Judgment;Summary — ECLI:EU:C:2019:761
Date: 2019-09-19
Language of the case: English
Court formation: Fourth Chamber
Subject matter: Citizenship of the Union;Right of establishment
Procedure: Reference for a preliminary ruling
Origin: United Kingdom

IN THE UPPER TRIBUNAL
(ADMINISTRATIVE APPEALS CHAMBER)
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CF/393/2016
BETWEEN
HER MAJESTY'S REVENUE AND CUSTOMS
Appellant
And
MsHD
Respondent
REFERENCE TO THE COURT OF JUSTICE OF THE EUROPEAN UNION
PURSUANT TO ARTICLE 267 OF THE TREATY ON THE FUNCTIONING OF THE
EUROPEAN UNION
Relevant factual background
1. This case concerns a claim for child benefit made by the respondent ("Ms D") on
27 August 2014. By a decision dated 1 February 2015 it was rejected because she
was considered under national legislation (see [2] below) to lack a sufficient right to
reside to meet the qualifying condition for that benefit. Her appeal to the First-tier
Tribunal ("FtT") on 29 September 2015 succeeded. Her Majesty's Revenue and
Customs ("HMRC"), who administer child benefit, were subsequently given
permission to appeal to the Upper Tribunal against the FtT's ruling.
2. The domestic legislation is as follows:
(a) Section 146 of the Social Security Contributions and Benefits Act 1992 provides:
"(1) ...
No person shall be entitled to child benefit for a week unless he is in Great
Britain in that week.
(3) Circumstances may be prescribed in which any person is to be treated for
the purposes of subsection (1) or (2) above as being, or as not being, in Great
Britain." ,
(b) Regulation 23 of the Child Benefit (General) Regulations 2006 SI 2006 No. 223
provides:
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"(4) A person shall be treated as not being in Great Britain for the purposes of
section 146(2) of SSCBA where he makes a claim for child benefit on or after
1st May 2004 and
(a) does not have a right to reside in the United Kingdom; or
(b) [provides that certain categories of right to reside do not count for this
purpose, but these are not relevant to the present case]."
(c) At the material time, the Immigration (European Economic Area) Regulations
2006 SI 2006 No.1 0031 ("the 2006 Regulations") conferred a right of residence for
longer than three months on a "qualified person". By reg 6(1), a "qualified person"
included a worker and a self-employed person. Reg 6(2) made provision for '....orker
status to be retained by a person temporarily unable to work as the result of an
illness or accident and (subject to conditions) a person who is involuntarily
unemployed. As in Directive 2004/38 ("the Directive"), which the 2006 Regulations
sought to implement, no specific provision is made for women around the time of
childbirth: they are dependent on being classed, at that time, as a ''worker'' or self-
employed.
3. Ms D is a Lithuanian national. She had been employed in the UK from 2011 as a
warehouse operative, working at night. She became pregnant in December 2013.
She had sadly experienced two miscarriages previously and so from 25 December
2013 decided to engage in less demanding work, namely as a self-employed beauty
therapist, a field in which she had trained in Lithuania. She offered treatments by
way of eyelash extensions, eyebrow treatment and waxing. She owned the range of
products and equipment needed for the treatments she provided which were
provided from the shared home where she then lived. As such she was exercising
her right of freedom of establishment under art.49 TFEU.
4. As her pregnancy went on and its effects made themselves increasingly felt, she
found it increasingly hard to deliver the treatments. Some of her customers went
elsewhere. The number of customers reduced in around the fourth or fifth month of
pregnancy. Although she did not stop working entirely she saw herself as having
been "on maternity leave" from 17 April 2014. On 11 May 2014 she became in
receipt of maternity allowance".
5. She moved home on 22 July 2014. Before her move she had been expecting her
customers would continue with her but her expectation was in substantial measure
disappointed. Her new home is about a 30 minute bus ride from her old one.
