The Supreme Court has today dismissed the Home Office appeal in the case of Gubeladze [2019] UKSC 31. The judgment affects hundreds of thousands of EU citizens from the so-called Accession Eight (or “A8”) countries that joined the EU in 2004 and means that the United Kingdom unlawfully imposed a registration system, known as the Worker Registration Scheme, on these citizens between 2009 and 2011.

The Worker Registration Scheme for A8 migrants

When new countries join the EU, self employed workers from those nations enjoy immediate access to the labour market of other EU countries. EU law allows pre-existing EU countries to impose restrictions, referred to as “transitional arrangements”, on employed workers if they consider it proportionate to do so for a maximum period of seven years.

When eight new countries joined the EU in 2004, the UK decided not to prevent employed workers from being able to work in the UK but at the last minute did impose a registration scheme, the Worker Registration Scheme. This was initially imposed for a period of five years. In 2009, it was extended for a further two years.

The issue in this case was not whether it was lawful to impose transitional arrangements at all but whether the particular transitional arrangements that were imposed were lawful. Mrs Gubeladze argued that the requirements of the Worker Registration Scheme were disproportionate in EU law, imposing too heavy a burden on EU citizens and on employers for very little purpose.

The scheme created a criminal offence for employers, the cost for workers was £90 and evidence suggested that non-compliance by relevant workers, which was likely accidental in almost all cases, was as high as 33%. Non-compliance would affect entitlement to claim benefits, acquisition of permanent residence and, ultimately, eligibility for British citizenship. 

Over two thirds of the judgment is given over to quoting the various relevant legal provisions in EU and UK law and dealing with the government’s argument that EU law proportionality did not apply at all in this situation, contrary to the earlier House of Lords case of Zalewska [2008] UKHL 67. This argument was rejected and the earlier case confirmed.

Proportionality of extending the Worker Registration Scheme

The Supreme Court noted that the government had failed to give any reasons for deciding to continue the scheme when it was known there was an adverse impact on employers and affected workers. The Government had relied entirely on a Migration Advisory Committee (“MAC”) report commissioned for this purpose, which postulated a slight deterrent effect to the WRS and therefore some benefit to its continuance in limiting inflow of workers at a time of disturbance in the labour market due to the financial crisis and rise in unemployment. However, MAC had noted the impact on employers and affected workers and left it to the government to weigh the benefits.

This the government had not done, simply relying on the MAC report as it stood. This did not mean that the extension of the WRS was automatically unlawful, but

it does mean that it is difficult to say that any significant weight or respect should be given to the Secretary of State’s (unexplained) assessment that it was right to extend the WRS when conducting a proportionality review.

Civil servants and Ministers seemed to have confused evidence with policy.

The Supreme Court goes on to uphold the findings of the tribunal and Court of Appeal below that the decision to extend the WRS was not proportionate. The benefits of doing so were “very limited and rather speculative” but there were “considerable detriments for employers and workers from A8 States“.

Retirees and whether residence must be lawful

The court then goes on to find that an EU citizen seeking retirement and permanent residence rights in another member state on the basis of three years residence, one year of which must have been as a worker, does not need to prove lawful residence for that three year period.

This highlights a difference in language in the Citizens’ Directive between Article 16 on “normal” acquisition of permanent residence after five years of “residing legally” and early acquisition of permanent residence on the basis of retirement as a worker under Article 17, which just says “residence”. The UK government argued that Article 17 flowed from Article 16 and therefore residence must be lawful, but lost on this point.

Implications of the judgment in practice

The judgment means that the extension of the Worker Registration Scheme between 2009 and 2011 was unlawful. In turn, this suggests several things:

• All those A8 EU citizens who paid the £90 fee to register between 2009 and 2011 should in theory be refunded their payments. A fee needed to be paid for every job, so a person moving between jobs may have had to make several payments. If there is any announcement from the government on this we’ll update this blog post.
• EU citizens who sought permanent residence on the basis of five years’ lawful residence and were refused because of non-compliance with the WRS between 2009 and 2011 were wrongly refused permanent residence. There is probably no point trying to put this right for most of those affected because the right of permanent residence becomes meaningless if Brexit goes ahead and an application will need to be made under the settled status scheme anyway.
• EU citizens who were refused British citizenship for not meeting either the residence or good character requirements because of non-compliance with the WRS between 2009 and 2011 should ask for their decisions to be reconsidered.
• Any retirees denied benefits and permanent residence because of non-compliance with the WRS between 2009 and 2011, like Mrs Gubeladze herself, should ask that these decisions be reconsidered and seek legal advice on whether they are eligible for back payments.
• Anyone convicted of the criminal offences associated with the WRS between 2009 and 2011 should consider getting legal advice to see if their conviction might be overturned.

Over 100,000 people applied to the WRS in 2009 alone, government figures show.