Habitual Residence test and Right to Reside

The complexity of the subject, the interpretation of the law and the frequency of the decisions by the European and the national courts particularly on the issue of Right to Reside requires that in most cases expert advice is sought.

The article attempts to briefly clarify:

What is the habitual residence test?

What is the right to reside?

Who is affected?

Which benefits are affected?

The Habitual Residence Test (HRT)

In the late 1980s the British government concerned about the perceived magnetic effect of the welfare benefit system in United Kingdom (UK), under the heading of “Benefit Tourism”, sought to affect a preventative measure to reduce the claims for benefits for people coming to UK from aboard.

In 1994, the concern gave rise to a new legislation which was thought to be the preventative measure.

The new legislation is called Habitual Residence Test (HRT).

The HRT applies to both British and non-British people alike.

The essence of the legislation is that any one who comes to UK and wants to claim a social security benefit has to show that s/he is habitually resident in UK. However, there is no actual definition for the test.

Satisfying the test

In order to pass the test HRT, claimants have to establish that they:

Are voluntarily in UK
Are resident in UK
Have a settled intention to remain in UK
Have been in UK for an appreciable period of time.

If claims for benefits fail on the grounds that the claimants have not satisfied the HRT test, the tribunals and national courts will consider the claims based on the particular circumstances of each case. That is, based on the facts of each case, and, how those facts relate to the 4 key factors outlined above.

As the result a body of case law (courts decisions) has been created. And, depending on the particular facts of each case, the decisions establish at what stage a claimant can be deemed to have satisfied the test.

For example, one of the key factors is the appreciable period of time. This is the actual period of time that a claimant has spent in UK. A Social Security Commissioner has stated that this could a period between 1 to 3 months of residence in UK.

However, this is not conclusive. It appears that all the 4 key factors have an inter-relationship with each other and it is the overall picture that will determine the outcome.

Therefore, one can state that whether or not someone is habitually resident in United Kingdom is a question of fact. The facts of an individual case, assessed in relation to the 4 key factors.

The HRT has been reasonably effective at preventing people coming to the UK for short periods and claiming benefit.

However the HRT was not effective at stopping those who become habitually resident from claiming benefit on a long term basis throughout their time in the UK. Thus, the British government introduced the Right to Reside in May 2004.

Right to Reside (R2R)

Before 1 May 2004 European Union (EU) consisted of the following nations:

Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Portugal, Republic of Ireland, Spain, Sweden, and United Kingdom.

In addition to the above, there are Iceland, Liechtenstein, and Norway who are members of the European Economic Area (EEA) and not EU, and since 1 June 2002 Switzerland, though not a member of the EEA.

On 1 May 2004, ten (10) new countries joined the EU. They are called the “Accession countries”.

One can say that for the purposes of benefit entitlement (see below), the 2004 Accession countries are made up of two distinct groups:

The A2nationals: Malta and Cyprus.

The A8 nationals: Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Slovenia and the Slovak Republic.

On 1 January 2007 Romania and Bulgaria also joined the EU. The position of these nationals in respect of a claim for benefit is the same as the A8 nationals. They are often called the A2 nationals, which is somewhat confusing. In this Article we refer to Malta and Cyprus as the A2 nationals for the sake of simplification.

The United Kingdom government treats the A2 nationals more favourably than the A8 nationals and the Romanian and Bulgarian nationals in respect of benefit claims.

All the above nations have a right of free movement between member states. But, as we shall see later, the A8 nationals although free to move to find work in UK, unlike other EU citizens, they need to “register” their work, and the Romanians and Bulgarians must be “authorized” workers.

Because the UK government understood that the HRT was not going to be effective enough to prevent claims for benefit, it amended its legislations and introduced the Right to Reside test, implementing it from 1 May 2004.

As the result, all the means tested benefits regulations were amended to give effect to the change in the legislation.

Hence, from 1 May 2004 no one is habitually resident in United Kingdom, Republic of Ireland, and the Common Travel Area (CTA), who does not have a Right to Reside.

(CTA) consists of the Channel Islands and the Isle of Man

This means that if someone is not ‘habitually resident’ they are described as a “person from abroad” (PFA). The effect of being a PFA is that they have an applicable amount of ‘nil’, for benefit purposes.

