EU’s minimum wage directive under threat: Advocate General’s opinion sparks legal and social turmoil across Europe.
It came as a shock to many supporters of a Social Europe when, on 14 January 2025, the Advocate General to the Court of Justice of the European Union (CJEU), Cypriot judge Nicholas Emiliou, presented his Opinion on the European Minimum Wage Directive. In his assessment, he concluded that the Directive is incompatible with EU law and should therefore be annulled. This Opinion could have dire consequences for one of the EU’s most significant pieces of social legislation, potentially undermining the Union’s legitimacy. However, it is crucial to note that the game is not over yet!
Legal Action Against the EU Minimum Wage Directive
The European Council adopted “Directive (EU 2022/2041) on adequate minimum wages in the European Union” with the backing of 24 out of 27 Member States. The Directive aims to establish a framework for ensuring adequate minimum wage levels and promoting collective bargaining. Denmark and Sweden were the only countries to vote against its adoption, citing concerns that the Directive could threaten their national models of autonomous labour relations. In early 2023, the Danish government, supported by both Danish employers’ associations and trade unions, and later joined by Sweden, brought a case before the CJEU (Case C-19/23). Their argument hinges on the claim that the Directive violates Article 153(5) of the Treaty on the Functioning of the European Union (TFEU), which limits EU competences on the issue of “pay.”
In his Opinion, the Advocate General broadly aligns with the Danish and Swedish arguments and proposes the full annulment of the Directive. His position stands in stark contrast to the legal opinions issued earlier by the European Parliament, the Council, and the European Commission, which had thoroughly scrutinised the legal foundation of the Directive.
The Dispute Over Article 153(5) TFEU
The heart of the legal dispute centres on the interpretation of Article 153(5) TFEU, which limits the EU’s competence in relation to “pay.” According to Article 153(1b) TFEU, the EU can “support and complement” Member States’ efforts in the area of working conditions, including wage matters. Given that pay is a core element of working conditions, the CJEU has previously argued in cases such as Del Cerro (C-307/05) that “the ‘pay’ exception cannot […] be extended to any question involving any sort of link with pay; otherwise some of the areas referred to [153(1) TFEU] would be deprived of much of their substance.”
The European Minimum Wage Directive, however, is grounded in the idea that it does not directly define wage levels or specific procedures for setting minimum wages. Instead, it provides a procedural framework for the establishment of statutory minimum wages and the enhancement of collective bargaining, leaving these processes to be implemented at the national level. The Directive’s proponents argue that it respects national autonomy and only complements existing national practices.
Nevertheless, the Advocate General takes a far more expansive view of Article 153(5), contending that any form of regulation on pay, even indirect, contravenes EU law. In his reasoning, he makes a controversial distinction between what he deems an acceptable “implicit” impact on pay, as seen in other EU directives such as the Fixed-Term Work Directive or the Temporary Agency Work Directive, and what he considers an unacceptable “explicit” regulation on pay, which he believes the European Minimum Wage Directive constitutes. If this distinction cannot withstand scrutiny, the entire argument in the Advocate General’s Opinion would collapse.
Furthermore, the Advocate General fails to sufficiently acknowledge the safeguards in the Directive that protect national competences, particularly in the realm of collective bargaining. For instance, the Directive allows significant national variation in terms of the criteria used for setting minimum wages. The wage benchmarks set by Member States in the implementation of the Directive range widely – from 46 percent of the average wage in Latvia to 60 percent in Slovakia. Even the Danish and Swedish governments have acknowledged that the Directive’s provisions do not directly affect their national wage-setting systems. Their opposition appears to be based more on principle than on any tangible impact on national practice.
What Will the European Court of Justice Do Next?
It is crucial to remember that the Opinion of the Advocate General is not binding. While the CJEU often follows the Advocate General’s advice, there are many instances where the Court has taken a different view, especially in cases concerning European legislation. Given the significant implications of the case, it is likely that the Court will take a more nuanced approach, particularly as the legal arguments put forward by the Advocate General remain far from clear and consistent.
Moreover, the CJEU will surely consider the political ramifications of its ruling. The European Minimum Wage Directive is widely regarded as a flagship initiative in the EU’s bid to promote a more socially inclusive Europe. An annulment of the Directive would represent a severe blow to workers’ rights and could reinforce the perception of the EU as an institution more attuned to the interests of business elites than to those of ordinary citizens. It would also weaken the EU’s ability to protect wages from undercutting through competition, thus fostering social dumping.
The European Minimum Wage Directive was intended as part of a broader paradigm shift following the EU’s controversial interventions into national wage-setting and collective bargaining systems during the financial crisis of the early 2010s. If the Directive were to be annulled, it would mark a significant setback for the EU’s social agenda and further fuel the rise of nationalist and populist forces that are already critical of European integration.
National Struggles Continue…
Importantly, the Advocate General’s Opinion does not alter the current legal status of the Directive: Member States are still required to transpose it into national law by the prescribed deadlines, and the European Commission’s monitoring and enforcement mechanisms remain in place. Even before the formal transposition of the Directive, its provisions had already sparked debates and initiatives in many countries aimed at securing adequate minimum wages and promoting collective bargaining. It also has broader implications, such as providing an “adequate wage benchmark” for the European Sustainability Reporting Standards for companies.
Should the CJEU decide to annul the Directive in full, the objectives it set out – ensuring adequate minimum wages and promoting collective bargaining – would remain as valid as ever. The Directive’s effectiveness always hinged on its ambitious implementation at the national level, and this process is already underway. The adoption of the Directive by 24 EU Member States represents a powerful commitment to tackling in-work poverty, promoting social cohesion, and curbing unfair competition driven by low wages.
Irrespective of the future of the Directive, this commitment remains intact. Member States are still free to set clear criteria for adequate minimum wage levels, such as 60 percent of the median wage or 50 percent of the average wage, in their own national legislation. They also retain the autonomy to implement action plans aimed at increasing collective bargaining coverage. While the annulment of the Directive would undoubtedly represent a major setback for Social Europe, the national struggle to achieve fair wages and stronger labour protections will continue. It’s not all over now…
Thorsten Schulten is Head of the collective agreements archive of the Institute of Economic and Social Research (WSI) at the Hans Böckler Stiftung. He is also an Honorary Professor at the Eberhard Karls University of Tübingen.
Torsten Müller is senior researcher at the European Trade Union Institute.