EU citizens who move to another member state ‘solely in order to obtain social assistance’ may be excluded from benefits schemes, the Court of Justice of the European Union (CJEU) ruled yesterday (C-333/13 Dano v Job Centre Leipzig).
The ruling is likely to appease critics of ‘benefit tourism’, a marginal phenomenon which has emerged on the back of freedom of movement between member states but which stirred a huge debate in the UK and, to a lesser extent, in some other EU countries such as Germany, where earlier this year a government task force proposed certain restrictions to access to social benefits in order to limit potential abuse.
British Conservatives in the European Parliament promptly welcomed the ruling (probably through gritted teeth given the case was referenced through the German Courts and decided by European judges). Conservative MEP Anthea McIntyre said in a press release:
‘The European Court of Justice has ruled in favour of common sense. The court has made it clear that the original purpose of free movement is to allow free movement of labour and not of benefits tourists.’
What was the case about?
The case concerned ‘special non – contributory benefit’ under the EU regulation on social security ((EC) No 883/2004), and was brought to the CJEU by Mrs. Dano, a Romanian national and her son, who were refused certain benefits by a social court in Leipzig, Germany. She had not entered Germany in order to work, and indeed had never worked in Germany. The case arose after she requested benefits (she was already in receipt of child benefit) by way of basic provision which were only for jobseekers, though apparently her case file said that she was not seeking employment.
The Court of Justice confirmed some of what we already knew, namely that under the (EU freedom of movement) Citizens Directive 2004/38, the host member state is not obliged to grant social assistance during the first three months of residence (the UK does this through the Social Security (Persons from Abroad) Amendment Regulations 2006 SI 2006/1026) and later only if doing so would not impose an unreasonable burden on the host country’s welfare system (Article 7(1)(b) and Article 14(2) of the Directive).
A key provision of Directive 2004/38 is contained in Recital (10) which says that persons who had a right of residence should not be an unreasonable burden on the social assistance system of the host state during an initial period. The Directive provides for this to be five years. This was recently held to be proportionate by the Court of Appeal (Ahmed v Secretary of State  EWCA Civ 988).
In light of all this the judges ruled:
‘A member state must therefore have the possibility of refusing to grant social benefits to economically inactive Union citizens who exercise their right to freedom of movement solely in order to obtain another member state’s social assistance although they do not have sufficient resources to claim a right of residence.’
They added that the financial situation of each person from another EU state has to be examined individually, without taking account of the social benefits claimed, in order to determine whether they meet the condition of having sufficient resources to qualify for a right of residence
A key question was whether the German provisions under consideration infringed the right of all Union citizens, residing on the basis of the Directive in the territory of the host member State, to enjoy equal treatment with the nationals of that member state (Article 24 (1)). In this case benefits were in fact granted to German nationals in the same situation as Mrs. Dano. The court said that unequal treatment was an ‘inevitable consequence’ of the EU rules. In any event, so far as it concerned access to social benefits, Union citizens could only claim equal treatment with nationals of the host member state if their residence in the territory of the host member state complied with the conditions of Directive 2004/38. In this case Mrs. Dano could not invoke the equal treatment rule, since she did not qualify to be covered by the Directive in the first place. This was because she could not be considered to have sufficient resources, which was a necessary pre-condition of obtaining residence rights.
Finally, the court ruled that the EU’s Charter of Fundamental Rights was not applicable, since when member states lay down the conditions for the grant of special non-contributory cash benefits and the extent of such benefits, it falls within their national competence and they are not implementing EU law.
The case law of the CJEU has long recognized that individuals may not improperly take advantage of provisions of Community law or circumvent national legislation (Article 35 of Directive 2004/38 allows Member States, in the case of abuse of rights, such as marriages of convenience, to adopt the necessary measures to refuse, terminate or withdraw any right conferred by that Directive). The judgment today says member states can act against blatant types of ‘benefit tourism’ and is a clear nod to the political debate amongst some of the EU ‘family’.
Union citizens who have never worked and who are not looking of work, can therefore be prevented from using the host member state’s welfare system to fund their means of subsistence. This judgment, both in tone and content, does mark a discernible shift from previous judgments, which have often relied upon the equal treatment rules in the treaties, to suggest that impoverished EU citizens might still be entitled to benefits. However the question of what restrictions might be placed on say job-seekers or former workers’ access to benefits remains unclear, especially given previous EU case law which has been keen to prohibit Member States from denying benefits of a financial nature that are intended to facilitate access to the labour market (C-22/08 Vatsouras).