In his Opinion delivered on 14 January 2025, Advocate General Emiliou in Case C-19/23, Denmark v Parliament and Council (Minimum Wage Directive) has stated that the Court should annul the Minimum Wage Directive (Directive 2022/2041) in its entirety.
For him, Article 153(5) TFEU, a provision of EU primary law, explicitly excludes the adoption of the EU secondary law in question; and that no matter how wrapped up in other objectives or how indirectly the Member States are involved, the central objective of the Directive, for him, still appears to be to regulate ‘pay’.
Opinions of the Advocates General
Opinions of the Advocates General are not ordinarily meant to thrill. Of the thousands delivered over decades, few stand out beyond the core readership when delivered, and even fewer stand out over longer periods of time (the exceptions are, however, worthy of analysis). The Opinion at hand, however, is an exciting one.
With only eleven members of the Court able to deliver such Opinions, supported by a core key of highly-skilled référendaire, Opinion should only be delivered in cases that raise not just novel questions (assuming all cases are ‘novel’), but ones that break new legal ground, raising big constitutional questions.
At hand, is the Opinion of Advocate General Emiliou, who delivered his Opinion this week in Case C-19/23, Denmark v Parliament and Council (Minimum Wage Directive), is one that a lot of thought has gone into, and with many hours of research to support it. This, as a result of what he is proposing, as explained in this blog post, can thus result in the case be considered a ‘constitutional’ case, for its magnitude could be felt beyond just those interested in EU employment law and EU labour law, but EU constitutional law, for it attempts to set out the limits of EU legislative competence in the context social policy.
Member States taking such annulment actions against adopted EU legislation is nothing new. It is rarely done, but not unheard of. Ordinarily, when taken, it is a Member State taking such an action to the Court as a place of last resort, going in search of a legal argument to advance, after having lost the political battle in the Council during the legislative process. Member States succeeding in annulment actions is uncommon.
Here, the Advocate General is opining, to Denmark’s (and Sweden’s) delight, that the EU has no competence to legislate on ‘adequate minimum wages’, because of an express limitation placed upon the EU by EU primary law.
Whilst the judgment of the Grand Chamber of the Court awaits later in 2025, for now, Denmark can draw some comfort in that their legal argument against an adopted piece of EU secondary law, the Minimum Wage Directive, has won the support of the assigned Advocate General.
The Minimum Wage Directive, and the action for annulment
Directive 2022/2041 on adequate minimum wages in the European Union was adopted with Article 153(2)(b) TFEU and Article 153(1)(b) TFEU as its legal basis.
Denmark has sought, mainly, the complete annulment of the Directive.
In the alternative, second, it wants a partial annulment of the Directive, specifically, Article 4(1)(d) and/or Article 4(2). Article 4 concerning the ‘Promotion of collective bargaining on wage-setting’.
Article 4(1)(d) of the Directive states,
‘With the aim of increasing the collective bargaining coverage and of facilitating the exercise of the right to collective bargaining on wage-setting, Member States, with the involvement of the social partners, in accordance with national law and practice, shall:…for the purpose of promoting collective bargaining on wage-setting, take measures, as appropriate, to protect trade unions and employers’ organisations participating or wishing to participate in collective bargaining against any acts of interference by each other or each other’s agents or members in their establishment, functioning or administration.’
Article 4(2) of the Directive states,
‘In addition, each Member State in which the collective bargaining coverage rate is less than a threshold of 80 % shall provide for a framework of enabling conditions for collective bargaining, either by law after consulting the social partners or by agreement with them. Such a Member State shall also establish an action plan to promote collective bargaining. The Member State shall establish such an action plan after consulting the social partners or by agreement with the social partners, or, following a joint request by the social partners, as agreed between the social partners. The action plan shall set out a clear timeline and concrete measures to progressively increase the rate of collective bargaining coverage, in full respect for the autonomy of the social partners. The Member State shall review its action plan regularly, and shall update it if needed. Where a Member State updates its action plan, it shall do so after consulting the social partners or by agreement with them, or, following a joint request by the social partners, as agreed between the social partners. In any event, such an action plan shall be reviewed at least every five years. The action plan and any update thereof shall be made public and notified to the Commission.’
Complete annulments of an entire directive is a tall order for a Member State to ask the Court. Partial annulments are more palpable, however, as will be seen, Advocate General Emiliou here agrees with Denmark, and is recommending the Court goes the whole nine yards.
Article 153 TFEU as a legal basis for EU secondary law
Article 153 TFEU gives the EU the competence to adopt secondary law to support and complement the activities of Member States. For the sake of clarity, despite its length, ought to be out in full:
1. With a view to achieving the objectives of Article 151, the Union shall support and complement the activities of the Member States in the following fields:
(a) improvement in particular of the working environment to protect workers’ health and safety;
(b) working conditions;
(c) social security and social protection of workers;
(d) protection of workers where their employment contract is terminated;
(e) the information and consultation of workers;
(f) representation and collective defence of the interests of workers and employers, including co-determination, subject to paragraph 5;
(g) conditions of employment for third-country nationals legally residing in Union territory;
(h) the integration of persons excluded from the labour market, without prejudice to Article 166;
(i) equality between men and women with regard to labour market opportunities and treatment at work;
(j) the combating of social exclusion;
(k) the modernisation of social protection systems without prejudice to point (c).
