New EU social security co-ordination rules

Issue 217 (August 2010)

Pamela Fitzpatrick considers the significance of changes to the European Union (EU) social security co-ordination rules.


On 1 May 2010, EC Regulations 883/04 and 987/09 came into force, providing new rules on the co-ordination of social security schemes throughout the EU. The new regulations do not create any new entitlements to social security. Their intention is to:

  • consolidate the existing legislation;
  • reflect caselaw;
  • re-enforce the general principles of the co-ordination rules; and
  • make EU citizens’ rights more effective, in particular by requiring member states to provide an efficient and timely service and to provide more information to people covered by the rules.

The co-ordination rules are notoriously complex and the complexity is likely to increase with the coming into force of the new regulations because, although they are intended to eventually replace EC Regulations 1408/71 and 574/02, there will be a 10-year transitional period where both sets of co-ordination rules will be in force. This is intended to protect a person who is already in receipt of a benefit under Regulation 1408/71 and who might otherwise have lost benefit under the new Regulations. Claimants have the right to request to be transferred and considered under the new rules if this would benefit them. The transitional period is also necessary because the EU has not yet concluded agreements with non-EU states on the application of the new rules. It should also be noted that the UK Government has secured an ‘opt out’ to ensure that third-country nationals1 living in the UK will only be able to rely on the old co-ordination rules for the time being.

Who is covered by the new Regulations?

From 1 May 2010 the following people fall within the personal scope2 of Regulation 883/04 (the new co-ordination rules):

  • anyone who is or has been subject to the legislation of one or more member states; and
  • is a national of one of the EU member states (this does not include Norway, Iceland, Liechtenstein or Switzerland); or
  • is a refugee; or
  • is a stateless person; or
  • is a family member or a survivor of one of the above.

Who remains covered by the old co-ordination Regulations?

The following people remain within the scope of Regulation 1408/71:

  • anyone who is an employed or self employed person; and
  • is an EU national who has moved to Norway, Iceland, Liechtenstein or Switzerland; or
  • is an EU national who has elected to remain covered by Regulation 1408/71 (this applies as long as her/his circumstances do not change);3 or
  • is a national of Norway, Iceland, Liechtenstein and Switzerland4 (if s/he moves to an EU state, s/he will also be covered by the old rather than the new rules); or
  • is a ‘third-country national’ who has longterm residence5 in the UK.

General principles of the new rules Many of the basic principles of EU co-ordination will remain the same, including the following:

  • it is only generally possible to claim benefit from one member state (the single state principle);
  • this is normally the state in which the claimant last worked;
  • there must be equality of treatment with nationals of the member state in which the person is residing;
  • periods of employment, residence and national insurance (NI) contributions paid in any member state can be aggregated to qualify for benefit in another state;
  • benefits can be taken abroad to other member states (the exportability principle).

The major changes

More benefits covered

Benefits such as paternity and pre-retirement benefits are now covered.6

Clarity on applicable legislation

The applicable legislation refers to the state responsible for paying benefits. The general rule that this is the state in which a person last worked remains, but if this does not apply it is the state in which the person is resident. Residence is defined in the new co-ordination rules and residence rights are not restricted to people who are economically active.

Wider personal scope

The new rules include people who have never worked. Under the old co-ordination rules a person had to be an employed or selfemployed person to be covered. This meant s/he must have worked and paid NI contributions or be a family member of such a person. Consequently certain people who had been unable to work (eg, due to long-term illness) were not covered and would be unable, for example, to export benefits such as disability living allowance (DLA). The new co-ordination rules cover all citizens who are subject to the social security legislation of a member state. As well as EU workers and their families, this will include people who are currently out of work, not yet in work, no longer working, or who have never worked.

Equal treatment of effects of benefit entitlement

Under the new rules where receipt of a social security benefit or other income has a certain legal effect, receipt of equivalent benefits from another member state must be accorded the same effects. So, for example, if receipt of income-based jobseeker’s allowance (JSA) means that a person will be ‘passported’ on to other benefits, receipt of an equivalent benefit from another EU state must have the same effect. The same principle applies to other specified facts and events which must be taken into account as if the event or fact occurred in the place the person is now living.

Greater exportability

Family benefits such as child benefit and child tax credit (CTC) are now exportable to other EU states. Under the old rules family benefits could be paid for family members living in other European Economic Area (EEA) states but were generally not exportable.

Better information

Information must be provided actively and delivered rapidly by the social security institutions in member states. Services provided must be ‘user-friendly’. The European Commission has a new website with access to a new online directory of social security institutions in Europe.

Prompt decision making

The intention is for claimants to have faster access to benefits. The new rules therefore state that claimants should receive a timely response from benefit authorities. The response should be provided within any national time limits.7 If there are no time limits, it is desirable for member states to consider adopting them.

Time limits for claims and providing information

The complexity of the co-ordination rules means that member states should make a particular effort to support insured persons who have not complied with time limits for claims or providing information.8

Temporary affiliation

A very significant change is that of ‘temporary affiliation’. Whenever the institutions of different member states are unable to agree on a given individual’s status with a view to identifying the social security legislation applicable to him/her, provision is made for temporary affiliation to a social security scheme, to allow payment of benefits pending investigations into which is the competent state.9

Interim payments

Member states must make interim payments if there is disagreement about which state a person is subject to the legislation of; this should avoid the problem of people covered by the coordination rules being left without any benefit.10

Definition of ‘habitual residence’

The new rules provide a definition of habitual residence.11This is possibly one of the most significant aspects of the new rules because it has implications for people excluded from benefit under the UK right to reside test.

