On 11 November 2025, the European Court of Justice annulled part of the Minimum Wage Directive, while at the same time giving the seal of approval to the rest of the directive.

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In October 2022, the proposed Directive on Adequate Minimum Wages for Workers in the EU was finally adopted, and on 14 November 2022 the Directive entered into force. EU Member States had until 15 November 2024 to implement the Directive into national law, and we have previously reported on the adoption of the Directive in an article that can be found here.

The Minimum Wage Directive does not require Member States to set minimum wages in legislation, nor does it aim to harmonise minimum wages across the EU or introduce a uniform mechanism for setting minimum wages.

Instead, the Minimum Wage Directive requires Member States with statutory minimum wages to establish the necessary procedures for setting and updating statutory minimum wages. Such setting and updating must be based on national criteria, which must include at least a number of elements listed in the Directive.

Member States that do not have statutory minimum wages, such as Denmark, are required under the Directive to promote the development and strengthening of the capacity of the social partners to engage in collective bargaining on wage setting.

Action for annulment
From the outset, the Minimum Wage Directive has been faced with considerable resistance from Denmark. This resistance must be seen in light of the Danish model, which means that pay conditions and collective bargaining are a matter for the social partners. On 18 January 2023, Denmark therefore brought an action for annulment against the European Parliament and the Council, claiming annulment of the Minimum Wage Directive. We have previously discussed the action for annulment here.

Denmark, aided by Sweden, sought annulment of the Minimum Wage Directive in its entirety and, in the alternative, annulment of certain provisions of the Directive. In support of this, the Danish government argued, among other things, that the Directive exceeded the powers conferred on the EU by the Treaties and infringed the EU’s competence, as the EU has no competence in relation to, for instance, pay conditions, and that the Directive could not be adopted on the basis of the EU’s competence to make decisions on working conditions.

The European Parliament and the Council, supported by several Member States, argued that the Directive only aims to improve working conditions by means of measures on the adequacy of minimum wages, and that the Directive only lays down procedural obligations through minimum requirements as to how to determine whether statutory minimum wages are adequate and promotes negotiations on the setting of those wages, and that the Directive does not prescribe a specific wage level or similar.

Opinion of the Advocate General
On 14 January 2025, the Advocate General stated in their opinion on the case that the Directive was incompatible with the EU’s treaty basis, as the EU does not have the competence to adopt directives on “pay conditions”. We have previously discussed the Advocate General’s opinion here.

Ruling of the CJEU
The CJEU chose to annul only part of the Directive on Minimum Wages and thus found – contrary to the Advocate General – that the Directive as a whole is not contrary to the Treaty.

Specifically, the CJEU found that the provision in the Directive listing criteria for setting and updating statutory minimum wages should be annulled because this provision (and two provisions derived from it) falls outside the EU’s legislative competence.

Denmark was thus only partially successful in the action.

Norrbom Vinding notes:

It is unusual for an EU legal act to be wholly or partially rejected by the CJEU, so in that light it is a victory for the Danish government and the social partners that Denmark was partially successful in the action. However, the ruling is still largely a defeat.

However, the outcome has no concrete significance in the short run. Given the high level of coverage by collective agreements in the Danish labour market, it has not been widely believed that Denmark should be required to legislate on minimum wages.

It is more in the somewhat longer term that the ruling may have an impact. The Danish government believe that the EU should show greater respect for the Danish model. The CJEU does not agree. What does the future hold in this regard?

The content of the above is not, and should not be a substitute for legal advice.