2. To this end, the European Parliament and the Council:
(a) may adopt measures designed to encourage cooperation between Member States through initiatives aimed at improving knowledge, developing exchanges of information and best practices, promoting innovative approaches and evaluating experiences, excluding any harmonisation of the laws and regulations of the Member States;
(b) may adopt, in the fields referred to in paragraph 1(a) to (i), by means of directives, minimum requirements for gradual implementation, having regard to the conditions and technical rules obtaining in each of the Member States. Such directives shall avoid imposing administrative, financial and legal constraints in a way which would hold back the creation and development of small and medium-sized undertakings.
The European Parliament and the Council shall act in accordance with the ordinary legislative procedure after consulting the Economic and Social Committee and the Committee of the Regions.
In the fields referred to in paragraph 1(c), (d), (f) and (g), the Council shall act unanimously, in accordance with a special legislative procedure, after consulting the European Parliament and the said Committees.
The Council, acting unanimously on a proposal from the Commission, after consulting the European Parliament, may decide to render the ordinary legislative procedure applicable to paragraph 1(d), (f) and (g).
3. A Member State may entrust management and labour, at their joint request, with the implementation of directives adopted pursuant to paragraph 2, or, where appropriate, with the implementation of a Council decision adopted in accordance with Article 155.
In this case, it shall ensure that, no later than the date on which a directive or a decision must be transposed or implemented, management and labour have introduced the necessary measures by agreement, the Member State concerned being required to take any necessary measure enabling it at any time to be in a position to guarantee the results imposed by that directive or that decision.
4. The provisions adopted pursuant to this Article:
– shall not affect the right of Member States to define the fundamental principles of their social security systems and must not significantly affect the financial equilibrium thereof,
– shall not prevent any Member State from maintaining or introducing more stringent protective measures compatible with the Treaties.
5. The provisions of this Article shall not apply to pay, the right of association, the right to strike or the right to impose lock-outs.
Argument of the parties, and the Opinion of the Advocate General
Denmark (with Sweden, intervening in support) argue that the EU lacked the competence to adopt the Minimum Wage Directive based on Article 153(2)(b) TFEU and Article 153(1)(b) TFEU, because Article 153(5) TFEU excludes pay from being part of EU secondary law.
In his examination, the Advocate General examined whether the Directive could be adopted on tthe legal bases that it was. However, he went way further than that, stating not only was the legal bases of the Directive incorrect, but that the EU does not have the competence to adopt such legislation, in that way, at all.
By looking at various provision of the Directive, the Advocate General examined, inter alia, Article 4 (the promotion of collective bargaining on wage-setting) and Article 5 (the procedure for setting adequate statutory minimum wages).
On his reading, he comes to the conclusion that Article 4 interferes with the power of Member States to determine their wage-setting mechanisms, and Article 5 also tinkers, directly, with the level of minimum wages.
Thus, for him, the conclusion is obviously: the Directive in question primarily aims to regulate pay, which is excluded by Article 153(5) TFEU, and therefore is incompatible with EU primary law.
For him,
‘it is obvious from the wording and number of those provisions that the EU legislature did not ignore that, when adopting the…Directive, it was walking on thin ice in respect of the ‘pay’ exclusion contained in Article 153(5) TFEU‘ (para 50).
He further notes that,
‘the ‘pay’ exclusion contained in Article 153(5) TFEU covers, but is not limited to, measures that harmonise the level of pay; it also covers measures that harmonise other aspects of the Member States’ wage-setting systems (including the modalities or procedures for fixing the level of pay). Understanding the ‘pay’ exclusion as being limited to measures that harmonise the level of wages is,…a fallacy.’ (para 59).
With consequentialist logic, he further stated that,
‘the ‘pay’ exclusion in Article 153(5) TFEU would be deprived of its substance, as pay would be treated just as any other working condition coming within the scope of Article 153(1)(b) TFEU.’ (para 66).
The most blunt statement was spared for what he says is, is the real objective of the Directive, given what it demands take place, as a process, within Member States. For him,
‘Interference may be light or limited and, yet, it will still be direct if the object of the instrument is to regulate pay.’ (para 64).
The Advocate General thus concludes that the Directive directly interferes with the exclusion of pay in Article 153(5) TFEU and, therefore, the EU legislature, the Parliament and the Council, exceeded its competence in adopting.
Brief comment
The Opinion is worth reading in full. It reads as much as an academic paper as it does a judicial opinion, and goes through a lot of the prior case-law which has seen litigation, including validity cases referred through the preliminary reference procedure, on challenges to EU secondary law adopted on Article 153 TFEU, which could touched upon ‘pay’, but have primarily been about other working conditions.
The EU legislature knew about the risk of this Directive being annulled or later invalidated. However, there is nothing it could do about the existence of Article 153(5) TFEU, other than to carefully account for the manner in which it sought to achieve its objective through other provision of the said provision.
Even if the Court finds another way to answer this case, through partial annulment, or dismissing the action entirely, the Opinion will serves as a key reminder that there are, in EU primary, (un-)clear and (im/)explicit limits to the EU legislators’ power in certain, narrowly-defined areas.
In other words, if the EU legislature pushes it ‘too far’ to achieve a specific objective, such as in this case, influencing pay, the Court will see to it that EU competence is reigned in, if the objectives, and the means to achieve such objectives, go beyond what the EU Treaties exclude.
Reading the Opinion
The judgment of the Grand Chamber of the Court will be delivered later in 2025.
For now however, the Opinion of Advocate General Emiliou in Case C-19/23, Denmark v Parliament and Council (Minimum Wage Directive), delivered on 14 January 2025, can be read here.