Member states are required to co-operate in determining the state of habitual residence and, if a dispute arises, are required to consider the criteria set out in the new co-ordination rules to establish the person’s centre of interest.12The criteria include:

a) the duration and continuity of presence in the territory of the member state concerned;

b) the person’s circumstances, including:

(i) the nature and specific characteristics of any activity pursued, in particular the place where such activity is habitually pursued, the stability of the activity and the duration of any work contract;

(ii) her/his family status and family ties;

(iii) the exercise of any non-remunerated activity;

(iv) in the case of a student, the source of her/his income;

(v) her/his housing situation and how permanent it is;

(vi) the member state in which s/he is deemed to reside for tax purposes. If having considered these factors there is still no agreement as to the place of residence, the deciding factor will be the intention of the person as it appears from the facts and circumstances of the case and the reasons for the move.

Implications for claimants

The implications of the new rules may be particularly significant for claimants who are refused benefit (in particular income support – IS – and pension credit – PC) under the right to reside test. Under the co-ordination rules ‘special non contributory benefits’ are available to a person covered by them in their place of residence.13This is defined as ‘habitual residence’, in the EU sense. The UK Government lists IS, income-based JSA, income-related employment support allowance (ESA), PC and the mobility component of DLA as special non-contributory benefits.

In theory, a lone parent who has been refused IS under the right to reside test could nonetheless access IS under the co-ordination rules. In the past, however, this argument has not been accepted on the basis that the person must have a right of residence under Directive 2004/38 to be able to successfully claim a special non-contributory benefit. Generally this would mean that the person must be economically active. CPAG has argued that this approach was inconsistent with the caselaw of the European Court of Justice (ECJ).14The new co-ordination regulations codify the caselaw of the ECJ and make it clear that habitual residence is not limited to those only with a right of residence as an economically active person. There is no doubt that the UK will continue to resist and refuse such claims but there may be grounds to challenge such decisions under the new co-ordination rules. In any case, if there is a dispute as to whether a person is habitually resident in the UK, s/he should be temporarily affiliated to the UK in accordance with the new rules and be able to receive interim payments until the matter is resolved.15

Generally it will always be better for a claimant to work, even if on a very part-time basis, as this will invariably give the person better rights under EU law. However, at CPAG we regularly come across cases where this is not possible.

Example 1

A Polish woman has been working in the UK for five months and becomes pregnant. Her employer dismisses her and she is refused IS under the right to reside test. She cannot sign on for JSA as she has not completed 12 months of registered work.

CPAG would normally advise that the person makes a claim for maternity allowance, relying, where necessary, on any work undertaken in Poland or other EEA states to meet the employment condition. This would give the claimant sufficient income to argue that s/he is ‘self-supporting’, allowing housing benefit, child benefit and other benefits to also be paid.

The claimant could argue that the new coordination rules would, in addition, allow the person to access IS as well as family benefits such as child benefit and CTC.

Example 2

A Portuguese national has lived in the UK for the past four years. He is severely disabled and has never been able to work. He was supported and cared for by his brother but claimed benefits when his brother died unexpectedly. Benefit was refused under the right to reside test.

In the past a person in this situation would have to rely on social services support. Under the new co-ordination rules, s/he could argue that s/he can claim income-related ESA.

Clients refused benefit in the above or similar circumstances should consider appealing on the basis that they are habitually resident in the UK and covered by the co-ordination rules. While the appeal is ongoing, the person should ask for interim payments. If interim payments are refused, contact CPAG’s advice line to discuss the matter further.

Please be aware that welfare rights law and guidance change frequently. Therefore older Bulletin articles may be out of date. Use keywords or the search function to find more recent material on this topic.

  • 1. Third country nationals are people who are long term residents in the UK – eg, people with indefinite leave to remain. It does not apply to refugees who will be covered by the new rules.
  • 2. Article 87 (8) EU Regulation883/04
  • 3. Article 87(8) Regulation 883/04
  • 4. Regulation 1408/71 will continue to apply in relation to Norway, Iceland, Liechtenstein and Switzerland, as agreements with those countries still have to be concluded with regard to the application of Regulation 883/2004.
  • 5. This would include, for example, someone with indefinite leave.
  • 6. There are no pre-retirement benefits in the UK
  • 7. Preamble 9 Regulation 987/09
  • 8. Regulation 987/09 preamble 10; Article 6 Regulation 987/09
  • 9. Preamble 11 Regulation 987/09
  • 10. Article 6 Regulation 987/09
  • 11. Article 11 EC Regulation 987/09
  • 12. Regulation 987/09
  • 13. Article 10a Regulation 1408/71; Article 70.4 Regulation 883/04
  • 14. In cases such as DiPaolo Case 78/78
  • 15. R(IS) 4/99, CIS/3182/2005 and CIS/339/2009 held that, as Regulation 1408/71 provides that benefits be granted ‘in accordance with the legislation of that State’, the claimant still has to meet additional tests under UK domestic law – eg, additional presence test or right to reside test. Article 70.4 Reg 883/04 is worded similarly so it seems likely this previous caselaw will apply. The issue may need to go to the ECJ to be resolved.