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Current problems and latest developments in EU social security coordination Warsaw, 14 June 2013 Sasha Trevelyan Rob Cornelissen.

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Presentation on theme: "Current problems and latest developments in EU social security coordination Warsaw, 14 June 2013 Sasha Trevelyan Rob Cornelissen."— Presentation transcript:

1 Current problems and latest developments in EU social security coordination Warsaw, 14 June 2013 Sasha Trevelyan Rob Cornelissen

2 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

3 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".

4 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

5 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.

6 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!

7 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.

8 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

9 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

10 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.

11 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

12 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

13 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.

14 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)

15 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

16 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

17 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

18 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"

19 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

20 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)

21 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?

22 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

23 Conclusions Adv Gen Brey case Adv-Gen (point 49):"Concepts of 'social security' and 'special non- contributory 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 non- contributory 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!

24 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"

25 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 non- contributory 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!

26 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

27 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

28 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"

29 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

30 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

31 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

32 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 No sub-committee planned for 2013 Fyrom EU position adopted 6 December 2012 – letter sent 2 nd Meeting held May 2013 Association Council – no date Israel Technical meeting 25 – 26 October 2012 Workshop on administrative arrangements – 14 March 2013 Association Council – no date State of Play 2010 package 2012 package Montenegro EU position adopted 6 December 2012 – letter sent Technical meeting held on 7 June 2013 Association Council – no date Albania EU position adopted 6 December 2012 – letter sent Technical meeting under preparation Association Council – no date San Marino EU position adopted 6 December 2012 – letter sent Technical meeting held on 10 June Association Council – no date Turkey EU position adopted 6 December 2012 – letter sent Technical meeting under preparation Association Council – no date

33 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.

34 EESSI Project Planning ITBusiness National preparations Commence development of agreed IT solution Test IT Solution with MS Deploy IT solution into Live Environment Test/Utilise the Structured Electronic Documents and flows May 2016 May 2015 January 2014 Development of national IT interfaces Test National IT interfaces Preparation of institutions

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