RF v London Borough of Lambeth (HB) (European Union law - workers)

Factual and Procedural Background

This opinion concerns an appeal against a decision by a local authority to terminate a claimant's housing benefit on the basis that the claimant no longer met the required Minimum Earnings Threshold to be considered a self-employed person with a right to reside in the United Kingdom. The claimant initially received housing benefit as a self-employed cleaner but reported reduced working hours, prompting the local authority to cease the benefit. The claimant appealed the decision to the First-tier Tribunal, which dismissed the appeal. The Upper Tribunal was then asked to review the First-tier Tribunal’s decision.

Legal Issues Presented

1. Whether the First-tier Tribunal and the local authority erred in law by misapplying the Minimum Earnings Threshold in assessing the claimant’s right to reside as a self-employed person.
2. Whether the First-tier Tribunal denied the claimant a fair hearing by proceeding with the appeal in the claimant’s absence without adequately considering an adjournment or providing proper directions.
3. Whether the tribunal properly applied the legal test for determining if self-employment is genuine and effective under the relevant EU law and domestic regulations.

Arguments of the Parties

Appellant's Arguments

• The claimant argued that the local authority and the First-tier Tribunal misunderstood the application of the Minimum Earnings Threshold, treating it as a strict rule rather than a guideline that triggers further assessment if not met.
• The claimant contended that the First-tier Tribunal’s adverse findings regarding the genuineness of her business relationship and evidence were unfair, particularly as she and her representative did not attend the hearing.
• The claimant’s representative indicated that the claimant’s reduced income was due to sub-contracting arrangements, and that the evidence provided should have been properly considered.

Respondent's Arguments

• The local authority maintained that the Minimum Earnings Threshold was introduced as part of a government plan to ensure benefits only go to those genuinely working and that earnings below the threshold showed self-employment was not genuine and effective.
• The local authority’s representative asserted that the claimant’s earnings fell below the required level, justifying termination of housing benefit.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
KK v Secretary of State for Work and Pensions [2015] UKUT 417 (AAC)	Guidance on assessing right to reside and genuineness of self-employment under EU law and domestic regulations.	The tribunal was directed to reconsider the appeal in accordance with the principles established in this precedent, particularly regarding the claimant’s right to reside.
Directive 2004/38/EC Article 7(1)(a)	Defines right to reside for self-employed persons within member states.	Used to establish the legal framework for determining whether the claimant’s self-employment was genuine and effective.
Housing Benefit Regulations 2006 regulation 10(3B)(za)	Regulatory provision implementing the right to reside condition for housing benefit entitlement.	Applied to assess the claimant’s entitlement based on self-employment status and earnings.

Court's Reasoning and Analysis

The Upper Tribunal identified that the local authority and the First-tier Tribunal made a legal error by treating the Minimum Earnings Threshold as a strict rule rather than a threshold that triggers a broader assessment of the genuineness and effectiveness of self-employment. The Department for Work and Pensions Circular A3/2014 clarifies that meeting the threshold is a concession of genuine self-employment, but failure to meet it requires further examination of other factors such as hours worked and nature of employment. The tribunal failed to apply this two-stage approach correctly.

Moreover, the tribunal’s decision to proceed in the claimant’s absence without adequately considering an adjournment or giving directions on evidence was found to deny the claimant a fair hearing. The tribunal made adverse findings of fact amounting to an implication of fraud without providing the claimant an opportunity to respond or clarify. This procedural unfairness was a separate and additional ground for setting aside the decision.

Consequently, the Upper Tribunal set aside the decision and remitted the case for rehearing by a differently constituted panel, with explicit instructions to reconsider all issues, including the claimant’s right to reside, in line with established legal principles.

Holding and Implications

The Upper Tribunal SET ASIDE the decision of the First-tier Tribunal and REMITTED the case for rehearing by a differently constituted panel.

The direct effect of this ruling is that the claimant’s appeal must be reconsidered afresh, ensuring proper application of the legal test regarding the Minimum Earnings Threshold and the right to reside, as well as guaranteeing procedural fairness through appropriate directions and hearing procedures. The decision does not create new precedent but reinforces the correct legal approach and procedural safeguards in housing benefit entitlement cases involving self-employed persons.