Between the date of her move and when her son was born (8 August 2014) and
thereafter for a further 2 month period (Le. to approximately the end of October
2014) she treated no customers at all. Thereafter, she saw roughly two customers
per week. Some of those customers were from the area to which she had moved,
others from the area near her previous home. She stopped this activity just before
1 The Regulations were replaced by the Immigration (European Economic Area) Regulations
2016/1052, now themselves amended by the Immigration (European Economic Area) (Amendment)
Regulations 2018/801 with effect from 24 July 2018.
2 Maternity allowance is not subject to a "right to reside" condition.
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she claimed jobseeker's allowance on 10 February 2015, because her profit was
less than it had been previously, and insufficient.
6. On or around 1 April 2015 she once again took up employment as a warehouse
operative.
7. The Upper Tribunal in its first interim decision dated 12 January 2017:
a. held that the FtT had erred in law and set its decision aside; and
b. remade the decision that had been under appeal to the FtT to the extent of
making further findings of fact (including those summarised above). It
concluded that from 22 July 2014 any economic activity as a self-employed
beauty therapist was marginal and ancillary. As such activity was never
resumed in a way which was not marginal and ancillary, there was, in
consequence, a period from 23 July 2014 to 9 February 2015 when Ms D was
not (sufficiently) economically active (in any capacity), within which the date of
her son's birth fell.
8. In C-507/12 Saint-Prix3 the Court held that:
"Article 45 TFEU must be interpreted as meaning that a woman who gives up
work, or seeking work, because of the physical constraints of the late stages
of pregnancy and the aftermath of childbirth retains the status of 'worker',
within the meaning of that article, provided she returns to work or finds
another job within a reasonable period after the birth of her child."
9. In the present case HMRC concedes that the reason why Ms D ceased any
genuine and effective economic activity was because of the physical constraints of
the late stages of pregnancy and the aftermath of childbirth and that her return to
economic activity, first by way of job-seeking and then by way of employment,
occurred within a reasonable period after the birth of her child. .
10. Accordingly the issue for the Upper Tribunal is whether principles equivalent to
those in Seint-Ptix apply to a person who, prior to ceasing economic activity, was
exercising rights of freedom of establishment under art.49 TFEU rather than, as in
Ms Saint-Prix's case, freedom of movement as a worker under art.45.
11. It appeared possible that the reference by the Irish Court of Appeal in C-442116
Florea Gusa might have led to a ruling from the Court in terms which would have
answered the present question and accordingly the present case was stayed to
await it. Once the Court's decision became available further submissions were
invited. By a second interim decision, dated 26 April 2018, the Upper Tribunal
decided to refer the matter to the Court under art. 267 TFEU.
3 The domestic case which seeks to apply Saint-Prix within the context of the UK's social security
system is Secretary of State for Work and Pensions v SFF and linked cases [20151 UKUT 502 (AAC);
[20161AACR 16
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Submissions of the parties
12. HMRC submits (in outline):
a. Florea Gusa was a decision on the specific terms of Article 7 of the
Directive, leading to the conclusion that the protection against involuntary
unemployment applied to the previously self-employed as to the previously
employed;
b. C-147/1 and C-148/11 Czop and Punakova are further illustrations of the
Court applying an approach based on specific pieces of legislation - in those
cases holding that art.12 of Regulation No. 1612168 did not extend to the self-
employed;
c. in some cases workers and the self-employed have the same rights, but
there is no general principle to that effect': and
d. the present issue is not one of those where workers and the self-employed
should be treated alike. An employee who becomes pregnant is in a binary
situation: absent the ruling in Saint-Prix, a person with a contract of
employment is protected, a person without a contract of employment is not. A
self-employed person who becomes pregnant is not in a binary situation.
Unlike an employee, she is not required personally to carry out the work. It is
open to her to take steps to maintain her self-employment through the period
of pregnancy and maternity (e.g. by arranging for others to carry out the work,
keeping contacts "live" and so on, as Ms P, the claimant in the case
previously linked to this one", did) and in due course to resume more fully. If
she chooses not to continue the business, she is choosing not to exercise art.
