1 By its application, the Kingdom of Denmark seeks, primarily, annulment of Directive (EU) 2022/2041 of the European Parliament and of the Council of 19 October 2022 on adequate minimum wages in the European Union (OJ 2022 L 275, p. 33; ‘the contested directive’) in its entirety and, in the alternative, annulment of Article 4(1)(d) and/or Article 4(2) of the contested directive.
2 Title X of Part Three of the FEU Treaty, entitled ‘Social policy’ contains Articles 151 to 161 TFEU.
3 As set out in Article 151 TFEU: ‘The [European] Union and the Member States, having in mind fundamental social rights such as those set out in the European Social Charter signed at Turin on 18 October 1961 and in the 1989 Community Charter of the Fundamental Social Rights of Workers [(“the Charter of Social Rights”)], shall have as their objectives the promotion of employment, improved living and working conditions, so as to make possible their harmonisation while the improvement is being maintained, proper social protection, dialogue between management and labour, the development of human resources with a view to lasting high employment and the combating of exclusion. To this end the Union and the Member States shall implement measures which take account of the diverse forms of national practices, in particular in the field of contractual relations, and the need to maintain the competitiveness of the Union economy. They believe that such a development will ensue not only from the functioning of the internal market, which will favour the harmonisation of social systems, but also from the procedures provided for in the Treaties and from the approximation of provisions laid down by law, regulation or administrative action.’
4 The first paragraph of Article 152 TFEU provides: ‘The Union recognises and promotes the role of the social partners at its level, taking into account the diversity of national systems. It shall facilitate dialogue between the social partners, respecting their autonomy.’
5 Article 153 TFEU provides: ‘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: … (b) working conditions; … (f) representation and collective defence of the interests of workers and employers, including co-determination, subject to paragraph 5; … 2. To this end, the European Parliament and the Council [of the European Union]: … (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 [European] Economic and Social Committee [(EESC)] and the [European] Committee of the Regions [(CoR)]. 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. … 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.’
6 Article 156 TFEU reads as follows: ‘With a view to achieving the objectives of Article 151 and without prejudice to the other provisions of the Treaties, the [European] Commission shall encourage cooperation between the Member States and facilitate the coordination of their action in all social policy fields under this Chapter, particularly in matters relating to: … - the right of association and collective bargaining between employers and workers. …’
7 The contested directive was adopted on the basis of Article 153(2)(b) TFEU, read in conjunction with Article 153(1)(b) TFEU.
8 Recitals 3, 7, 8, 12, 16, 18, 19, 22, 24, 25, 28 and 29 of that directive state: ‘(3) Article 31 of the Charter of Fundamental Rights of the European Union … (“the Charter”) provides for the right of every worker to working conditions which respect his or her health, safety and dignity. … … (7) Better living and working conditions, including through adequate minimum wages, benefit workers and businesses in the Union as well as society and the economy in general and are a prerequisite for achieving fair, inclusive and sustainable growth. Addressing large differences in the coverage and adequacy of minimum wage protection contributes to improving the fairness of the Union’s labour market, to preventing and reducing wage and social inequalities, and to promoting economic and social progress and upward convergence. … (8) When set at adequate levels, minimum wages, as provided for in national law or collective agreements, protect the income of workers, in particular of disadvantaged workers, [and] help ensure a decent living, as pursued by International Labour Organization (ILO) Minimum Wage Fixing Convention No 131 (1970). Minimum wages that provide for a decent standard of living and thus meet a threshold of decency can contribute to the reduction of poverty at national level and to sustaining domestic demand and purchasing power, strengthen incentives to work, reduce wage inequalities, the gender pay gap and in-work poverty, and limit the fall in income during economic downturns. … (12) While minimum wage protection exists in all Member States, in some that protection stems from legislative or administrative provisions and from collective agreements while in others it is provided exclusively through collective agreements. The different national traditions in the Member States should be respected. … (16) While strong collective bargaining, in particular at sector or cross-industry level, contributes to ensuring adequate minimum wage protection, traditional collective bargaining structures have been eroding during recent decades … In addition, sectoral and cross-industry level collective bargaining came under pressure in some Member States in the aftermath of the 2008 financial crisis. However, sectoral and cross-industry level collective bargaining is an essential factor for achieving adequate minimum wage protection and therefore needs to be promoted and strengthened. … (18) With a view to improving living and working conditions as well as upward social convergence in the Union, this Directive establishes minimum requirements at Union level and sets out procedural obligations for the adequacy of statutory minimum wages, and enhances effective access of workers to minimum wage protection, in the form of a statutory minimum wage where it exists, or provided for in collective agreements as defined for the purposes of this Directive. This Directive also promotes collective bargaining on wage-setting. (19) In accordance with Article 153(5) TFEU, this Directive 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. It does not interfere with the freedom of Member States to set statutory minimum wages or to promote access to minimum wage protection provided for in collective agreements, in accordance with national law and practice and the specificities of each Member State and in full respect for national competences and the social partners’ right to conclude agreements. This Directive does not impose and should not be construed as imposing an obligation on the Member States where wage formation is ensured exclusively via collective agreements to introduce a statutory minimum wage or to declare collective agreements universally applicable. Moreover, this Directive does not establish the level of pay, which falls within the right of the social partners to conclude agreements at national level and within the relevant competence of Member States. … (22) Well-functioning collective bargaining on wage-setting is an important means by which to ensure that workers are protected by adequate minimum wages that therefore provide for a decent standard of living. In the Member States with statutory minimum wages, collective bargaining supports general wage developments and therefore contributes to improving the adequacy of minimum wages as well as the living and working conditions of workers. In the Member States where minimum wage protection is provided for exclusively by collective bargaining, their level as well as the share of protected workers are directly determined by the functioning of the collective bargaining system and the collective bargaining coverage. Strong and well-functioning collective bargaining together with a high coverage of sectorial or cross-industry collective agreements strengthen the adequacy and the coverage of minimum wages. … (24) In a context of declining collective bargaining coverage, it is essential that the Member States promote collective bargaining, facilitate the exercise of the right of collective bargaining on wage-setting and thereby enhance the wage-setting provided for in collective agreements to improve workers’ minimum wage protection. Member States have ratified ILO Freedom of Association and Protection of the Right to Organise Convention No 87 [, adopted in San Francisco on 9 July 1948,] and ILO Right to Organise and Collective Bargaining Convention No 98 [, adopted in Geneva on 1 July 1949]. The right to bargain collectively is recognised under those ILO conventions, under ILO Labour Relations (Public Services) Convention No 151 [, adopted in Geneva on 27 June 1978,] and ILO Collective Bargaining Convention No 154 [, adopted in Geneva on 19 June 1981], as well as under the Convention for the Protection of Human Rights and Fundamental Freedoms [, signed in Rome on 4 November 1950,] and the ESC. Articles 12 and 28 of the Charter guarantee, respectively, the freedom of assembly and association and the right of collective bargaining and action. According to its preamble, the Charter reaffirms those rights as they result, in particular, from the Convention on the Protection of Human Rights and Fundamental Freedoms and the Social Charters adopted by the Union and by the Council of Europe. Member States should take, as appropriate and in accordance with national law and practice, measures promoting collective bargaining on wage-setting. Such measures might include, among others, measures easing the access of trade union representatives to workers. (25) Member States with a high collective bargaining coverage tend to have a small share of low-wage workers and high minimum wages. … Each Member State with a collective bargaining coverage below a threshold of 80% should provide a framework of enabling conditions for collective bargaining, and establish an action plan to promote collective bargaining to progressively increase the collective bargaining coverage rate. In order to respect the autonomy of the social partners, which includes their right to collective bargaining and excludes any obligation to conclude collective agreements, the threshold of 80% of collective bargaining coverage should only be construed as an indicator triggering the obligation to establish an action plan. … Member States’ collective bargaining coverage rates vary significantly owing to a number of factors, including national tradition and practice as well as historic context. This should be taken into account when analysing progress towards a higher collective bargaining coverage, particularly with regard to the action plan provided for in this Directive. … (28) Minimum wages are considered to be 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. The adequacy of statutory minimum wages is determined and assessed by each Member State in view of its national socioeconomic conditions, including employment growth, competitiveness and regional and sectoral developments. For the purpose of that determination, Member States should take into account purchasing power, long-term national productivity levels and developments, as well as wage levels[,] wage distribution and wage growth. … (29) Without prejudice to the competence of Member States to set the statutory minimum wage and to allow for variations and deductions, it is important to avoid variations and deductions being used widely, as they risk having a negative impact on the adequacy of minimum wages. …’
9 The contested directive comprises four chapters. Chapter I of that directive, entitled ‘General provisions’, consists of Articles 1 to 4 thereof. Chapter II of that directive, entitled ‘Statutory minimum wages’, contains Articles 5 to 8 thereof. Chapter III of that directive, entitled ‘Horizontal provisions’, contains Articles 9 to 13 thereof. Chapter IV of the contested directive, entitled ‘Final provisions’, consists of Articles 14 to 19 thereof.
