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

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42.  Commissioner Rowland’s treatment of the argument that the sanction for failing to register was disproportionate - in two of those cases it was a delay in registering that was the problem, and in two others there was a period of registration followed by a period of more than 30 days when the employment was not registered - is of particular interest. He accepted that the sanction was not technically a penalty. Nonetheless it imposed a cost in cases where a person had actually worked for 12 months uninterruptedly but was not authorised to work for the whole of that period and wished to claim a form of social assistance. A failure to register for a short period might result in a loss of benefit for a much longer period: paras 40, 41. In para 46 however he observed that, although the consequences might produce some hard cases, they were the same as those contemplated by the Treaty of Accession for workers who become temporarily sick or unemployed after being employed for just under 12 months. The Treaty envisages those who interrupt their activities in the labour market having to start the qualifying period all over again. In other words, the consequence of late registration or a failure to re-register fits into that pattern. He accepted that it might have been possible to devise other sanctions for a failure to register. But most of them would have downsides as well as upsides. Some of them would affect people who were not adversely affected by the present scheme.

43.   Mr Drabble submitted that Commissioner Rowland’s reasoning was flawed because he misconstrued the width of the derogation. I agree in part with this criticism. In para 42 of his reasons the Commissioner referred to the third subparagraph of paragraph 2 of Part 2 of Annex XII, which confers rights under Community law on those who have been “admitted to the labour market” of an existing member state following accession for an uninterrupted period of 12 months or longer. In para 43 he said that in relation to the United Kingdom this term must involve becoming employed because A8 state nationals are not admitted to the labour market when merely looking for work, and that it must also mean not just becoming employed but also remaining employed. So far, so good. But he went on to say that the reference to admission “for an uninterrupted period of 12 months or longer” showed that a person had been admitted to the labour market for that period only when the period had elapsed. If by this sentence the Commissioner meant that the person was not admitted to the labour market until the end of that period, his construction of the phrase would have been wrong. Admission to the United Kingdom labour market is obtained as soon as the A8 state national begins work for an authorised employer: reg 5(2) of the 2004 Regulations. But the sentence is rather compressed, and I am not convinced that the Commissioner misunderstood the subparagraph.

44.  In any event this point does not affect Commissioner Rowland’s assessment of the issue of proportionality, which I would respectfully endorse. I think that he was right to have regard to the need for a system which imposed some degree of pressure on A8 state nationals to register their employment, on the desirability of up-to-date statistics and means of verification, and on the problems that devising other possible sanctions for a failure to register or re-register might give rise to. The right that the Accession Treaty gives to regulate access to the labour market during the accession period carries with it the right to ensure that the terms on which access is given are adhered to. Regulation of the right of access and monitoring its exercise are appropriate and necessary consequences of making that right available. Furthermore, it does not seem to me that there is any difference in principle between the consequences of late registration, which have not been criticised as disproportionate, and those that flow from a failure to re-register. They are the result, in both cases, of the same basic failure. The terms on which access is given have not been adhered to, so the rights that flow from it are not available. This may come with a cost, depending on the person’s circumstances. But, for the reasons that the Commissioner gave and the other reasons that I have mentioned in the previous paragraphs of this opinion, I do not think that the consequences in either case when examined in their whole context are unreasonable or disproportionate.

Conclusion

45.  In my opinion the Court of Appeal reached the right decision in this case, for reasons which it has now been possible to explain more fully after further argument. I would dismiss the appeal and affirm the decision of the Social Security Commissioner

BARONESS HALE OF RICHMOND

My Lords,

46.  As my noble and learned friend, Lord Hope of Craighead, has so clearly demonstrated, we are here concerned with national measures which implement EU law in relation to one of the fundamental rights protected by that law, the freedom of movement for workers. That this is so is reinforced by the vires under which the Regulations with which we are principally concerned, the Accession and (Immigration and Worker Registration) Regulations 2004, were made. They were made by the Secretary of State as a Minister designated for the purpose of section 2(2) of the European Communities Act 1972, which gives such a Minister power to make regulations for the purpose of implementing community law, and in the exercise of the powers conferred on him by section 2 of the European Union (Accessions) Act 2003, which is headed “freedom of movement for workers". The conclusion is indeed inescapable, as Lord Hope explains, at para 30 that “any national measures that member states introduce under the authority of paragraph 2 [of the Treaty of Accession] must be compatible with the authority given to them by the Treaty of Accession and with the Community law principle of proportionality".