49 rights. The need arose to safeguard a person in the position of Mr Gusa
because the absence of work had been beyond his control: such is not the
case for a self-employed woman, who can take steps to keep her business
alive.
13. Ms D submits (in outline) that:
a. the Court's decision in Florea Gusa contains dicta as to matters which
evidently fortified the Court in its interpretation of Art 7 and which would
support the proposition that the previously self-employed should have the
benefit of Seint-Prix rights. At [36], the Court identifies the key distinction as
being whether, not how, a person is economically active. At [40], the Court
relies on a teleological approach which had also found favour in Saint-Prix
4 An argument that there is such a principle was rejected by the Court of Appeal in the domestic case
of Hrabkova v Secretary of State for Work and Pensions [2017) EWCA Civ 794; [2017) PTSR 1624
which concerned the application of art.1 0 of Regulation 492/2011 (the successor to the legislation
considered in Czop and Punakova).
5 Ms P's case is addressed within the first interim decision (12 January 2017) in the present case
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itself. Unjustified differences in treatment are seen as contrary to the purposes
of the Directive: [41] and [42]. The employed and self-employed may be in
comparable circumstances and should not be treated differently [43]. Nor
should a self-employed person, who will have been paying taxes and other
charges on his income, be treated inequitably:[44J.
b. Czop and Punakova concern legislation specifically framed by reference to
workers, as does Hrabkova. By contrast, though there are Directives about
maternity pay and leave, as regards rights of residence at times of maternity,
whether of the employed or the self-employed, the EU simply failed to
legislate.
c. in response to the argument summarised at [12dJ above, in addition to
relying on the points emerging from the Gusa decision summarised at [13aJ
above, the respondent submits (i) that if Selnt-Prlx did not apply to the self-
employed, there would be a risk of deterring people from exercising their right
of free movement and (ii) that the true question to be asked is not whether
someone can continue to carry on in some shape or form the business they
have got, but whether they should be permitted to retain self-employed status,
a distinction which may have implications for a woman's post-pregnancy
choices;
d. an interpretation that art.49 should continue to apply to Ms D at the time in
question is consistent with general principles of EU law of equal treatment as
between men and women and with provision made for such treatment in
secondary legislation; and
e. it is not necessary in order for Ms D to succeed to establish a general
princlple that the self-employed and the employed should have the same
rights. Looking at whether they should do so in specific situations, for the
reasons above, this is such a situation.
Reasons for reference to the CJEU
14. The Upper Tribunal considers that whether the principles of Saint-Prix can be
applied to a person who had been exercisinq rights of freedom of establishment
under art.49 is not acte clair, is an important question of potentially wide applicability
across the EU and is one that has not yet been clarified or otherwise addressed by
the CJEU, and one which the Upper Tribunal considers necessary to enable it to
give judgment. It is therefore appropriate to refer the question below to the CJEU.
15. Question referred
In circumstances where an EU citizen who is a national of one Member State
(i) is present in another Member State (the host Member State), (ii) has been
active as a self-employed person within the meaning of Article 49 TFEU in the
host Member State, (iii) was paid a maternity allowance from May 2014 (a
point at which she considered herself less able to work on account of
pregnancy), (iv) has been found to have ceased to be in genuine and effective
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self-employed activity from July 2014, (v) gave birth in August 2014, and (vi)
did not return to genuine and effective self-employed activity in the period
following the birth and prior to claiming jobseekers' allowance as a jobseeker
in February 2015:
Must Article 49 TFEU be interpreted as meaning that such a person,
who ceases self-employed activity in circumstances where there are
physical constraints in the late stages of pregnancy and the aftermath
of childbirth, retains the status of being self-employed, within the
meaning of that Article, provided she returns to economic activity or
seeking work within a reasonable period after the birth of her child?
C.G.Ward
Judge of the Upper Tribunal
7 August 2018
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