The Court of Justice has handed down judgment (19 September 2019) in the case of HMRC v Dakneviciute C-544/18 holding that that pregnant self-employed EU citizens can retain their self-employed status during periods of pregnancy and maternity when not working.
I acted as Counsel in the case, together with my colleague Desmond Rutledge of Garden Court Chambers. We were instructed by the Welfare Rights Service of the City of Wolverhampton Council.
The highly significant ruling allows pregnant women to retain a right to reside in the UK during pregnancy and maternity and to be eligible for child benefit, tax credits, homelessness assistance, social housing and other related benefits. It also gives them lawful residence in this period.
Her Majesty’s Revenue and Customs (HMRC), the UK Government agency in the case, had argued that pregnant women and those in the post-birth maternity period lost their right of residence. Had the Government succeeded many women would have lost their means to live at a critical time in their lives. The ruling protects the position of women and new-born babies.
The Court considered the provisions of the free movement rule for EU Citizens, Directive 2004/38/EC, as well the provisions made for equal treatment between men and women engaged in a self-employed capacity, Directive 2010/41/EU.
Ms Dakneviciute ceased self-employment in the late stages of pregnancy. She claimed child benefit shortly after the birth of her child and did not return to look for work until a few months later. Her child benefit application was refused for want of a right to reside. HMRC said that she had ceased to exercise EU rights of free movement as a self-employed person and so lacked a qualifying right to reside. She appealed. When the case reached the Upper Tribunal, a question as to whether she could retain her self-employed status during the period of her pregnancy and maternity was referred to the Court of Justice.
Provision for free movement for self-employed EU Citizens is found in Article 49 of the Treaty on the Functioning of the European Union (TFEU). In substance, the question referred asked whether Article 49 TFEU must be interpreted as meaning that a woman 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, provided that she returns to the same or another self-employed activity or employment within a reasonable period after the birth of her child.
In Saint-Prix C-507/12 the Court had held that article 7(3) of Directive 2004/38 which lays down the cases in which a Union citizen who is no longer a worker or self-employed person nevertheless retains that status, and the correlate right of residency, does not cover the case of a woman who temporarily gives up work (i.e. employment) because of the late stages of her pregnancy and the aftermath of childbirth.
The Court also recalled that Article 7(3) of Directive 2004/38 does not list exhaustively the circumstances in which an EU Citizen who is no longer a worker or self-employed person in the host Member State will nevertheless retain the status of ‘worker’ for the purposes of Article 7(1)(a) thereof and, consequently, the right of residence derived from that status.
In Saint-Prix the Court held that the fact that the physical constraints of the late stages of pregnancy and the immediate aftermath of childbirth require a woman to give up work during the period needed for recovery does not, in principle, deprive her of the status of ‘worker’ within the meaning Article 45 TFEU ( which provides for free movement for workers).
In Ms Dakneviciute’s case the question resolved itself into whether self-employed women should be treated differently from employed women. The Court recalled that Articles 45 and 49 TFEU afford the same legal protection, the classification of the economic activity thus being without significance.
It went on to hold that an EU Citizen would be deterred from exercising her right to freedom of movement if, in the event that she was pregnant in the host Member State and gave up self-employed activity as a result, if only for a short period, she risked losing her status as self-employed in that State. Employees and the self-employed are in a comparable vulnerable position if obliged to stop working, and therefore cannot be treated differently as regards retention of their right of residence in the host Member State.
HMRC’s argument that a self-employed person could temporarily find a substitute person to fulfil her work was rejected: such substitution could not be assumed where the work involved a personal relationship or a relationship of trust with a customer.
In the result self-employed EU Citizens retain their self-employed status and right of residence in the following way: a woman 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, provided that she returns to the same or another self-employed activity or employment within a reasonable period after the birth of her child.
The ruling shows the Court upholding the rights of economically active women, acknowledging that they have to cease self-employment during periods of pregnancy and maternity but finding that they should not thereby lose rights of residence. The ruling opens the door not only to continued lawful residence in that period but also to all forms of social assistance, benefits, housing assistance, and tax credits that impose a right to reside test. It is to be welcomed.