Abstract
The EU regulations on the coordination of social security systems provide a high standard of protection for people moving within the EU. For a long time, third-country national workers have been excluded from this protection. This article shows that the explanation for this exclusion is to be found in the legal basis of the EU regulations. This article also demonstrates how developments in primary law in the last two decades have paved the way for the extension of the EU regulations to third-country nationals. Regulation 1231/2010 offers third-country nationals, in the field of social security, the same protection as EU citizens moving within the EU. However, this extension is subject to two conditions. For this reason, a considerable number of third-country nationals working in a Member State do not benefit from equal treatment as nationals of the host State. The article clarifies why Regulation 1231/2010 does not apply in Norway, Iceland, Liechtenstein, Switzerland and Denmark. Attention is paid to a number of challenges and open questions, such as the special position of the UK and the relationship between Regulation 1231/2010 and bilateral agreements concluded between a Member State and a third country.
Keywords
Introduction: Third-country nationals and social security coordination
It is not contested that the EU regulations on the coordination of social security systems provide a very high standard of protection in the field of social security for people moving within the EU. Until 2003, many people were excluded from this protection for the sole reason that they were not nationals of a Member State. The explanation for this exclusion is to be found in the legal basis of the EU regulations.
Under the principle of conferred powers, set out in Article 5(2) TEU, EU legislation is possible only if it is aimed at attaining one or more objectives set out in the Treaties and if the Treaties have provided the necessary powers. From its very beginning, one of the objectives of the EEC, the predecessor of the EU, was the establishment of the internal market, including free movement of workers. Free movement of workers means, in particular, that workers who are a national of a Member State have the right to go to another Member State to seek employment and to work there. And from day one, the Treaty has included a strong legal basis for EU legislation in the field of coordination of social security, in order to make free movement a reality. The main idea behind the EU social security regulations was to avoid penalising people for exercising or for having exercised their right to freedom of movement enshrined in Article 48 EEC, corresponding to the current Article 45 TFEU. Since only workers who were nationals of a Member State enjoyed such freedom of movement, 1 it seemed logical to reserve the protection offered by the regulations based on Article 51 EEC, corresponding to the current Article 48 TFEU, to workers who were nationals of Member States. 2
Citizenship of the Union, introduced by the Maastricht Treaty has extended the right to free movement to all EU citizens. 3 In line with this development, the current EU social security regulations 4 apply to all EU nationals 5 who are insured under national law. Third-country nationals who do not enjoy the right to free movement within the meaning of Article 45 TFEU (and a fortiori Article 21 TFEU) are not covered by the personal scope of the EU social security regulations, based on Article 48 TFEU. 6
However, some third-country nationals have always been covered by these regulations. In fact, Article 48 TFEU provides a legal basis for the coordination of social security not only for EU employed and self-employed migrant workers, but also for the members of their family and their survivors, even when these members of the family or survivors are third-country nationals. 7 In addition, the survivors of a worker who is not a national of a Member State are also covered if such survivors are themselves nationals of a Member State. 8 However, members of the family and survivors cannot rely on those provisions of Regulation 883/2004, which are applicable solely to employed or self-employed persons, such as the Chapter entitled Unemployment. 9
In November 1997, the Commission presented a proposal aimed at extending the scope of the whole Regulation 1408/71 10 to third-country nationals. 11 This proposal foundered on its legal basis, however. Three Member States (Denmark, the United Kingdom, and Ireland) considered that in view of the close link between (what are now) Articles 45 TFEU and 48 TFEU, the latter provision could not provide a legal basis for extending the scope of Regulation 1408/71 to include third-country nationals. The dispute concerning the legal basis caused the proposal to be put on hold.
This issue was implicitly clarified in October 2001 by the Court of Justice in its Khalil judgment. 12 In this case, the Court of Justice was asked for a ruling on the question whether Article 51 EC (now Article 48 TFEU) provided a legal basis for applying Regulation 1408/71 to stateless persons and refugees.
