Fratila & Anor, R (on the application of) v Secretary of State for Work and Pensions & Anor

A right of residence granted under domestic law, independently of Directive 2004/38/EC, may engage the free-standing prohibition of nationality discrimination in Article 18 TFEU. Excluding that right from a social-security residence test may constitute indirect, rather than direct, discrimination where the exclusion affects only some nationals of other Member States. Direct discrimination requires an exact coincidence between the rule applied and the protected characteristic. Any justification must address each constituent part of the statutory scheme as well as its cumulative effect. Excluding pre-settled status from the relevant residence test was justified because it preserved the existing rationale and operation of the social-security rules.

The claimants, Romanian nationals, challenged amendments made by the Social Security (Income-related Benefits) (Updating and Amendment) (EU exit) Regulations 2019 to residence conditions for Universal Credit and other income-related benefits.

The amendments provided that limited leave granted under Appendix EU to the Immigration Rules, including pre-settled status, did not count as a qualifying right of residence for the habitual-residence test. The second claimant held pre-settled status and had been refused Universal Credit on that basis. The first claimant had subsequently obtained settled status and was not materially affected by the amendment.

The central issues were whether the exclusion unlawfully discriminated on grounds of nationality contrary to Article 18 TFEU, whether any discrimination was direct or indirect, and whether it was objectively justified.

1. Article 18 TFEU. The reasoning in Grzelczyk v Centre Public d’Aide Sociale d’Ottignies Louvain La Neuve [2002] 1 CMLR 19 and Trojani v Centre Public d’Aide Sociale de Bruxelles [2004] 3 CMLR 38 remained applicable. An EU national lawfully resident in another Member State on a basis independent of the Citizens’ Rights Directive may rely directly on Article 18 TFEU.
2. Pre-settled status arose under Appendix EU to the Immigration Rules and had a distinct domestic legal basis from the rights conferred by the Immigration (European Economic Area) Regulations 2016. It could therefore support a free-standing Article 18 claim.
3. Nature of the discrimination. Applying Patmalniece v Secretary of State for Work and Pensions [2011] 1 WLR 783, the composite residence scheme had to be considered. However, the exclusion of pre-settled status did not directly discriminate because it did not exclude all non-UK EU nationals. Direct discrimination required an exact or indissociable coincidence between the rule and nationality. The exclusion was therefore indirect discrimination.
4. Justification. Justification could not be assessed by broad reference to the scheme as a whole. Each constituent restriction had to be capable of justification, as well as the cumulative effect of regulation 9. The objective of protecting the social-security system from persons insufficiently economically integrated or insufficiently closely connected with the United Kingdom was legitimate.
5. The exclusion of pre-settled status was proportionate and justified. Pre-settled status did not alter any separate rights available under the EEA Regulations. The amendment preserved the pre-existing position and the rationale of the habitual-residence test. The same conclusion applied to the materially identical amendments affecting the other listed benefit schemes.
6. The application for judicial review failed.