Judgments - Zalewska (AP) (Appellant) v Department for Social Development (Respondents) (Northern Ireland)

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23.  The Child Poverty Action Group and the Public Law Project, intervening, support the appellant’s second argument. Their case is that the registration requirements are incompatible with Community law because they are an unlawful interference with Community law rights and because the consequences of a failure to register amount to a disproportionate penalty. As Mr Drabble QC put it, where a Member State decides, pursuant to the derogation, that it will admit accession nationals into the labour market by permitting them to work, national measures governing the legality of that work must pursue a legitimate aim and be proportionate. He submitted that the requirement to re-register failed to satisfy that test, in view of the consequences of a failure to comply with it.

24.  The respondent’s primary argument is the reverse of the appellant’s primary argument. Mr Lewis QC said that the effect of the derogation is that the question whether national rules are disproportionate restrictions on a Community law right of access to the labour market does not arise. The rules define the scope of the right under national law. This is not a right that is derived from Community law. His alternative submission was that the 2004 Regulations performed a legitimate aim and were a proportionate way of ensuring that the United Kingdom has timely and accurate information on the accessing of its labour market by A8 state nationals.

Discussion

25.  The first question is whether the appellant can rely directly on article 39EC and article 7(2) of Regulation 1612/68 to qualify for income support, despite the fact that she was not authorised to work for an authorised employer under reg 7 of the 2004 Regulations for the whole of the 12 month period. In my opinion the answer to it is to be found in paragraph 2 of Part 2 of Annex XII to the Act of Accession.

26.  Absent the derogation provisions in that paragraph, a worker who is a national of any member state has the same rights of access to the labour market and to the social advantages that go with it as those of any other member state. That is the effect of article 39EC read together with article 7 of the Regulation. It is not open to the United Kingdom to impose restrictions on workers who are nationals of other member states that are incompatible with the fundamental rules of Community law. But, as paragraph 1 of Part 2 of Annex XII makes clear in the case of Poland, article 39EC is subject to derogation in the case of the freedom of movement of workers from nationals of the A8 states. Paragraph 2 of Part 2 states, by way of derogation, that for the two year period from the date of accession the member states will apply national measures, and that they will continue to apply such measures until the end of the five year period following the date of accession. The effect of that paragraph was to enable the United Kingdom, notwithstanding the fundamental rules of Community law as to freedom of movement of persons, to lay down its own rules for access to its labour market by A8 state nationals.

27.  It is true that paragraph 2 does not mention article 7 of Regulation 1612/68. It states that the liberty that is given to the member states to apply national measures is by way of derogation from articles 1 to 6 of the Regulation. But I think that there are two reasons for the fact that article 7 is not mentioned in this paragraph. The first is that mention of it was unnecessary. Access to labour markets is treated in Title I of the Regulation as a question of eligibility. The fundamental rules about the eligibility for employment of any national of a member state are set out in articles 1 to 6. A national of a member state who takes up employment in another member state under those rules is a worker for the purposes of article 7, but not otherwise. Taking Poland as the example, displacement of articles 1 to 6 by national measures was all that the derogation provision in paragraph 2 of part 2 of Annex XII needed to do to ensure that access to employment in the 15 existing member states by workers from Poland was controlled by national measures during the five year period. The second is that its exclusion from derogation ensured that any workers from Poland who did obtain access to the labour market in an existing member state under its national measures enjoyed the same guarantees against discrimination as regards conditions of employment and social and tax advantages as national workers. But the rights conferred on Polish workers by article 7 were to depend on their compliance with the national measures. It is those measures that determine their eligibility to obtain access to the national labour market on which the rights given by article 7 in their turn depend. The reference to Polish nationals “admitted to the labour market of a present member state” in the third subparagraph of paragraph 2 of Part 2 of Annex XII is a reference to Polish nationals who have been admitted to it under the national measures regulating access.

