Henri Krishna reviews recent changes in rules1 about residence and benefits, concentrating on developments not already covered by articles on the 1 January 2014 changes in CPAG's Welfare Rights Bulletin 238 and the Saint Prix decision of the European Court of Justice in CPAG's Welfare Rights Bulletin 241.
Minimum earnings threshold
In March 2014 new guidance was published covering when European Economic Area (EEA) workers or self-employed persons might pass the well-established ‘genuine and effective activity’ test.2 While this represents no legislative change, it does somewhat fly in the face of the direction of caselaw which has shied away from setting minimum earnings or periods of employment for determining whether an EEA national should be treated as a worker or self-employed person under European Union (EU) law. Initially this guidance only applied to claims for jobseeker’s allowance (JSA), housing benefit (HB), child benefit and child tax credit (CTC), but from October it has been extended to income support and employment and support allowance, and from November to pension credit.3
The guidance introduces a minimum earnings threshold, designed as a two stage test. First, the decision maker must determine if there is evidence that an EEA worker or self-employed person has undertaken activity which generates weekly income of at least the primary earnings threshold (the point at which someone becomes liable to pay national insurance – currently £153 a week but this changes every April) for the last three months. If so, s/he is deemed to have been engaged in genuine and effective activity and so has had worker or self-employed status.
If the first stage is not passed, this does not necessarily mean that the test is failed. Instead, this should trigger the second stage – a thorough examination of the claimant’s circumstances to determine whether s/he might still be treated as a worker or self-employed person in light of the facts and established caselaw. It is only after this second stage that a decision should be made whether someone is or was an EEA worker or self-employed person during the period in question.
Exclusion of EEA jobseekers from housing benefit
From 1 April 2014, many EEA jobseekers are excluded from HB even if entitled to income-based JSA. Prior to this amendment, income-based JSA entitlement passported all EEA nationals through the habitual residence test for HB. The amendment specifically excludes those with a right to reside only as a jobseeker under the EEA Regulations (plus their family members).4 The amending regulations include a savings provision for those already passported to HB by their JSA entitlement, but in the event of an end of entitlement to HB or JSA that protection is lost.
Only those whose only right to reside is as a jobseeker (plus their family members and those who only have an initial three months’ right to reside) are excluded. If entitled to income-based JSA on any other basis (eg, someone with retained worker status), EEA nationals still can receive HB.
Condition C: jobseeker status after time-limiting
Further to the time limits imposed on right to reside as a jobseeker or with retained worker status, from 1 January 2014, a new condition, ‘C’, requiring a period of absence from the UK, was added for those wishing to establish job-seeker status following a ‘relevant period’ from 1 July 2014. A ‘relevant period’ is 182 days (amended from six months) as a jobseeker or six months of retained worker status. As such, condition C applies to those caught by the time-limiting of jobseeker and retained worker status who fail (or cannot as they worked for less than a year) to provide compelling evidence that they have a ‘genuine prospect of work’ (see below).
Note that the 182 days of jobseeking are cumulative, with periods separated by absences from the UK of less than 12 months being linked, but DWP guidance indicates that it considers the link to be broken by a period of genuine and effective work.5 Those subject to condition C are also required to provide compelling evidence of a genuine prospect of work from the start of this new period of jobseeker status. What constitutes a period of absence? Given that a person is not usually considered present if outside the UK throughout the day, a whole day should fit the definition. However, it is arguable that a day without a right to reside should be treated as an absence.6
Genuine prospect of work test
The amendments to the EEA Regulations from 1 January and 1 July 2014 both introduce the concept of providing ‘compelling evidence’ that someone is seeking, and has a genuine chance of gaining employment. What constitutes compelling evidence is not defined but the DWP has provided guidance to decision makers in the form of the ‘genuine prospect of work test’.7 This suggests that the test is satisfied in two circumstances:
- having a ‘definite’ offer of genuine and effective work which will start within three months of the ‘relevant period’;
- having a change of circumstances, such as completing a vocational course, a change in labour market conditions or moving to an area with better prospects, which is likely to lead to genuine and effective work within two months of the change.
In either circumstance, the time limited period may be extended at a decision maker’s discretion.