10 Article 1 of the contested directive, entitled ‘Subject matter’, provides in paragraphs 1 to 4 thereof: ‘1. 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, this Directive establishes a framework for: (a) adequacy of statutory minimum wages with the aim of achieving decent living and working conditions; (b) promoting collective bargaining on wage-setting; (c) enhancing effective access of workers to rights to minimum wage protection where provided for in national law and/or collective agreements. 2. This Directive shall be without prejudice to the full respect for the autonomy of the social partners, as well as their right to negotiate and conclude collective agreements. 3. In accordance with Article 153(5) TFEU, this Directive shall be without prejudice to the competence of Member States in setting the level of minimum wages, as well as to the choice of the Member States to set statutory minimum wages, to promote access to minimum wage protection provided for in collective agreements, or both. 4. The application of this Directive shall be in full compliance with the right to collective bargaining. Nothing in this Directive shall be construed as imposing an obligation on any Member State: (a) where wage formation is ensured exclusively via collective agreements, to introduce a statutory minimum wage; or (b) to declare any collective agreement universally applicable.’
11 Article 2 of that directive, entitled ‘Scope’, provides that it ‘applies to workers in the Union who have an employment contract or employment relationship as defined by law, collective agreements or practice in force in each Member State, with consideration to the case-law of the [Court]’.
12 Article 3 of that directive, entitled ‘Definitions’, is worded as follows: ‘For the purposes of this Directive, the following definitions apply: (1) “minimum wage” means the minimum remuneration set by law or collective agreements that an employer, including in the public sector, is required to pay to workers for the work performed during a given period; (2) “statutory minimum wage” means a minimum wage set by law or other binding legal provisions, with the exclusion of minimum wages set by collective agreements that have been declared universally applicable without any discretion of the declaring authority as to the content of the applicable provisions; (3) “collective bargaining” means all negotiations which take place according to national law and practice in each Member State between an employer, a group of employers or one or more employers’ organisations on the one hand, and one or more trade unions on the other, for determining working conditions and terms of employment; (4) “collective agreement” means a written agreement regarding provisions on working conditions and terms of employment concluded by the social partners that have the capacity to bargain on behalf of workers and employers respectively according to national law and practice, including collective agreements that have been declared universally applicable; (5) “collective bargaining coverage” means the share of workers at national level to whom a collective agreement applies, calculated as the ratio of the number of workers covered by collective agreements to the number of workers whose working conditions may be regulated by collective agreements in accordance with national law and practice.’
13 Article 4 of that directive, entitled ‘Promotion of collective bargaining on wage-setting’, provides: ‘1. 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: … (c) take measures, as appropriate, to protect the exercise of the right to collective bargaining on wage-setting and to protect workers and trade union representatives from acts that discriminate against them in respect of their employment on the grounds that they participate or wish to participate in collective bargaining on wage-setting; (d) 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. 2. 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.’
14 Article 5 of the contested directive, entitled ‘Procedure for setting adequate statutory minimum wages’, is worded as follows: ‘1. Member States with statutory minimum wages shall establish the necessary procedures for the setting and updating of statutory minimum wages. Such setting and updating shall be guided by criteria set to contribute to their adequacy, with the aim of achieving a decent standard of living, reducing in-work poverty, as well as promoting social cohesion and upward social convergence, and reducing the gender pay gap. Member States shall define those criteria in accordance with their national practices in relevant national law, in decisions of their competent bodies or in tripartite agreements. The criteria shall be defined in a clear way. Member States may decide on the relative weight of those criteria, including the elements referred to in paragraph 2, taking into account their national socioeconomic conditions. 2. The national criteria referred to in paragraph 1 shall include at least the following elements: (a) the purchasing power of statutory minimum wages, taking into account the cost of living; (b) the general level of wages and their distribution; (c) the growth rate of wages; (d) long-term national productivity levels and developments. 3. Without prejudice to the obligations set out in this Article, Member States may additionally use an automatic mechanism for indexation adjustments of statutory minimum wages, based on any appropriate criteria and in accordance with national laws and practices, provided that the application of that mechanism does not lead to a decrease of the statutory minimum wage. 4. Member States shall use indicative reference values to guide their assessment of adequacy of statutory minimum wages. To that end, they may use indicative reference values commonly used at international level such as 60% of the gross median wage and 50% of the gross average wage, and/or indicative reference values used at national level. 5. Member States shall ensure that regular and timely updates of statutory minimum wages take place at least every two years or, for Member States which use an automatic indexation mechanism as referred to in paragraph 3, at least every four years. 6. Each Member State shall designate or establish one or more consultative bodies to advise the competent authorities on issues related to statutory minimum wages, and shall enable the operational functioning of those bodies.’
15 Under Article 6 of that directive, entitled ‘Variations and deductions’: ‘1. Where Member States allow for different rates of statutory minimum wage for specific groups of workers or for deductions that reduce the remuneration paid to a level below that of the relevant statutory minimum wage, they shall ensure that those variations and deductions respect the principles of non-discrimination and proportionality, the latter including the pursuit of a legitimate aim. 2. Nothing in this Directive shall be construed as imposing an obligation on Member States to introduce variations of or deductions from statutory minimum wages.’
16 Articles 7 and 8 of that directive are entitled, respectively, ‘Involvement of the social partners in the setting and updating of statutory minimum wages’ and ‘Effective access of workers to statutory minimum wages’.
17 Articles 9 to 11 of that directive are entitled, respectively, ‘Public procurement’, ‘Monitoring and data collection’ and ‘Information on minimum wage protection’.
18 Article 12 of the contested directive, entitled ‘Right to redress and protection against adverse treatment or consequences’, provides that: ‘1. Member States shall ensure that, without prejudice to specific forms of redress and dispute resolution provided for, where applicable, in collective agreements, workers, including those whose employment relationship has ended, have access to effective, timely and impartial dispute resolution and a right to redress, in the case of infringements of rights relating to statutory minimum wages or relating to minimum wage protection, where such rights are provided for in national law or collective agreements. 2. Member States shall take the measures necessary to protect workers and workers’ representatives, including those who are trade union members or representatives, from any adverse treatment by the employer and from any adverse consequences resulting from a complaint lodged with the employer or resulting from any proceedings initiated with the aim of enforcing compliance in the case of infringements of rights relating to minimum wage protection, where such rights are provided for in national law or collective agreements.’
19 Article 13 of that directive, entitled ‘Penalties’, provides: ‘Member States shall lay down the rules on penalties applicable to infringements of rights and obligations falling within the scope of this Directive, where those rights and obligations are provided for in national law or collective agreements. In Member States without statutory minimum wages, those rules may contain or be limited to a reference to compensation and/or contractual penalties provided for, where applicable, in rules on enforcement of collective agreements. The penalties provided for shall be effective, proportionate and dissuasive.’
