On 14 January 2025, the Advocate General (AG) issued an elaborate opinion1 recommending to the Court of Justice of the European Union (CJEU) that the European Directive 2022/2041 on adequate minimum wages, in full, be annulled.2
The Directive on adequate minimum wages sets a framework for wage setting and it promotes collective bargaining on wages across the EU.
The outcome of this case could impact the relationship between the EU and the member states.
The case revolves around the authority of the EU to influence setting of wages in the member states by adopting a framework for wage setting in a European directive, or if such directive breaches member states’ exclusive right to set wages nationally.
The outcome of the case has yet to be decided.
Since the majority of EU member states support the Directive on adequate minimum wages, the member states can choose to adopt its framework for wage setting in their national legislation even if the Directive is annulled by the CJEU.
In 2022, the EU adopted Directive 2022/2041 on adequate minimum wages. The Directive laid out procedures for setting and updating of the statutory minimum wages and it promoted collective bargaining on wages across the EU member states.
However, on 18 January 2023, Denmark brought an action to the CJEU claiming that the Court should annul in full Directive 2022/2041 on adequate minimum wages in the European Union.
Denmark argued that the EU does not have authority to adopt legislation that regulates any aspect of wages. The Treaty on the Functioning of the EU empowers the EU to set minimum requirements in the field of working conditions,3 while the Treaty at the same time clarifies that the EU does not have the authority to regulate ‘pay’.4
In its proposal for a directive on minimum wages, the European Commission (EC) noted that many workers in the EU were not protected with an adequate minimum wage and that the statutory minimum wage did not provide sufficient income for a single minimum wage earner.5
Statistical data for 2022 showed that minimum wages in the EU member states varied from EUR 334 to EUR 2,257 monthly.6 The EC concluded that among the factors causing insufficient protection of workers with an adequate minimum wage across the EU was a lack of clear and stable criteria for setting and updating minimum wages and that the social partners (e.g., unions, trade groups) were not sufficiently involved in the process of wage setting.7
Therefore, the EC established a framework to make up for the discrepancies and improve the adequacy of minimum wages. It proposed to promote collective bargaining on wages, while fully respecting national systems, national authority, and contractual freedom.8 A directive on adequate minimum wages came to life with an objective to improve living conditions in the EU by reducing wage inequality.
The AG observed that the Directive on adequate minimum wages is the first legal instrument adopted in the field of minimum wages. Further, the AG noted that even though the EU, in its overall objectives, states that workers must have a right to fair wages to help provide a decent standard of living and that an adequate minimum wage should be ensured,9 such objectives do not have a legally binding effect.
Further, the AG noted that the arguments for annulment of the Directive presented by Denmark reflected a principaled opposition to the EU’s interference in the contractual autonomy of the social partners rather than expressing opposition to the content of the Directive itself.
The distribution of authority between the EU and member states is a question of a constitutional nature, and if the EU has adopted legislation that is not within its authority, such legislation cannot be defended on the grounds of its impact, for example that the Directive only carries mild consequences for the member state opposing it.
Carefully analyzing the Directive on adequate minimum wages, the AG concluded that the Directive is regulating wages directly, which is not within the EU’s authority. Therefore, the AG recommended to the CJEU to annul the Directive in full.
The AG noted that several EU directives, including the EU Directive for Posting of Workers, use the term ‘pay’, but do not interfere directly with regulating the level of pay. Those directives contain provisions that affect pay. For example, in the Directive for Posting of Workers, a posted worker must be remunerated at the same level as a local worker, but the Directive does not interfere with how the level of wages is set in an EU member state.
The AG concludes that the observations and the outcome in the case about the Directive on adequate minimum wages do not impact other directives on working conditions, including the Directive on Posting of Workers.
The AG clearly favors the arguments presented by Denmark and Sweden in the proceedings and calls on the CJEU to annul the Directive in full. The CJEU is expected to deliver a ruling in the coming months. The date for delivery of a ruling has not been set.
