Is the Court of Justice going to annul the minimum wage directive?

Is the von der Leyen Commission’s flagship “social” measure set to be wiped off the map by a court ruling? This is what may happen in a few months’ time, if the Court of Justice accepts the opinion of its Advocate General, delivered on 14 January, on the case brought by Denmark against the European Parliament and the Council of the EU, concerning Directive 2022/2041 of 19 October 2022 on adequate minimum wages in the EU (AMW Directive). It had been known from the outset that there was a risk of this directive being annulled.
In terms of substance, the legal problem is fairly straightforward. The areas over which the EU has competence to legislate are defined in the Treaty on the Functioning of the European Union (TFEU). In the field of social affairs, they are set out in Article 153 paragraph 1: for example, it can act to “protect workers’ health and safety”, improve “working conditions” and protect “workers where their employment contract is terminated”. On this legal basis, it can pass directives imposing minimum requirements on its Member States. On the other hand, as stated in Article 153 paragraph 5, the EU’s competence “shall not apply to pay, the right of association, the right to strike or the right to impose lock-outs”. That is why there are no directives regulating the right to strike or indicating how collective bargaining should be conducted.
So, how can the adoption of this directive on the minimum wage, which the directive itself defines as “a minimum remuneration” (Art. 3 para. 1 of the directive), be justified? The approach adopted by the EU legislature has been to select Article 153 paragraph 1 b as the legal basis for the directive, with a view to “improving living and working conditions in the Union, in particular the adequacy of minimum wages for workers in order to contribute to upward social convergence and reduce wage inequality” (see Working conditions). As the Advocate General notes, the legislature was extremely careful in its wording of the directive, indicating that it “neither aims to harmonise the level of minimum wages across the Union nor does it aim to establish a uniform mechanism for setting minimum wages”. He emphasises that the wording adopted shows that the legislature “did not ignore that […] it was walking on thin ice”. This risk of moving beyond the EU’s sphere of competence is all the more sensitive in that the other aim of the directive is to promote collective bargaining, which is itself an excluded subject, given that the EU is prohibited from intervening in the “right of association”, from which the right to conduct collective bargaining is derived. In conclusion, he takes the view that, since the object of the AMW Directive is to “regulate ‘pay’”, it “directly interferes with the ‘pay’ exclusion in Article 153(5) TFEU”. Consequently, the EU legislature “was not competent to adopt that instrument and, thus, acted in breach of the principle of conferral laid down in Article 5(2) TFEU”. This finding should lead “the Court to conclude that the AMW Directive must be annulled in full”.
This was music to the ears of the Danish Employment Minister, Ane Halsboe-Jørgensen, who had argued that the EU had strayed onto “thin ice”, and called on the Court of Justice to annul the directive, three months after its adoption, a move that was immediately supported by Sweden. She says she will now await “the final verdict of the Court of Justice, but in football parlance, we’re 3-0 up at half-time” (see press release). The Danes’ intransigent position reflects the opposition of some Nordic trade unions to this directive, which they regard as direct interference in activities that are the preserve of the social partners: setting wages and collective bargaining. The directive also reopens the wounds left by the Court of Justice ruling in the Laval un Partneri case (see Laval case) in 2007, which held that a Swedish trade union was not entitled to blockade a building site, in order to force “a provider of services established in another Member State to enter into negotiations with it on the rates of pay for posted workers and to sign a collective agreement”. This fear of EU interference in the Nordic social model even came close to prompting several Nordic trade unions to withdraw from the European Trade Union Confederation (ETUC), whose former President Laurent Berger viewed the adoption of this directive as “a victory” and “good news for European workers”. The Advocate General’s opinion is a huge let-down for the ETUC. It is now up to the Court of Justice to pronounce on whether or not, in matters of law, the EU legislature has flouted the Treaty. And the verdict may well be a painful one.