20 Article 16 of that directive, entitled ‘Non-regression and more favourable provisions’, provides, in paragraph 1: This Directive shall not constitute valid grounds for reducing the general level of protection already provided to workers within Member States, in particular with regard to the lowering or abolition of minimum wages.’
21 The Kingdom of Denmark claims that the Court should: - annul the contested directive; - in the alternative, annul Article 4(1)(d) and/or Article 4(2) of the contested directive, and - order the Parliament and the Council to pay the costs.
22 The Parliament contends that the Court should: - dismiss the action; and - order the Kingdom of Denmark to pay the costs.
23 The Council contends that the Court should: - dismiss the principal head of claim as unfounded; - dismiss the alternative head of claim as inadmissible or, in the alternative, as unfounded, and - order the Kingdom of Denmark to pay the costs.
24 By decisions of the President of the Court of 26 April and 25 May 2023, respectively, the Kingdom of Belgium and the Republic of Portugal were granted leave to intervene in support of the form of order sought by the Council.
25 By decisions of the President of the Court of 8 and 26 May, 5 and 7 June 2023, respectively, the Commission, the Kingdom of Spain, the Federal Republic of Germany, the Hellenic Republic, the Grand Duchy of Luxembourg and the French Republic were granted leave to intervene in support of the form of order sought by the Parliament and the Council.
26 By decision of the President of the Court of 26 May 2023, the Kingdom of Sweden was granted leave to intervene in support of the form of order sought by the Kingdom of Denmark.
27 By its action, the Kingdom of Denmark, supported by the Kingdom of Sweden, seeks, principally, the annulment of the contested directive in its entirety and, in the alternative, the annulment of Article 4(1)(d) and/or Article 4(2) of that directive.
28 In support of its principal head of claim, the Kingdom of Denmark raises two pleas in law alleging, first, disregard of Article 153(5) TFEU and misuse of the powers conferred by the Treaties on the EU legislature and, second, that it is not possible to adopt the contested directive on the basis of Article 153(1)(b) TFEU, since that directive pursues several different objectives.
29 In support of its alternative head of claim, the Kingdom of Denmark raises a single plea in law, alleging that, by adopting Article 4(1)(d) and (2) of the contested directive, the Parliament and the Council infringed the principle of conferral and acted in breach of Article 153(5) TFEU.
30 In the first part of its first plea, the Kingdom of Denmark submits that the contested directive, in the light of its subject matter, the framework which it establishes and its effects, taken together, amounts to direct interference by EU law in the determination of pay within the Member States, in disregard of Article 153(5) TFEU and the division of competences between the European Union and the Member States provided for in that article.
31 First of all, the contested directive concerns minimum remuneration. However, according to the Court’s case-law, minimum remuneration is at the heart of Article 153(5) TFEU. Next, in accordance with the framework established by that directive, Member States must implement various procedures and adopt various measures with the explicit aim of producing effects on the minimum level of pay within the European Union and thus ensuring its adequacy. Lastly, that directive is clearly intended to have effects on the level of pay in the Member States, by leading to an increase in that level.
32 Several provisions support that analysis.
33 It is apparent from Article 1(1) of the contested directive that the purpose of that directive is to improve living and working conditions in the Union, in particular the adequacy of minimum wages for workers. That presupposes that the provisions of that directive have an effect on the level of pay in the Member States and lead to its increase, which also coincides with the Commission’s intention. The framework referred to in that provision to ensure that effect includes (i) measures to increase collective bargaining coverage, which are provided for in Article 4 of that directive, and (ii) measures to ensure the setting of adequate statutory minimum wages, which are provided for in Articles 5 and 6 thereof.
34 First, Article 4(1) of the contested directive provides both for measures akin to ‘programmatic statements’ and for the adoption of measures by the Member States.
35 In addition, Article 4(2) of the contested directive requires Member States in which the collective bargaining coverage rate is less than a threshold of 80% to provide for a framework of conditions such as to enable collective bargaining, either by law or by agreement with the social partners, and an action plan to promote collective bargaining. That framework, providing for ‘enabling conditions’ for collective bargaining, must be legally binding in the Member State, at least for the partners concerned.
36 In the event that the collective bargaining coverage rate falls below the threshold of 80% in a Member State, that could have an impact on the legal framework currently applicable to the social partners for the pursuit of collective bargaining, in particular in relation to pay. Member States where the collective bargaining coverage is below that threshold should adopt measures and establish an action plan to effectively promote collective bargaining. Those Member States are thus required to interfere in areas which, as in Denmark, fall within the competence of the social partners.
37 Article 4(2) of the contested directive thus amounts to direct interference by EU law in what is ‘at the very heart of the Danish model’, in accordance with which it is for the social partners alone to negotiate and determine the level of pay with complete autonomy.
38 Second, Article 5 of the contested directive, which establishes a procedure for setting adequate statutory minimum wages, in fact entails interference by EU law in the determination of pay within the Member States, irrespective of the imprecise nature of what is meant by the ‘adequacy’ of statutory minimum wages to enable a ‘decent standard of living’ to be achieved and even though that article does not set a specific level below which a statutory minimum wage may be regarded as inadequate.
39 In accordance with Article 5(1) of the contested directive, Member States must establish the necessary procedures for the setting and updating of statutory minimum wages, based on legally binding criteria, including those set out in paragraph 2(a) to (d) of that article. In view of the extent of those elements, Article 5 of that directive may not leave the Member States real freedom to establish additional criteria, even though they are free to decide on the relative weight of the criteria thus laid down. In any event, the fact that the Member States are required to include the criteria laid down in Article 5(2) of that directive when setting and updating statutory minimum wages amounts to interference by EU law in the determination of pay within the Member States. That analysis is supported, moreover, by Article 5(3) of that directive, which prohibits the application of an automatic mechanism for indexation adjustments which leads to ‘a decrease of the statutory minimum wage’, and by Article 5(5) thereof, under which regular and timely updates of statutory minimum wages must, as the case may be, take place at least every two or four years.
40 It follows that Article 5 of the contested directive requires, in fact, the application of minimum criteria and the use of indicative reference values directly linked to statutory minimum wages in the Member States and intended directly to have an upward effect on the level of those wages.
41 Third, Article 6 of the contested directive limits, in the light of its content, the power of the Member States to provide for variations and deductions applicable to statutory minimum wages, which demonstrates a serious limitation on the autonomy of the Member States to determine statutory minimum wages and, therefore, a direct impact on the determination of pay. Member States which have introduced statutory minimum wages and which intend to allow different rates for specific categories of workers must comply with the principle of proportionality and justify such differentiation by a ‘legitimate objective’.
42 Consequently, the overall framework established by Articles 4 to 6 of the contested directive has a direct and immediate link with pay, in breach of Article 153(5) TFEU.
43 The Kingdom of Denmark also submits that the Court’s case-law on the interpretation of Article 153(5) TFEU is not decisive for the assessment of whether the contested directive amounts to direct interference by EU law in the determination of pay within the Member States.
44 In the second part of its first plea, the Kingdom of Denmark submits that the contested directive governs areas covered by the concept of ‘right of association’ and thus fails to have regard to the exclusion of competence relating to the right of association in Article 153(5) TFEU.
45 The Kingdom of Denmark submits that the purpose of Article 153(5) TFEU is to protect the social partners’ autonomy in collective bargaining from possible interference. Measures connected with the right of association can therefore be taken under Article 153(1) TFEU only in so far as the national law governing that right is not directly affected. In the light of the meaning given to the concept of ‘right of association’ referred to in that Article 153(5) by the Charter of Social Rights, in particular, that concept must be understood as referring to the right of every worker and every employer to join or not to join an organisation or trade union and to participate freely in collective bargaining.
