of the case, under articles 12(2) and 46a,
MS cannot withdraw entitlement to a retirement pension retroactively
on the ground that a survivor’s pension was received in another
Member State where the applicant was also resident
• However, Article 45 does not preclude the amount of the
retirement pension paid in the first Member State from being
reduced up to the limit of the amount of the benefits received in the
other Member State under domestic rules
• Must not create an unfavourable situation in comparison with a
situation where there is no cross-border element, unless, where
there is disadvantage, it can be justified by objective considerations
and be proportionate to a legitimate objective pursued by national
law. This falls to the national court to verify.
II. Residence issues
• I. Residence Directive (2004/38): lays down conditions governing
right of free movement and residence
• Right of residence for up to three months: without conditions or
formalities
• Right of residence for more than three months: conditions for
economically inactive persons:
• Have sufficient resources: compare with national criteria in host
Member state to be granted basic social assistance
• Have comprehensive sickness insurance
• Objectives of these conditions: protection of public finances, being a
legitimate interest of MS (Zhu judgment, points 32 and 33)
Residence Directive
• Interpretation Court of condition: "have sufficient
resources":
• Origin of resources is not relevant; e.g. resources from an
accompanying family member are also to be taken into account (Zhu
and Chen judgment)
•
Retention right of residence
• First three months: as long as person does not become "an
unreasonable burden on the social assistance system of host MS"
• After three months: as long as person meets conditions, which
means: being economically active or having sufficient resources
and comprehensive sickness insurance
• In case of reasonable doubt: verification by MS possible
Expulsion
• No expulsion of economically active persons and
jobseekers
• No expulsion "as long as person does not become an
unreasonable burden on social assistance system of host MS",
which means:
• Expulsion measure no automatic consequence of recourse to social
assistance system
• Host MS must examine whether it is case of temporary difficulties,
duration of residence, personal circumstances, amount of aid granted
• Court: condition must be applied in compliance with Union law and in
accordance with principle of proportionality: national measures must
not go beyond what is necessary to achieve objective of protection of
public finances of MS
Notion of "unreasonable burden on social
assistance system"
• Depends on circumstances of each individual case
• Those who arrive in host MS without fulfilling residence conditions
cannot count on same approach as those who have fulfilled
conditions and who have acquired right of residence for more than
three months, but owing to circumstances are temporarily unable to
fulfill conditions
Directive 2004/38. Equal treatment
• Union citizens residing on basis of Directive 2004/38 in host MS
enjoy equal treatment with nationals of that MS within scope of
Treaty.
• "within scope of Treaty" includes access to social assistance and
housing benefits
• Exceptions: MS not obliged to provide social assistance during
first three months or during period of jobseekeing
• No definition of "social assistance"
• Court: must be interpreted restrictively (Vatsouras). Benefits
intended to facilitate acces to labour market are not "social
assistance"
Regulation 883/2004 - Directive 2004/38
• Reg 883/204 applies to all Union citizens insured under legislation
of MS, including non-active persons
• Reg guarantees export of cash benefits acquired in a MS to
territory of other MS: impact on "sufficient resources"
• Reg guarantees access to health care in a MS other than
competent MS: impact on "having comprehensive sickness
insurance"
• Separate coordination system for "special non-contributory
benefits": benefits aimed at avoiding poverty:minimum subsistance
benefits, listed in Annex X of Reg 883/2004
Separate coordination system for minimum
subsistence benefits
• Examples: minimum income guarantee (ES), supplementary
allowances (FR), jobseekers allowance (Ireland), income replacement
allowance (BE),basic subsistance income for elderly or handicapped
persons (DE), income support, DLA(UK), compensatory supplement
(AT)
• To be granted to persons covered by Reg 883/2004 in MS of
"residence"
• "Residence" in meaning of Reg 883/2004: based on factual (not
legal) situation : where is centre of interest? (Swaddling judgment)
• Not necessary to have worked in MS of "residence" in order to be
entitled to minimum subsistance benefits (Snares judgment)
Relationship Directive 2004/38 and Reg
883/2004
• Do people claiming "special non-contributory benefits" within
meaning of Reg 883/2004 put their right of residence under Directive
2004/38 at stake, because they no longer have the right to reside in
host MS under Directive 2004/38?