Mrs. Khalil and her husband were Palestinians from Lebanon. Fleeing civil war in Lebanon, they arrived in Germany in the early 1980s, where they had resided ever since. They were considered as stateless persons under German law. Their application for child benefits in Germany was refused because, by virtue of German law, only foreigners in possession of a residence entitlement or a residence permit were entitled to such benefits. Mrs. Khalil and her husband claimed that they were, as stateless persons, covered by Regulation 1408/71 which would mean that they should be treated in the same way as German nationals regarding the allocation of child benefits. Accordingly, those benefits should not have been made conditional upon the possession of a specific residence document. Their appeal against the refusal of the German institution finally came before the Bundessozialgericht, which decided to refer the following two questions to the Court of Justice: ‘Does Article 51 EC (corresponding to Article 48 TFEU) provide a sufficient legal basis to include stateless persons and refugees in the personal scope of Regulation 1408/71? If the answer to the first question were in the affirmative, would Regulation 1408/71 also apply to stateless workers and to members of their families who have travelled directly to a Member State from a third country and have not moved within the Community?’
The Court answered the first question in the affirmative, but it was notably the grounds of the judgment that attracted attention. The Court dwelt on the historical context of the inclusion of stateless persons and refugees in the personal scope of Regulation 1408/71. In fact, before founding the Community, Member States had entered into international obligations concerning stateless persons and refugees with one another and with third countries, not only under the Treaties of Geneva in 1951 and New York in 1954 but also under the European Interim Agreements and the European Convention on social security for migrant workers of 9 December 1957, based on Article 69(4) of the Treaty establishing the European Coal and Steel Community. In view of this historical context:
‘the Council cannot be criticized for having…also included stateless persons and refugee’s resident on the territory of the Member States in order to take into account the above-mentioned international obligations.’
Otherwise, in the opinion of the Court, this would have meant that the Member States ‘in order to ensure compliance with their international obligations, had to establish a second coordination regime designed solely for that very restricted category of persons.’ It could be deduced from these grounds that Article 51 EC (now Article 48 TFEU) did not provide a legal basis for extending the regulation to the very large category of third-country nationals residing legally in the territory of the Member States.
As to the second question, the Court recalled that the Treaty rules governing freedom of movement of persons cannot be applied to activities or situations ‘which are confined in all relevant respects within a single Member state.’ In other words, Mrs. Khalil, who was, as a stateless person, covered by the personal scope of Regulation 1408/71, could not invoke this regulation since there was no cross-border element between at least two Member States.
New legal context
The Amsterdam Treaty
The Amsterdam Treaty inserted Article 63 into the EC Treaty, thereby providing specific Community competence for social security coordination on behalf of third-country nationals ‘residing legally in a Member State’. Under Article 63(4) EC, the Council was the legislature, the Parliament having only a consultative role. Within the Council, unanimity was required.
However, the Amsterdam Treaty contained two Protocols that were relevant to Title IV EC, which included Article 63. Pursuant to the Protocol on the position of Denmark, Title IV did not apply to Denmark. Nor did this Title apply to the UK and Ireland, unless these Member States decided otherwise in accordance with the procedures laid down in the Protocol on the position of the UK and Ireland (i.e., ‘opt in’ or ‘opt out’).
In February 2002, the Commission submitted a new proposal 13 to extend Regulation 1408/71 to cover third-country nationals, this time based on Article 63(4) TFEU. The 1997 proposal was withdrawn at the same time. In May 2002, both the UK and Ireland announced that they had decided to opt in. However, two Member States (Germany and Austria) indicated that they were not able to give their agreement to the Commission proposal unless special provisions were made in an annex, allowing these two Member States to grant family benefits to third-country nationals who were in possession of certain types of residence permits only. That was, at that time, the price to pay for attaining the unanimity required by Article 63(4) EC for the Commission proposal in Council.
On 14 May 2003, Council Regulation (EC) 859/2003 14 was adopted extending the scope of Regulation 1408/71 to third-country nationals. This regulation was the first piece of Community legislation ever adopted under the new Article 63(4) EC. Regulation 859/2003 entered into force on 1 June 2003.
