Documents considered by the Committee on 15 September 2010 - European Scrutiny Committee Contents

6   Co-ordination of social security for mobile workers



COM(10) 333

Draft Council Decision on the position to be adopted by the EU in the Joint Committee established by the Agreement between the EU and Switzerland on the free movement of persons as regards the replacement of Annex II on the co-ordination of social security schemes

Legal base
Document originated28 June 2010
Deposited in Parliament1 July 2010
DepartmentWork and Pensions
Basis of considerationEM of 21 July 2010 and SEM of 10 August 2010
Previous Committee ReportNone
To be discussed in CouncilPossibly September 2010
Committee's assessmentLegally important
Committee's decisionNot cleared; further information requested


6.1  In 1999, the European Community and its Member States entered into an Agreement with Switzerland on the free movement of persons to enable EU or Swiss nationals to live and work in each others' territories. The Agreement entered into force on 1 June 2002 and includes provision for the co-ordination of social security systems for the following purposes:

  • securing equality of treatment;
  • determining the legislation applicable;
  • aggregation, for the purpose of acquiring and retaining the right to benefits, and of calculating such benefits, all periods taken into consideration by the national legislation of the countries concerned;
  • paying benefits to persons resident in the territory of the Contracting Parties; and
  • fostering mutual administrative assistance and cooperation between authorities and institutions.[13]

6.2  Annex II of the Agreement sets out the relevant EU instruments on the co-ordination of social security systems which EU Member States and Switzerland are required to apply, as well as any necessary modifications to take account of Swiss social security legislation. Annex II may be amended by a decision of the Joint Committee established by the Agreement and comprising representatives of the Contracting Parties.

6.3  On 1 May 2010, new EU Regulations on the co-ordination of national social security schemes came into effect.

The draft Council Decision

6.4  The purpose of the draft Council Decision is to establish the position to be taken by the EU in the Joint Committee with a view to updating Annex II to include the new EU Regulations and thereby simplifying the co-ordination of social security schemes between EU Member States and Switzerland. The effect of the proposed changes to Annex II would be to extend to Swiss nationals the arrangements for social security co-ordination already applicable since 1 May 2010 to EU nationals. As the arrangements are reciprocal, the changes would also apply to EU nationals living and working in Switzerland.

6.5  The draft Decision sets out the EU's position by means of an Annex containing a draft decision for agreement by the Joint Committee and incorporating a revised Annex II. The draft Decision does not, however, cite the provisions of the Treaty on the Functioning of the European Union (TFEU) on which it is based.

The Government's view

6.6  In his Explanatory Memorandum of 21 July 2010, the Minister for Employment at the Department for Work and Pensions (Chris Grayling) noted the absence of a substantive legal basis in the draft Council Decision which remained under discussion in the Commission and Council Legal Services.

6.7  The Minister provided a Supplementary Explanatory Memorandum on 10 August 2010 in which he says that the Council Legal Services have suggested Article 79(2)(b) TFEU as the appropriate legal base. This provides for the adoption of EU measures on "the definition of the rights of third country nationals residing legally in a Member State, including the conditions governing freedom of movement and of residence in other Member States". EU legislation on immigration matters does not apply to the UK unless the Government expressly opts in. The Minister continues:

"Although no legal base has been cited and the European Commission are still considering the matter, it is our view that the proposals do contain measures pursuant to Article 79(2)(b) of the TFEU as they define the rights of third country nationals who are legally resident in a Member State.

"The Article falls within Title V of the TFEU and therefore, in accordance with Protocol 21 to the Treaty, the UK must decide whether it wishes to opt in to the measure. The Government is considering its position on opting in to this proposal. The deadline for indicating to the Council whether or not the UK will opt in is three months from when the proposal is formally presented to the Council. That deadline expires on 29th September".

6.8  The Minister says that, if the UK were to opt into the draft Council Decision, there could be a small increase in the number of individuals covered by the arrangements for social security co-ordination as the scope of the EU Regulations which would be incorporated in Annex II has been extended to include citizens who have not been in employment. The UK currently pays benefits to around 8,600 individuals in Switzerland, most of whom are retirement pensioners and whose position would be unaffected by the proposed changes to Annex II. The Minister estimates that any increase in the number of individuals who would be entitled to benefit payments as a result of changes to Annex II would be small.

6.9   If the UK decided against opting into the draft Council Decision, the Minister says that benefit expenditure would remain at its current level and the UK would still be bound by EU rules on social security co-ordination in force up until 1 May 2010. The UK would therefore have to run parallel systems of social security co-ordination based on two sets of rules for cases involving EU Member States and those concerning Switzerland. This would create administrative difficulties in certain circumstances, for example when dealing with the social security contributions of posted workers sent to work in Switzerland by a UK employer. There would also be a potential increase in administrative expenditure which the Minister estimates to be negligible as the UK already has systems in place to deal with the co-ordination of social security for third country nationals.


6.10  We note with concern that, notwithstanding lack of agreement on an appropriate legal base for the draft Council Decision, the Minister states that the Government must notify the Council whether it wishes to opt in by 29 September.

6.11  Article 3 of the UK's opt-in Protocol provides that the UK may notify the President of the Council in writing that it wishes to take part in the adoption of a proposed measure "within three months after a proposal or initiative has been presented to the Council pursuant to Title V of Part Three of the Treaty on the Functioning of the European Union".[14] The absence of a legal base in the draft Council Decision suggests to us that the requirements of Article 3 of the Protocol have not been met in this case as the proposal has not been presented "pursuant to Title V of Part Three" of the TFEU. We should therefore be grateful if the Minister would explain whether and why he considers the 29 September deadline to be justified, given the continuing uncertainty over the choice of legal base and the consequences both for the UK, in terms of its opt-in, and for parliamentary scrutiny of the opt-in.

6.12  Pending the Minister's reply, we shall retain the draft Council Decision under scrutiny.

13   Article 8 of the Agreement, see OJ No. L 114, 30.04.02. Back

14   Article 3(1) of the Protocol on the position of the UK and Ireland in respect of the area of freedom, security and justice, annexed to the TFEU and TEU. Back

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