Living in the UK requirements for family benefits
Similar to the new three months’ living in the UK requirement for income-based JSA claimants from 1 January 2014, anyone entering the UK from 1 July 2014 is subject to the same requirement before being entitled to child benefit or CTC.8 However, similar to the set of circumstances where claimants are exempt from the habitual residence test for JSA, there are exceptions where the three months’ living in requirement does not apply. These differ from the exemptions to the habitual residence test in that they include Crown servants, those temporarily absent for less than 52 weeks and non-EEA nationals who would qualify as worker or self-employed persons if they were EEA nationals. The last of these arguably covers returning UK nationals given that they are not usually treated as EEA nationals if they have not been exercising EU Treaty rights.9
Tactics and potential challenges
There are a number of potential avenues for challenges or circumnavigating these changes.
For the living in the UK test for income-based JSA, child benefit and CTC, firstly a definition of ‘living’ is lacking. Decision makers are advised to use the ordinary meaning and take a ‘common sense’ approach. Therefore, while short absences should not mean someone stops living in the UK, it is also arguable that neither should longer temporary absences where the claimant can demonstrate that the UK remains her/his home. CPAG has heard from several advisers of cases of clients attending courses or training in another EEA state for several months and on return to the UK being refused income-based JSA; in such cases if should be argued that the claimant never ceased to be living in the UK.
Secondly, these benefits come with the scope of EC Regulation 883/04 (the EU Social Security Co-ordination Rules): child benefit and CTC are ‘family benefits’; income-based JSA is a special non-contributory benefit.10 As such, EEA nationals (including UK nationals who have been exercising Treaty rights) can aggregate periods of residence in other EEA states to meet the UK residence test.11 At the time of writing, the application of these rules to the living in the UK test was unclear.
Where the minimum income threshold may be an issue, advisers should be prepared to challenge decisions on the basis of both the caselaw on genuine and effective activity and misapplication of the test. It should be remembered that in cases where people have been working as little as 5.5 hours a week, or for only a fortnight, they have been found to be in genuine and effective work. If it appears that decision makers are not carrying out an examination of ‘each case as a whole, taking account of all circumstances’12 when the first-tier test is not met, then as well as a legal challenge, the DWP’s and HMRC’s complaints system should be invoked. In extreme cases, judicial review could be appropriate.
The time-limiting of jobseeker and retained worker status, together with the need for compelling evidence embodied in the genuine prospect of work test, might be challenged by direct reference to EU law – though at the time of writing it is difficult to forecast the prospects of success. Where domestic legislation fails to fully implement or inadequately transcribes EU legislation, that legislation can be relied on directly and the UK legislation disapplied.13 The strict time limits on rights to reside for job-seekers or those with retained worker status do not appear in the EU legislation and caselaw: a worker under EC Directive 2004/38 retains status for ‘no less than six months’ if working for less than a year and where working for more than a year no period is mentioned.14 While right to reside as a jobseeker does not strictly fall within the scope of EC Directive 2004/38, the caselaw refers to a period of at least six months and longer if s/he ‘provides evidence that (s/)he is continuing to seek employment and that (s/)he has genuine chances of being engaged’.15 Nowhere is there a reference to the need for ‘compelling evidence’.
The HB amendments represent some of the harshest changes, particularly as they may catch those who may have been in the UK for many years. Given the lack of impact assessment before the amendments were laid, that may offer one source of challenge as many of those hit may be the separated female partners of workers and their children and so arguably constitute unlawful discrimination. Challenges might also be made on the basis of the need to facilitate entry to the UK labour market for work seekers which is otherwise in conflict with their Treaty rights.16
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. SI 2014/1451
- 2. See DMG paras 071200 – 071215, www.gov.uk/government/publications/child-benefit-and-child-tax-credit-ri... and HB Circular A3/2014
- 3. Memo DMG 21/14
- 4. Reg 2 SI 2014/539
- 5. Paras 17 and 21Memo DMG 15/14
- 6. SSWP v Maria Dias  C-325/09
- 7. See Memo DMG 15/14
- 8. SI 2014/1511
- 9. Definition of ‘EEA national’ reg 2(1) Immigration (EEA) Regulations 2006
- 10. Art 70 and Annex X EC Regulation 883/2004
- 11. Art 6 EC Regulation 883/2004
- 12. Para 071204 DMG; para 7 Child benefit and child tax credit – right to reside establishing whether an EEA national is/was a worker or a self-employed person under EU law, HMRC
- 13. Art 288 TFEU
- 14. Art 7(3) EC Directive 2004/38
- 15. The Queen v Immigration Appeal Tribunal ex parte Gustaff Desiderius Antonissen  Case C-292/89
- 16. Art 45 Treaty on the Functioning of the European Union; The Queen v Immigration Appeal Tribunal, ex parte Gustaff Desiderius Antonissen  Case C-292/89; Collins v SSWP  EUECJ C-138/02