The CJEU does not have to follow the AG opinion, and can reach a different result. However, it will be interesting to see how the Court will tackle the question of the division of authority between the EU and the member states when it comes to wages.
It is clear from the Treaty of the Functioning of the EU that the EU has no authority to regulate levels of wages, but does the Directive on adequate minimum wages regulate the level of wages or does it ‘only’ provide a framework for wage setting that has no impact on the actual level of wages that is set exclusively by the individual member state?
This is a remarkable case. Annulling – if that turns out to be the result of this case – an entire directive is rare. Regardless of the outcome, the case will impact the relationship between the EU and the member states:
Even though the effects of the Directive on adequate minimum wages are minimal on Denmark, Denmark refuses to open the door to any form of interference from legislators in their labour market, often called ‘the Danish Model,”13 where social partners have autonomy to regulate the conditions of the labour market, including the setting and updating of wages.
Lastly, it is notable that the AG makes it clear that other directives that have a dimension of wages in their content, such as the Directive on Posting of Workers, do not fall in the same category as the Directive on adequate minimum wages. The Directive on Posting of Workers has a solid legal basis in EU law and is not impacted by the AG’s observations or the outcome of this case.
Even if the Directive on adequate minimum wages is annulled, the individual member states can choose to use its contents, such as the criterion for wage setting and updating in their national legislation. Employers should follow developments of the wage setting and wage levels in each of the EU member states where they have employees working, either on a temporary or permanent basis.
1 Court of Justice for European Union: Opinion of Advocate General Emiliou in Case C-19/23, 14 January 2025.
2 Full text on the EUR-Lex website: Directive (EU) 2022/2041 of the European Parliament and of the Council of 19 October 2022 on adequate minimum wages in the European Union, 19 October 2022.
3 Official Journal of the European Union: C 326/47 Consolidated Version of the Treaty on the Functioning of the European Union, 26 October 2012, Article 153(2)(b) in conjunction with Article 153(1)(b).
4 Official Journal of the European Union: C 326/47 Consolidated Version of the Treaty on the Functioning of the European Union, 26 October 2012, Article 153(5).
5 European Commission: Proposal for a directive on adequate minimum wages in the European Union, 28 October 2020, p.2.
6 Eurostat: First 2022 data on minimum wages in the EU, 28 January 2022.
7 On the EUR-Lex website, Document 52020SC0246, European Commission: Commission Staff Working Document Executive Summary of the Impact Assessment Accompanying the document Proposal for a Directive on adequate minimum wages in the European Union, 28 October 2020.
8 European Commission: Proposal for a directive on adequate minimum wages in the European Union, 28 October 2020, p.2.
9 European Commission, Employment, Social Affairs and Inclusion: European Pillar of Social Rights in 20 principles, 24 October 2024, recital 12.
10 Berlingske: Generaladvokat: EU-direktiv om mindsteløn bør annulleres, 14 January 2025. Dansk Industri: Klart nej til EU’s mindsteløn fra generaladvokaten, 14 January 2025. Please note that by clickin gon the afremnetioned links, you are leaving the KPMG website for an external site (non-governmental, non-KPMG), that KPMG is not affiliated with nor does KPMG endorse its content. The use of the external site and its content may be subject to the terms of use and/or privacy policies of its owner or operator.
11 Court of Justice for European Union: Opinion of Advocate General Emiliou in Case C-19/23, 14 January 2025, para 45-47.
12 Publications Office of the European Union: Opening statement in the European Parliament plenary session 16 July 2019; Speech in the European Parliament plenary session 27 November 2019. President of the European Commission Ursula von der Leyen stated that the “…dignity of work is sacred. Within the first 100 days of my mandate, I will propose a legal instrument to ensure that every worker in our Union has a fair minimum wage.” p. 10.
13 (In Danish) Danish Ministry of Employment (Beskæftigelsesministeriet): Den danske model.
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