3 Social security coordination
| (32402)
5063/11
COM(10) 794
| Draft Regulation of the European Parliament and Council amending Regulation (EC) No 883/2004 on the coordination of social security systems and Regulation (EC) No 987/2009 laying down the procedure for implementing Regulation (EC) No 883/2004.
|
| Legal base | Article 48 TFEU; co-decision; QMV
|
| Document originated | 20 December 2010
|
| Deposited in Parliament | 6 January 2011
|
| Department | Work and Pensions
|
| Basis of consideration | Minister's letter of 13 April 2011
|
| Previous Committee Report | HC 428-xv (2010-11); chapter 5 (2 February 2011)
|
| To be discussed in Council | No date set
|
| Committee's assessment | Legally important
|
| Committee's decision | Not cleared; further information requested
|
Background and previous scrutiny
3.1 The draft Regulation would amend two existing EU Regulations
on the coordination of social security systems for EU citizens
who move to, or work in, another Member State. The Regulations
took effect on 1 May 2010 and are significant because they include
within their scope all EU citizens who are, or have been, covered
by social security legislation in one Member State and exercise
their right to move to another Member State. So, for example,
they apply not only to migrant workers (including those who are
self-employed) and their dependants, but also to those who are
not economically active, perhaps because of disability, illness
or caring responsibilities. Most of the changes proposed are of
a minor and technical nature but some are more substantive. The
more significant amendments proposed, and the Government's views
on them, are described in our Seventeenth Report.[19]
3.2 We noted in the Conclusion to our Report that
the Government supported nearly all of the amendments but expressed
concern about the Commission's choice of legal base. This was
because Article 48 of the Treaty on the Functioning of the European
Union (TFEU), which provides for the adoption of EU measures in
the field of social security, only applies to migrant workers.
It does not apply to those who are not economically active. The
Government therefore suggested that it would be necessary to cite
an additional Treaty Article to cover this category of non-active
EU citizen. It proposed either Article 21(3) TFEU or Article 352
TFEU but believed that the former was more appropriate as it refers
specifically to the adoption of social security measures if needed
to facilitate EU citizens in exercising their right to "move
and reside freely" in another Member State. We agreed with
the Government and asked it to keep us informed of developments.
3.3 The Government also told us that Her Majesty's
Revenue and Customs intended to consult interested parties on
the Commission's proposal to introduce a "home base"
provision for air crew working in two or more Member States. This
would designate their employers' registered office or place of
business as their home base (the place where they start and finish
their duties and pay social security contributions). We asked
the Government to tell us the outcome of its consultation.
The Minister's letter of 13 April 2011
3.4 The Minister for Employment (Chris Grayling)
tells us that the Government continues to raise its concerns regarding
the Commission's choice of a single legal base — Article
48 TFEU — during negotiations, but that they are not shared
by most other Member States. The Minister notes, in particular,
that the draft Regulation would introduce a change to the voting
procedure in the Administrative Commission — the body comprising
representatives of the Member States which is responsible for
interpreting and administering EU rules on the coordination of
social security. Whilst the rules governing the Administrative
Commission would still have to be agreed by all its members, it
would be able to act by a qualified majority "in all other
cases".[20]
3.5 The Minister continues:
"The Commission view is that the majority of
the matters covered by the amendments package relate directly
to workers and their rights. Therefore, it considers that using
Article 48 TFEU is the only appropriate provision because it covers
most of the changes.[21]
We continue to press for Article 21, but there is also a strong
view that Article 21 TFEU should not be used for coordination
matters. Other parties to the negotiations also point to the difficulties
in combining Article 21 and Article 48 because of ECJ caselaw
which suggests that these legal bases cannot be used together.
We will continue to press for a change in legal base to protect
the UK position."
