Sweden: CJEU Partially Annuls Minimum Wage Directive After Danish Action Supported by Sweden
Author: Karolina Sundqvist
The Court of Justice of the European Union, in an action brought by Denmark and supported by Sweden, partially annulled the Minimum Wage Directive, setting aside provisions on fixed criteria and non‑regression for statutory minimum wages while upholding the remainder. The Court confirmed that the EU may establish procedural frameworks and promote collective bargaining but may not directly determine pay.
Directive (EU) 2022/2041 of the European Parliament and of the Council on adequate minimum wages in the European Union (the Minimum Wage Directive) aims to ensure that all workers in the EU receive a minimum wage sufficient to cover basic living costs and maintain a decent standard of living. The directive has provoked strong reactions in Denmark and Sweden, even though it does not set wage levels or prevent the Danish and Swedish labour market model based on wage-setting through collective bargaining. The objection instead concerns the very fact that the EU is legislating in this area at all, which is seen as an interference with national sovereignty. In the council vote, Denmark and Sweden were the only member states to vote against the directive.
In January 2023, Denmark initiated legal proceedings before the Court of Justice of the European Union with a view to having the directive annulled, arguing that the EU lacks legislative competence in this area and that issues concerning pay should be regulated nationally. Sweden later joined Denmark’s action by intervening in support of the Danish position. In the legal proceedings, the central question has been the EU’s competence under the treaties to legislate on pay.
On 14 January 2025, Advocate General Nicholas Emiliou delivered his Opinion in the case. He sided with Denmark and Sweden and argued that the directive should be annulled because it is contrary to Article 153(5) of the Treaty on the Functioning of the European Union (TFEU). According to that provision, the EU has no legislative competence in the area of “pay.” The Advocate General took the view, in line with Denmark and Sweden, that the exclusion for pay cannot be limited solely to issues concerning wage levels, but also extends to the very mechanisms of wage-setting.
The Court of Justice has now delivered its judgment. The Court removed certain provisions that required member states with statutory minimum wages to apply fixed criteria when setting and updating those wages and that prevented decreases when using automatic indexation. The remainder of the directive was upheld as within the EU’s legislative competence. The Court explained that the treaties exclude EU measures that directly determine pay, but not measures that only have a connection to pay. Procedural frameworks and the promotion of collective bargaining therefore remain permissible, provided national models and the autonomy of the social partners are respected.
Although Sweden would have preferred a complete annulment of the directive, and although the annulled provisions do not affect Sweden, which has no statutory minimum wages, the judgment is considered important because it clarifies the limits of the EU’s legislative competence in this area.