What does the Right to Reside actually mean?

Unlike the Habitual Residence test that affects British and non - British nationals alike, the Right to Reside mainly affects the EU and the EEA nationals.

The right to reside is simply a requirement that a person can show they have a right (conferred by law) to reside in the UK.

Not everyone has a right to live in the UK. The 1971 Immigration Act provides that only people with a right of abode (British citizens) have the right to live in and move freely in and out of the country. Everyone else requires permission. Therefore, if a person needs permission to either enter the UK or to remain in the UK and they do not have it, they are here illegally.

Membership of the European Union requires that some European citizens also have rights to enter and remain in the UK without permission. Section 7 of the 1988 Immigration Act provides that a person does not require leave to enter or remain if he is entitled to by “virtue of an enforceable Community right or of any provision made under section 2(2) of the European Communities Act 1972.”

No EEA citizen needs permission to enter the UK - Regulation 11 of the Immigration (EEA) Regulations 2006. However there is no equivalent provision allowing all EEA citizens a right to remain in the UK. If they cannot find an enforceable Community right to benefit from they require permission to remain in the UK. In the absence of that permission they are not here legally.

This means that they effectively do not have a right to remain in the UK, even though it is highly unlikely they will ever be deported. So, if they have no right to remain, they do not have a right to reside. If they do not have a right to reside, they cannot claim certain benefits.

As the majority of enforceable Community rights are attached to the economically active, the right to reside test is then an efficient and effective way to prevent the many economically inactive people from accessing benefits.

Which benefits are affected?

Only the following benefits are affected:

Both the right to reside and the habitual residence test:

pension credit
income support
income-based jobseeker's allowance
housing benefit
council tax benefit

Only the right to reside test:

child tax credit
child benefit

One way of looking at eligibility for benefits is to first ascertain if the claimant is exempt from both the HRT & R2R. If they are not exempt, to go on and see if they are habitually resident, and then to ascertain whether they have a Right to Reside.

Who is exempt?

1- EU workers (not the A8 or Romanian & Bulgarian nationals – see 2 below):

Workers are exempt from both tests and can claim all the in-work benefits (e.g. housing benefit; council tax benefit, child benefit, child tax credit, working tax credit etc), assuming that they satisfy the entitlement conditions.

For the definition of who is a worker or how many hours of work are required, or what questions the Department of Work and Pension (DWP) may ask to establish worker-status, it is best to seek advice, as the definitions mostly come from the European Court of Justice (ECJ) decisions.

2-A8 registered workers:

A8 nationals must register their work with their employers and the Home Office. They must register again if they start a new employment. There is only one registration fee payable at the start of the first employment. They must continue the registered work for 12 uninterrupted months (minus a 30 day grace).

The Romanian and Bulgarian nationals must be "authorised workers" for 12 months.

Whilst at work (and considered as being a worker), they can claim all the in-work benefits. If they stop work within the 12 months period, all the in-work benefit will stop.

However, some A8 nationals (similar provisions exist forRomanian and Bulgarian nationals) may be protected from registration if:

Had leave to enter or remain on 30.4.04 which was not subject to conditions restricting employment
Legally worked before 30.4.04 and completed 12 months, without interruption*, either before that date or after
An A8 national who has legally worked for 12 months since 30.4.04, without interruption*
Posted workers
Family member of an EEA national

3- Self-employed people including A8 nationals:

They can claim all the in-work benefits. A self-employed worker should register with Inland Revenue. There may be times that the DWP argues that it does not consider a claimant to be a self-employed person. You may need to seek advice on this.

4-Retaining worker status:

This is a complex area of law.

On 30 April 2006, a new European Directive was introduced that repealed all but some of the previous EU Directives and Regulations. Much of the case law on the retention of the worker’s status, which was based on previous Directives and Regulations, may not be applicable any more.

The Directive is known as EC Residence Directive 2004/38. It has been transposed in to the UK domestic regulations, namely, the Social Security (Persons from Abroad) Amendment Regulations 2006, and the Immigration (European Economic Area) Regulations 2006. All these legislations are obtainable via the internet.