On 1 May 2010, Regulations 1408/71 and 574/72 were replaced by the current Regulations 883/2004 15 and 987/2009. 16 On a considerable number of points, the rights of citizens have been improved by Regulation 883/2004 as compared with Regulation 1408/71. The latter regulation covered employed and self-employed persons and students, as well as members of their families and survivors. Regulation 883/2004 applies to all EU nationals who are insured under national law, whether they are employed, self-employed, students, civil servants or indeed, non-active. The principle of equal treatment has been strengthened, too, by the insertion of the important provision stipulating cross-border recognition of facts or events. 17
Therefore, a new legal instrument was needed to extend the scope of the new EU social security regulations to include third-country nationals. On 23 July 2007, the Commission submitted a proposal to this end. 18 This proposal did not contain the special provisions which were foreseen by Regulation 859/2003 for Germany and Austria referred to above, in view of recent developments in the case law of the European Court of Human Rights. 19 During the negotiations on the new Commission proposal, Germany and Austria made it clear that they would only agree if the same special provisions, which had been contained in Regulation 859/2003, were also included in the new regulation extending the scope of Regulation 883/2004 to third-country nationals. Some other delegations reacted by saying that, if such special provisions were included for these two Member States, they would insist on having similar special provisions for them as well. Since Article 63(4) required unanimity in Council, no progress was made until the very end of 2009.
The Lisbon Treaty
The specific legal competence to legislate on behalf of third-country nationals, which was until 1 December 2009 foreseen by the old Article 63(4) EC, is now laid down in Article 79(2) TFEU. More important than the renumbering of the Article are the amendments to the rules related to the decision-making process. Under the old Treaty, the legislature was the Council, with Parliament only having a consultative voice. The Council had to act unanimously. The entry into force of the Lisbon Treaty has brought two major changes. The Council and the Parliament are now co-legislators. And, the Council acts in accordance with the ordinary legislative procedure, which means qualified majority.
Like the Amsterdam Treaty, the Lisbon Treaty contains two Protocols that are relevant to the Treaty provisions in respect of the area of freedom, security and justice, which includes Article 79 TFEU. In accordance with Protocol 22 on the Position of Denmark, Article 79(2) TFEU does not apply to Denmark. Pursuant to Protocol 21, Article 79 TFEU does not apply to UK and Ireland, unless these two Member States decide otherwise in accordance with the procedures laid down in this Protocol (opt in or opt out).
After the entry into force of the Lisbon Treaty on 1 December 2009, negotiations went smoothly in the Parliament and Council. On 24 November 2010, Regulation 1231/2010 20 was adopted. This regulation extends the scope of Regulation 883/2004 to third-country nationals without the special provisions as contained in the old Regulation 859/2003. It entered into force on 1 January 2011.
Conditions and limitations of Regulation 1231/2010
Regulation 1231/2010 offers third-country nationals, in the field of social security, the same protection as EU citizens moving within the Union. There are, however, two conditions.
First condition: Legal residence
First, the person concerned must be ‘legally resident in the territory of a Member State’. 21 At this moment, it is not clear what this requirement means. At first sight, the condition of being ‘legally resident’ in a Member State is the logical consequence of Article 79(2) TFEU constituting the legal basis of the regulation. 22 However, a comparison of four linguistic versions of both Article 79(2) TFEU and Article 1 Regulation 1231/2010 leads to some confusion. In fact, such comparison shows substantial differences on this specific requirement. The German, 23 Dutch 24 and French 25 versions of Article 79(2) TFEU seem to refer to a notion of ‘stay’ rather than ‘reside’. In addition, the French 26 and German 27 versions of Article 1 Regulation 1231/2010 are not coherent with the terminology used in Article 79(2) constituting the legal basis of Regulation 1231/2010.
It is likely that the question of what is meant by the notion ‘legally resident in a Member State’ within the meaning of Article 1 Regulation 1231/2010 will soon be clarified by the Court of Justice in the pending Balandin case. 28 This case concerns Ukraine and Russian nationals who work legally in the Netherlands for a company established in the Netherlands and who work for that company temporarily in other Member States. It is not contested that these third-country nationals do not reside in the Netherlands within the meaning of Article 1(j) of Regulation 883/2004. However, the referring Dutch tribunal would like to know whether these persons could nevertheless be considered as being ‘legally resident’ in the Netherlands within the meaning of Article 1 of Regulation 1231/2010 and therefore, whether they may invoke Regulation 883/2004.
Second condition: Cross-border element between Member States
The second condition is that the person concerned is in a situation ‘which is not confined in all respects within a single Member State’. In other words, there must be a cross-border element between at least two Member States. For instance, a Lebanese worker, working and residing with his children in Germany cannot invoke Regulation 883/2004 in order to claim the same amount of family benefits to which German nationals are entitled. However, if his children reside in another Member State, he can indeed invoke Regulation 883/2004 because there is a cross-border element between two Member States.