28.  Mr O'Hara sought to rely in support of his primary argument on Lopes da Veiga v Staatssecretaris van Justitie (Case 9/88) [1989] ECR 2989. That was a case about the Act concerning the Conditions of Accession to the European Community of Spain and Portugal annexed to the Treaty of Accession that was signed on 12 June 1985. The proceedings were between a Portugese national who was employed on vessels flying the Dutch flag and the State Secretary of Justice about the grant of a residence permit. In para 10 of his opinion Advocate General Darmon said that as soon as the Act of Accession came into force workers who were nationals of the new member state and who were already employed in the territory of one of the member states of the Community must be able to enjoy the freedoms which the Treaty guarantees. In para 10 of its judgment the court said that the fact that the provisions of Title I of Regulation 1612/68 had been suspended by the transitional arrangements did not provide a reason for refusing to allow the provisions of Title II dealing with employment and equality of treatment to be applied to a person already employed in the territory of one of the old member states. The second subparagraph of paragraph 2 of part 2 of Annex XII gives effect to that decision in the case of Polish nationals who were legally working in an existing member state at the date of accession. The 2004 Regulations too were careful to provide that an A8 state national was not an accession state worker requiring registration if he was legally working in the United Kingdom on 30 April 2004 and had been legally working in the United Kingdom without interruption for a period of 12 months ending on that date: reg 2(3). But these provisions which apply to the decision in Lopes da Veiga are of no assistance to the appellant, as she did not arrive in Northern Ireland until after the accession date.

29.  The next question is whether, as Mr Lewis submitted, the United Kingdom has a complete discretion to determine the conditions on which nationals from the A8 states may obtain access to its labour market, or whether Community law requires that the measures that it selects must have a legitimate aim and be proportionate. He took as his starting point a series of propositions which I would regard as impeccable. The word “worker” in article 7 of Regulation 1612/68 refers to a national of one member state who is admitted to the labour market in another member state. A national of an A8 state is a “worker” in the United Kingdom for the purposes of article 7 only if he complies with the national measures that regulate access to the labour market in this country. This is because articles 1 to 6 of the Regulation have been suspended during the accession period and the national measures as to eligibility have taken their place. Cases such as Royer v Belgium (Case 48/75)[1976] ECR 497 and Trojani v Centre public d'aide sociale de Bruxelles (Case C- 456/02) [2004] ECR I-7573, where the rights relied on were conferred directly by the Treaty or provisions adopted for its implementation, are distinguishable. So long as the requirements of the national rules are satisfied an A8 state national is entitled to the benefit of article 7(2) of the Regulation because he is a person who is admitted to the labour market, but not otherwise. Conversely an A8 state national is not admitted to the labour market if he does not comply with the national measures. So he is not in a position to acquire the rights that Community law gives to workers. In other words, access by an A8 state national to the Community rights in an existing Member state that the EC Treaty gives to workers there depends on his satisfying the national measures that give access to its labour market. So long as those measures are satisfied the United Kingdom is under a Community law obligation to give him the benefit of article 7(2), but not otherwise.

30.  The proposition that I cannot accept however is that the national measures that the United Kingdom selects have nothing to do with Community law, so the issue as to whether they are proportionate is irrelevant. The only authority that the United Kingdom has to introduce national measures to give access to nationals of an A8 state to its labour market in place of article 39EC and Title I of Regulation 1612/68 is that which is given to it by paragraph 2 of Part 2 of Annex XII. As article 10 of the Treaty of Accession makes clear, this derogation from the application of the original Treaties and acts adopted by the institutions of the Community was agreed to by the member states under the umbrella of Community law. Furthermore the fact that the derogation does not extend to article 7 of the Regulation shows that where the national measures of an existing member state give the status of “worker” to an A8 State national he is entitled to all the rights in that state that Community law gives to workers. It is not possible to detach the opportunity that is given to the member states to apply national measures from its Community law background. The conclusion that any national measures that the member states introduce under the authority of paragraph 2 must be compatible with the authority given to them by the Treaty of Accession and with the Community law principle of proportionality seems to me to be inescapable.

