Pamela Fitzpatrick describes provisions on exporting certain benefits relating to disability within the EEA.
EC Regulation 1408/71 is an important provision for people moving within the European Economic Area (EEA) and a key function of the Regulation is to allow certain benefits to be exported to another member state.1 Generally this applies to those benefits paid on a long-term basis that are intended for retirement, bereavement, invalidity or industrial injury.2
Prior to 1 June 1992, it was possible to export attendance allowance (AA), disability living allowance (DLA) and carer's allowance (CA) to another EEA state because they were considered to be 'invalidity benefits' and consequently were fully exportable under the EC Regulation.
This position was confirmed in Newton Case C-356/89, where the European Court of Justice (ECJ) held that mobility allowance (the predecessor to DLA) was an invalidity benefit for the purpose of 1408/71 and was fully exportable.3
In June 1992, Regulation 1408/71 was amended to include a new category of 'special noncontributory benefits'.4 Following this change, member states were required to list the benefits considered to fall within this category in Annex IIa to Regulation 1408/71. The UK listed AA, CA and DLA 5 to be special noncontributory benefits and consequently from that date would not allow exporting.6
The change in classification was the subject of a legal challenge in Snares Case C-20/96. However, the challenge failed with the ECJ holding that DLA was no longer exportable. The Snares case was followed by a similar judgment by the ECJ in respect of attendance allowance (Partridge Case C-297/96).
However, a number of subsequent decisions by the ECJ have cast doubt upon the validity of Snares and Partridge. In particular, in Jauch Case C-215/99, the ECJ rejected a submission that the listing of a benefit in Annex IIa to Regulation 1408/71 was conclusive of its nature as a special noncontributory benefit. It therefore declined to follow its earlier decision in Snares.
The Court held in Jauch that, given the importance accorded by the EC Treaty to the principle of freedom of movement for workers, any provisions that derogate from the principle of exportability of social security benefits must be interpreted strictly. A special noncontributory benefit not only had to be listed within Annex IIa but it also had to be 'special' and noncontributory Applying those principles, the Court held that an Austrian care allowance was not a ' special noncontributory benefit' within Article 10a even though it had been expressly listed as such in Annex IIa.
The Court goes on to state in Jauch that in the cases of Snares, Partridge and Swaddling (Case C-90/97):
' . . . the special noncontributory character of the benefits in question was not discussed'.
Shortly after Jauch, in the case of Leclere and Deaconescu (case C-43/99), the Court reached a similar conclusion and held that the inclusion of a maternity allowance by a member state in Annexe IIa was invalid.
This point was reiterated in the recent judgment of Hosse Case C-286/03. Further cases are pending before the ECJ but these are unlikely to be decided this year.7
It is clear from the emerging case law that the mere inclusion of a benefit in Annexe IIa is not conclusive of it being a special noncontributory benefit. The crucial question is whether or not a benefit can be said to have the characteristics of a special noncontributory benefit.
What is a 'special non contributory benefit'?
Article 4(2)(a) of the Regulation provides that for a benefit to be a special noncontributory benefit it must be:
- intended to provide supplementary, substitute or ancillary cover against one of the social security risks covered by the Regulation.
All three benefits are clearly noncontributory, but it is not clear that the other two criteria are necessarily fulfilled.
Guidance as to the meaning of the term 'special' is available by a resolution of the Administrative Commission.8 It states that the following cumulative criteria are particularly relevant in determining whether a benefit is 'special':
a) The benefit has the characteristics of a social security benefit of a 'mixed type', in that it gives the beneficiary a legally defined right to benefit which is a characteristic of a social security benefit but also contains features of social assistance, in that the particular financial and/or other needs of the individual are taken into account.
b) The characteristics of the category of benefit are closely linked to a particular social and economic context in the member state where the beneficiary resides.
c) In the case of insufficient economic resources, the benefit is designed to provide assistance.
d) The award could be subject to means testing, although due to its general nature it is not always necessary to examine the specific circumstances of each individual case. Means testing is an important, though not an essential, criterion which may, in particular, take into account income from gainful activity or other social security benefits.
It is far from clear that such criteria apply to AA, CA or DLA.
'Intended to provide cover against one of the social security risks'
There is very little guidance as to the meaning of this. However, it is difficult to see that any of the three benefits acts as a substitute or provides supplementary or ancillary cover for any of the risks in the Regulation. They appear instead to be unique benefits which stand alone rather than a top up or replacement benefit for invalidity benefit.
Action by the European Commission
In light of the developing case law the European Commission put forward, draft legislation intended to reflect the judgments. Although not entirely clear, it appears that the likely effect of the amendment would be that all three benefits would be fully exportable. In order for the amendment to take effect all member states have to agree to its introduction but three member states, including the UK, have blocked the new legislation. This has led to the European Commission beginning infringement proceedings.
The final outcome of all of this activity remains unknown but clients who intend to move abroad to another EEA state should be advised to make a request to export the benefits. It will inevitably be refused and the claimants should appeal. The appeal is likely to be stayed pending the outcome of the cases before the ECJ. However, by making a claim and lodging an appeal they will protect any future possible entitlement to retain their benefit.
Please be aware that welfare rights law and guidance change frequently. Therefore older Bulletin articles may be out of date. Use keywords or the search function to find more recent material on this topic.
- 1. For a fuller account of the scope of this regulation, see CPAG's Welfare Benefits and Tax Credits Handbook.
- 2. Article 10 EC Regulation 1408/71
- 3. Mobility Allowance was replaced by DLA in April 1992, but the rules were virtually unchanged.
- 4. Regulation 1247/92 introduced Articles 4(2)(a) and Article 10a. Article 5 of the Regulation was also amended so as to provide that member states were to list the benefits considered to fall within this category in Annex IIa to Regulation 1408/71.
- 5. The UK has also listed IS and income-based JSA as being special noncontributory benefits.
- 6. Some people who were entitled to one of the benefits prior to 1 June 1992 retain the right to export benefit.
- 7. Kersbergen Case C-154/05, Hendrix Case C-287/05 and Commission v Council and Parliament Case C-299/05
- 8. Resolution 2001/C44/06 of the Administrative Commission of 29 June 2000