EU court backs minimum wage directive, strikes down parts on pay

The European Court of Justice (ECJ) upheld most of the EU’s Minimum Wage Directive on Tuesday, rejecting a Danish-led challenge but ruling that the bloc overstepped its powers on two points by directly interfering in national wage-setting.

Commission President Ursula von der Leyen hailed the verdict as “a milestone for Europeans – it is about dignity, fairness, and financial security,” adding that the directive would be implemented “with full respect for national traditions, the autonomy of social partners, and the importance of collective bargaining.”

The ruling marks a partial victory for the European Commission, which defended the 2022 directive aimed at ensuring “adequate minimum wages” and strengthening collective bargaining across the EU. However, the court annulled provisions introducing procedures to harmonise wage-setting and to prevent reductions in existing minimum wages, saying these went beyond EU competence.

In the European Parliament, centre-left and far-left groups both welcomed the ruling. The centre-left S&D described the verdict as “a powerful signal of hope and social justice.”

The Left’s MEP Özlem Demirel was less cheerful, calling it “very regrettable” that parts had been annulled, but welcomed the fact that the court had confirmed “the essential parts” of the directive.

Europe’s top labour organisation was also upbeat.

The European Trade Union Confederation  urged on “member states to stop the ‘wait and see’ approach and to get on with implementing the Directive in full”.

The case was brought by Denmark and backed by Sweden, which argued that the directive violated EU treaties by intruding into an area reserved for national governments and social partners. Under the directive, countries with less than 80% collective-bargaining coverage are required to draw up a plan to boost wage negotiations.

“The Danes probably had set their ambitions too high,” says Laust Høgedahl, associate professor of employment relations at Aalborg University in Denmark.

“They had hoped that the Commission would draw a clear line in the sand and annul the directive completely. Instead they got a consolation prize in having the parts potentially most controversial parts revoked.”

In January, the court’s advocate general had recommended that judges rule in favour of Denmark in a non-binding opinion.

Instead, the EU’s top court ruled that, while the directive “does not amount to direct interference” overall, parts of it went too far in prescribing how minimum wages should be managed, finding that two of its provisions “amount to direct interference by EU law in the determination of pay”.

(aw)