The UK has lobbed a farewell grenade at the EU: the ramifications of CG v Department for Communities

We are days away from the expedited CJEU hearing in Department for Communities in Northern Ireland. This case results from a surprise, last-minute reference from the social security tribunal in Northern Ireland, and pips the UK Supreme Court to the post on the same issue in Fratila – whether EU nationals (and their family members) with ‘presettled’ status in the UK should be entitled to equal access to benefits.

The CJEU case isn’t just important for the progress of Fratila, however. In catapulting the issue before the EU court, the Northern Ireland tribunal has forced the CJEU to address some fundamental questions of EU law that have been looming for years. The ramifications will be felt throughout the EU, where EU citizens will live with the consequences long after the UK’s presettled status ceases to exist.

Not a passing, parochial issue

It would be a grave mistake to treat the case as just the product of some esoteric features of the UK’s specific and temporary residence scheme for EU nationals in the wake of Brexit. The questions referred go to the core tension at the heart of EU citizenship case law – whether Article 18 TFEU means anything anymore, and whether there really is a ‘general principle of equal treatment’ in EU law. 

Is there a default of equal treatment, or of discrimination?

Primary EU law provides for a default of equal treatment on the grounds of nationality (Article 18 TFEU). This may be subject to limitations and conditions laid down in secondary law. Hence the Citizens’ Residence Directive provides for limitations and conditions for establishing an EU-law based lawful residence/a right to reside. If someone has a right to reside, then equal treatment rights follow – with some narrow, specific exceptions. Following the EU case of Trojani, this includes those with a domestic right to reside.

This mechanism provides a useful get-around – allowing Member States to restrict access to welfare, while ostensibly upholding the principle of equal treatment. EU law does not attach general nationality-based conditions to accessing benefits. It attaches conditions to establishing a right to reside.

Credit - Court of Justice of the European Union

The rationale is quite similar to that adopted in a case about discrimination in employment. EU law requires EU nationals to have equal access to employment, but creates a permissible exception for ‘employment in the public services’. In the Sotgiu case, a German court asked whether this meant that it was lawful to pay EU nationals working in public service positions less than own-state nationals. The CJEU was emphatic in rejecting the idea of a general licence to discriminate. The aim of the derogation allowed Member States to restrict access to public services; not to admit them and then discriminate against them once they were employed.

Here, we have pre-settled status having been awarded, creating a right to reside under domestic law. In other words, the UK has decided not to use the permitted exclusions in secondary EU law. Indeed, EU law cannot prohibit (ex)Member States from adopting more generous right to reside rules (even if “unintentionally” offered). But once that has been granted, and lawful residence is unequivocally established, then equal treatment duties must kick in.

The Secretary of State’s argument that the Trojani has been effectively overruled by cases like Dano is not supported by the cases in question. Those ‘restrictive’ EU citizenship cases all turned on whether the claimants had a right to reside at all. They simply do not address a Trojani like situation, where a claimant has a right to reside. The suggestion that the government never meant to create equal treatment rights that did not exist previously is – with respect – neither here nor there. They did do so, as is evidenced by the introduction legislation removing those rights.

The integrity and coherence of EU law are at stake. The arguments of the UK government in Fratila – that they could award a right to reside and then discriminate against holders of that right – would undermine the CJEU’s efforts to preserve some content for Article 18 TFEU and the principle of non-discrimination on the ground of nationality. Following the UK’s logic, it would be in the interests of Member States who desired to discriminate against EU migrants, to set up, and encourage EU migrants to apply for, an easily achieved right to reside, (e.g. on the basis of self-sufficiency but not imposing a comprehensive sickness insurance requirement), and call it a ‘domestic’ right. If they then made it harder to qualify for an EU right (e.g. by introducing minimum earnings thresholds to be classified as a worker), they could discriminate with impunity, perpetually excluding holders of the ‘domestic’ right to reside from public services.  

The indirect discrimination fig-leaf falls away

By hitherto requiring EU nationals to hold a ‘right to reside’ before allowing equal access to welfare benefits, the UK and the EU have been able to preserve their modesty by finding that exclusions from benefits are ‘indirect’ discrimination – ie that they are not direct discrimination on the ground of nationality, which would be pernicious and BAD, and against the fundamental principles of the EU, but that they are indirectly discriminatory - a difference in treatment based on having/not having a right to reside, which just happens to impact more upon EU nationals.

The award of pre-settled status causes that indirect discrimination figleaf to fall away completely. Here, we have EU nationals who do have a (domestic) right to reside, and they are treated differently to UK nationals who also have a (domestic) right to reside. As the Court of Appeal of England and Wales recognised ruling against the UK government in Fratila, the distinction is nationality.

Having and eating its cake?

The UK-EU Withdrawal Agreement allows the UK to impose conditions similar to those in the citizens’ residence directive, on EU nationals’ rights to reside. The UK chose not to do this, probably as a matter of administrative urgency – the size of the task of establishing a new status for 5 million + residents in a short period of time being quite overwhelming enough, without having to scrutinise the minutiae of complicated work, residence, health and relationship histories. But the UK wants to be treated as though it did do that.

Moreover, the UK could have created a declaratory scheme, whereby meeting the conditions of the residence right was important, not having the status – which is essentially how EU nationals’ residence rights operated pre-Brexit. Under such a scheme simply having a certificate would not create equal treatment rights (and also not having the certificate after a deadline would not deprive someone of their underlying rights). But the UK chose not to do this – opting for a constitutive scheme in which the award of status confers residence rights. This means on the one hand, that we are facing a cliff edge deadline, whereby people who have not secured status by the 1 July 2021 face a total and immediate loss of lawful residence rights (and if they do not have ‘good reason’ for missing the deadline, that loss is irreversible). The flipside of this scheme, is that for those who have it, the status confers residence rights – it is not a merely declaratory piece of (virtual) paper. But the UK wants to be treated as though it did not do this.     

A risk of time-travelling benefit tourists?

Even leaving aside the wealth of evidence to suggest that benefit tourism is something of a mythical phenomenon, it is not plausible to suggest that extending equal treatment to people with pre-settled status opens the UK up to benefit tourism. No EU national can now move to the UK in order to establish pre-settled status – only those already resident on the 31 December 2020 are eligible. The judgment in this case could only affect the decisions of those with cleverly adapted DeLoreans.  

Nor is it realistic to suggest that the prospect of being required to not discriminate would unbalance the public finances of the UK. We are dealing with a minority of a minority of a minority; EU nationals with pre-settled status being a minority of the EU national population in the UK; and only those who have a (likely temporary) need, and who meet the conditions, for, means-tested benefits. Moreover, the numbers affected will dwindle and disappear over time, as they increasingly become eligible for settled status.

But… why should people with a right to reside be entitled to equal treatment?

The fundamental principle is equal treatment on the ground of nationality. The job of Member States is not to look for a reason to stick to that principle, but rather the onus is on them to find lawful reasons to depart from it. EU law permits certain limited departures, which, the CJEU has consistently held, must be narrowly construed. The Secretary of State in essence, wishes to create her own derogation. But the CJEU has cautioned against allowing Member States to ‘eliminate at will the protection afforded by the Treaty’.

To return to the starting point, the default is not discrimination. That the UK government wishes to discriminate is not enough to bring the contested legislation within the exceptions permitted by EU law. The CJEU should be wary of any major alterations to the Trojani ratio, or ad hoc hollowing out of Article 18 TFEU and the fundamental principle of non-discrimination; it is a legal grenade lobbed by a departed State. There should be limits to the  trail of legal destruction blazed in Brexit’s wake.