The condition that the person concerned is in a situation ‘which is not confined in all respects within a single Member State’ should probably be understood as meant to refer to a situation ‘which is not confined in all relevant respects within a single Member State.’ 29 A Canadian national, for instance, works and resides legally in Germany. While on holidays in France he requests benefits in kind there thanks to the European Health Insurance Card. It is doubtful whether this is a sufficient element to trigger the application of Regulation 883/2004 when claiming German family benefits for his children residing with him in Germany.
The second condition is criticised by Pennings, 30 who states the following:
‘This limitation can also be found in the Khalil judgment, and earlier in the Petit judgment. Still, this limitation could be criticized as, different from these two cases, the new regulation 31 is not based on Article 48 TFEU, but on Article 63(4) EC. This separate legal basis is not related to the right to free movement, which is an EU right, so why require that at least the facts of two Member States have to be involved?’
Pennings seems to ignore the content of Article 63(4) EC constituting the legal basis for Regulation 859/2003, the predecessor of Regulation 1231/2010. In fact, Article 63(4) EC created, for the first time, European competence to legislate on ‘measures defining the rights and conditions under which nationals of third countries who are legally resident in a Member State may reside in other Member States’. Article 63(4) EC itself presupposed the very existence of a cross-border element between at least two Member States. Since the entry into force of the Lisbon Treaty on 1 December 2009, the provisions previously laid down in Article 63(3) and (4) EC are now contained in Article 79(2) TFEU providing for competence to legislate on ‘the definition of the rights of third-country nationals residing legally in a Member State, including the conditions governing freedom of movement and of residence in other Member States’. As we have seen above, in the Khalil judgment the Court of Justice ruled that stateless persons and refugees - who did not have a right to free movement guaranteed by the (predecessor of) Article 45 TFEU - residing in the territory of one of the Member States, could only invoke the EU social security regulations if they were not ‘in a situation which is confined in all respects within that one Member State’. The condition that the third-country national concerned should be in a ‘situation which is not confined in all respects within a single Member State’, laid down in Article 1 Regulation 1231/2010, is almost identical to the condition imposed by the Court of Justice in the Khalil judgment on stateless persons and refugees for being able to rely on the EU social security regulations.
The condition that there should be a cross-border element between at least two Member States means that Regulation 1231/2010 does not always guarantee that third-country nationals legally residing in a Member State are treated equally as Union nationals in that Member State. Several categories of third-country nationals do have such an EU level guarantee, with some exceptions, although there is no cross-border element between Member States, either based on a series of legal instruments based on (the predecessor of) Article 79 TFEU, 32 or based on the direct effect of provisions laid down in Association agreements concluded with third countries 33 or in Decision 3/80 of the EEC/Turkey Association Council. 34 In addition, many Decisions of several Association Councils are in the pipeline, guaranteeing, inter alia, equal treatment in the field of social security for workers who are nationals of the third countries concerned and who are legally employed in a Member State. 35 These instruments and Association agreements are examined by other authors in this edition.
On the other hand, once the third-country national has fulfilled the two conditions of Regulation 1231/2010, he/she (or his/her survivors) can invoke the equal treatment provision laid down in Article 4 of Regulation 883/2004 concerning the conditions for receiving old-age, survivors’ or invalidity pensions acquired in one or more Member States, even when the beneficiary resides in a third country. 36 The EU social security regulations do not contain any obligation for Member States to export pensions to a third country. Therefore, the question whether pensions are exported to a third country is to be decided exclusively by Member States. But if they do export pensions to a third country for their own nationals, then they must also do it for third-country nationals having previously fulfilled the two conditions laid down in Regulation 1231/2010, by virtue of Article 4 Regulation 883/2004. Likewise, the question whether pensions acquired in a Member State are indexed for beneficiaries residing in a third country is to be decided exclusively by Member States. But if they do index pensions for their own nationals, they must also do it for third-country nationals having previously fulfilled the two conditions of Regulation 1231/2010.
