Regulation 883/2004 on the harmonisation of social security systems in the EU was drafted, at least in part, to mitigate any potential negative consequences that the utilisation of free movement rights could have on access to social security. The Regulation serves to establish the competent Member State for the provision of social security benefits such as (inter alia) old-age benefits, unemployment benefits, sickness benefits and family benefits. It is therefore a vital part of the free movement framework, making sure that mobile citizens in the EU do not lose access to vital financial support as a result of their free movement.
Yet, for EU citizens in the UK who had utilised their free movement rights pre-Brexit, and who have family members in EU Member States who should be theoretically protected by the tenets of Regulation 883/2004 via the EU-UK Withdrawal Agreement, the Regulation may no longer live up to its fullest potential in that regard. This is due to a dispute that has arisen in the UK as to the classification of certain welfare benefits for the purposes of Regulation 883/2004. The answer to that dispute in Simkova will have consequences on access to those benefits for EU citizens who migrated to the UK both pre- and post-Brexit.
1. The legal issue in Simkova
Child tax credits were UK benefits aimed at relieving some of the financial burdens of child-rearing, and were previously classified as a family benefit under Regulation 883/2004 by the CJEU (C-308/14 Commission v UK, para. 61). EU citizens with a right to reside in the UK would have access to those benefits, even when their family members lived in another EU Member State, as the Regulation makes provisions for the granting family benefits ‘as if [the cross-border family member] were residing in the [competent] Member State’ (Article 67). For Ms Simkova, an EU national in the UK with a son residing in another Member State, the matter of access to family benefits – and the applicability of Article 67 of Regulation 883/2004 to them – is an important one.
The problem? UK welfare reform has now ended child tax credits as a form of benefit. The reform has subsumed the former benefit into the scheme of the UK’s ‘universal credit’ benefits, creating instead a ‘child element’ of that benefit that is factored into the final calculation for assistance for claimants with children who live with them. The subsuming of child tax credits into the calculation for universal credit raises a question: how should the benefits be classified for the purposes of EU social security coordination? Universal credit was considered to be social assistance for the purposes of the Citizens’ Rights Directive 2004/38 (C-709/20 CG v The Department for Communities in Northern Ireland, para. 71), but the predecessor to the child element of that benefit was a ‘family benefit’ under the coordinating Regulation (C-308/14Commission v UK, para. 61). So: can the child element of universal credit, like its predecessor, be claimed on the basis of the coordination of social security in EU law? If the child element falls under the remit of the Regulation, Ms Simkova may continue to receive that amount for her son. If it the classification of that amount has changed due to the UK’s welfare reform, the UK can deny her the child element on the basis that her son does not live with her and she must go without the extra support available for universal credit claimants with children.
The case has revolved primarily around the classification of blended (or ‘combined’) benefits like universal credit according to EU law. As the facts of the dispute arose pre-Brexit, EU law, as it stood at the time, is being applied by the UK courts. Particularly, the courts have been asked to consider whether there is a potential obligation to sever such benefits into their constituent elements for more accurate classification and awarding under Regulation 883/2004. So far, two appellate courts: the Upper Tribunal (administrative appeals chamber) and the Court of Appeal have heard the dispute. The focus of those courts was to establish whether there is an obligation to sever benefits for accurate classification according to EU law, as well as whether it would be pertinent or possible to refer the question on the classification of universal credit to the CJEU. Both appellate courts have found that there is sufficient clarity on the matter: there is no obligation to sever blended benefits for the purpose of classification under Regulation 883/2004, universal credit (including the child element) is therefore not a ‘family benefit’, and no reference to the CJEU is necessary. The UK Supreme Court will deliver a (potentially) final judgment on the matter after it hears the case on 30thJune – 1st July 2025.
