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Notes:
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Reported as [2012] AACR 27.
European Union law – application of Regulation (EEC) 1408/71 to long-term incapacity benefit
The claimant was a Polish citizen. He worked in the United Kingdom (UK) for the period 19 December 2005 to 20 October 2006. He paid national insurance contributions in the tax year 2005–06 for 16 weeks, followed by 28 weeks in the tax year 2006–07. In October 2006 he was taken ill and was admitted to a psychiatric hospital. He returned to Poland in November 2006 and in January 2008 made a claim for a Polish invalidity pension, which was rejected because he failed to meet the condition under Polish law of a period of insurance of five years at the date of claim, even when his 11 months of insurance in the UK were taken into account, a decision subsequently upheld by the Court of Appeal in Warsaw. On his claim being referred to the UK under EU procedures, the Secretary of State decided that he was not entitled to long-term incapacity benefit under UK legislation because he had completed an insurance period of less than one year, citing Article 48.1 of Regulation (EEC) 1408/71, which provides that the institution of a Member State shall not be required to award benefits in respect of periods completed under the legislation it administers which are taken into account when the risk materialises, if the duration of the said periods does not amount to one year. The claimant appealed. The First-tier Tribunal dismissed his appeal on the basis that the requisite number of contributions had not been satisfied by the claimant during his period of employment in the UK, without considering or enquiring into his contributions in Poland. The claimant appealed to the Upper Tribunal. For the purposes of Regulation 1408/71 there are two types of invalidity benefits: those where the amount of invalidity benefits is independent of the duration of periods of insurance (“Type A”) and those where the amount does depend on such periods (“Type B”). A list of the former appears at Annex IV, part A of the Regulation and includes, at point AA, the legislative provisions applicable to UK invalidity pension, the statutory predecessor to long-term incapacity benefit. The Annex does not refer to invalidity benefit in Poland and the Polish scheme is, therefore, a Type B scheme.
Held, allowing the appeal but substituting a decision in identical terms, that:
1. as UK long-term incapacity benefit was a Type A scheme (being dependent on completion of a period on short-term incapacity benefit rather than of periods of insurance) whereas Poland’s was a Type B scheme, Article 40 was applicable, which in turn applies by analogy the rules about retirement pensions in Articles 44–51a (paragraphs 14 to 16);
2. Article 40(2) created an exception from Article 40(1) where a claimant “suffers incapacity for work leading to invalidity while subject to a legislation listed in Annex IV, part A”, and led to a different set of rules. The more natural reading of the English text was that the expression “suffers incapacity for work leading to invalidity” referred to the onset of the period of incapacity, not of the subsequent invalidity. On that assumption, the claimant’s incapacity commenced when he had his sudden episode of mental illness and therefore while he was subject to UK legislation, but that did not assist him as the indents to Article 40(2) required him to have satisfied the conditions of UK legislation by completing 364 days on short-term incapacity benefit (paragraphs 17 to 21);
3. Article 40(3) made special provisions for a person who had suffered incapacity for work leading to invalidity not in the Member State whose Type A scheme was being considered, but in “another Member State”, but even if that were taken as referring to the onset of invalidity, it did not assist the claimant as he had not received any benefits in Poland that could be taken into account (paragraphs 23 to 24);
4. the whole language of Article 48 addressed a period which was brought to completion by virtue of the risk materialising and, whether the date at which the risk materialised in the present case were taken as the date of onset of incapacity in the UK or of invalidity in Poland, the claimant could not escape the operation of Article 48. It would make no difference that it was allegedly because of stress at work that he was unable to complete one year because he was taken ill (paragraphs 29 to 30);
5. the expression “periods completed” in Article 48 is intended to refer to actual periods completed so that, even if it were the case that the claimant’s earnings had been sufficiently high to enable him to meet the national insurance contributions condition for any given year while in fact working for a lesser period, that would not help him, since the European legislature would express law intended for application across Europe in terms (actual periods) which were capable of being applied anywhere, rather than dependent on the idiosyncrasies of a particular Member State’s system (paragraph 31);
6. Article 48(3) contained a provision for when both Member States concerned could otherwise rely on Article 48(1), aimed at stopping a claim in those circumstances from falling through the gaps. However, Article 48(3) did not apply in the present case as Poland did not have any obligations to be relieved of by Article 48(1) because the claimant did not satisfy the relevant Polish insurance conditions (paragraph 33);
7. the First-tier Tribunal had either failed to apply all the relevant provisions necessary before it was in a position to conclude that Article 48 applied or failed to set out sufficiently its reasons as to how those various provisions applied to enable the Upper Tribunal to see whether or not the law had been correctly applied, and had failed to make sufficient findings on key matters, notably what benefits, if any, the claimant had been in receipt of in Poland in the year running up to his claim for long-term incapacity benefit. For those reasons it was in error of law, although its decision was, in the outcome, correct (paragraphs 34 to 35).
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