2 Co-ordination of social security
within the European Economic Area
| (32023)
13493/10
SEC(10) 1013
| Proposed Council Decision on the position to be taken by the EU in the EEA Joint Committee concerning an amendment to Annex VI (Social Security) and Protocol 37 to the EEA Agreement
|
| Legal base | Articles 48, 218(9) and 352 TFEU; unanimity; EP consent
|
| Document originated | 9 September 2010
|
| Deposited in Parliament | 8 October 2010
|
| Department | Work and Pensions
|
| Basis of consideration | EM of 15 October 2010
|
| Previous Committee Report | None
|
| To be discussed in Council | No date set
|
| Committee's assessment | Legally important
|
| Committee's decision | Not cleared; further information requested
|
Background
2.1 The Agreement establishing the European Economic Area
("EEA") entered into force in 1994. Its purpose is to
"promote a continuous and balanced strengthening of trade
and economic relations" between EU Member States and the
remaining EEA States (Iceland, Liechtenstein and Norway) by establishing
the free movement of goods, persons services and capital within
a homogeneous European Economic Area.[1]
Article 4 of the EEA Agreement prohibits discrimination on grounds
of nationality. Article 28 provides for the free movement of workers
within the EEA, and Article 29 seeks to facilitate the exercise
of free movement rights by providing certain social security entitlements
for workers, the self-employed and their dependants. These include:
- aggregation, for the purpose of acquiring and retaining the
right to benefit and of calculating the amount of benefit, of
all periods taken into account by the national legislation of
the countries concerned; and
- payment of benefits to persons resident in EEA
States.
2.2 Annex VI of the EEA Agreement sets out the
relevant EU instruments on social security which EU and EEA States
are required to apply, as well as any necessary modifications
to take account of social security legislation in Iceland, Liechtenstein
and Norway. The Annex may be amended by a decision of the EEA
Joint Committee which comprises representatives of all the States
which are parties to the EEA Agreement.
2.3 On 1 May 2010, new EU Regulations on the
co-ordination of social security systems took effect within the
EU. A significant feature of the new Regulations is that they
extend the personal scope of EU arrangements for the co-ordination
of social security to include non-economically active EU citizens,
for example those who have never worked because of sickness, disability,
or caring responsibilities.
The draft Council Decision
2.4 The purpose of the draft Council Decision
is to update Annex VI of the EEA Agreement to include the new
EU Regulations, thereby simplifying the co-ordination of social
security schemes across the EEA. The effect of the proposed changes
to Annex VI would be to extend to nationals of Iceland, Liechtenstein
and Norway 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 Iceland, Liechtenstein and Norway. The draft Decision
would also amend Protocol 37 of the EEA Agreement, which lists
the committees with which representatives of the EEA States may
be associated, to include the Administrative Commission for the
co-ordination of social security systems.
2.5 The draft Council Decision cites three Treaty
Articles for its legal base. Article 48 of the Treaty on the Functioning
of the European Union (TFEU) provides for the adoption of EU measures
in the field of social security necessary to facilitate the free
movement of migrant workers (including the self-employed) and
their dependants. It provides specifically for the aggregation
of benefits, to ensure that any entitlement to benefit acquired
in one Member State is not lost if a worker moves to another Member
State, and for the payment of benefits to be made wherever the
worker is resident within the EU. Article 352 TFEU is a residual
legal base. It gives the EU power to act where such action is
needed to achieve a Treaty objective but where the Treaties have
not expressly conferred the necessary powers. The Commission is
required to notify any proposed use of Article 352 to national
parliaments, and the Council must act by unanimity after obtaining
the consent of the European Parliament. Article 218(9) TFEU is
essentially a procedural provision which empowers the Council
to establish the position to be taken by the EU within the EEA
Joint Committee.
The Government's view
2.6 In his Explanatory Memorandum of 15 October
2010, the Minister for Employment (Chris Grayling) says that there
are continuing discussions with the Commission and Presidency
on the correct legal base. The Government believes that Article
48 TFEU is solely concerned with movement within the EU and therefore
is not an appropriate legal base for a proposal concerning the
social security rights of workers moving between the EU and third
countries (Iceland, Liechtenstein and Norway). The Government
considers that Article 79(2)(b) TFEU, which provides for the adoption
of EU measures on the rights of legally resident third country
nationals and the conditions governing their freedom of movement
and residence within the EU, is the correct legal base and should
be cited instead of, or in addition to, Article 48 TFEU. It follows,
according to the Minister, that the UK's opt-in applies and the
Government must determine by 10 December 2010 whether or not to
opt into the draft Council Decision.