Regulation 1231/2010 does not apply in Norway, Iceland, Liechtenstein, Switzerland and Denmark
Regulations 883/2004 and 987/2009 also apply in Norway, Iceland Liechtenstein thanks to the agreement creating the European Economic Area (EEA). 37 This agreement is a special one; it comes close to membership as the four fundamental freedoms are guaranteed without any notable exceptions. One of the EFTA countries, Switzerland, rejected the agreement following a referendum. The EU and Switzerland have then concluded an agreement of free movement of persons including full applicability of the EU social security regulations. 38
However, neither the EEA agreement nor the bilateral EU/Switzerland agreement includes provisions in the area of freedom, security and justice, such as Article 79 TFEU. It means that Regulation 1231/2010 does not apply in Norway, Iceland, Liechtenstein and Switzerland. The consequences are very well illustrated by the Xhymshiti judgment. 39
An Albanian married couple resided legally in Germany with their two children who had German nationality. The parents themselves did not have German nationality. The couple had a permanent residence permit. Mrs. Xhymshiti did not work. Mr. Xhymshiti worked in Switzerland. He received Swiss family benefits for his children. In 2007 Mrs. Xhymshiti submitted a claim for a ‘top-up’ family benefit with the German social security institution, corresponding to the difference between German family benefits and the Swiss family benefits, which were lower. If the Xhymshiti couple could rely on Regulation 1408/71 they would have been entitled to that ‘top-up’ benefit. But the claim was rejected. The German authorities argued that the condition required by Regulation 859/2003 that the third-country national should be in a ‘situation which is not confined in all respects within a single Member State’, was not fulfilled.
The Court of Justice agreed. Since Regulation 859/2003 does not apply in Switzerland, the mere fact that Mr. Xhymshiti worked in Switzerland was not a factor which extended his situation beyond the limits of one single Member State. Therefore, since the second condition laid down in Regulation 859/2003 was not fulfilled, that regulation did not apply to Mr. Xhymshiti. The Court of Justice further ruled that the refusal by the German authorities to grant family benefits to the wife of Mr. Xhymshiti was not incompatible with the EU social security regulations, even though her children were European citizens. Since one of the conditions stipulated by Regulation 859/2003 were not fulfilled, the grant of family benefits was governed exclusively by the legislation of the Member State of residence, Germany.
What would the situation be if Mr. Xhymshiti had worked not in Switzerland but in Denmark? Would the Xhymshiti couple then be able to rely on the EU social security regulations? To date, the Court of Justice has not been asked to give a ruling on this specific question concerning Denmark. But I think that the outcome would not be fundamentally different from the Xhymshiti judgment. True, contrary to Switzerland, Denmark is an EU Member State. However, Regulation 1231/2010 is based on Article 79(2) TFEU, which forms part of Title V of Part Three TFEU. The first part of Article 2 of Protocol 22 on the position of Denmark, attached to the Treaties stipulates:
‘None of the provisions of Title V of Part Three of the Treaty on the Functioning of the European Union, no measure adopted pursuant to that Title, no provision of any international agreement concluded by the Union pursuant to that Title, and no decision of the Court of Justice of the European Union interpreting any such provision or measure or any measure amended or amendable pursuant to that Title shall be binding upon or applicable in Denmark’.
In other words, Denmark does not count as a Member State for the purposes of any legislative instrument taken by the Union in the area of freedom, security and justice. Pennings 40 is of the opinion that there is no good reason not to take the period in Denmark into account, because it would not lead to any extra costs for Denmark. I am not convinced by this argument. In fact, the question whether there would be any extra costs for Switzerland was completely irrelevant in the Court’s ruling in Xhymshiti to allow the German authorities to refuse to grant German family benefits. The only and decisive element was the question whether the two conditions stipulated by Regulation 859/2003 were fulfilled.