In a forthcoming article for the Journal of Social Security Law, I have argued that the UK Supreme Court should – at the very least – refer the case to the CJEU for clarification. In that article, three matters are highlighted as being too easily brushed over by the findings of the lower appellate courts in Ms Simkova’s case. Considering the outcome of the case will determine the level of disadvantage that EU citizens living in the UK will face in accessing family benefits; and especially as it will have a knock-on impact those who are covered by the tenets of the Withdrawal Agreement, I believe the Supreme Court has a duty to pay closer attention to these elements in its judgment – whatever the outcome of the deliberations may be. The issues I have raised highlight important questions about the strength and scope of EU law’s objectives to protect the social security rights of cross-border citizens in the EU, making it of potential interest to readers of this blog.
2. The Overlooked Objective of Regulation 883/2004
The appellate courts in the UK both relied on the tale-as-old-as-time argument that welfare policy is a matter of national competence and national competence alone. This is evidenced by the Regulation’s coordinating rather than harmonising nature, and has led the UK courts in Simkova to the conclusion that EU law does not – or cannot – influence the national structuring of welfare benefits (Simkova v SSWP, para. 52). As a result, it was considered highly unlikely that any obligation to sever blended benefits would ever exist under EU law without explicit recognition in legislation or case law.
I argue that this is only half of the story. The courts are correct in asserting that the Regulation is not intended to lay out the conditions for welfare access, but does that mean welfare policy should not be scrutinised for its compliance with EU law? I argue not. The Regulation is coordinating, but it is also there to protect the rights of EU citizens. It can and doesraise obligations on Member States as a result. Most pertinently, in relation to the classification of family benefits, the CJEU has expanded on the purpose of the provisions on exportability of those benefits, which exist to ‘prevent a Member State from making entitlement to, or the amount of, family benefits dependent on residence of the members of the worker’s family in the Member State providing the benefits’ (C-372/20 QY v Finanzamt Österreich, para. 76; C-328/20Commission v Austria, para. 46) If we accept that subsuming family benefits into a broader scheme of benefits changes their classification as social security – without changing their substance – then Member States would be allowed to do exactly what the Regulation seeks to prevent. It would allow Member States to circumvent the awarding of family benefits intended to lower the burden of child-rearing when family members are resident in another Member State. I therefore argued that the deferential nature of EU law in matters of social security structuring have been overstated so far in the Simkova judgments, and that more interest must be taken to the purpose and objective of Article 67 of Regulation 883/2004.
3. Assumptions on the Clarity of Classification of Blended Benefits
Both judgments emanating from the UK appellate courts in Ms Simkova’s case found sufficient evidence in previous CJEU jurisprudence to uphold the claim that no obligation to sever benefits into their composite parts for accurate classification exists in EU law. I am not convinced that the EU case law considered in the judgments actually provides enough evidence to eradicate any lingering doubts on that front:
Firstly, the courts rely on the 1985 Hoeckx judgment from the CJEU (Case 249/83) as being pretty much determinative on the matter. That case asked, I believe, a question too different from the one at issue in Simkova to be conclusive. Hoeckxasked whether the Belgian general social assistance benefit – the minimex – would fall under Regulation 883/2004. The CJEU found that, as a ‘general’ benefit, it would not fall under any of the branches of social security law regulated under its provisions. I argue there are two key differences between Ms Simkova’s situation and the situation in Hoeckx. The benefits themselves are not exactly comparable. The minimex is a welfare safety net. Universal credit, on the other hand, is a large, complex blended benefit that has subsumed otherwise discrete benefits into its remit. Moreover, Simkova is not asking whether universal credit in general may be granted under the Regulation. Ms Simkova has already established her entitlement to the benefit. Only the child element is at issue, which complicates the matter.