46 In that regard, the Kingdom of Denmark takes the view that, since Article 4(1)(d) of the contested directive requires Member States to take measures to protect trade unions and employers’ organisations participating in collective bargaining against any interference in their establishment, functioning or administration, that provision amounts to direct interference by EU law with the ‘right of association’, in disregard of the exclusion of competence relating to that right set out in Article 153(5) TFEU.
47 In addition, the Kingdom of Denmark submits that Article 4(2) of the contested directive also has an impact on the legal framework for membership of a trade union or organisation and, consequently, goes to the very heart of the right of association within which the Danish social partners operate. In order for it to be able to have any effect, the obligation laid down in that provision must necessarily have as its objective that a larger number of workers are covered by an agreement by joining a trade union organisation.
48 The Parliament, the Council, the Commission and the Member States intervening in support of the form of order sought by the defendant institutions contend, as regards the first part of the first plea, that the contested directive, the sole objective of which is to improve working conditions by means of measures concerning the adequacy and promotion of minimum wages and the promotion of collective bargaining on wage-setting, could be adopted in full compliance with Article 153(5) TFEU.
49 The contested directive only sets out, by means of minimum requirements at EU level, procedural obligations relating to the determination of the adequacy of statutory minimum wages and promotes negotiations on the setting of those wages. That directive thus lays down procedural obligations as to means, and not obligations as to the result to be achieved, in full respect for the autonomy of the social partners and the different systems for setting pay in the Member States. Thus, that directive does not prescribe specific levels or components of pay which the Member States are required to ensure in a harmonised manner and, consequently, it is not capable of directly determining pay in the European Union.
50 As regards the second part of the first plea, the Parliament, the Council, the Commission and the Member States intervening in support of the form of order sought by the defendant institutions contend that, although the right of association is a precondition for the right to collective bargaining, those two rights are nevertheless distinct.
51 In the present case, the contested directive, and in particular Article 4 thereof, does not lay down any rules on the right of association. That directive only establishes a framework to facilitate the exercise of the right to collective bargaining, without laying down any obligations concerning the joining, leaving or dissolution of those trade unions or associations. Nor does the Directive impose any condition as to the manner in which those trade unions or associations operate or amount to any interference with them.
52 In accordance with the principle of conferral set out in Article 4(1) and Article 5(1) and (2) TEU, the Union is to act only within the limits of the competences conferred upon it by the Member States in the Treaties to attain the objectives set out therein, and competences not conferred upon the Union in the Treaties remain with the Member States.
53 In adopting the contested directive, the EU legislature relied on the combined provisions of Article 153(2)(b) and Article 153(1)(b) TFEU, which empower the Parliament and the Council to adopt, by means of directives, minimum requirements in the field of ‘working conditions’.
54 However, under Article 153(5) TFEU, the provisions of that article ‘shall not apply to pay, the right of association, the right to strike or the right to impose lock-outs’. The provisions of paragraphs 1 to 4 of that article cannot therefore be used as a legal basis in order to circumvent the express exclusion of any competence laid down in Article 153(5) (see, by analogy, judgment of 5 October 2000, Germany v Parliament and Council, C‑376/98, EU:C:2000:544, paragraph 79).
55 Therefore, it is necessary to ascertain whether, by adopting the contested directive on the basis of the provisions of Article 153(1) and (2) TFEU, the EU legislature infringed the exclusions of competence relating to ‘pay’ and the ‘right of association’ set out in paragraph 5 of that article and, therefore, failed to have regard to the competences conferred on the European Union by the Treaties.
56 In that regard, account must be taken of the settled case-law according to which the choice of legal basis for an EU measure must rest on objective factors that are amenable to judicial review; these include the aim and the content of the measure (judgments of 12 November 1996, United Kingdom v Council, C‑84/94, EU:C:1996:431, paragraph 25, and of 8 December 2020, Hungary v Parliament and Council, C‑620/18, EU:C:2020:1001, paragraph 38). It is in the light of those objective factors that it is necessary to examine whether an EU act falls, in whole or in part, within an exclusion of EU competence laid down by the Treaties.
57 In the first place, as regards the purpose of the contested directive, it is intended, as is apparent from Article 1(1) thereof, to improve 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.
58 Recital 7 of that directive states, in that regard, that ‘better living and working conditions, including through adequate minimum wages, benefit workers and businesses in the Union as well as society and the economy in general and are a prerequisite for achieving fair, inclusive and sustainable growth’. That recital further states that ‘addressing large differences in the coverage and adequacy of minimum wage protection contributes to improving the fairness of the Union’s labour market, to preventing and reducing wage and social inequalities, and to promoting economic and social progress and upward convergence’. Recital 8 of that directive adds that, ‘when set at adequate levels, minimum wages, as provided for in national law or collective agreements, protect the income of workers, in particular of disadvantaged workers, [and] help ensure a decent living’.
59 In the second place, as regards the content of the contested directive, it contains 19 articles. Articles 1 and 2 of that directive set out its subject matter and scope, respectively, while Article 3 of that directive gives a harmonised definition of the concepts of ‘minimum wage’, ‘statutory minimum wage’, ‘collective bargaining’, ‘collective agreement’ and ‘collective bargaining coverage’.
60 In order to achieve the objectives set out in paragraphs 57 and 58 of the present judgment, the contested directive, in accordance with Article 1(1) thereof, read in the light of recital 18 thereof, establishes a framework based on three main axes, referred to in points (a) to (c) of that provision. The first axis concerns the adequacy of statutory minimum wages with the aim of achieving decent living and working conditions. The second axis concerns the promotion of collective bargaining on wage-setting. Lastly, the third axis relates to enhancing effective access of workers to rights to minimum wage protection where provided for in national law and/or collective agreements.
61 As regards the first axis, Article 5(1) of the contested directive requires, in the first paragraph thereof, Member States with statutory minimum wages to establish the necessary procedures for the setting and updating of statutory minimum wages which must be guided by criteria set to contribute to their adequacy, and lays down, in paragraph 2 thereof, criteria which must be taken into account by the Member States for this purpose. Article 5(3) of that directive expressly confirms the Member States’ power to use an automatic mechanism for indexation adjustments of statutory minimum wages, subject to the obligations and conditions set out therein. In addition, Article 5(4) of that directive provides that the assessment of the adequacy of statutory minimum wages must be guided by indicative reference values. Furthermore, paragraphs 5 and 6 of Article 5 of that directive relate, respectively, to the frequency of updates of statutory minimum wages and to the designation or establishment of consultative bodies to advise the competent authorities on issues related to statutory minimum wages.
62 Articles 6 to 8 of the contested directive concern, respectively, variations of and deductions from statutory minimum wages, the involvement of the social partners in setting and updating those wages and the effective access of workers to those wages.
63 As regards the second axis, Article 4(1) of the contested directive, with the aim of increasing the collective bargaining coverage and of facilitating the exercise of the right to collective bargaining on wage-setting, provides, inter alia, that Member States are to take, as appropriate, the measures referred to in points (c) and (d) thereof to protect workers and trade union representatives as well as trade unions and employers’ organisations when they participate or wish to participate in such collective bargaining.
64 Moreover, Article 4(2) of that directive requires Member States in which the collective bargaining coverage rate is less than a threshold of 80% to provide for a framework for promoting collective bargaining, either by law after consulting the social partners or by agreement with them, and to establish an action plan to that end, setting out a clear timeline and concrete measures to progressively increase the rate of collective bargaining coverage; that plan is to be reviewed regularly and updated if needed. It is apparent from recitals 16 and 22 of that directive that the EU legislature relied, in that regard, on the premiss that there is a correlation between a high rate of collective bargaining coverage and the adequacy of minimum wages.