Following the introduction of the 2004/38 Directive, claimants may be entitled to benefits (by establishing that they have retained the status of a worker), if they are not at work as the result of sickness or accident; have lost their job on voluntary or involuntary basis; have worked more or less than a year; or have had a fixed term contract that has come to an end. It is important that expert advice is sought to correctly ascertain whether there is an entitlement.

5- Family members:

Family members of workers, self-employed people and those who retain their worker or self-employed status are exempt from the HRT and R2R. Family rights are parasitic so you must identify the qualified person first.

For example:

The 20 year old daughter of a person who is in one of the above groups claims child benefit. It should be awarded, because her father has a right to reside, and because of that she has a right to reside..

Family members are:

Spouse or civil partner;
Descendants of the relevant person or their spouse / civil partner who are under 21 or are their dependants;

Dependent direct relatives in the ascending line of the relevant person or their spouse / civil partner, e.g, parents or grand parents.
Partners; if a long and stable relationship can be established.

In addition to the above, some extend family members who have been dependent on the qualified person ( that is, the worker or the self-employed, or has retained the status of the worker), and, continue to be a dependent also have a right to reside, but certain conditions must be satisfied. You may need to seek advice on this.

6- People with a right of permanent residence:

A person who has resided ‘lawfully’ in the UK for 5 years has a right of permanent residence. ‘Lawfully’ is not defined in the EU Directive and the domestic regulations state that it is residing ‘in accordance with the regulations’ for a continuous period of 5 years. This also applies to non-EU family members who have resided for 5 years in accordance with the regulations.

Continuity of absence is not broken if:

Absence from the UK for 6 months or less in a year
Absence from the UK for compulsory military service
Absences of up to a maximum of a continuous year for reasons such as pregnancy and child birth, serious illness, study or vocational training or an overseas posting

For example: X, a German citizen, comes to UK in 2002. He has been working continuously for 5 years, or, has been self-employed for 5 years. In 2008 he requests that he be given a permanent Right of Residence. As he has been in UK for 5 years “legally” [that is has been a worker, not that he has a visa or needs permission to be in UK] under the Immigration (European Economic Area) Regulations 2000, he should be given a permanent Right to Reside, and hence, able to claim benefits unrestricted.

Therefore, It will be highly unlikely for a person who has been living in UK and receiving income support or job seeker allowance for most of the required 5 years residence ( possibly through the transitional protection), to be considered for a permanent right of residence.

This is a complex issue and you may need to seek advice.

If not exempt?

First clarify if the claimant is Habitually Resident in the UK. See above for the definition of who is.

Some people are exempt (see above), and some automatically pass this test if they are:

A8 workers who have completed 12 months registered employment
Self-sufficient people

Every one else, including British nationals returning to UK need to satisfy the test.

Once the HRT is satisfied, claimants must show that they have a Right to Reside.

Who automatically passes the right to reside test?

British citizens returning to the UK from outside CTA

Citizens of the CTA coming to the UK from outside those countries

A8 workers who have completed 12 months registered employment

EEA Jobseekers claiming JSA (not A8)

Students

Self-sufficient people

People providing a service ( same as self-employed but on temporary basis)

But note for example that a student, who is deemed to pass the test automatically, may not necessarily be able to claim means tested benefits.

This is because a declaration about ability to self-support has to be made. In these circumstance (e.g. a student needs to give up study because she is pregnant and needs to claim income support), only the European interpretation of law (E CJ Decisions) may be of some help. Advice must be sought.

What if the Right to Reside is not automatically passed?

From 30 April 2006 Directive 38/2004/EEC provides that there are three periods where someone may have a right to reside; up to 3 months, between 3 months and 5 years and after 5 years. Permanent residence (after 5 years residency) has been partly discussed above.

(a)- The first 3 months:

Jobseeker
Worker
A8 registered worker
Self-employed person
Self-sufficient person including students
Family members of the above

Jobseekers (not the A8 nationals and the nationals of Romania and Bulgaria – they can claim jobseekers allowance after they have finished 12 months of registered, or authorized work, respectively), are allowed to claim jobseekers allowance during the first 3 months. However, this does not mean that they cannot be caught by the habitual residence test (see above).

