6 Co-ordination of social security
for mobile workers
| (31756)
11630/10
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
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| Legal base | —
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| Document originated | 28 June 2010
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| Deposited in Parliament | 1 July 2010
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| Department | Work and Pensions
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| Basis of consideration | EM of 21 July 2010 and SEM of 10 August 2010
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| Previous Committee Report | None
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| To be discussed in Council | Possibly September 2010
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| Committee's assessment | Legally important
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| Committee's decision | Not cleared; further information requested
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Background
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.
Conclusion
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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