Secondly, from what little case law there is on the severability of composite benefits for accurate classification under Regulation 883/2004, the CJEU has only ever held that Member States may choose to sever for the purposes of accurate classification. However, the CJEU has so far only answered this question in cases concerning benefits that could already be either jointly or severally awarded according to national legislation (Commission v Parliament (C-299/05, para. 69) and Bartlett (C-537/09, para. 21). I do not think this sufficiently answers the question of what to do with composite benefits like universal credit, that have subsumed parts of social security law without offering any discrete entitlement to that amount, rendering them unable to be awarded severally.
Therefore, I argue that the strongest, objective conclusions that can be drawn from relevant existing case law are:
1. Blended benefits that are ‘general’ may fall outside the scope of Regulation 883/2004, but we do not know what such general benefits are and whether universal credit is such a general benefit.
2. Severability for accurate classification is a live issue for benefits classification under Regulation 883/2004, but we do not know whether it has a place in cases on blended benefits that cannot be discretely awarded.
Considering the question of whether there is sufficient clarity on the matter of severability to avoid making a preliminary reference, I remain unconvinced. The Simkova case instead seems to raise important, technical questions on social security coordination that would warrant from input from the CJEU.
3. The Potential Bite of the Withdrawal Agreement
Aside from the technicalities of classification under Regulation 883/2004, which I argued are messier than have been represented (so far) in Ms Simkova’s case, I also believe that the potential impact of this case warrants a referral to the CJEU. Ms Simkova’s dispute arose at an unfortunate point in time: while the UK was in the EU enough for pre-Brexit EU law to apply to her case, but slowly transitioning its way out, leaving preliminary references seemingly off the table by the time the case was adjudicated in an appellate court. However, this is not a blip of a case with no impact beyond Ms Simkova’s circumstances. Regulation 883/2004, and the classification of benefits under it, continue to apply to EU citizens in the UK who fall under the tenets of Part Two of the UK-EU Withdrawal Agreement (Article 30). For EU citizens who were resident in the UK pre-Brexit, and who continue to reside there, access to social security benefits continues to be regulated and impacted by the Regulation. The classification of UK benefits for the purposes of that Regulation is, therefore, not an issue that is about to fade into legal obscurity.
I therefore argue that, as the provisions and objectives of the Regulation continue to make up an important part of the UK and EU’s legal relationship, more weight should be given to the Regulation’s objective of ensuring that family benefits are accessible even when family members do not reside in the same Member State. At present, the decisions handed down in Ms Simkova’s case work precisely to make entitlement to family benefits dependent on her son’s residence (or lack thereof) in the UK. The same will be true for all EU citizens covered by the Withdrawal Agreement with family members in EU Member States. The classification of the universal credit child element thus plays an important role for the realisation of rights for EU citizens in the UK, and creates a potential point of tension between the UK and EU. Arguably, it would be most beneficial to get the input of the CJEU on whether the Regulation really allows Member States to classify family benefits that they have subsumed into the calculation of social assistance as falling outside the scope of Regulation 883/2004, thus allowing them to avoid granting them to EU citizens with cross-border families.
4. Conclusion
What answer would the Court in Luxembourg give to a preliminary reference in Ms Simkova’s case? That is too difficult to predict. On the one hand, the Court has taken a non-interventionist approach to the scrutiny of welfare provisions in the recent past (see, e.g. O’Brien, 2017). On the other hand, it has also recognised the importance of Article 67 of Regulation 883/2004 for preventing the disadvantaging of EU citizen families living across borders (C-372/20 QY v Finanzamt Österreich).
I believe, whatever the outcome of a judgment from the CJEU would be, a referral is still the only course of action that respects the true intentions of Regulation 883/2004 and the importance of its provisions on family benefits access for the continued relationship between the UK and EU vis-à-vis citizens’ rights. This case, now pending before the UK Supreme Court, will therefore be one worth watching for those interested in EU free movement law.
Dr Victoria Hooton is a Senior Research Fellow at the Max Planck Institute for Legal History and Legal Theory in Frankfurt, Germany. She holds a PhD in EU law and has published mainly on matters of free movement, EU citizenship and cross-border welfare access.