(b)- between 3 months and 5 years :

To claim benefits, claimant must be a “qualified person”

Qualified people are:

Jobseekers (again; A8 & Romanian - Bulgarian nationals after they have completed 12 months of registered or authorized work)
Workers
A8 registered workers
Self-employed people
Self-sufficient people including students
Family members of the above

Some imporrtant points:

1- An EU national can claim Jobseekers Allowance (JSA), for as long as the claimant establishes that they are genuinely and effectively seeking work, if as we have discussed above, they pass the HRT.

2- An A8 national or Romanian/Bulgarian national ( unless they are protected – see above) should finish 12 months of uninterrupted ( minus 30 days grace) registered or authorized work, respectively, before they can claim Jobseekers Allowance, or claim benefit on the basis that they have retained the worker status.

3- If an EU national is exempt from both tests (see above for who is), or pass the Right to Reside test, their spouse, civil partners, their children under 21 years of age and their direct ascendants including some members of their extended family also have a right of residence, and may be able to claim benefits.

4- Income support is not payable to EU nationals on the grounds of being a single parent.

5- Income support may be payable, on temporary basis, if the claimant has retained the status of worker, because of sickness or an accident at work. You may need to seek advice on this.

6- EU nationals (including A8 and Romanian/Bulgarian nationals) can claim all the in-work benefits, if they establish that they are “workers” or “self employed”. A8 and Romanian/Bulgarian nationals may be receiving these benefits whilst they are working, however, if they stop work within the 12 months mandatory registered/authorized work, payment of benefits would cease, and, because they cannot claim jobseekers allowance, no other related benefit such as child tax credit or housing benefit is payable.

7- Some EU nationals (e.g. a single parent) may have been in receipt of Income Support, because of the transitional protection, when the new Right to Reside provision came to force in 2004. This protection will end if entitlement to benefit, or, if there are other means-tested benefits, entitlement to those benefits cease. Seek advice on this.

8- Some EU nationals may have been receiving Income Support as a single parent due to being a primary carer. That is, they may have argued that in accordance with Article 12 of the EC Regulation 1612/68 and its interpretation by the European Court of Justice decision in the case of Baumbast, because their children have a right to reside due to their right to be in education in UK, so have they as their primary carer. Recently a UK Social Security Commissioner has interpreted the law differently, and it may be that the claimants cannot argue their case as before. You may need expert advice on this.

9- Please note that other benefits, for example Disability Living Allowance, Attendance Allowance, Carer’s Allowance and all the contributory benefits (based on National Insurance contributions) such as Incapacity Benefit are not caught by the HRT or the R2R. It is important to ascertain whether an EU national is entitled to the above benefits or, for example, Statutory Sick Pay, Statutory Maternity Pay or Maternity Allowance. See 10 below.

10- Also note that EC Regulation 1408/71 allows for aggregation of National Insurance Contributions paid in another member state for the purpose of contributory benefits (e.g. Incapacity Benefit) in the UK.

11- There is also a Right of Residence for the family members of a qualified person (see above for definition) following death or divorce, termination or annulment of marriage, whether the family member is himself or herself an EU national or a non-EU national. The rules differ for the EU and the non- EU family members. The relevant provisions can be obtained from Directive 2004/38 and in the UK under provisions of Immigration (European Economic Area) Regulations 2006. You may need to seek advice on this issue.

12- Quite often when a jobseeker, who is claiming jobseekers allowance and as the result is receiving housing benefit and if applicable, child benefit, child tax credit etc, becomes ill. S/he is often advised to claim income support. Also claimants claim income support because they are told they can do so due to being a single parent (one of the conditions of the entitlement to income support in UK). THIS IS NOT A CORRECT ADVICE, and will lead to loss of all related benefits.

This article is a summary of the habitual residence test and the right to reside.

The position of law on these subjects, particularly the right to reside, changes rapidly. This is due to the frequency and the interpretation of law by domestic and European courts.

Given the complexity of the subject, you may need to seek expert advice for how these tests will affect you or your clients.

Essie Rashidschi, Specialist Support Service, London Advice Services Alliance, February 2008