2.7 The Minister explains that, if the UK were
to opt into the draft Council Decision, arrangements in the UK
for the co-ordination of social security systems would be the
same for cases involving EU and EEA States. As the scope of the
new EU social security Regulations which would be incorporated
in Annex VI of the EEA Agreement has been extended to include
all migrants, including non-economically active migrants, there
would be an increase in the number of migrants who would be entitled
to benefit payments, but the Minister thinks that the number of
potential beneficiaries is likely to be small.
2.8 If the UK decided against opting into the
draft Council Decision, then the Minister says that benefit expenditure
would remain at the current level as the UK would still be bound
by EU rules on social security co-ordination in force up until
1 May 2010. The UK would have to run parallel systems of social
security co-ordination based on two sets of rules, one for cases
involving only EU Member States, the other for cases involving
EEA States. However, any increase in administrative expenditure
is likely to be negligible, as the UK already has arrangements
in place to deal with co-ordination of social security for migrant
workers moving to or from other (non-EEA) third countries.
2.9 The Minister says that, in deciding whether
or not to opt into the draft Council Decision, the Government
"will give very careful consideration to the acceptability
in principle of extending social security rights to any migrants
from outside the EU who have never worked". He adds that,
"at a time when we are considering stringent measures to
control public expenditure we also consider that if we accept
the extension of social security rights to this small group now,
it would set a precedent for extending them to much larger groups
in the future".
Conclusion
2.10 It is unfortunate that the Commission's
brief explanatory memorandum accompanying the draft Council Decision
provides no explanation for the proposed choice of legal base.
It seems that the substantive Articles cited — Articles
48 and 352 TFEU — reflect the choice of legal base for the
principal Regulation (883/2004) which is to be incorporated into
Annex VI of the EEA Agreement. As Article 48 appears only to apply
to EU citizens (and their dependants) who are working in other
EU Member States, we assume that Article 352 is needed because
Regulation 883/2004 extends EU rules on the co-ordination of social
security systems to EU citizens who have moved to other Member
States and who are not economically active and have not worked.
2.11 We confess to some difficulty in understanding
the Government's reasoning as regards the appropriate legal base
for the draft Council Decision. The Government's objection to
Article 48 TFEU appears to be based on its territorial scope which,
the Government says, is limited to EU Member States and cannot
be extended to encompass EEA States. However, Article 79(2)(b)
also appears to have a limited territorial scope, as it concerns
the rights of third country nationals who are legally resident
within a Member State and the conditions governing their freedom
of movement and residence in other Member States. We do not see
how this Article could be used to extend social security entitlements
to those exercising free movement rights within the wider European
Economic Area. We should therefore be grateful if the Government
would provide more detailed reasons to justify its preferred choice
of legal base, explaining:
- its views on the material
scope of Article 48 TFEU;
- its understanding of the Commission's reasons
for including Article 352 as a legal base; and
- whether Article 79(2)(b) TFEU alone provides
the correct legal base, or should be cited in combination with
Article 48 and/or Article 352.
2.12 It seems that, for the purposes of this
draft Decision, the Government does not differentiate between
EEA States and other third countries. We wonder whether this is
justified in light of the obligations contained in the EEA Agreement,
and in particular, Articles 1 and 4, which provide for the free
movement of persons and prohibit discrimination on grounds of
nationality. We therefore ask the Government to explain whether
limiting the territorial scope of arrangements for the co-ordination
of social security systems to the movement of migrants exclusively
within the EU would be consistent with the EEA Agreement.
2.13 We note the Minister's assertion that
the UK's Title V opt-in applies and that the Government will be
required to notify whether or not it wishes to participate in
the draft Council Decision by 10 December 2010. As we have explained
elsewhere,[2] we
think that this is at odds with the actual wording of Article
3 of the UK's opt-in Protocol which states clearly that the three-month
period for notifying the UK's opt-in decision runs from the date
on which "a proposal or initiative has been presented to
the Council pursuant to Title V of Part Three of the TFEU".
The inclusion of a Title V legal base — so far absent from
the draft Council Decision — would seem to be the essential
trigger for the notification procedure specified in Article 3
of the Protocol.
We ask the Minister to keep us informed of any
further developments regarding the choice of legal base and to
tell us the Government's eventual decision on whether or not to
opt into the draft Council Decision. Pending further information
from the Minister, the proposal remains under scrutiny.
1 Article 1, EEA Agreement, see OJ L1, 3.1.1994, p.1. Back
2
See chapter 9 of this Report. Back
| 
