The Court of Justice of the European Union has confirmed the validity of Directive 2022/2041 on adequate minimum wages in the EU (see EUROPE 12966/12), although it has annulled the provision (article 5.2) setting out the criteria to be taken into account in determining the amount of these wages, in a ruling handed down on Tuesday 11 November (case C-19/23).
Supported by Sweden, Denmark brought an action before the Court seeking to have the Directive annulled in its entirety on the grounds that the EU legislation, by directly interfering with the determination of pay and the right of association, infringed the division of powers between the EU and the Member States (see EUROPE 13096/13).
In its ruling, the Court considers that the exclusion of the EU’s competence in the two areas mentioned above does not extend to any issue connected with the level of pay or the right of association. Otherwise, some of the powers conferred on the Union to support and supplement the action of the Member States in the field of working conditions (Article 153.1 TFEU) would be stripped of their substance.
However, according to the European Court of Justice, the Directive constitutes an unlawful direct interference in the competence of States in two specific cases.
Firstly, by requiring Member States in which statutory minimum wages exist to take into account criteria for setting and updating such wages (purchasing power, cost of living, general level and distribution of wages, rate of wage growth, long-term national productivity trends), the Directive excessively harmonises some of the components of statutory minimum wages.
The same applies to the rule preventing a reduction in statutory minimum wages (Article 5.3) where national legislation provides for an automatic indexation mechanism, as in Belgium.
The Court therefore annulled the provisions of the directive constituting a direct interference by EU law in the determination of remuneration. It dismisses Denmark’s action as to the remainder, in particular as regards the choice of legal basis and the provisions relating to the right of association. In its view, on this last point, promoting collective bargaining with a view to determining pay does not require Member States to make it compulsory for the largest possible number of workers to be members of a trade union organisation.
Reactions. The Chair of the Committee on Employment and Social Affairs (EMPL), Li Andersson (The Left, Finnish), described the ruling as a “victory for a Social Europe”, calling on the Member States to apply the directive and “tackle the cost-of-living crisis”. The EMPL committee has set up a monitoring group on minimum wages.
The Court’s ruling “is about dignity, fairness, and financial security”, said the President of the European Commission, Ursula von der Leyen, promising that the directive would be applied “with full respect for national traditions, the autonomy of social partners and the importance of collective bargaining”.
Among the social partners, the European Trade Union Confederation (ETUC) welcomed the fact that the Court had upheld the “core provisions” of the directive, “ensuring that the fight for fair wages in Europe continues on firm legal ground”.
Although the CJEU annulled the criteria for assessing the adequacy of statutory minimum wages, ETUC added, it confirmed other provisions (articles 5.1 and 5.4) aimed at “achieving a decent standard of living”, in particular the “threshold of decency”, based on 50% of the median wage and 60% of the average wage as a reference for assessing the adequacy of minimum wages. “These benchmarks remain binding tools for guiding fair statutory minimum wage setting and ensuring that minimum wages protect workers from in-work poverty”, the organisation stressed.
The Swedish organisation PTK, which represents over a million workers in the private sector, welcomed the fact that the Court clarifies how the EU can legislate in areas relating to pay and the promotion of social dialogue. It called for respect for national systems for regulating pay, whether these systems are “based on statutory minimum wages or collective agreements”.
Finally, the Director General of the employers’ organisation BusinessEurope, Markus J. Beyrer, felt that the Court, by clarifying the application of Article 5 of the Directive, “recognises that national competences have been overstepped”. “This partial annulment should lead to better consideration of the limits of the EU Treaty by EU policy makers in the future”, he said.
Link to the judgment of the Court of Justice: https://aeur.eu/f/jdg (Original version in French by Mathieu Bion)