Simkova v Secretary of State for Work and Pensions: Universal Credit and EU coordination rules

The Supreme Court has dismissed an appeal concerning whether the child element of Universal Credit constitutes a separate "family benefit" under EU Regulation 883/2004, affirming that UC operates as a single composite benefit that cannot be disaggregated for coordination purposes.

Ms Michaela Simkova, a Slovakian national residing in England, claimed the child element of UC for her son Markus, who lived with his grandparents in Slovakia. Under domestic law, Regulation 4(2) of the Universal Credit Regulations 2013 requires a child to "normally live with" the claimant. Ms Simkova contended that the child element qualified as a family benefit under Article 3(1)(j) of the Coordination Regulation, thereby triggering Article 67 which deems children to be living with the claimant regardless of their actual residence.

The Secretary of State maintained that the child element forms an integral part of UC and cannot be characterised separately from the benefit as a whole. The Supreme Court, in a judgement delivered by Lord Lloyd-Jones and Lady Rose, agreed.

The nature of Universal Credit

The Court emphasised UC's fundamentally unitary structure under the Welfare Reform Act 2012. Section 1(3) provides that UC comprises a standard allowance with additional amounts for children, housing, and other circumstances. Claims must be made for UC itself; individual elements cannot be claimed in isolation. The child element affects not only the quantum of the award but also housing cost calculations, work allowances, and conditionality requirements.

Drawing on the Court of Appeal's analysis in R (Salvato) v Secretary of State for Work and Pensions, the Court noted that UC operates as a single monthly payment designed to respond flexibly to changing circumstances. This integrated structure distinguishes it fundamentally from standalone benefits.

The coordination framework

The Coordination Regulation, as the Court explained, coordinates rather than harmonises social security systems. Member States retain discretion over benefit design, subject to principles of non-discrimination. For a benefit to qualify as coordinated social security, it must satisfy two conditions: availability based on objective criteria without individualised assessment, and direction toward one of the risks listed in Article 3(1).

The parties accepted that UC considered holistically constitutes an anti-poverty measure addressing needs beyond those enumerated in Article 3(1). The critical question became whether individual elements could be severed and assessed independently.

Rejecting the severance doctrine

Ms Simkova advanced two principal arguments. First, she contended that the child element replaced Child Tax Credit, which was recognised as a family benefit. Second, she argued that CJEU jurisprudence, particularly Lachheb and the Disability Living Allowance cases, supported treating benefit components separately.

The Court rejected both contentions. Unlike Child Tax Credit, which existed as a standalone benefit, the child element is substantively integrated into UC's architecture. The Lachheb decision, properly understood, simply reinforced that benefits must be characterised by their essential features rather than formal labels—it did not establish a principle of mandatory disaggregation.

Similarly, the DLA jurisprudence reflected the particular structure of that benefit, where section 71(2) of the Social Security Contributions and Benefits Act 1992 expressly provided for entitlement to either component separately. No comparable provision exists for UC.

Green LJ's observation in the Court of Appeal proved persuasive: a generalised severance doctrine would be "controversial and complex" and would require explicit provision within the Coordination Regulation's detailed framework. The policy architecture militates against implied severability, particularly given the risk of cascading disaggregation across diverse benefit structures.

The Supreme Court declined to exercise its discretion to refer questions to the CJEU under Article 158 of the Withdrawal Agreement, concluding that the issues could be resolved definitively without such reference. The appeal was dismissed, confirming that entitlement to UC remains governed exclusively by domestic criteria where the benefit falls outside the Coordination Regulation's scope.

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