The Secretary of State for Work and Pensions v Gubeladze

For the purposes of Article 17(1)(a) of the Citizens Directive, residence means legal residence. The provision derogates from the five-year duration requirement in Article 16, but not from the quality of residence required.

A Member State may extend transitional labour-market restrictions only if the treaty precondition is met and the extension remains proportionate. Proportionality requires consideration of the measure’s practical benefit and its adverse effects on individuals. The extension of the Worker Registration Scheme was disproportionate because its benefits were small and speculative, while its consequences were substantial.

The respondent, a Latvian national, arrived in the United Kingdom in 2008 and worked for various employers between 2009 and 2012. She registered under the Worker Registration Scheme only in August 2010. Her claim for state pension credit was rejected because earlier employment had not been registered.

The First-tier Tribunal wrongly held that it lacked jurisdiction. The Upper Tribunal allowed the respondent’s appeal, holding that Article 17(1)(a) required actual residence and, alternatively, that the extension of the Worker Registration Scheme was unlawful. The Secretary of State appealed on both issues.

1. Appeal dismissed. The Secretary of State succeeded on the construction of Article 17(1)(a), but failed to establish that the extension of the Worker Registration Scheme was lawful. Both grounds were required to overturn the Upper Tribunal’s decision.
2. Meaning of residence. Article 17(1)(a) of the Citizens Directive is a derogation from Article 16. It reduces the period of residence required for permanent residence, but does not remove the requirement that the residence be legal. The word resided therefore means legally resided. The textual distinction between Articles 16 and 17 was not decisive when the provisions were read in context and in light of their integration objective. The reasoning in [2011] All ER (EC) 1169 was pertinent and consistent with that construction.
3. The court assumed, without finally deciding, that regulation 5(2)(c) of the Immigration (European Economic Area) Regulations 2006 merely transposed Article 17(1)(a). The result was the same on either interpretation.
4. Proportionality. The intensity of EU-law proportionality review depends on the nature of the decision. The categories identified in [2015] UKSC 41 are guidance, not rigid compartments. This decision fell between review of a national derogation from a fundamental freedom and review of a measure implementing EU law. Moderate scrutiny was appropriate, but the court declined to apply only the manifestly disproportionate test.
5. The serious disturbance of the labour market satisfied the precondition in paragraph 5 of Annex VIII to the Act of Accession. It did not itself establish proportionality. The Secretary of State had to consider whether extending the Scheme was appropriate and necessary for the objective pursued, and weigh that objective against the adverse effects on persons who failed to register.
6. The Migration Advisory Committee had been asked whether retention was sensible, rather than whether it was proportionate. Its evidence indicated that abolition would have little effect on immigration flows and that the information obtained from the Scheme had limited continuing value. The fee, employer burdens, legal uncertainty and serious consequences for access to benefits and permanent residence supported the Upper Tribunal’s conclusion that the extension was disproportionate. That conclusion was open to the tribunal even under the less demanding standard.
7. The Court of Appeal’s function under section 13 of the Tribunals, Courts and Enforcement Act 2007 was to review for error of law, not to remake the Upper Tribunal’s specialist evaluative decision. The absence of infringement proceedings by the European Commission carried only modest weight.

• Court of Appeal (Civil Division) — The appeal was dismissed. The court allowed the challenge to the interpretation of Article 17(1)(a), but upheld the finding that the extension of the Worker Registration Scheme was disproportionate: [2017] EWCA Civ 1751.
• Upper Tribunal (Administrative Appeals Chamber) — On 30 January 2015, the Upper Tribunal allowed the respondent’s appeal against the Secretary of State’s decision.
• First-tier Tribunal — The tribunal initially and erroneously held that it lacked jurisdiction.