Published in the Irish Employment Law Journal 2025, volume 22 Issue 2, pgs 41-42
Advocate General (“AG”) Nicholas Emiliou delivered his opinion on 14 January 2025 in Kingdom of Denmark v European Parliament and Council of the European Union, a recent action concerning Directive (EU) 2022/2041 on adequate minimum wages in the European Union (the “AMW Directive”). The Kingdom of Denmark, supported by the Kingdom of Sweden, asked the Court of Justice of the European Union (the “CJEU”) to annul the AMW Directive, on grounds that the European Parliament and the Council lacked competency to adopt the AMW Directive (C-19/23).
Emiliou noted that the European Union (EU) is only allowed to act within the limits of the competences conferred upon it by the Member States and set out in the Treaties, referred to as the “principle of conferral”. The AG considered this principle and the relevant EU legislation in his opinion on the AMW Directive.
The AMW Directive, which was to be transposed into national law in the Member States by 15 November 2024, sets out procedural obligations regarding the adequacy of statutory minimum wages in the EU. This Directive provides that minimum wages are considered adequate if:
“they are fair in relation to the wage distribution in the relevant Member State and if they provide a decent standard of living for workers based on a full-time employment relationship”.
It was observed that not all workers in the EU are effectively protected by minimum wages and that in particular, this affects women, young workers, low-skilled workers, people with disabilities and migrant workers. Article 5 of the AMW Directive provides that Member States are to be guided by certain criteria in the setting and updating of statutory minimum wages, with the view of achieving a decent standard of living within the EU and reducing in-work poverty. These criteria shall include consideration of the purchasing power of statutory minimum wages, taking into account the cost of living in the Member State and the growth rate of wages.
The AMW Directive provides that where more favourable provisions exist in the current national framework, these rights should continue to apply. The AMW Directive states that the Directive is without prejudice to the full respect for the autonomy of the social partners and their right to negotiate collective agreements in the Member State. In addition, Article 4 of the AMW Directive requires Member States to promote collective bargaining on wage-setting. An action plan is required to be established in each Member State where the collective bargaining coverage rate is less than 80 per cent (this includes Ireland).
Prior to the current action before the CJEU, the Danish Parliament had already indicated its opposition to the AMW Directive, giving an opinion in December 2020 that, in its view, wage conditions were best regulated at a national level.
Article 153 of the Treaty on the Functioning of the European Union (“TFEU”) provides that the EU shall support and complement the activities of the Member States in certain fields, such as working conditions, representation and collective defence of the interests of workers and employers. However, subs.5 provides that 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.” As its principal head of claim, the Kingdom of Denmark submitted to the CJEU that the AMW Directive directly interferes with the exclusions on pay and the right of association.
The AG noted that several instruments have been adopted over the years on the basis of Article 153 TFEU, for example, the recent Directive (EU) 2019/1152 on transparent and predictable working conditions in the EU. However, the AG observed that the current action does not exist in a vacuum, and instead it is linked to a broader perception of “competence creep” by the EU and specifically the Nordic Member States’ opposition to EU actions which they regard as interfering in their labour law.
He also notes that the AMW Directive, from a practical perspective, will not affect the national systems in the countries of Sweden or Denmark to any great extent and that one may regard this action as a mere “principled opposition”. However, ultimately, the AG considered the motivations of these countries as irrelevant to the case before him.
The AG described the European Parliament as walking on “thin ice” in their interpretation of the pay exclusion in Article 153(5). They argued that pay refers to the level of wages, not procedures for setting wages. However, in the AG’s view, the term “pay” in Article 153(5) is not limited in this way and is intended to cover all aspects of Member States’ wagesetting systems. It was not accepted by the AG that the AMW Directive only imposes procedural obligations.
The AG referred to Article 5, which outlines criteria that Member States shall consider when establishing procedures for setting and updating statutory minimum wages and commented as follows:
“I do not see how, for example, the obligation contained in Article 5(2)(c) of that directive that the procedure for the setting and updating of statutory minimum wages is to be guided by the growth rate of wages could mean anything other than that the level (amount) of minimum wages must be based on and reflect that growth rate. What is presented as a procedural obligation is, in fact, a substantive obligation in disguise.”
The AG also reviewed other relevant Articles of the AMW Directive and submitted that, as it has as its object the regulation of pay, it directly interfered with the pay exclusion in Article 153(5) of TFEU.
In relation to the right of association exclusion, the AG was not convinced by the argument of the Danish and Swedish governments that the right of association equals the right to collective bargaining. He commented that these are separate and distinct rights, one being the right to join organisations to protect economic interests (such as trade unions) and the other being related to a specific mandate of those organisations.
It is interesting that the AG’s opinion seemed to take a contradictory approach in utilising a very broad interpretation of pay and a very narrow interpretation of the right to association. The AG found it difficult to conclude that Article 4 of the AMW Directive concerning collective bargaining has as its object the regulation of the right to association.
Ultimately, the AG concluded that the European Parliament and the European Council had indeed acted in breach of their jurisdiction by legislating in an area, i.e. pay, specifically excluded from the EU’s competence and proposed that the AMW Directive be annulled.
The Minister for Enterprise, Trade and Employment in Ireland enacted the European Union (Adequate Minimum Wages) Regulations 2024 (S.I. No. 633 of 2024) in November last year to transpose the AMW Directive. The Minister noted that Ireland’s minimum wage setting framework was already largely in compliance. The changes included the addition of wording requiring the Low Pay Commission (“the Commission”) to consult with representatives of employers and employees prior to making a recommendation in respect of the national minimum hourly rate of pay to the Minister.
It also introduced additional criteria the Commission shall have regard to when making the recommendation, in line with Article 5 of the AMW Directive. If the AMW Directive is annulled, S.I. No. 633 of 2024 will likely be repealed. The action plan on the promotion of collective bargaining, as required by Article 4 of the AMW Directive, will no longer be required. The Irish government was actively working on this plan, as a public consultation on how Ireland can increase and promote collective bargaining just recently closed for submissions on 12 May 2025.
It has been reported in Irish media that trade union officials are dismayed by the AG’s opinion, as they view the AMW Directive as having the potential to promote collective bargaining in the private sector. It is important to note that even if the AMW Directive is annulled, employers in Ireland will still be required to comply with existing national legislation concerning minimum rates of pay, namely the National Minimum Wage Acts 2000 and 2015.
The AG’s opinion has been met with some surprise and criticism, considering the significant support for the AMW Directive by other Member States bar Sweden and Denmark and how the AG’s opinion appears contrary to previous case law and other Directives. It is considered uncommon for the CJEU not to follow an AG’s opinion. However, it is very rare for the CJEU to annul an entire Directive.
Some commentators have offered their view that it is unlikely the CJEU will annul the entire AMW Directive, and that “conflicts over competence are generally settled on the political stage”. It is also deemed likely that the European Parliament’s more restrictive interpretation of the pay exclusion will be considered within the band of reasonableness in light of existing case law.
It remains to be seen how the final CJEU decision will impact future EU directives concerning industrial relations and labour law. The decision of the CJEU is expected in the coming months, so this is one to watch!
Anne O’Connell Solicitors
19-22 Lower Baggot Street
Dublin 2.
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