65 As regards the third axis, Articles 9 to 13 of that directive lay down horizontal provisions concerning public procurement, monitoring and data collection, information on minimum wage protection, the right to redress and protection against adverse treatment or consequences, and the rules on penalties.
66 In those circumstances, it follows from an examination of the purpose and content of the contested directive that it established, inter alia, a framework for setting adequate minimum wages with a view to improving living and working conditions in the Union. That directive therefore falls prima facie within one or more of the matters listed in Article 153(1) TFEU, which include the ‘working conditions’ referred to in point (b) of that provision, while relating to the matter of ‘pay’, which could fall within the exclusion of competence provided for in Article 153(5) TFEU relating to ‘pay’.
67 In the light of the analytical framework set out in paragraphs 52 to 56 of the present judgment, it must be borne in mind that the Court has repeatedly held that the exception relating to ‘pay’ set out in Article 153(5) TFEU is explained by the fact that fixing pay falls within the contractual freedom of the social partners at national level and within the relevant competence of Member States. In those circumstances, in the present state of EU law, it was considered appropriate to exclude determination of the level of pay from harmonisation under Article 151 TFEU et seq. (see, to that effect, judgments of 13 September 2007, Del Cerro Alonso, C‑307/05, EU:C:2007:509, paragraphs 40 and 46, and of 7 July 2022, Coca-Cola European Partners Deutschland, C‑257/21 and C‑258/21, EU:C:2022:529, paragraph 47).
68 Consequently, that exclusion of competence must be construed as covering measures - such as the equivalence of all or some of the constituent parts of pay and/or the level of pay in the Member States, or the setting of a minimum guaranteed wage at EU level - that amount to direct interference by EU law in the determination of pay within the European Union. On the other hand, it cannot be extended to any question involving any sort of link with pay; otherwise, some areas referred to in Article 153(1) TFEU would be deprived of much of their substance (judgments of 15 April 2008, Impact, C‑268/06, EU:C:2008:223, paragraphs 124 and 125, and of 24 February 2022, Glavna direktsia Pozharna bezopasnost i zashthe na naselenieto, C‑262/20, EU:C:2022:117, paragraph 30).
69 It is true that, as the Kingdom of Denmark and the Kingdom of Sweden have pointed out, in the cases which gave rise to the judgments cited in the preceding paragraph, the Court had been called upon to examine the delimitation of competences between the European Union and the Member States in the areas referred to in Article 153 TFEU in respect of acts which do not relate to pay, but which govern other working conditions or which have a different purpose and the provisions of which could have certain repercussions or effects on the determination of pay. The fact remains that, in those judgments, the Court interpreted the scope of the exclusion relating to ‘pay’ provided for in paragraph 5 of that article in general terms, without focusing on the more or less close link with the subject matter of pay of the acts whose interpretation was sought.
70 Therefore, in the light of the requirements of legal certainty, clarity and continuity in the application of the criteria governing the division of competences between the European Union and the Member States, the criterion of ‘direct interference by EU law in the determination of pay within the European Union’ referred to in paragraph 68 of the present judgment must guide the examination of whether the exclusion of competence relating to ‘pay’ laid down in Article 153(5) TFEU has been complied with, irrespective of the more or less close link between the act at issue and the matter of ‘pay’. That means that the competence of the European Union cannot be considered to be automatically excluded where that act relates to that matter.
71 Moreover, the ability of the EU legislature to achieve the aims of social policy, as set out in the first paragraph of Article 151 TFEU, and, more generally, to give concrete expression to the social dimension of integration within the Union would be seriously compromised if that legislature were prevented from adopting measures which, in practice, have positive effects or repercussions on the level of pay, and even if, to that end, such measures fully respected the diversity of the national practices of the Member States and the autonomy of the social partners, in accordance with the second paragraph of Article 151 TFEU and the first paragraph of Article 152 TFEU.
72 That finding applies, a fortiori, as regards ‘working conditions’, which are among the matters in which Article 153(1) TFEU confers on the European Union competence to support and complement the activities of the Member States and the scope of which overlaps, in part, with the scope of the exception relating to ‘pay’ set out in Article 153(5) TFEU, because pay forms an integral part of working conditions (see, to that effect, judgments of 11 November 2004, Delahaye, C‑425/02, EU:C:2004:706, paragraph 33, and of 22 December 2010, Gavieiro Gavieiro and Iglesias Torres, C‑444/09 and C‑456/09, EU:C:2010:819, paragraph 58).
73 Furthermore, the fact referred to by the Parliament that the EU legislature has already been led to adopt other acts concerning pay founded on the legal bases set out in Article 153 TFEU is irrelevant to the question whether the contested directive could validly be adopted on a legal basis set out in that article, without infringing the exclusion of competence relating to ‘pay’ provided for in paragraph 5 thereof. According to the case-law, the legal basis for a measure must be determined having regard to its purpose and content and not to the legal basis which has been used for the adoption of other European Union measures which might, in certain cases, display similar characteristics (see, to that effect, judgments of 28 June 1994, Parliament v Council, C‑187/93, EU:C:1994:265, paragraph 28, and of 12 February 2015, Parliament v Council, C‑48/14, EU:C:2015:91, paragraph 30).
74 In those circumstances, even though it follows from the examination carried out in paragraphs 57 to 66 of the present judgment that the contested directive relates to the matter of pay and is capable of having an impact on the level of pay, those circumstances alone cannot automatically lead to the conclusion that, by adopting that directive, the EU legislature infringed the exclusion of competence relating to ‘pay’ provided for in Article 153(5) TFEU.
75 It is also necessary to ascertain, to that end, whether Articles 4 to 6 of the contested directive, to which the criticisms of the Kingdom of Denmark and the Kingdom of Sweden essentially relate, amount to direct interference by EU law in the determination of pay within the European Union, within the meaning of the case-law referred to in paragraphs 67 and 68 of the present judgment.
76 As the Kingdom of Denmark and the Kingdom of Sweden submit, Article 4 of the contested directive lays down certain requirements both in general terms and in such a way as to require the adoption of specific measures to be taken for the purpose of promoting collective bargaining on wage-setting. That article requires, more specifically, in paragraph 2 thereof, that Member States in which the collective bargaining coverage rate is less than a threshold of 80% are to provide for a framework of enabling conditions for collective bargaining either by ‘law’ after consulting the social partners or by ‘agreement’ with them. Those Member States must also draw up an ‘action plan’ setting out a clear timeline and ‘concrete measures’ to progressively increase the rate of collective bargaining coverage, which they must review regularly, make public and notify to the Commission. It should also be noted that the concepts of ‘collective bargaining’, ‘collective agreement’ and ‘collective bargaining coverage’ referred to in that provision are the subject of harmonised definitions in Article 3(3) to (5) of that directive.
77 Although Article 4 of the contested directive thus introduces a certain form of State intervention in the arrangements for collective bargaining on wage- setting, it does not follow that its provisions would amount to direct interference by EU law in the determination of pay within the European Union, within the meaning of the case-law referred to in paragraphs 67 and 68 of the present judgment.
78 First, Article 4 does not interfere with the choice made by the Member States as to the wage- setting model, namely by legislative means, by collective bargaining or by a combination of the two. Recital 12 of the contested directive states, moreover, that ‘the different national traditions in the Member States should be respected’.
79 Second, Article 4 neither governs the content nor prescribes the result of collective bargaining. As the Parliament and the Council contend, the various measures which Article 4 lays down impose on the Member States not obligations as to the result to be achieved but, at most, obligations as to means. Thus, Article 4(2) of the contested directive provides that the Member States are required not to reach the threshold of 80% of collective bargaining coverage referred to in that provision, but to establish a ‘framework’ of enabling conditions for collective bargaining and draw up an ‘action plan’ to promote such bargaining. That provision must, moreover, be read in the light of recital 25 of the contested directive, which states, for that purpose, that ‘the threshold of 80% of collective bargaining coverage should only be construed as an indicator triggering the obligation to establish an action plan’ and that, when analysing progress towards a higher collective bargaining coverage, particularly with regard to the action plan provided for in that directive, account should be taken of the fact that ‘Member States’ collective bargaining coverage rates vary significantly owing to a number of factors, including national tradition and practice as well as historic context’.
