EU benefit rights: a not so new deal?

One of the most anticipated reform items of the UK’s membership renegotiations was EU citizens’ rights to social benefits. From the result, it appears that the new agreement clarifies rather than radically alters free movement rights.

The agreement, which applies to all member states and does not create a specific regime for the UK, uses well-known concepts and terminology from the current regime. In particular, the system created in the Citizens’ Rights Directive 2004/38 (CRD) features heavily, though the CRD is not specifically referred to. The agreement confirms that the right to free movement is qualified and limited to economically active citizens, such as workers and the self-employed.  

Under established rules, an EU citizen has the right to take residence in another member state for up to three months; during that time there is no access to social assistance from the host state (article 24(2) CRD), as recently confirmed by the Court of Justice in Dano (Case C-333/13, 2014) and Garcia Nieto (Case C-299/14, 2016). This rule also applies to jobseekers.

EU citizens who reside in a host member state for a period exceeding three months are affected by the new deal in two key ways.

First, it will be possible for member states to index child benefits to the cost-of-living rates where the children live. Secondly, the agreement proposes to set up an “alert and safeguard mechanism” to limit the access of newly arriving EU workers to non-contributory in-work benefits for four years from commencement of employment. While this may initially seem restrictive of free movement of the less affluent, some of the notions are already well embedded within the existing free movement framework.

The CRD itself mentions how, after five years’ residence in a member state, an EU citizen is to be considered a permanent resident. This has a twofold benefit. An EU citizen is entitled to the full range of social benefits, and is protected from expulsion on grounds of not being able to provide for themselves or their family.

Stages of integration

Prior to attaining permanent residence, as a general rule EU citizens are entitled to equal treatment to citizens of the host state, save for the provision of social assistance for study purposes (article 24). However, the CRD also states that during that time an EU citizen may lose the right of residence if they become “a burden to the social assistance system of the member state”. Further provision is made for specific cases such as loss of employment.

This notion of gradual access to full benefits also appears from Court of Justice case law, which has previously emphasised, with particular reference to students, how through gradual integration to the economy, fuller rights of access to social benefits in the host state can be obtained. The underlying idea is that as these EU citizens are contributing to the economy of their host state, their status becomes more permanent – or, in the court’s terminology, they become gradually integrated to the economy of the host state, gaining access to the full range of social benefits. This principle was recently applied to jobseekers who had lost their employment before becoming fully integrated: Alimanovic (Case C-67/14, 2015).

What is potentially restricted is recourse to social assistance for those who are not self-sufficient. Yet, strictly speaking, equal treatment in employment is protected in the new agreement. It does not propose any change to access to contributory benefits, such as pensions or employment sickness funds. Therefore EU citizens, while required to be self-sufficient, continue to have access to these benefits to which they make a direct contribution from their pay, such as pensions or employment sickness funds.

What is perhaps most notable is that a member state cannot simply restrict EU citizens’ access to non-contributory in-work benefits, but must use the “alert and safeguard mechanism”. This requires the state to notify the Commission and Council that there is such an exceptional magnitude of inflow of EU citizens and in such a scale that it affects essential aspects of its social security system, including the primary purpose of its in-work benefits system, or 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. Approval is by the Council on the proposal of the Commission. Finally, the system is devised as temporary, in that it can be applied only for seven years at a time.

This creates a mechanism whose scope is rather modest and which clearly indicates that workers should continue to have rights to non-contributory benefits, including welfare assistance, even without deeper than three months’ integration to the economy. The unique procedure and its conditions also make it clear that a member state cannot simply cite financial or employment market difficulties as a reason to deny access to these benefits, unlike what is possible for other migrants. The agreement therefore still supports the idea that EU citizens and their rights form a separate class – they are not quite natives but not quite migrants either.