Proportionality

31.  This brings me to the issue about proportionality, which is the most troublesome aspect of this case. The principle of proportionality requires that the means employed to achieve an aim recognised by Community law as legitimate correspond to the importance of that aim and are necessary for its achievement. There is no doubt that it was legitimate for the United Kingdom to exercise the right of derogation that the Treaty of Accession provides and to introduce regulations that gave effect to it. The question is whether a national measure which says that only those A8 state nationals who work for an authorised employer for an uninterrupted period of 12 months are entitled to the status of “worker", having regard to the consequences of according them that status, is disproportionate. The consequence of the appellant’s failure to re-register after she left the employment of Monaghan Mushrooms was, as Mr Drabble put it, a complete denial of Community law rights. She lost the right to reside in the United Kingdom and, as a consequence of losing that right, access to social security benefits. Admittedly, she would qualify for those benefits if she were to work for an authorised employer for a further uninterrupted period of 12 months. But loss of access to the benefits for the time being is, it is said, too severe a penalty for someone who can prove that she has already worked without interruption for the whole of the 12 months period.

32.  Reference was made to a number of decisions of the ECJ which illustrate the approach which that court takes to issues of proportionality where a national measure restricts the free movement of goods or the freedom to provide services. For example, in Canal Satélite Digital SL v Administracíon General del Estado, (Case C-390/99) 22 January 2002, para 33, the court said that the question must be examined in the light of the articles of the Treaty in order to determine whether the national measure at issue pursued an objective of public interest and whether it complied with the principle of proportionality, that is to say whether it is appropriate for securing the attainment of that objective and does not go beyond what is necessary in order to attain it. In Mouvement contre le racisme, l'antisémitisme et la xénophobie ASBL (MRAX) v Belgium (Case C-459/99) [2002] ECR I-6591, a case about a residence permit, the court said in paras 77-80 that Community law did not prevent Member States from prescribing for breaches of national provisions concerning aliens any sanctions necessary to ensure the efficacy of those provisions provided that those sanctions were proportionate, but that a measure which was based solely on a failure to comply with legal formalities and which impaired the very substance of a right conferred by Community law on a person married to a Community national would be manifestly disproportionate: see also Criminal proceedings against Skavani and Chryssanthakopoulos (Case C-193/94) [1996] ECR I-929; Oulane v Minister voor Vreemdelingenzaken en Integratie (Case C-215/03) [2005] ECR I-1215; Commission of the European Communities v Belgium (Case C-408/03) [2006] ECR I-2647. I do not find these decisions helpful in the present case where the rights conferred directly on workers by the Treaty and Regulation 1612/68 have been suspended by way of derogation in favour of national measures applied by member states.

33.  Mr Lewis submitted that differential treatment between nationals of the A8 states and other EU nationals that resulted from the worker registration scheme pursued a legitimate aim. The purpose of the scheme was to enable the United Kingdom to monitor and review the arrangements for access by A8 state nationals to its labour market to determine whether further steps needed to be taken to prevent its disruption during the accession period as a result of the accession of the A8 states. In the Lopes da Veiga case [1989] ECR 2989, para 10 Advocate General Darmon said, in the context of the accession arrangements for Portugal’s accession to the European Community, that the ratio of such derogations was to prevent disruption of the labour markets of the old member states through the massive influx of Portugese nationals seeking employment. Mr Lewis said that the same ratio applied to the accession arrangements in the case of Poland. As for proportionality, the worker registration scheme was objectively justified. The United Kingdom had adopted less severe restrictions than most of the other member states. Those that it had adopted defined when and how an A8 state national was permitted access to the labour market. An A8 state national who did not comply with those measures simply did not have access during the period of non-compliance to the labour market for the purpose of establishing an uninterrupted period of 12 months employment. This was not to be seen as a sanction which denied the existence of a Community right. It was a consequence of a failure to comply with the 2004 Regulations.