80 The fact that a Member State has not achieved the 80% collective bargaining coverage rate referred to in Article 4(2) of that directive does not therefore in itself constitute a breach of an obligation on that Member State.
81 It should be added that Article 4(2) of the contested directive is worded in such a way as to guarantee fully social partners’ autonomy. In accordance with that provision, Member States falling within its scope are required to involve the social partners in establishing the framework of enabling conditions for collective bargaining referred to in that provision, whether that ‘framework’ is adopted by law or by agreement, and in the establishment, updating and review of the action plan referred to therein. Similarly, Article 1 of that directive provides, in paragraph 2, that the Directive ‘shall be without prejudice to the full respect for the autonomy of the social partners, as well as their right to negotiate and conclude collective agreements’ and, in paragraph 4, that ‘the application of [that d]irective shall be in full compliance with the right to collective bargaining’.
82 Article 4 must be read in conjunction with recital 19 of the contested directive, which states that that directive does not interfere with the freedom of Member States, inter alia, to promote access to minimum wage protection provided for in collective agreements, ‘in accordance with national law and practice and the specificities of each Member State and in full respect for national competences and the social partners’ right to conclude agreements’.
83 It follows that Article 4 respects the broad discretion enjoyed by the social partners in the negotiation and conclusion of collective agreements.
84 Moreover, Article 4 of the contested directive must be read in the light of Article 152 TFEU, which was introduced by the Treaty of Lisbon and which expressly lays down, in its first paragraph, respect for the autonomy of the social partners. Accordingly, Article 4(2) of that directive cannot be interpreted as obliging the Member States to require a larger number of workers to join a trade union organisation. As Article 1(4) of that directive expressly states, nor can that Article 4(2) be interpreted as meaning that the Member States must declare a collective agreement universally applicable.
85 In the light of the foregoing, it must be concluded that Article 4 of the contested directive does not amount to direct interference by EU law in the determination of pay within the European Union, within the meaning of the case-law referred to in paragraphs 67 and 68 of the present judgment.
86 It should be noted at the outset that Article 5 of the contested directive, entitled ‘Procedure for setting adequate statutory minimum wages’, applies, as is apparent from paragraph 1 thereof, to Member States with statutory minimum wages. Article 1(4)(a) of that directive, read in the light of recital 19 thereof, provides, in that regard, that nothing in that directive is to be construed as imposing an obligation on any Member State where wage formation is ensured via collective agreements to introduce a statutory minimum wage. Therefore, as the Kingdom of Denmark and the Kingdom of Sweden acknowledge, Article 5 of that directive respects the competence of the Member States to choose the wage-setting model.
87 It is nevertheless necessary to ascertain whether the specific provisions of that Article 5 amount to direct interference by EU law in the determination of pay within the European Union, within the meaning of the case-law cited in paragraphs 67 and 68 of the present judgment.
88 As regards, first, Article 5(1) of the contested directive, that provision requires, in its first and second sentences, Member States with statutory minimum wages to establish ‘the necessary procedures for the setting and updating of statutory minimum wages’. Moreover, those procedures must be based on criteria, defined in a ‘clear way’, ‘set to contribute to [the] adequacy [of statutory minimum wages], with the aim of achieving a decent standard of living, reducing in-work poverty, as well as promoting social cohesion and upward social convergence, and reducing the gender pay gap’.
89 However, as the Parliament, the Council and the French Republic rightly contend before the Court, neither Article 5 of the contested directive nor any other provision of that directive defines the concept of ‘adequacy’ of statutory minimum wages. On the contrary, in view of its broad wording, Article 5(1) of that directive leaves a significant margin of discretion to the Member States to define that concept and to determine its exact scope. The adequacy of statutory minimum wages is, at most, an indicative value towards which Member States should aim when setting and updating statutory minimum wages. That reading is supported both by the third sentence of Article 5(1) of that directive, which refers, for the purposes of defining the criteria referred to in the second sentence of that provision, to the national practices of the Member States, to the decisions of their competent bodies and to tripartite agreements, and by the fifth sentence thereof, which allows Member States to decide on the relative weight of those criteria, taking into account their national socioeconomic conditions.
90 Therefore, in view of the express reference made by that provision, inter alia, to national practices defined in national laws, the concept of ‘adequacy’ of statutory minimum wages cannot be regarded as an autonomous concept of EU law (see, to that effect, judgment of 29 July 2024, CU and ND (Social assistance - Indirect discrimination), C‑112/22 and C‑223/22, EU:C:2024:636, paragraph 35 and the case-law cited), on which the Parliament and the Council also agree.
91 In addition, Article 5(1) of the contested directive governs the ‘procedure’ for setting and updating statutory minimum wages, requiring the Member States concerned to establish procedures that are based on criteria which they must set at national level in such a way as to contribute to the adequacy of those wages and to their updating, and in respect of which they may determine their relative weight. Formulated in general terms and based on a procedural approach, that provision thus does not confer a right to an adequate statutory minimum wage on workers or a right to the updating of such wages which are inherent in EU law. Such a reading of that provision is supported by Articles 12 and 13 of that directive, which, as regards Article 12, makes access to the remedies for which it provides, in the case of infringements of ‘rights relating to statutory minimum wages or relating to minimum wage protection’, subject to the existence of those rights in national law or in collective agreements, and, as regards Article 13, requires Member States to lay down the rules on penalties applicable to infringements ‘of rights and obligations falling within the scope of [that d]irective’, ‘where those rights and obligations are provided for in national law or collective agreements’.
92 In those circumstances, it must be concluded that Article 5(1) of the contested directive does not amount to direct interference by EU law in the determination of pay within the European Union, within the meaning of the case-law referred to in paragraphs 67 and 68 of the present judgment.
93 It should be added that, in view of the exclusion of competence relating to ‘pay’ laid down in Article 153(5) TFEU, a right inherent in EU law to ‘adequate’ or ‘fair’ statutory minimum wages cannot moreover be inferred from a combined reading of Article 5(1) of the contested directive and Article 31(1) of the Charter. Under Article 51(2) thereof, the Charter does not extend the field of application of Union law beyond the powers of the Union or establish any new power or task for the Union, or modify powers and tasks as defined in the Treaties.
94 As regards, second, Article 5(2) of the contested directive, it lists, in points (a) to (d), four elements, namely, respectively, ‘the purchasing power of statutory minimum wages, taking into account the cost of living’, ‘the general level of wages and their distribution’, ‘the growth rate of wages’ and ‘long-term national productivity levels and developments’, which the national criteria referred to in paragraph 1 of that article must at least include.
95 Admittedly, as the phrase ‘at least’ used in Article 5(2) shows, that list is not exhaustive, since the Member States are free to add other elements to it. In addition, as is recalled in paragraph 89 of the present judgment, it is apparent from the third sentence of Article 5(1) of the contested directive that the Member States are to define the national criteria referred to in that latter provision in accordance, inter alia, with their national practices and from the fifth sentence of that paragraph that Member States may also decide on the relative weight of the various national criteria, including the elements referred to in Article 5(2). Moreover, it is the socioeconomic conditions prevailing in each Member State that serve as a reference point for those various national criteria. The fact remains that, as the Kingdom of Denmark rightly points out, Article 5(2) requires Member States with statutory minimum wages to ensure that those criteria include, at the very least, the four elements listed therein. By requiring the use of those elements in the procedures for setting and updating statutory minimum wages, the EU legislature established a requirement relating to the constituent elements of those wages, which has a direct effect on the level of those wages, and contrary to what is stated in the last sentence of Article 5(1) of the contested directive, irrespective of the relevance of those elements at national level in view of the socioeconomic conditions prevailing in the Member States.
