Alhashem v The Secretary of State for Work and Pensions

Factual and Procedural Background

This appeal concerns social security law and questions of law to which EU law applies. The Appellant, a citizen of another EU member state, had been residing in the UK since 2010. Initially, she was awarded a job seeker's allowance ("JSA"), which ceased due to ill health preventing her from signing on for work. She then applied for employment and support allowance ("ESA"), which was refused by the Secretary of State on the basis that she did not have the right to reside in the UK. The Appellant appealed to the First-tier Tribunal ("FTT") on two grounds; only the second ground is relevant here, claiming that under EU law, ESA should be available to job seekers with a right to reside who meet financial eligibility criteria. Both the FTT and the Upper Tribunal ("UT") rejected this ground, with the UT concluding that ESA is intended for claimants unable to access the labour market and is not a benefit facilitating access to the labour market as defined by EU law. Permission to appeal to the Court was refused by the UT Judge who emphasized the preliminary nature of ESA's work-related activity.

Legal Issues Presented

1. What is the proper test under EU law to distinguish between "social assistance" and "labour market-related benefits" for job seekers from other member states?
2. Does ESA qualify as a labour market-related benefit or as social assistance under EU law?
3. Can ESA be separated into distinct components for the purpose of applying the predominant function test?
4. Are there any other relevant legal considerations affecting the entitlement of job seekers to ESA under EU law?

Arguments of the Parties

Appellant's Arguments

• ESA is intended to facilitate access to the labour market, not merely provide subsistence.
• The Department for Work and Pensions describes ESA as helping people with illness or disability to move into work.
• Work-related conditionality for the Work Related Activity Group evidences ESA’s purpose to facilitate labour market access.
• Claimants may undertake limited permitted work while receiving ESA, supporting its labour market-related nature.
• ESA should be treated as a labour market-related benefit a fortiori given relevant EU case law recognizing similar benefits as such.
• ESA’s conditionality and work-permission elements demonstrate its function beyond mere social assistance.
• ESA’s components payable to the Work Related Activity Group can be separated out as a distinct benefit under EU law.

Respondent's Arguments

• ESA does not facilitate immediate access to the labour market and its predominant function is social assistance.
• ESA is a safety net for those unable to support themselves due to disability and is payable only to those with limited capability for work.
• The Secretary of State cannot verify whether claimants are genuinely seeking work, making ESA unsuitable as a job seeker benefit.
• EU law, particularly the CJEU judgment in Alimanovic, supports a narrow interpretation of labour market-related benefits.
• ESA cannot be separated into components because its design allows claimants to move between groups based on capability.
• Neither conditionality nor permitted limited work changes ESA’s fundamental character as social assistance.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Case C-67/14 Jobcenter Berlin Neukolln v Alimanovic	Test to distinguish social assistance from labour market-related benefits based on predominant function.	Applied to conclude ESA is social assistance, not a labour market-related benefit.
Case C-456/02 Trojani v Centre Public d'aide sociale de Bruxelles	Member states may restrict social assistance to lawful residents.	Supported the principle that ESA could be withheld from non-resident job seekers.
Case C-140/12 Pensionsversicherungsanstalt v Brey	Definition of social assistance as assistance to those lacking resources for basic needs.	Confirmed ESA fits within the broad concept of social assistance.
Case-138/02 Collins v Secretary of State for Work and Pensions	Non-discrimination in benefits for workers and job seekers; genuine link test.	Distinguished JSA as a labour market-related benefit and set parameters for eligibility.
Case C-22/08 and C-23/08 Vatsouras v ARGE Nurnberg	Test for labour market-related benefits based on intention to facilitate access to employment.	Discussed but refined by later Alimanovic case; intention test supplemented by predominant function test.
Case C-299/14 Vestische Arbeit Jobcenter Kreis Recklinghausen v Garcia-Nieto	Confirmed Alimanovic’s approach to distinguishing social assistance from labour market-related benefits.	Reinforced narrow approach to labour market-related benefits.
Case C-333/13 Dano v Jobcenter Leipzig	Permitted member states to restrict social assistance to protect financial balance of social security systems.	Supported protection of member state public finances against "benefits tourism".
Case C-289/92 R (o/a Antonissen) v Immigration Appeal Tribunal	Member states may verify entitlement to benefits based on genuine job seeking.	Distinguished ESA as unsuitable for such verification and conditionality.
Case C-224/98 D'Hoop v Office National d'Emploi	Labour market-related benefit characterized by facilitating access to employment.	Used to argue ESA is labour market-related; court rejected this on predominant function basis.
Case C-299/05 Commission of the European Communities v European Parliament	Benefit components may be severed if distinct (e.g., mobility element of disability living allowance).	Considered but court held ESA is not separable into components for EU law purposes.
Sanneh v Secretary of State for Work and Pensions [2015] 2 CMLR 27	EU law does not guarantee equal social security benefits to non-EU nationals caring for EU citizens.	Illustrated limits of EU law in social security benefits; analogized to limitations on ESA entitlement.

Court's Reasoning and Analysis

The Court began by identifying the applicable legal test under EU law to distinguish social assistance from labour market-related benefits. It concluded that the predominant function test, as clarified in Jobcenter Berlin Neukolln v Alimanovic, is controlling. This test requires evaluating whether the main purpose of the benefit is to facilitate access to the labour market, not merely the intention behind it.

Applying this test, the Court examined the nature and purpose of ESA. It noted ESA's design as a non-contributory benefit aimed at assisting individuals with limited capability to work, including those unable to undertake work-related activity. The majority of ESA claimants fall into a support group with limited capacity to engage in work or related activities, indicating ESA's primary function is welfare and subsistence rather than labour market integration.

The Court rejected the Appellant's reliance on ESA's conditionality and permitted limited work, finding these features insufficient to alter the predominant welfare function of ESA. The inability of the Secretary of State to verify genuine job seeking or impose strict work-related requirements further supported this conclusion.

Regarding the argument that ESA could be separated into components, the Court agreed with the Respondent that ESA is structured to allow claimants to move between groups, making it a single, integrated benefit. Consequently, the predominant function test applies to ESA as a whole.

The Court also acknowledged the broader policy context, including the need for member states to protect their social security systems from abuse ("benefits tourism") and the inherent limitations on EU citizenship as a basis for claiming social benefits across member states.

Ultimately, the Court found that ESA is social assistance under EU law and not a labour market-related benefit, thus it may be lawfully withheld from job seekers from other member states who do not have the right to reside.

Holding and Implications

The Court DISMISSED THE APPEAL.

The Court held that Employment and Support Allowance (ESA) is a social assistance benefit whose predominant function is to provide welfare for individuals unable to support themselves due to disability, rather than a labour market-related benefit intended to facilitate access to employment. As a result, under EU law, ESA need not be made available to job seekers from other member states who lack the right to reside in the UK. This decision confirms the narrow interpretation of labour market-related benefits, emphasizing that EU citizenship does not guarantee entitlement to all social benefits across member states. No new precedent was established beyond applying existing EU case law to the facts of this case. The direct effect is that the Appellant and similarly situated individuals are not entitled to ESA under EU law in the UK.