47.  I agree with Lord Hope that the measures taken were compatible with the authority given by the Treaty of Accession. I cannot, however, agree that they were compatible with the community principle of proportionality. According to the classic statement in Fromancais v Forma [1983] ECR 395, para 8:

“In order to establish whether a provision of community law is consonant with the principle of proportionality it is necessary to establish, in the first place, whether the means it employs to achieve its aim correspond to the importance of the aim and, in the second place, whether they are necessary for its achievement.”

48.  One must therefore first establish the aim which the measure sought to achieve, and then ask whether the means used were suitable to achieve that aim, and then whether they were necessary, in the sense that the adverse impact upon an interest worthy of protection was justified in view of the importance of the objective pursued. It seems to me that proportionality must be judged, not in relation to an aim which the measure might lawfully have had, but in relation to the aim that it actually did have. The fact that the UK could lawfully have imposed much more extensive restrictions, in order to protect its own labour market from a sudden influx of workers from the accession states, is in my view irrelevant. The UK chose to open its doors from the outset. The measures which it employed had the much more limited aim of monitoring what took place. The sanction, of depriving a worker who had been employed here for 12 months of the social benefits to which she would normally be entitled as a result of having joined the UK workforce, is neither suitable nor necessary for the achievement of that limited aim. In short, it is disproportionate.

49.  The facts of this case illustrate very clearly both the working of the scheme and the gravity of the sanction. The appellant is Polish. She came to this country on 1 July 2004, two months after the accession of Poland to the European Union. She started work on 9 July 2004 picking mushrooms for Monaghan Mushrooms Ltd of Dungannon. She applied to the Home Office for a registration certificate. We are not told when she applied but the certificate was issued on 5 November 2004. This meant that her employers were and had always been an “authorised employer": see the 2004 Regulations, reg 7(2)(c). They would in any event have been an authorised employer for the first month after she started work: see reg 7(2)(d) and (3). And even if no certificate had been issued, they would have been an authorised employer provided that she had applied for a certificate within the first month after she started work and not been refused one: see reg 7(2)(b).

50.  She left that job on 7 January 2005 and on 8 January she began work as a packer for Smirnoff Vodka in Belfast. That work was obtained through an employment agency. It is not entirely clear whether Smirnoff or the agency was her employer, but the way in which the facts are told by the Social Security Appeal Tribunal suggests that it was the agency. If so, more shame on them for not ensuring that she applied for a registration certificate. She did not do so. But either Smirnoff or the agency were an authorised employer for the first month after she started work for them: see reg 7(2)(d) and (3). She stayed with Smirnoff for three weeks and then moved, at the end of January, to work for Linwoods in Armagh, baking and packing bread. If Linwoods were her employers they were an authorised employer for the first month after she started work with them: see reg 7(2)(d) and (3). This takes us up to the end of February 2005, almost eight months after she started work. Once again, she did not apply for a registration certificate for her job with Linwoods. But had she done so at any time and had the certificate been issued before she left, Linwoods would have been an authorised employer: see reg 7(2)(c). If the agency were her employer, then she would not have needed to apply for another certificate when she moved to Linwoods. Either the agency, or both Smirnoff and Linwoods, were guilty of a (not very serious) criminal offence in employing her without a certificate or evidence that she had applied for one: reg 9.

51.  She did not commit a criminal offence under the Regulations, but the consequences for her were much more serious. She last worked on 10 July 2005. She had therefore been in continuous employment for more than 12 months and if registered throughout would have been entitled to benefits. We do not know why she left work. Her three year old daughter joined her here in January 2005. The father of her child came over in April 2005, living in Newry. Mother and daughter moved in with him in May. At the end of June, they left the family home because of domestic violence and initially moved in with a friend and then to a Women’s Aid hostel in Portadown on July 21. The appellant made her application for income support on 22 July 2005. These circumstances may have little relevance in law but they tend to indicate two things: first, that she was going through a very difficult time when she ceased work; and second, that there is nothing at all to suggest that she came here to work with a view to claiming benefits in due course. Indeed, the Tribunal which heard her case in November 2005 stated that she was continuing to seek work although not required by the benefit rules to do so.

52.  The issue of the certificate is a purely administrative act. No discretion is exercised. No check is made to ensure that the employer is complying with employee protection legislation, paying the national minimum wage, properly deducting tax and employee national insurance contributions and paying the employer’s contributions. The Home Office is obliged to issue the certificate if the formalities have been correctly complied with and it is satisfied that the worker began working for the employer on the date specified in the application: see reg 8(5), (6). Nor does it appear that any great haste is shown in issuing the certificates which have been applied for. We do not know exactly when the appellant applied for her certificate, but it is likely to have been before 9 August 2004, within the first month of her starting work with Monaghan Mushrooms, yet the certificate was not issued until 4 November.