3.6 The Minister sets out the background to the Government's
consultation on the Commission's "home base" proposal
for air crew. He says that, under the existing EU Regulations,
"they are treated in the same way as all other employed persons
who work in two or more Member States." He continues:
"This means they are insured in the Member State
in which they are resident, provided they perform a 'substantial
part' of the their activities there, by which we mean at least
25% of their working time is carried out there and/or at least
25% of their remuneration is earned there. If a substantial part
of their activity is not performed in the worker's State of residence,
they are insured in the Member State in which their employer has
its registered office or place of business. In practice, employed
persons who work in two or more Member States are in most cases
insured in the Member State of residence.
"However, the Commission has received representations
from various Member States who reported difficulties in determining
where international air transport workers should be insured. This
was partly because of alleged difficulties in obtaining relevant
information from employers, such as duty rosters, but some Member
States have maintained that this is made worse by the absence
of any special rules for these workers in the new Regulation.
One Member State also reported that it had faced problems when
a major airline established a branch there in order to employ
aircrew working in other Member States and thus obtain social
security coverage in the first State at lower rates of contributions
than those levied in the other Member States — arrangements
commonly called 'contribution shopping'.
"In recognition of these difficulties, the Commission
proposed that for international air transport workers, the registered
office or place of business of their employer should be deemed
to be their 'home base'. This concept is taken from long-standing
EU aviation regulations on health and safety measures at work.
Broadly it refers to the Member State where aircrew start and
finish their duties."
3.7 The Minister says that the Government held detailed
discussions with "those organisations which expressed an
interest in the matter, namely a major international accountancy
firm and a trade union." He adds:
"[...] some concern was expressed about what
would happen in those cases where there might be frequent changes
in the home base, which would result in an individual's insurance
record being more fragmented. Nevertheless, it was noted that
the EC Regulations already allow two or more Member States to
agree exceptions to the normal rules on insurability, provided
it is in the interests of the workers in question and that the
employees themselves agree to any such exception. Moreover, the
trade union was aware of 'contribution shopping' by some airline
companies and advised that most of their members did in fact work
from the same place over lengthy periods."
3.8 In light of these discussions and the Commission's
broader consultation with representatives of the European air
transport industry, the Government believes that the Commission's
"home base" proposal provide "a welcome clarification"
of the application of the EU Regulations. The Minister continues:
"The concept is well established in the air
transport industry and should help to address difficulties arising
from contribution shopping. In most cases, it will complement
the existing rules for employees working in two or more Member
States by reinforcing insurance in the worker's State of residence,
where the worker will have his or her closest personal ties."
Conclusion
3.9 We thank the Minister for his letter and accept
the Government's view that the Commission's "home base"
proposal provides useful clarification of the way in which the
EU Regulations on social security coordination apply to air crew
working in more than one Member State.
3.10 We note the Commission's view that the majority
of the amendments in the draft Regulation concern matters which
relate directly to workers and their rights and so fall within
the scope of Article 48 TFEU. However, the draft Regulation would
also introduce a new majority voting rule within the Administrative
Commission which would apply to all its decisions, including those
concerning non-active EU citizens who are not covered by Article
48 TFEU.
3.11 We note also that there are objections to
the use of Article 21(3) TFEU for coordination matters and to
its use in combination with Article 48 TFEU. As we indicated in
our earlier Report, the two existing EU Regulations which the
draft Regulation would amend each have a dual legal base comprising
Treaty Articles with different decision making procedures and
voting rules.[22]
It is not clear why the use of a dual legal base, if justified
by the content of the draft Regulation, should create particular
difficulties in this case. Nor is there anything in the wording
of Article 21(3) which suggests that it cannot be used for coordination
matters. We therefore agree with the Government that there is
a case for citing Article 21(3) in addition to Article 48 TFEU.
3.12 In light of the uncertainty as to the outcome
of negotiations concerning the legal base, we are retaining the
draft Regulation under scrutiny and ask the Minister to provide
us with progress reports.
19 See headnote. Back
20
Article 1(7) of the draft Regulation. Back
21
This view is based on the idea that a legal base should be selected
on the predominant purpose or component of a proposal (ECJ rulings
in C-178/03 para 42 and C-411/06 para 46 inter alia). Back
22
Articles 42 and 308 of the EC Treaty - now Articles 48 and 352
of the TFEU. Back
| 
