The European Court Of Justice Annuls Parts Of The EU Directive On Adequate Minimum Wages In Response To Denmark's Challenge

On 18 January 2023, the Danish government brought an action before the European Court of Justice (the "ECJ") seeking annulment of the EU Directive on Adequate Minimum Wages (Directive (EU) 2022/2041) (the "Directive"). On 11 November 2025, the ECJ delivered its final judgment in Case C-19/23, partly ruling in favour of Denmark. The ECJ annulled parts of Article 5 of the Directive, finding that these specific provisions interfered directly with wage determination within the EU — an area outside the EU's competence as set out in the Treaty on the Functioning of the European Union ("TFEU"), which is part of EU's constitutional framework. The remaining part of the Directive remains in force, contrary to the opinion earlier this year of Advocate General Emiliou, who had recommended full annulment.

The Case

The Directive was adopted on 19 October 2022 and introduced several procedural obligations for EU Member States relating to wage formation. The aim was to ensure that workers in the EU have access to an adequate minimum wage.

The Directive raised several concerns in Denmark, as wage-setting is a cornerstone of the Danish labour market model. Therefore, Denmark brought an action before the ECJ against the Council and the European Parliament, seeking annulment of the Directive in its entirety.

The core of the case concerns the balance between two provisions of the TFEU. On the one hand, TFEU Article 153 (1) (b) allows the EU to adopt directives establishing minimum requirements on "working conditions". On the other hand, TFEU Article 153 (5) expressly excludes certain matters, including "pay", from the areas in which the EU has competence in the field of social and labour policy.

In other words, EU Member States retain sovereignty over, inter alia, wage determination. Accordingly, Denmark argued that the Directive went beyond this national sovereignty, as pay-related matters are explicitly excluded from EU competence under the TFEU.

Denmark's claim was supported by the Advocate General Emiliou in a non-binding opinion delivered on 14 January 2024, which upheld Denmark's position and principally proposed that the Directive be annulled in its entirety.

We have published a separate news article on this opinion, which you can read here.

The ECJ ruling

With reference to EU case law, the ECJ held that the exception in TFEU Article 153 (5), i.e. EU Member States' sovereignty in certain areas, including matters of pay, means that EU law may not directly interfere with the determination of wages within the EU. At the same time, the ECJ noted that this limitation cannot be extended to every issue that is merely connected to pay.

On this basis, the ECJ carried out an assessment of the provisions of the Directive to determine whether any of them directly interfered with wage-setting.

Article 5 of the Directive sets out procedural requirements for how EU Member States with statutory minimum wages must establish and update these wages. The ECJ found parts of this article to directly interfere with the determination of wages in the EU Member States. Consequently, three specific sentences in Article 5 of the Directive were annulled in whole or in part.

All other provisions of the Directive were upheld, as the ECJ found that the remaining provisions respect national autonomy in relation to pay. The Directive includes, among other things, a provision introducing an obligation for EU Member States to prepare an "action plan" where collective bargaining coverage at national level is below 80%. According to data from the Confederation of Danish Employers (in Danish: "Dansk Arbejdsgiverforening"), overall collective bargaining coverage in Denmark is currently estimated at 82%.

Our remarks

This is a case of principle in which Denmark has taken a firm stand to ensure that the Council and the European Parliament, as EU legislators, do not act beyond the competences conferred upon them under the TFEU. It is noteworthy that the ECJ did not follow the opinion of Advocate General Emiliou, which highlights both the complexity of assessing the scope of EU competences and the importance of sometimes having questions about that tested before the ECJ.

The Danish Ministry of Employment has previously stated that the Directive will not affect Danish law, as Denmark already complies with its provisions. We will continue to monitor the Danish Ministry of Employment's actions in this respect.

Read the judgment

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