Guidance

A5/2021: Pre-settled status – effect of the Court of Appeal decision in the Fratila case

Updated 31 January 2022

Who should read

All Housing Benefit (HB) staff

Action

For information

Subject

Pre-settled status – effect of the Court of Appeal decision in the Fratila case

Guidance Manual

The information in this circular does not affect the content of the HB Guidance Manual.

Queries

Extra copies of this circular/copies of previous circulars can be found at Housing Benefit for local authorities: adjudication circulars

For queries about the:

• general or technical content of this circular, contact housing.policyenquiries@dwp.gov.uk
• distribution of this circular, contact lawelfare.correspondence@dwp.gov.uk

Introduction

1. This circular is to inform local authority (LA) decision makers on a recent Court of Appeal decision (Fratila and Tanase v SSWP & AIRE Centre [2020] EWCA Civ 1741) which deals with the issue of whether the amendments made by the Social Security (Income-related Benefits) (Updating and Amendment)(EU Exit) Regulations 2019 (SI 2019/872) to income-related benefits are discriminatory under European Union (EU) law and if so, whether that discrimination was justified.

2. The amendments made by SI 2019/872 provided that pre-settled status granted to European Economic Area (EEA) nationals and their family members was not sufficient in itself to satisfy the right to reside for the purposes of the habitual residence test.

Background

3. The claimants in the Court of Appeal case are Romanian nationals who came to the UK in 2014 and 2019. In 2019, each was granted limited leave to remain in the UK under the EU Settlement Scheme (also known as ‘pre-settled status’).

4. The claimants then applied for Universal Credit (UC) which was refused on the grounds that pre-settled status is not a right to reside which enables access to means-tested benefits.

5. The claimants argued that the non-entitlement to benefits, despite having limited leave to remain in the UK with no conditions restricting recourse to public funds, was in breach of the EU right to not be discriminated against on the ground of nationality in comparison with UK nationals, a right which has direct effect. The claimants requested that SI 2019/872 be quashed.

High Court decision

6. The High Court held that the claimants could rely upon Article 18 of the Treaty on the Functioning of the European Union to protect themselves against unlawful discrimination on the grounds of nationality as they were EU nationals legally residing in the UK under domestic law (due to the acquisition of pre-settled status). However, the Court held that the discrimination treatment they had suffered was lawful because it was justified. The claimants also accepted that the legal basis for their claim fell away at the end of the transition period.

Court of Appeal decision

7. The Court of Appeal determined that as they had been granted a right of residence under UK law, and as EU laws still applied until the end of the transition period on 31 December 2020 the claimants could rely on the EU Treaty’s prohibition on discrimination, which covers social assistance.

8. The Court also found that the exclusion of pre-settled status as a right to reside which enables a claimant to access means-tested benefits was prohibited as made clear in previous cases. This rule was directly discriminatory on the grounds of nationality and therefore unlawful as this type of discrimination cannot be justified under EU law.

9. The decision of the Court of Appeal was limited to the interpretation of EU Law as it applied up to the end of the transition period on 31 December 2020.

10. If this decision were to be implemented, it would mean that those with pre-settled status, who are present in the UK, (and provided that they made a claim prior to the end of the transition period) have a qualifying right to reside that allows access to means-tested benefits in the same way as those with settled status. In other words, they are said to have a right to reside which is sufficient for the purposes of satisfying the habitual residence test.

11. The Secretary of State (SoS) has been granted permission to appeal this decision to the Supreme Court.

12. This judgment does not affect the amendments made in respect of pre-settled status for Zambrano carers and such cases should continue to be assessed as they are currently.

Staying lookalike cases

13. Decision makers should stay making decisions on claims to HB in respect of any case where the issue involves the refusal of benefit due to the claimant having no right to reside other than their pre-settled status (leave to remain), and the application for HB was made prior to the end of the transition period. If the claimant with pre-settled status has an alternative right to reside then their application should proceed as usual.

14. If a claimant applies for a revision or supersession of a disallowance decision made on an application made before 31 December 2020, on the grounds that the Court of Appeal decision means that they are entitled to benefit, the Decision Maker should stay making a decision in response.

15. The claimant should be notified that the decision maker has decided to use the staying power and so will not make a decision on the claim (or in response to the application for revision or supersession) until the result of the Supreme Court judgment is known.

16. See paragraphs 7.960 – 7.969 of Chapter C7 of the HB guidance manual for more advice on staying cases.

17. There is no right of appeal against a decision to stay.

Appeals

18. Where a lookalike case has already had a decision and an appeal is received against that decision, the appeal should be referred to the First Tier Tribunal (FtT) in the normal way, but the FtT should be advised of the lead case and that they may wish to use their case management powers (Tribunal Procedure (First-tier Tribunal) (SEC) Rules 2008, Rule 5(3)(j)) to stay proceedings and defer further action pending the outcome of the appeal to the Supreme Court.

19. Similarly, where an appeal is pending before a FtT and the Judge raises the question of whether the Court of Appeal decision in Fratila applies in a case, the decision maker should :

• advise the FtT that the SoS has received permission to appeal the Court of Appeal decision in the Supreme court and
• invite the FtT to use their case management powers to stay proceedings and defer further action pending the outcome of the appeal to the Supreme Court

Difficult cases

20. Decision makers may encounter cases where it is difficult to decide whether the case in front of them is a genuine lookalike case. Such cases can be referred to Decision Making and Appeals (DMA) Leeds) for advice.

Applications for HB from 1 January 2021

21. Although the decision of the Court of Appeal in Fratila quashes the amendments made to the regulations for income-related benefits by SI 2019/872, this only has effect up to the end of the transition period. Therefore, the grant of a stay of execution on the quashing order means that decisions from 1 January 2021 can still be made relying on SI 2019/872.