34.  Materials which were shown to your Lordships provide some support for Mr Lewis’s description of the aim of the 2004 Regulations. When the worker registration scheme was first introduced its purpose was said to be to allow A8 state nationals access to the United Kingdom labour market in a way that would enable the Government to monitor the numbers working and the sectors where they were employed. It was not expected to be a barrier to those who wanted to work. On the contrary it was thought that it would encourage those A8 state nationals who were working here illegally to regularise their status and begin contributing to the formal economy. Three strands of thought can be seen to be at work here. There was a concern about numbers, which was of course the reason why member states had sought derogation from the direct application of article 39 and articles 1 to 6 of Regulation 1612/68 for a period of years following the date of accession. There was a concern to identify which sectors of the labour market were being affected by the influx, in case remedial measures might have to be taken to control it. And there was a concern about the number of A8 state nationals who were already working here illegally, at risk to their own health and safety, and might continue to do so. A registration system was an obvious way of combating this abuse.

35.  Similar concerns about the impact of enlargement on the benefit system led to the amendment to the social security regulations that prevents the appellant from obtaining income support. The Social Security (Habitual Residence) Amendment Regulations 2004 (SI 2004/1232) introduced into the income-related benefit rules for Great Britain the same amendment for the habitual residence test as that which was introduced for Northern Ireland by the Social Security (Habitual Residence) Amendment Regulations (Northern Ireland) 2004. They were referred when in draft to the Social Security Advisory Committee. The Committee’s Report was presented to Parliament in April 2004 (Cm 6181). In his introduction to the Report the Secretary of State said that the underlying purpose of the Regulations was to safeguard the UK’s social security system from exploitation by people who wished to come to the United Kingdom not to work but to live off benefits. They were intended to support the Government’s policy of opening the United Kingdom’s labour market immediately to workers from the A8 states. But it was recognised that any resulting influx of people from abroad might lead to additional and inappropriate demands on the UK’s social security system.

36.  The appellant does not suggest, I think rightly, that these aims were not legitimate. Were the provisions of the 2004 Regulations proportionate to those aims? The debateable ground on this issue is quite narrow. I do not think that it can reasonably be suggested that it is disproportionate for A8 state nationals to be required to apply for a registration certificate for the first employment that they obtain in the United Kingdom unless they fall within the categories listed in reg 2 which are exempt from it. Information about the numbers coming here from the A8 states is a necessary requirement if the extent of the influx is to be monitored effectively. The fact that an A8 state national who does not register does not have access to the income-related benefits system because he has no right to reside here is part and parcel of the same requirement. Registration brings with it the package of benefits that a worker is entitled to because article 7 of Regulation 1612/68 requires that he must not be treated differently. Failure to register does not. This is simply because the United Kingdom has chosen to make registration a requirement that an A8 state national must satisfy to become a worker here. It is entitled to insist, by way of derogation, that the mere fact that the person is working in the United Kingdom is not enough.

37.  The debateable ground is whether the requirement that A8 state nationals must re-register if they change their employment within the 12 month period is proportionate. Mr Drabble did not criticise other aspects of the scheme as being either unsuitable or unnecessary. He confined the interveners’ submission to the re-registration requirement which, as he pointed out, was not addressed by the Court of Appeal in Northern Ireland or by the Court of Appeal in England when it refused permission for judicial review of the scheme in R (D) v Secretary of State for Work and Pensions [2004] EWCA Civ 1468, holding that the scheme as a whole was a reasonable and proportionate concomitant of the permitted derogation: per Maurice Kay LJ, para 17. He said that disbarring the appellant and others in her position from social security benefits because of a failure to comply with the formality of re-registration despite the fact that she had worked here for an uninterrupted period of 12 months impaired the very substance of the qualified rights that the Treaty of Accession conferred on A8 state nationals. It was a disproportionate penalty. If the only point of the worker registration scheme was to count them on their first arrival, the consequences of a failure to re-register to the individual would seem, he said, to be wholly out of proportion to that aim.