• Or the opposite? Persons entitled under Reg 883/2004 to "special
non-contributory benefits" do they automatically fulfill requirement of
having "sufficient resources" under Directive 2004/38?
Residence issues. Pending cases
• Does "social assistance" within meaning of Directive 2004/38
include special non-contributory benefits within meaning of Reg 883?
• Mr Brey, German national receives modest German pension.
Moves in 2011 to Austria. Applies for compensatory supplement. AT
legislation: only persons legally residing in AT are entitled. AT: in
order to reside legally in AT non-active person must have sufficient
resources. German pension is lower than minimum subsistence level
in AT: he does not reside legally in AT. Main issue concerns question
whether or not Mr Brey is entitled to Austrian supplement. But
question referred to Court focusses on right of residence: is AT
compensatory benefit "social assistance "in sense of Directive
2004/38?
• Commission: no. Adv-Gen in Brey case: yes
Conclusions Adv Gen Brey case
• Adv-Gen (point 49):"Concepts of 'social security' and 'special noncontributory benefit' are …mutually exclusive". He refers to point 36
Hosse judgment
• Point 36 Hosse judgment: "A benefit which satisfies the conditions
of a 'social security benefit' within the meaning of Article 4 (1) of
regulation 1408/71 ..cannot be analysed as a 'special noncontributory benefit'. In other words: if a benefit is a 'classical' social
security benefit, it cannot be a 'special non-contributory benefit'. A
'special non-contributory benefit' is nevertheless a social security
benefit covered by Regulations 1408/71 and 883/2004!
Conclusions Adv-Gen Brey case
• Adv-Gen (point 56): "Above all, the notion of 'social assistance' as
used in the two legal instruments cannot be the same, as they have
different objectives. The aim of Articles 3 (5) (a) and 70 (4) of
Regulation 883/2004 is to prevent the export of the benefits which
they govern. The aim of Article 7 (1) (b) of Directive 2004/38 is to
ensure that beneficiaries of a right to residence do not become an
unreasonable burden on social assistance system of host MS"
• Article 3 (5) (a) Reg 883: "This Regulation shall not apply to social
and medical assistance"
• Article 70 (4) Reg 883 concerns 'special non-contributory
benefits': "The benefits referred to in par 2 shall be provided in the
MS in which the persons concerned reside, in accordance with its
legislation. Such benefits shall be provided by and at the expense of
the institution of the place of residence"
Conclusions Adv-Gen Brey case
• Adv-Gen treats Art. 3 (5) (a) concerning social assistance on
same footing as Art. 70 (4) dealing with 'special non-contributory
benefits'!
• True, purpose of Art.70 (4) Reg 883 first sentence is to prevent
export of 'special non-contributory benefits'. But purpose of second
sentence of Art. 70 (4) is to guarantee the access of 'special noncontributory benefits" to all persons covered by Reg 883 who reside
in host State on basis of equal treatment as nationals of that State.
Not mentioned at all in the 97 points of the conclusions!
Is right to reside test compatible with Union
law?
• Since 2004: by virtue of UK legislation entitlement to all special
non-contributory benefits listed in Annex X Reg 883 is subject to
condition that claimant has right to reside (on basis of national law or
Directive 2004/38).
• Commission: this legislation violates Union law. Since 1992:
persons covered by Reg 883 who reside in host State can claim
special non-contributory benefits in same way as nationals of that
State. Residence is of a factual nature. Does not depend on legality
of that residence. A requirement in national legislation that claimants
comply with additional condition, namely the right to reside, as a
basis for accepting that they actually "reside" in host State within
meaning of of Reg 883 is incompatible with this Reg
Is right to reside test compatible with Union
law?