Challenges and open questions
Special position UK
By virtue of Protocol 21 on the Position of the United Kingdom and Ireland in respect of the Area of Freedom, Security and Justice, Title V of Part Three TFEU does not apply to the UK and Ireland, unless these Member States decide otherwise in accordance with the procedures laid down in Protocol 21 (opt in or opt out). As stated above, 41 both the UK and Ireland decided to opt in as to Regulation 859/2003 extending the scope of the old Regulation 1408/71 to third-country nationals. However, regarding Regulation 1231/2010 extending the scope of Regulation 883/2004 to third-country nationals, only Ireland decided to opt in, not the UK. The Union legislature has adopted transitional measures in order to avoid the situation where a category of third-country nationals who were previously protected by the EU social security regulations would suddenly be without protection when moving between the UK and another Member State. By virtue of Article 90(1)(a) of Regulation 883/2004, the old Regulation 1408/71 shall remain in force and shall continue to have legal effect for the purposes of Regulation 859/2003, for as long as that regulation has not been repealed or modified. Article 2 Regulation 1231/2010 has repealed Regulation 859/2003 ‘between the Member States that are bound by’ Regulation 1231/2010. The result of all this is that the old Regulation 1408/71 continues to have legal effect in all cases where a third-country national moves between the UK and another Member State except Denmark, leading to rather complicated situations for all parties involved. Depending on the outcome of the Brexit negotiations, 42 this situation might continue to last for a long time.
As of the date of Brexit, Regulation 883/2004 will cease to apply as such. It seems to be the intention of both sides, the UK and the EU27, to reach an agreement on the maintenance of acquired rights and of the maintenance of the rights in the process of being acquired by UK and EU27 nationals who are or who have been in a cross-border situation between the UK and EU27 on that date. Such an agreement would be part of the withdrawal agreement referred to in Article 50 TEU. If, indeed, both sides enter into such an agreement guaranteeing the maintenance of acquired rights and the maintenance of rights in the process of being acquired by UK and EU27 nationals, the provisions of Regulation 883/2004 will continue to apply for a long time in the relations between the UK and EU27.
Verschueren 43 gives the example of a UK or EU27 national who on the date of Brexit is 32 years old, who has at that moment already been working in the UK for 10 years, and who moves after Brexit to a EU27 Member State. This person will then be able to invoke, 35 years after Brexit (in 2054!), Regulation 883/2004 for claiming a UK pension as well as for the calculation and the export of that pension. Obviously, if indeed both parties enter into such an agreement, it must be decided whether a reference to Regulation 883/2004 is a dynamic or a static one. In case of a static reference, the Joint Committee, as set up in the framework of the EEA agreement and the EU/Switzerland agreement, could serve as a model enabling the integration of future modifications of the current EU social security regulations for the relations between UK and EU27.
However, as Verschueren has pointed out, 44 the documents produced until very recently remained silent on the rights of third-country nationals who find themselves in such a cross-border situation and who can now rely on the protection offered by the old Regulation 1408/71. If the agreement referred to above does not include provisions guaranteeing the maintenance of acquired rights and maintenance of rights in the process of being acquired by third-country nationals who are or have been in a cross-border situation between the UK and EU27 on Brexit day, the protection currently offered by the old Regulation 1408/71 would suddenly disappear. However, if the agreement does include such provisions on behalf of third-country nationals, then the current (complicated) situation where for all cases involving third-country nationals moving between the UK and EU27 (except Denmark) not the current Regulation 883/2004, but the old Regulation 1408/71 must be applied, will continue to exist for a long time.
If there were to be no agreement on the maintenance of acquired rights and of the maintenance of the rights in the process of being acquired by UK and EU27 nationals who find themselves or who have been in a cross-border situation between the UK and EU27 on Brexit day, then the rights of EU27 nationals will depend on UK legislation or on existing social security agreements concluded between the UK and the 27 Member States. Compared with EU27 nationals, UK nationals will be rather well protected by EU law. By virtue of the Belbouab judgment 45 they will be able to rely on Regulation 883/2004 for claiming benefits for periods completed in one of the 27 Member States during which the UK was still a Member State of the EU. This is true even when they reside in the UK. 46
For situations occurring after Brexit, an agreement - or agreements - need(s) to be concluded between the UK and the 27 EU Member States on the social security coordination between the systems involved. After Brexit, UK nationals become third-country nationals for the EU and the UK will be a third country. Whatever the outcome of the negotiations, UK nationals will be able to rely on Regulation 1231/2010. If the two conditions laid down in that regulation are fulfilled, they will be fully protected by Regulation 883/2004 when moving between two or more Member States. In addition, they can rely on a series of Directives guaranteeing them equal treatment in the field of social security. 47
Relationship between Regulation 1231/2010 and bilateral agreements concluded between a Member State and a third country
There is no doubt that when a third-country national works in two or more Member States for an employer established outside the EU, the EU rules determining the applicable legislation apply. Until now, 48 Article 14(11) of Regulation 987/2009 is the only provision that explicitly covers a situation exceeding the geographical framework of the EU.