96 Consequently, Article 5(2) of the contested directive amounts to harmonisation of some of the constituent elements of those wages and, therefore, direct interference by EU law in the determination of pay within the European Union, within the meaning of the case-law referred to in paragraphs 67 and 68 of the present judgment.
97 As regards, third, Article 5(3) of the contested directive, although that provision merely allows Member States to use an automatic mechanism for indexation adjustments of statutory minimum wages and refers to national law and practice as regards the appropriate criteria on which that mechanism must be based, it nevertheless makes, in the final part of the sentence, the use, by the Member States, of an automatic mechanism for indexation adjustments subject to the ‘[condition] that the application of that mechanism does not lead to a decrease of the statutory minimum wage’.
98 It follows that that provision, in so far as it requires a non-regression clause in the level of statutory minimum wages for Member States which use an automatic mechanism for indexation adjustments of those wages, amounts, as the Kingdom of Denmark rightly submits, to direct interference by EU law in the determination of pay within the European Union, within the meaning of the case-law referred to in paragraphs 67 and 68 of the present judgment.
99 As regards, fourth, Article 5(4) of the contested directive, it provides that Member States may, in order to guide their assessment of adequacy of statutory minimum wages, use ‘indicative reference values’ commonly used at international level, such as the threshold of 60% of the gross median wage and/or indicative reference values used at national level. However, as the Federal Republic of Germany submits, in essence, those indicative reference values differ from the elements which must necessarily be taken into account as a criterion in the procedures referred to in Article 5(2) of that directive for setting and updating national statutory minimum wages, in that such values are merely reference parameters for assessing the adequacy of statutory minimum wages, from which the Member States may, moreover, freely choose. Thus, Member States may use indicative reference values used at national level, indicative reference values used at international level or a combination of both. Consequently, Article 5(4) of that directive does not lay down mandatory elements as regards the levels of statutory minimum wages or harmonise all or some of the constituent elements of those wages, with the result that it does not amount to direct interference by EU law in the determination of pay within the European Union, within the meaning of the case-law referred to in paragraphs 67 and 68 of the present judgment.
100 Fifth, Article 5(5) of the contested directive requires Member States to update statutory minimum wages regularly and in a timely manner, and at least every two years or, for Member States which use an automatic indexation mechanism, at least every four years, while Article 5(6) of that directive requires them to establish one or more consultative bodies to advise the competent authorities on issues related to statutory minimum wages. However, those paragraphs merely lay down procedural rules for the setting and updating of statutory minimum wages, without prescribing mandatory substantive elements for the Member States as regards the level of statutory minimum wages or harmonising all or part of the constituent elements of those statutory minimum wages. Therefore, contrary to what the Kingdom of Denmark maintains, Article 5(5) and (6) does not amount to direct interference by EU law in the determination of pay within the European Union, within the meaning of the case-law referred to in paragraphs 67 and 68 of the present judgment.
101 It follows from the foregoing that Article 5 of the contested directive amounts, in paragraph 2 thereof and in the part of the sentence ‘provided that the application of that mechanism does not lead to a decrease of the statutory minimum wage’ in paragraph 3 thereof, to direct interference by EU law in the determination of pay within the European Union, within the meaning of the case-law referred to in paragraphs 67 and 68 of the present judgment, and therefore infringes the exclusion relating to ‘pay’ provided for in Article 153(5) TFEU.
102 Article 6 of the contested directive, entitled ‘Variations and deductions’, provides, in paragraph 1, that where Member States allow for different rates of statutory minimum wage for specific groups of workers or for deductions that reduce the remuneration paid to a level below that of the relevant statutory minimum wage, they must ensure compliance with the principles of non-discrimination and proportionality, including that of the pursuit of a legitimate aim. Article 6(2) adds that nothing in that directive is to be construed as imposing an obligation on Member States to introduce variations of or deductions from statutory minimum wages. Those provisions must be read in the light of recital 29 of that directive, which states that it is important to avoid those variations and deductions being ‘used widely’, as they risk having a negative impact on the adequacy of statutory minimum wages.
103 It should be noted, in that regard, that Article 6 of the contested directive leaves the Member States free to introduce, or not to introduce, variations of or deductions from statutory minimum wages that reduce the remuneration paid to a level below that of the relevant statutory minimum wage. For the remainder, Article 6 of the contested directive, which merely requires Member States to respect the principles of non-discrimination and proportionality where allowing for different rates of statutory minimum wages for specific groups of workers or for deductions that reduce the remuneration paid to a level below that of the relevant statutory minimum wage, does not amount to direct interference by EU law in the determination of pay within the European Union, within the meaning of the case-law referred to in paragraphs 67 and 68 of the present judgment.
104 Consequently, the first part of the first plea in law must be upheld in so far as it concerns Article 5(2) of the contested directive and, consequently, the part of the sentence ‘including the elements referred to in paragraph 2’ in the fifth sentence of Article 5(1) of that directive and the part of the sentence ‘provided that the application of that mechanism does not lead to a decrease of the statutory minimum wage’ in Article 5(3) of that directive. The first part of the first plea must be rejected as to the remainder.
105 Article 153(5) TFEU provides that the provisions of that article are not to apply, inter alia, to the ‘right of association’.
106 Although the concept of ‘right of association’ referred to in Article 153(5) is not defined in the FEU Treaty, according to settled case-law, the interpretation of a provision of EU law requires that account be taken not only of its wording and the objectives it pursues, but also of its context, and the provisions of EU law as a whole, since the origins of such a provision may also provide information relevant to its interpretation (see, to that effect, judgments of 10 December 2018,Wightman and Others, C‑621/18, EU:C:2018:999, paragraph 47 and the case-law cited, and of 19 November 2024, Commission v Czech Republic (Ability to stand for election and membership of a political party), C‑808/21, EU:C:2024:962, paragraph 91).
107 It should be noted, in that regard, that Article 153(5) TFEU removes four matters, namely ‘pay’, the ‘right of association’, the ‘right to strike’ and the right ‘to impose lock-outs’, from the social policy competences conferred on the European Union under paragraphs 1 to 4 of that article, matters which, as the Advocate General stated in point 67 of his Opinion, are linked in that they all relate, at least in part, to the prerogatives of the social partners. It should be added that, in the specific field of social policy, promoting the role of the social partners and facilitating dialogue between them, while respecting their autonomy, is one of the aims of Title X of Part Three of the FEU Treaty, as is apparent from the first paragraph of Article 152 TFEU (see, to that effect, judgment of 2 September 2021, EPSU v Commission, C‑928/19 P, EU:C:2021:656, paragraphs 60 and 61). It may be inferred from this that the purpose of the exclusion relating to the ‘right of association’, like the exclusion relating to ‘pay’, is primarily to preserve the autonomy of the social partners at national level (see, by analogy, judgments of 13 September 2007, Del Cerro Alonso, C‑307/05, EU:C:2007:509, paragraph 40, and of 7 July 2022, Coca-Cola European Partners Deutschland, C‑257/21 and C‑258/21, EU:C:2022:529, paragraph 47).
108 As regards the relationship between the right to participate freely in collective bargaining and the ‘right of association’, which is referred to in Article 153(5) TFEU, it is true that the former is not expressly referred to as one of the areas in which Article 153 TFEU confers a power of harmonisation on the European Union with a view to achieving the objectives of Article 151 TFEU. Moreover, as the Kingdom of Denmark rightly observes, there is a link between those rights in that the right of association is a prerequisite for the exercise of the right to collective bargaining. However, it cannot be inferred from this that the right to participate freely in collective bargaining, as an element inherent in the ‘right of association’, is excluded, on that basis, from the competences of the European Union in accordance with Article 153(5) TFEU.
