Coordination of social security systems-Third-country nationals pursuing gainful employment- Concept of lawful residence

In his Opinion delivered on 27 September (Balandin and Others’ C-477/17), Advocate General Wahl proposes a first interpretation of the concept of “lawful residence” in the sense of Regulation 1231/2010.

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Sep 30, 2018
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In his Opinion delivered on 27 September (Balandin and Others’ C-477/17), Advocate General Wahl proposes a first interpretation of the concept of “lawful residence” in the sense of Regulation 1231/2010.

The case in the main proceedings

The case concerns third-country nationals, who pursue gainful employment in the Netherlands, covered by short-stay Schengen visa (and by virtue of national legislation, exempt from the obligation to hold a work permit). On behalf of their employer, they perform work activities in other Member States, covered by the same short-stay Schengen visa, eventually complemented by national short-stay visas.

Question referred for a preliminary ruling

The question referred to the European Court of Justice, is whether the competent authority of the Member State of employment, must issue the Portable Document A1, to third-country nationals who work in various Member States on a temporary basis, and reside outside of the European Union (lawful stay in the European Union covered by short-stay visa).

Regulation 1231/2010

Pursuant to Article 1, Regulation 1231/2010, “Regulation (EC) No 883/2004 and Regulation (EC) No 987/2009 shall apply to nationals of third countries who are not already covered by those Regulations solely on the ground of their nationality, as well as to members of their families and to their survivors, provided that they are legally resident in the territory of a Member State and are in a situation which is not confined in all respects within a single Member State.”

Opinion delivered by Advocate General Wahl

The Advocate General observes first that pursuant to settled ECJ’ case law, third-country nationals holding a residence permit in a Member State, fulfil the criterion of lawful residence in the sense of Regulation 1231/2010.

Regulation 1231/2010 neither provides for a definition of the concept of lawful residence, and nor contains any reference to national legislations. Considering the need for an uniform application of EU law and the principle of equality, it follows that the concept must be “given an autonomous and uniform interpretation throughout the European Union”.

The concept of lawful residence determined by the conditions of entry, stay and residence under national legislations, is not relevant as the case at issue, however, such conditions are not fully harmonised under the EU law.

Having regard to the above considerations, under the social security coordination legislation, third-country nationals may not invoke any right to enter, stay, reside and work in a Member State. Such legislation produces its effects only if the person concerned is already legally resident in the territory of a Member State.

Referring to the observations submitted by the participants in the proceedings, the Advocate General takes the view that the concept of residence provided for by Article 1(j) Regulation 883/2004 and interpreted by Article 11 Regulation 987/2009, represents a factual concept, and as a consequence, irrelevant for the interpretation of the term “legally resident” in the sense of Regulation 1231/2010.

Practically, the Opinion distinguishes between on the one hand, the concepts of “residence” and” temporary stay” for the purposes of Regulation 883/2004 and its implementing regulation, considered as a question of fact, which must be answered by reference to facts and evidence, and on the other hand,  the concept of “legally resident” in a Member State, in the sense of Regulation 1231/2010, which must be strictly determined as a matter of EU law.

Pursuant to the ECJ’s settled case law, such a determination must consider the wording, the context and the objectives pursued by the rules of law.

Firstly, only a lawful residence in a Member State, would not satisfy the second criterion provided for by Article 1 Regulation 1231/2010. The third-country nationals concerned, must be beneficiaries of the right to move and reside in the European Union.

Advocate General Wahl observes that two categories of third-country nationals may enforce the right to move and reside in the European Union: those whose right is provided for by EU legal instruments (such as but not limited to the Blue Card Directive and the Intra Corporate Transfer Directive), and those whose right is derived from a legal status, on grounds of national law.

However, as the conditions of entry and residence of third-country nationals are not fully harmonised, and the criteria determining such rights vary among the Member States, in order to qualify for legal residence in the sense of Regulation 1231/2010, third-country nationals belong to the second category, must hold a residence permit.

The Advocate General concludes that beyond the categories above referred to, third-country nationals, cannot be deemed to be legally resident in the sense of Regulation 1231/2010, and as a consequence, may not invoke (Title II of) Regulation 883/2004 and Regulation 987/2009.

With simple words, the competent authority of the Member State of employment, may not issue the Portable Document A1, to third-country nationals who work in various Member States on a temporary basis, and reside outside of the European Union (lawful stay in the European Union covered by short-stay visa).

Insights on and beyond the Opinion

1 The reasoning disregards long stay visas in the sense of Regulation 265/2010, amending the Convention Implementing the Schengen Agreement and Regulation 562/2006 as regards movement of persons with a long-stay visa.

May a VLS-TS visa holder (i.e. long stay visa issued by France), invoke (Title II of) Regulation 883/2004 and Regulation 987/2009? The response should be positive.

2 The Opinion is based inter alia on the fact that the third-country nationals concerned, have stayed in the Schengen territory for a period beyond 90 days in any 180-day period, enforcing the right to obtain national visas. They could instead obtain residence permits, on grounds of the Single Permit Directive.

Provided that the duration of stay does not exceed 90 days in any 180-day period, on the one hand,  pursuant to Article 3.1(a) Single Permit Directive, the said directive applies to “third-country nationals who apply to reside in a Member States for the purpose of work”, and on the other hand, pursuant to Article 3.4, the provisions of Chapter II (Single application procedure and single permit), “shall not apply to third-country nationals who are allowed to work on the basis of a visa”.

Third-country nationals intend to stay for work, for a duration does not exceed 90 days in any 180-day period, can be submitted to the obligation to hold a work permit, however, do not have the choice to be issued a residence permit.

In any circumstances, the question is whether third-country nationals who pursue gainful employment in a Member State, and on behalf of their employer, perform work activities in other Member States, covered by short-stay Schengen visa (complemented or not by national visa), shall be subject to the legislation of two Member States. Alternatively, they shall be subject only to the legislation of the Member State of employment, and as regards the other Member States where work activity will be carried out, covered by the private health insurance should have been contracted in their country of residence pursuant to Article 15 Schengen Visa Code? It appears from the Opinion that the latter situation would be relevant.

Another question would be the determination of the employment status in the “host” Member State.

Advocate General Wahl, rules out not only the relevance of Article 56TFEU (freedom to provide services), but merely the status of “posted worker”.

It must be observed that the social security coordination regulations and the Directive 96/71/EC (Posted Workers Directive) are hermetic instruments.

As the case at issue, the third-country nationals have an employment contract with the Dutch employer, and have social security cover in the Netherlands.

The definition of posted worker provided for by Article 2 Directive 06/71/EC, does not contain any reference to the residence status.

Pursuant to Article 8 Regulation 593/2008 (Rome I), where the country from which the employee habitually carries out his work cannot be determined, the place of business through which the employee was engaged must be considered.

Lastly, in C-18/17 (Danieli and Others), Advocate General Wahl took the view that: “the directive applies to a wide array of situations in which workers are transferred from one Member State to another in the context of cross-border provision of services” (i.e. the Posting of Workers Directive).

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Tanel Feldman

Managing Partner, Immigration Law Associates

Corporate Immigration Law/Employment Law/Social Security Law/European Law

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