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Notes:
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Supreme Court decision reported as [2019]AACR 28
European union law - freedom of movement - right to reside - worker registration scheme – proportionality - social security - state pension credit
The central issue in this case concerned whether the respondent, a Latvian national living in the United Kingdom, was entitled to receive state pension credit, a means tested benefit. She had come to the United Kingdom in 2008 at the age of 57. Latvia had acceded to the European Union in 2004 with nine other states. Paragraph 2 of Annex VIII to the Act of Accession annexed to the treaty signed at Athens on 16 April 2003 permitted existing member states to apply national measures regulating access to their labour markets by Latvian nationals for five years with the possibility of extension for two years in the event of serious disturbances in the labour market or threat hereof. The United Kingdom adopted the Accession (Immigration and Worker Registration) Regulations 2004, which provided that, in order to be treated as legally working and hereby entitled to reside in the United Kingdom, the employment of (amongst others) any Latvian national coming to the United Kingdom in the first five years after accession had to be registered under the worker registration scheme. Further regulations in 2009 extended the five year period by a further two years owing to serious disturbance in the United Kingdom’s labour market caused by the financial crisis. The respondent worked for various employers in the United Kingdom between 2009 and 2012 but did not obtain a certificate under the worker registration scheme until 2010. In 2012 the respondent made a claim for state pension credit. The basis of her claim was that, having reached the qualifying age and having worked in the United Kingdom for at least the preceding 12 months and “resided” there continuously for more than three years, she had acquired a right of permanent residence under Article 17 of Parliament and Council Directive 2004/38/EC and, accordingly, she satisfied the eligibility conditions in section 1(2) of the State Pension Credit Act 2002 and regulation 2 of the State Pension Credit Regulations 2002 as amended. The respondent’s claim was rejected by the Secretary of State on the ground that, not having been registered under the worker registration scheme, she had not acquired a right of permanent residence. The First-tier Tribunal dismissed the appeal, holding that it had no jurisdiction to consider the challenge to the 2009 Regulations, contrary to the earlier decision of the Supreme Court in Zalewska v Department for Social Development [2008] UKHL 67; [2008] 1 WLR 2602 but that if it was, the 2009 Regulations were proportionate. The respondent submitted that the Court of Appeal had erred in its construction of Article 17(1) (a) and that the Upper Tribunal had been correct. The Upper Tribunal allowed her appeal from that decision. It went on to decide that the fact that she had not been registered under the worker registration scheme until 2010 did not prevent her from being someone who had “resided” in the United Kingdom for the three-year period from 2009 to 2012. The Upper Tribunal’s reasons were that since Article 17(1)(a) required actual rather than legal residence in the relevant member state and that the 2009 Regulations extending the worker registration scheme were unlawful because they were disproportionate and incompatible with European Union law. The Court of Appeal dismissed the Secretary of State’s appeal, holding that “resided” in Article 17(1)(a) meant legal rather than actual residence but that the Upper Tribunal had been entitled to find the extension of the scheme to be disproportionate and, therefore, incompatible with European Union law. The Secretary of State appealed, arguing that, a national measure adopted pursuant to a transitional provision in the Act of Accession was not subject to a proportionality review at all;
Held, dismissing the Secretary of State’s appeal, that
1. the principle of proportionality necessarily involved, as an essential component, an assessment of the degree to which the impugned measure interfered with a protected interest; that the Act of Accession created relevant protectable interests by conferring rights of European Union citizenship on citizens from the accession states, subject to initial, derogating transitional provisions, which were subject to the principle of proportionality; that national measures adopted pursuant to a temporary derogation from the law and the rights of European Union citizens also required to be justified in accordance with the principle of proportionality, by showing that the measure was suitable and necessary to achieve the particular objective identified by the provision authorising the transitional derogation and that the burden imposed was, having regard to that specific objective, not excessive; and that, accordingly, the decision to extend the worker registration scheme must be open to challenge on grounds of proportionality (paras 31, 32–35, 43–44, 94). Zalewska v Department for Social Development (Child Poverty Action Group intervening) [2008] 1 WLR 2602, HL(NI) applied. Vicoplus SC PUH v Minister van Sociale Zaken en Werkgelegenheid (Joined Cases C-307/09 to C-309/09) [2011] ECR I-453, ECJ and Valeško v Klagenfurt (Case C-140/05) [2006] ECR I-10025, ECJ considered. Mirga v Secretary of State for Work and Pensions (Advice on Individual Rights in Europe intervening) [2016] 1 WLR 481, distinguished.
2. the Migration Advisory Committee report in 2009 showed that extending the worker registration scheme would have a material, though small, effect in mitigating the serious disturbances to the UK labour market by reducing the flow of workers from the eight most populous accession states (‘A8 states’), including Latvia, which would otherwise occur. However, the extension would have only a small and rather speculative mitigating effect in relation to the serious disturbances in the UK’s labour market, whereas the burdens and detriments it would impose on employers and A8 nationals working in the UK were substantial and serious. The result was that the extension of the worker registration scheme in 2009 was a disproportionate measure which was unlawful under EU law [paragraph 74].
3. on the basis of the Court’s rulings on points 1 and 2 above, the appeal fell to be dismissed on the basis that Upper Tribunal and the Court of Appeal had plainly been entitled to come to the conclusion that the extension of the scheme was disproportionate and, therefore, incompatible with European Union law, particularly in the absence of any attempt by the Secretary of State to explain why the benefits associated with the extension of the scheme outweighed the considerable detriments (paragraphs 56, 69 to 70, 72, 74 and 94).
4. on its proper construction, the term “residence” in Article 17(1)(a) of Parliament and Council Directive 2004/38/EC referred to factual residence, rather than legal residence; that that interpretation was reinforced by the purpose of the Directive, which was to enhance existing rights of free movement and residence, and not to subject them to new restrictive conditions; and that, accordingly, the Upper Tribunal had arrived at a correct interpretation of Article 17(1)(a) (paragraphs 80–84, 92). Ziolkowski v Land Berlin (Joined Cases C-424/10 and C-425/10) [2014] All ER (EC) 31, ECJ distinguished.
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