An interesting question is what happens when the rules determining the applicable legislation laid down in the EU regulations diverge from those laid down in a social security agreement concluded between a Member State and a third country. The European Commission made its position very clear in its 2012 Communication on the external dimension of EU social security coordination: 49 the existence of Regulation 1231/2010 gives the Union exclusive competence as regards the social security coordination rights of nationals from third countries who are in a cross-border situation between Member States. This would mean that in cases of conflict the EU social security regulations take precedence over national rules contained in bilateral agreements with third countries. Where, for example, a national from a third country is sent to a Member State under the terms of a bilateral agreement with a third country and then moves to work in another Member State, Regulation 1231/2010 will apply to this second move.
However, this position seems to be contradicted by the EU legislature in Directive 2014/66/EU on intra-corporate transfers. 50 In fact, Article 18(2)(c) of this Directive stipulates:
‘In the event of intra-EU mobility, and without prejudice to bilateral agreements ensuring that the intra-corporate transferee is covered by the national law of the country of origin, Regulation (EU) No 1231/2010 shall apply accordingly’.
It will probably not take a long time before the Court of Justice is asked to clarify this question.
Conclusions
For a long time, workers who are third-country nationals have been excluded from the high-level protection offered by the EU social security regulations. The extension of the scope of these regulations to third-country national workers has only become possible after the insertion of Article 63(4) EC corresponding to the current Article 79(2) TFEU.
Regulation 1231/2010 constitutes an important contribution to the realisation of one of the pillars of European immigration policy: fair treatment of third-country nationals legally residing in a Member State. In fact, Regulation 1231/2010 offers third-country nationals, in the field of social security, the same protection as EU citizens when moving within the EU. It is likely that the question of what is meant by ‘legally residing within a Member State’ within the meaning of Article 79(2) TFEU and Article 1 Regulation 1231/2010 is soon clarified by the Court of Justice in pending Balandin case.
However, as the Court of Justice has ruled in its Khalil judgment concerning stateless persons and refugees, the EU social security regulations do not apply to situations which are confined in all respects within a single Member State. In order to rely on the EU social security regulations third-country national workers must demonstrate the presence of a cross-border element between two or more Member States. If they cannot, the EU social security regulations do not apply. In such cases, some protection may be offered by other legal instruments such as directives based on the Treaty provisions in the area of freedom, security and justice or existing or future Decisions adopted by Association Councils set up in the framework of Association agreements the EU has concluded with a number of third countries.
Regulation 1231/2010 extending the scope of Regulations 883/2004 and 987/2009 to third-country nationals, only concerns intra-EU mobility. However, once the third-country national has fulfilled the two conditions of Regulation 1231/2010, the reach of this regulation goes beyond the EU. It also guarantees equal treatment with nationals of Member States concerning conditions for receiving old-age, survivors’ and invalidity pensions acquired in the Member State concerned, even when he/she resides in a third country.
Because of its legal basis, Regulation 1231/2010 does not apply in Norway, Liechtenstein, Iceland and Switzerland. The special position of Denmark, Ireland and the UK is also linked to Article 79(2) being the legal basis of Regulation 1231/2010. By virtue of Protocol 22, Regulation 1231/2010 does not apply in Denmark. Since Ireland has opted in in accordance with Protocol 21, Regulation 1231/2010 does apply in Ireland. However, the UK which had previously opted in regarding Regulation 859/2003 extending the scope of the old Regulation 1408/71 to third-country nationals, has not opted in concerning Regulation 1231/2010. The result is that the social security institutions of the UK and of the other Member States involved have to apply the old Regulation 1408/71 in all cases where a third-country national moves between the UK and another Member State, except Denmark. Depending on the Brexit negotiations, this situation might continue for a long time. Paradoxically, regardless of the outcome of the Brexit negotiations, UK nationals will continue to be able to rely on Regulation 883/2004 when they move between two or more Member States after the Brexit, provided they ‘reside legally’ in one of the Member States. In addition, they can rely on a series of Directives guaranteeing them equal treatment in the field of social security.
Footnotes
Declaration of conflicting interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.