• Commission: entitlement to "special non-contributory
benefits"does not depend of having a right to reside under Directive
2004/38. Sole condition for entitlement to such benefits: reside in
host MS. Is centre of interest in host MS? If yes, then, persons are
entitled to "special non-contributory benefits" in host MS.
• Infringment proceedings against UK launched by Commission
• 31 May 2013: last step in proceedings: Commission brings UK
before Court
Residence issues: Ad-hoc Group on habitual
residence
• Concept of "residence" has Union wide meaning: place where
person habitually resides. Depends on a number of factors
(Swaddling judgment: family situation, duration and continuity of
presence, employment situation, exercise of non-remunerated
activities, housing situation) aimed at determining centre of
interests. A person who proves that his centre of interests is in host
State has shown having a sufficient genuine link with host State in
order to claim special non-contributory benefits.
• Practice shows that institution often assumes that place of
"residence" is identical with place where a persons has declared his
home address. Therefore: Ad-hoc Group Adm Comm has elaborated
report providing guidance on determination of "residence"
Ad-hoc Group on habitual residence
• Report contains number of concrete examples aimed at drawing
attention to specific characteristics that might be common to many
cases
•
•
•
Students
Pensioners
Inactive mobile persons
Importance of having facts and figures
• Public opinion: "benefit tourism" towards MS with most generous
special non-contributory benefits
• Perception: entitlement to certain benefits constitutes decisive
motivation to use right to free movement within EU
• Tress Think Tank report 2011: questionnaire. Vast majority of MS
declared that no statistical data about number of cases was available
• Size and impact of "benefit tourism"?
• Commission launched study late 2012 to obtain statistical data on
past, current and potential future flows of non-active intra EU
migrants per category (jobseekers, pensioners, students, non-active)
• Study also covers drivers for migration of non-active EU migrants
and its impact on MS' social security systems
External Dimension of EU Social
Security Coordination
• Adoption of 2nd package of EU negotiation
positions (Albania, San Marino, Montenegro and
Turkey)
• On-going negotiations with 10 countries
• Follow up to 2012 Communication – Forum 14
March 2013
2010 package
State of Play
Algeria
Technical meeting in Algiers – 25 February 2013
Association Council – no
date
Morocco
Videoconference – 28 September 2012
Sub-committee meeting
– 22 February 2013
Tunisia
No date
Fyrom
Israel
EU position adopted 6 December 2012 – letter sent
2nd Meeting held May 2013
Technical meeting 25 – 26 October 2012
Workshop on administrative arrangements – 14 March 2013
No sub-committee planned
for 2013
Association Council – no
date
Association Council – no
date
2012 package
Montenegro
Albania
San Marino
Turkey
EU position adopted 6 December 2012 – letter sent
Technical meeting held on 7 June 2013
EU position adopted 6 December 2012 – letter sent
Technical meeting under preparation
EU position adopted 6 December 2012 – letter sent
Technical meeting held on 10 June
EU position adopted 6 December 2012 – letter sent
Technical meeting under preparation
Association Council – no
date
Association Council – no
date
Association Council – no
date
Association Council – no
date
EESSI: Current position
• MS feedback from the original EESSI IT solution design highlighted
that some aspects were not fit for purpose.
• A reflection period was instigated to provide the opportunity for a
comprehensive review of all the requirements needed to deliver a
comprehensive EESSI solution.
• An investigation on how the requirements for EESSI could be met
by the technical solution is on going as part of the reflection period.
• A decision on the EESSI solution and the updated EESSI roadmap
is scheduled to be made before the close of 2013.
EESSI Project Planning
IT
Commence
development of
agreed IT
solution
Test IT Solution
with MS
Deploy IT
solution into Live
Environment
Business
National
preparations
January
2014
Test/Utilise the
Structured
Electronic
Documents and
flows
Development of
national IT
interfaces
Test National IT
interfaces
Preparation
of institutions
May
2015
May
2016