Patmalniece v Secretary of State for Work and Pensions

For a benefit within the scope of Council Regulation (EC) 1408/71, the conditions of entitlement must be assessed as a whole. A right-to-reside requirement was not overt nationality discrimination because nationals of other Member States could satisfy it in specified circumstances. It was, however, indirectly discriminatory because it was harder for those nationals to satisfy.

The discrimination was justified. Protecting public finances by limiting a means-tested hybrid benefit to persons with sufficient economic or social integration was independent of nationality and proportionate. Inclusion within the Regulation did not remove the benefit’s social-assistance characteristics or prevent residence conditions. The appeal was dismissed.

The appellant, a Latvian national, arrived in the United Kingdom in 2000 after claiming asylum. She was destitute apart from her Latvian pension. After Latvia joined the European Union, she claimed State Pension Credit under the State Pension Credit Act 2002. Her claim was refused because she had no right to reside in the United Kingdom.

The President upheld her appeal, finding direct discrimination. On 11 June 2008, Commissioner Rowland allowed the Secretary of State’s appeal, holding that the right-to-reside requirement caused indirect discrimination which was justified as a proportionate means of protecting public finances. The central issue in the Court of Appeal was whether the requirement was overt discrimination under Article 3 of Council Regulation (EC) 1408/71 and, if not, whether any indirect discrimination was justified.

Appeal dismissed unanimously. Moses LJ gave the judgment, with Sullivan LJ and the Master of the Rolls agreeing.

1. Direct discrimination. Article 3 of Council Regulation (EC) 1408/71 required the conditions for entitlement to be the same for Latvian and United Kingdom nationals. The court had to examine the conditions of entitlement as a whole, rather than isolate the right-to-reside condition. Workers and other specified categories from every Member State could be treated as habitually resident. Other nationals could acquire a right to reside as qualified persons. The conditions were therefore not overtly based on nationality.
2. Indirect discrimination and justification. The right-to-reside requirement was apparently neutral but more difficult for nationals of other Member States to satisfy. The relevant justification was independent of nationality and pursued the legitimate aim of protecting United Kingdom public finances. Restricting a means-tested benefit to persons with sufficient economic or social integration was proportionate.
3. Nature and purpose of the Regulation. The Regulation coordinated, rather than harmonised, national social-security schemes and promoted freedom of movement for workers. State Pension Credit was a hybrid special non-contributory benefit. Its inclusion within the Regulation did not deprive it of its social-assistance characteristics. Such benefits were linked to the economic and social conditions of the country of residence and could be subject to residence conditions. The appellant’s Latvian pension remained exportable, so the condition did not impede economic migration.
4. Other arguments. The special position of Irish nationals under the Common Travel Area did not invalidate the justification. The removal observations in Trojani concerned persons lawfully resident with a residence permit and did not apply to a person lawfully present without a right of residence.

The appeal was dismissed.

1. Court of Appeal (Civil Division): dismissed the appeal and upheld the decision of Commissioner Rowland; [2009] EWCA Civ 621.
2. Social Security Commissioners: Commissioner Rowland allowed the Secretary of State’s appeal on 11 June 2008, holding that the right-to-reside requirement involved justified indirect discrimination (case CPC/1072/2006).
3. Appeal Tribunal: the President had allowed the appellant’s appeal on the basis of direct discrimination.