53.  These provisions make it clear how limited was the aim of the registration scheme. It was not specifically aimed at “avoiding benefit tourism” or “preventing undue burden on the resources of the host member state” as the Commissioner put it. That is achieved by the 12 month rule. The aim of the registration scheme was described thus by the Department for Work and Pensions in the Explanatory Memorandum to the Social Security Advisory Committee:

“The workers’ registration scheme is intended to involve a light-touch system of registration, with minimal burdens on employers. Its purpose is to allow A8 nationals access to the UK labour market in a way that enables the Government to monitor the numbers working and the sectors where they are employed. It will not be a barrier to those who want to work: on the contrary, it should encourage those A8 nationals working here illegally to regularise their status and begin contributing to the formal economy.”

Mr Lewis, who appeared for the Department, did not seek to argue that the aims were any more than to ensure “that the UK has timely and accurate information on A8 nationals accessing the labour market". The great bulk of his argument was addressed, not to the proportionality issue, but to whether the rules restricted a community law right at all. We are all agreed that they did.

54.  Nor was the aim to limit the numbers of A8 workers here, or to impose quotas in particular sectors, or to require them to have particular qualifications. All of that might have been done under the Treaty of Accession but the UK chose not to do it. The aim was simply to monitor the situation. This would enable the UK to decide whether some rather heavier touch regulation might be needed in the second year and whether to continue the scheme after the first two years were up. An incidental benefit could be to encourage workers to work for regular employers, who might pay them the minimum wage, deduct the correct tax and ensure that the correct national insurance contributions were paid. But that could only be incidental as the scheme took no steps to ensure that this took place.

55.  As monitoring is the principal aim, a registration scheme of some sort is a legitimate way to achieve it. This scheme could have been better designed and implemented for that purpose. The one month rule, for example, could mean that some A8 workers were never counted at all. The long delay between application and issue could mean that many certificates were out of date when issued because the worker had moved on. The £50 fee for each application is a positive deterrent to migrant workers who are likely to be lowly paid. But in fact the Department was not really interested in counting the number of jobs which a particular worker did rather than the number of workers who came in. The Accession Monitoring Report for May 2004 to December 2006 (published by the Home Office, Department for Work and Pensions, HM Revenue and Customs, and Communities and Local Government, 27 February 2007, p 2) explains that only the first job for which a worker is registered is counted for the purpose of that report.

56.  As monitoring is the aim, however, it is difficult to see how the future denial of benefits to a person who has worked here for at least 12 months is even a suitable means of achieving it. It is just the sort of formal requirement (such as completing the census forms) to secure which minor criminal sanctions are usually considered appropriate. Given the lack of familiarity of many migrant workers with the UK system, it would obviously be more effective to target those sanctions against employers and employment agencies than against the employees. The employers should be fully aware of what needs to be done if an accession worker is employed.

57.  It is even more difficult to see how denial of benefits can be a necessary means of achieving the monitoring aim. The consequences for the worker’s right to freedom of movement are severe. She was allowed to come and to work here for 12 months. But she has been denied what she would otherwise be entitled to, having worked for so long. And by that stage the benefits for the monitoring scheme scarcely exist, but could in any event be achieved by allowing retrospective registration. The worker would still, of course, have to prove that she had indeed qualified by having worked here for the required period. The consequences of the sanction are particularly severe in a case such as this, where the claimant has registered once. She has therefore been counted for the main purpose of the scheme, which is to count heads rather than jobs.

58.  Even if encouragement to join the formal economy were an aim, a more suitable and proportionate means of achieving it would be by criminal sanctions against employers. The scheme does provide for sanctions against employers and an extended time limit for prosecution applies. But we have no information about how vigorously this has been pursued, either in general or in this particular case. If the agency (or Smirnoff or Linwoods) had been clear that they would be prosecuted for every A8 worker they took on without a certificate, the appellant would not have been in the predicament in which she found herself on 22 July 2005. The perils for them would not be disproportionate whereas the perils for her undoubtedly were.

59.  For these reasons, I would have allowed the appeal and restored the decision of the appeal tribunal.

LORD CARSWELL

My Lords,

60.  I have had the advantage of reading in draft the opinion prepared by my noble and learned friend Lord Hope of Craighead. For the reasons which he has given I too would dismiss the appeal and affirm the decision of the Social Security Commissioner.