38.  Mr O'Hara drew attention in his final speech to a joint Accession Monitoring Report by the Home Office, the Department for Work and Pensions, HM Revenue and Customs and Communities and Local Government for the period May 2004 to December 2006. A note on the worker registration scheme data published in this report states:

“Applicants must register more than once if they are employed by more than one employer. They must also re-register if they change employer. Each application to the WRS therefore represents one job, not one applicant. To avoid counting applicants more than once, each applicant is represented only once in this report, with information relating to the first job for which he/she registered.”

Mr O'Hara said that this showed that data monitoring was conducted only at the first stage. If this was so, the requirement to re-register carried with it a disadvantage that was unreasonable and disproportionate.

39.  I think, for my part, that Mr O'Hara was reading too much into this note. It is true that the information in the Monitoring Report concentrates on the first job for which the applicant was registered. But I am not persuaded that the way this statistical exercise was carried out means that the other information that the scheme produces is being treated as irrelevant. The aim of the scheme was to enable the Government to monitor the impact of A8 state nationals on the United Kingdom’s labour market and to discourage them from working illegally. To obtain a complete picture, information about the sectors in which they were employed during the whole of the uninterrupted period of 12 months, after which effect would have to be given to the third subparagraph of paragraph 2 of Part 2 of Annex XII, was likely to be as important as information about the number of arrivals. Information about the sector of first registration only would not enable changes of employment from one sector to another during the 12 month period to be monitored. These points have to be seen in the context of paragraph 12 of Part 2 of Annex XII to the Accession Act. It allows Member States to decide at any time after the third year following the date of accession to decide to apply article 1 to 6 of Regulation 1612/68 instead of national measures. On 24 April 2006 the Minster for Immigration, Citizenship and Nationality announced in a written statement that he had decided that the worker registration scheme would continue beyond 1 May 2006. But the need for the scheme would be kept under review. Monitoring of the information that the scheme provides is part of this process.

40.  Then there is the important question of access to social security benefits. The Secretary of State for Work and Pensions said in paragraph 4 of his introduction to the Report on the 2004 Social Security Regulations that their underlying purpose was to safeguard the United Kingdom’s social security system from exploitation by people who wished to come to the UK not to work but to live off benefits. The terms on which A8 state nationals are to have access to the labour market are critical to achieving that purpose. Access to that market confers on them the status of workers. So they become entitled immediately, under article 7 of Regulation 1612/68, to the same social advantages as nationals. And the third subparagraph of paragraph 2 of Part 2 of Annex XII provides that A8 state nationals admitted to the labour market of an existing member state following accession for an uninterrupted period of 12 months or longer are to enjoy access to the labour market of that state. This is a right that is given to them by Community law, with all the other rights that go with it, at the end of that period. But it is given only to those who are, as the subparagraph puts it, “admitted” to that labour market during that period. The proportionality of the formalities of registration and re-registration and of the consequences of a failure to comply with these requirements must be judged in that context.

41.  Commissioner Rowland addressed these issues in the cases of CIS/3232/2006, CIS/160/2007, CJSA/700/2007 and CIS/775/2007, in all of which the claimants were employed for a year without having been registered that long. They raised the question whether the requirement that the employment must have been registered was a legitimate one. At the end of his reasons which were given on 12 March 2008 he said that he was not persuaded that, viewed in their context, the administrative formalities that the United Kingdom has imposed for admission to the labour market and the consequences of failing to comply with them were disproportionate: para 47. He saw the requirement in reg 2(4) of the 2004 Regulations that A8 state nationals must have worked “legally” without interruption for 12 months before they no longer require to be registered as a rational way of imposing pressure on them to register employment when taking advantage of the rights afforded to them to enter the United Kingdom’s labour market. This was desirable for the provision of statistics: para 41. In para 37 he observed that the formality of registration ensured that contemporaneous evidence of past employment was available in the event of a claim for a right of residence or a benefit where entitlement depends on such a right.

 
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