LORD BROWN OF EATON-UNDER-HEYWOOD

My Lords,

61.  I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Hope of Craighead. For the reasons which he gives I too would dismiss the appeal and affirm the decision of the Social Security Commissioner. In deference to the contrary conclusion arrived at by my noble and learned friend Baroness Hale of Richmond I add just the following brief paragraphs.

62.  It is impossible, I accept, not to feel a measure of sympathy for the appellant. She was after all, allowed to come and work here and no one disputes that she completed (if only just) the 12 months’ work which could so easily have qualified her for the income support and other benefits she then sought to claim. But to qualify under the Regulations she needed to have worked for authorised employers and to this end she was required to have registered her work with them. This she failed to do in respect of her final period of employment with Linwoods.

63.  Is it then to be said that this requirement to register, and more particularly the adverse consequences of non-registration, were disproportionate so as to invalidate the scheme? To my mind not.

64.  It is obvious that different, and very possibly better, schemes might have been devised which would no less effectively have ensured that the government’s main aims were met. My Lords’ judgments make this plain. But I for my part cannot think that we are justified in subjecting this particular scheme to so high a degree of scrutiny as to insist upon the selection of the best possible scheme. The UK was generous in its approach towards aspiring workers in the A8 states joining the Union in 2003. Our doors were opened wide. The government’s right to impose conditions upon such workers is not contested. Why then should not a blunt requirement to register have been imposed to give a measure of clarity and certainty to the position? Without that it would not always be easy to establish one way or the other whether the necessary 12 months’ work had indeed been uninterruptedly completed. And why should not the sanction (if that indeed is how an unregistered worker’s inability to claim benefits is to be regarded) for non-registration fall on the employee, rather merely than the employer? After all, he or she is the principal beneficiary of the open door policy and it is he or she who would similarly fail to qualify for benefits if, for whatever reason, a year’s work were not to be completed—as would have been the situation in this very case had the appellant fallen ill a mere two days earlier. And why should not pressure be put upon those in fact working or minded to work here illegally to encourage them to regularise their employment and account for their earnings?

65.  I would be troubled by an approach which examined too closely and judged too nicely the suggested advantages and disadvantages of the registration requirement in fact imposed. To my mind nothing could be more calculated to disaffect those charged with deciding how the UK should react to opportunities for derogation such as arose in the present case. If Community law is really to be regarded as requiring your Lordships to strike down an essentially generous scheme such as was decided upon by government here, the UK may be expected to harden its heart in future.

LORD NEUBERGER OF ABBOTSBURY

My Lords,

66.  I have had the advantage of reading in draft the opinions of my noble and learned friends Lord Hope of Craighead, Baroness Hale of Richmond, and Lord Brown of Eaton-under-Heywood.

67.  I agree entirely with what Lord Hope says in paras 25 to 30 of his opinion as to the legal source of the Secretary of State’s powers to make the 2004 Regulations and the fact that they must be compatible with the Community law principle of proportionality. However, on the issue of whether the 2004 Regulations actually satisfy that principle, I agree with Lady Hale that, for the reasons she gives in paras 47 to 58 of her opinion, they do not do so, and there is nothing of real substance that I can usefully add to what she says on the point.

68.  I accept, of course, that it would be quite wrong for this court to conclude that the scheme contained in the 2004 Regulations was disproportionate simply because it was not the best possible scheme. However, that is not the test on which Lady Hale’s analysis relies. As she says in para 56 of her opinion, the outright denial of future benefits to a person who has worked here for 12 months is simply not a suitable means of achieving the primary aim of the scheme, and it is even harder to justify the very serious sanction of denial of benefits as a necessary means of achieving that aim. Given those factors, coupled with the penal nature of that sanction from the point of view of those such as the appellant, and the fact that there can be, indeed is, a far fairer and more proportionate sanction in the form of criminal proceedings against employers, I consider that the scheme under consideration in this case does not satisfy the proportionality requirement.

69.  The Government could have adopted a much more restrictive scheme than it actually did, but that cannot of itself justify the conclusion that every aspect of the scheme it did adopt in the 2004 Regulations is proportionate. I am prepared to assume for present purposes that it is a relevant factor when the question of proportionality of the adopted scheme falls to be considered. However, even making that assumption does not assist the Secretary of State in the present case, in my view. In a nutshell, as I see it, what the Government has done here is to open up the labour market relatively generously with one hand, while, by imposing an unnecessary and harsh sanction for failing to comply with a purely procedural requirement, it has, in many cases, severely and arbitrarily undermined that generosity with the other hand.

 
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