109 First of all, Article 153(1)(f) TFEU expressly confers on the EU legislature the power to adopt measures relating to ‘representation and collective defence of the interests of workers and employers, including co-determination’. The wording of that provision gives it a sufficiently broad scope to cover measures governing the right to collective bargaining, notwithstanding the exclusion relating to the right of association set out in Article 153(5) TFEU.
110 Next, it may be inferred from the juxtaposition of the concepts of ‘right of association’ and ‘collective bargaining between employers and workers’ in the seventh indent of the first paragraph of Article 156 TFEU that, for the purposes of that article and, more generally, of the provisions of Title X of Part Three of the FEU Treaty, the authors of the Treaties intended to draw a distinction between the matters covered by each of those two concepts.
111 Lastly, the Charter of Social Rights and the European Social Charter, as instruments expressly referred to in the first paragraph of Article 151 TFEU, as well as the Charter deal separately with the right of association and the right to collective bargaining.
112 As regards, more specifically, the Charter, first, the right of association laid down in Article 12 thereof refers inter alia to the ‘right of everyone to form and to join trade unions for the protection of his or her interests’. That right also includes the right not to set up or join an organisation, including a trade union. It also refers, in that regard, to the possibility for an association to pursue its activities and operate without unjustified interference by the State (see, to that effect, judgments of 9 March 2006, Werhof, C‑499/04, EU:C:2006:168, paragraph 33, and of 18 June 2020, Commission v Hungary (Transparency of associations), C‑78/18, EU:C:2020:476, paragraph 113).
113 Second, the right to collective bargaining, provided for in Article 28 of the Charter, includes, inter alia, the right of workers and employers, or their respective organisations, ‘to negotiate and conclude collective agreements at the appropriate levels’.
114 In that regard, it is indeed true that, as the Kingdom of Denmark submits, the derogation provided for in Article 153(5) TFEU derives from Article 2(6) of the Agreement on social policy concluded between the Member States of the European Community with the exception of the United Kingdom of Great Britain and Northern Ireland (OJ 1992 C 191, p. 91), annexed to Protocol (No 14) on Social Policy annexed to the EC Treaty, and therefore precedes the adoption of the Charter. However, the Kingdom of Denmark’s argument that the authors of the Treaties intended to exclude from the competences of the European Union, in Article 153(5) TFEU, the subject of free participation in collective bargaining, as an element inherent in the right of association, while not supported by the Charter, is also not supported by the provisions of the European Social Charter and the Charter of Social Rights, which, for their part, precede the adoption of the Agreement on social policy. The European Social Charter and the Charter of Social Rights also treat the right of association and the right to collective bargaining as distinct rights, namely, as regards the former, in Articles 5 and 6 thereof and, as regards the latter, in Articles 11 and 12 thereof.
115 Accordingly, the concept of ‘right of association’ referred to in Article 153(5) TFEU must be interpreted as referring to the freedom of workers and employers to form or dissolve organisations, including trade unions, or to join or not to join them, but does not cover measures governing the right to collective bargaining between employers and workers.
116 As regards the legal test applicable to the examination of whether the exclusion relating to the ‘right of association’ laid down in Article 153(5) TFEU has been complied with, it must be held, as the Advocate General observed in point 107 of his Opinion, that the exclusion of competence relating to the ‘right of association’, as defined in the preceding paragraph of the present judgment, covers not any measure having a link with the right of association, but only measures which amount to direct interference by EU law with that right or the exercise thereof. On the other hand, measures which, although connected with the right of association, do not directly govern that right but govern the right to collective bargaining do not fall within that exclusion.
117 Therefore, contrary to what the Kingdom of Denmark maintains, the fact that Article 4 of the contested directive may have a link with matters falling within the scope of the right to collective bargaining does not, on its own, lead to the conclusion that the EU legislature acted in disregard of the exclusion of the competence relating to the right of association provided for in Article 153(5) TFEU. It is necessary, however, to ascertain, for that purpose, whether the provisions of Article 4(1)(d) and Article 4(2) of the contested directive, which are more specifically referred to in the Kingdom of Denmark’s arguments, amount to ‘direct interference’ by EU law with the right of association.
118 First, it should be noted, on the one hand, that although the Kingdom of Denmark’s arguments do not relate specifically to that provision, Article 4(1)(c) of the contested directive seeks to protect the exercise of the right to collective bargaining on wage-setting and to protect workers and their representatives from acts that discriminate against them in respect of their employment on the grounds that they participate or wish to participate in collective bargaining on wage-setting. That provision does not govern the freedom of workers and employers to form or dissolve organisations, including trade unions, or to join or not to join them, but governs matters falling within the scope of the right to collective bargaining.
119 On the other hand, Article 4(1)(d) of that directive is intended 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. In accordance with those provisions, Member States must ‘take measures, as appropriate’, for those purposes. The protection which that provision is intended to confer against acts of interference concerns the ‘establishment’, ‘functioning’ and ‘administration’ of trade unions and employers’ organisations, matters falling within the scope of the right of association, both in its positive and negative aspects, namely the right to set up organisations, including trade unions, and to organise them.
120 Compliance with the exclusion of competence relating to the ‘right of association’, provided for in Article 153(5) TFEU, presupposes that neither Article 4(1)(d) of the contested directive nor the measures taken by the Member States to ensure the transposition of that provision into their national law amount to direct interference in the establishment, functioning and administration of associations.
121 In that regard, it is apparent from the very wording of Article 4(1)(d) of the contested directive that that provision, while having a link with the right of association, seeks to promote the right to participate freely in collective bargaining.
122 Accordingly, Article 4(1)(d) of the contested directive does not interfere with the competence retained by the Member States to adopt measures directly governing the right of association. That finding is supported by the fact that, as is apparent from (i) the reference in the wording of Article 4(1) of that directive to ‘national law and practice’ and (ii) the phrase ‘as appropriate’ in point (d) thereof, Member States are not required to take ‘measures’ under that point (d) and must, in any event, do so only in so far as their national law and practice so permit. It should also be noted, in that regard, that those provisions do not harmonise the content of the measures prescribed. In addition, as is apparent from paragraph 84 of the present judgment, the provisions of Article 4 of the contested directive must be read in the light of the first paragraph of Article 152 TFEU, which, since the entry into force of the Treaty of Lisbon, expressly enshrines respect for the autonomy of the social partners.
123 It follows from the foregoing that Article 4(1)(d) of the contested directive does not amount to direct interference by EU law with the right of association.
124 Second, as regards whether Article 4(2) of the contested directive complies with the exclusion relating to the right of association laid down in Article 153(5) TFEU, the Kingdom of Denmark submits that Article 4(2) also amounts to interference with the right of association within trade unions, since the objective of increasing the number of workers covered by a collective agreement referred to in that provision could be achieved only by an increase in the rate of membership of workers in trade union organisations.
125 However, that argument cannot succeed. As is apparent from paragraph 84 of the present judgment, Article 4(2) of the contested directive cannot be interpreted as obliging the Member States to require a larger number of workers to join trade union organisations.
126 It follows that Article 4(2) of the contested directive does not amount to direct interference by EU law with the right of association.
127 Consequently, the second part of the first plea must be rejected as unfounded.
128 In the light of the foregoing, the first plea in law must be upheld in so far as it concerns Article 5(2) of the contested directive and, consequently, the part of the sentence ‘including the elements referred to in paragraph 2’ in the fifth sentence of Article 5(1) of that directive and the part of the sentence ‘provided that the application of that mechanism does not lead to a decrease of the statutory minimum wage’ in Article 5(3) of that directive, and that plea must be rejected as to the remainder.
129 By its second plea, the Kingdom of Denmark, supported by the Kingdom of Sweden, submits that, even if the contested directive does not infringe the exclusions of competence relating to ‘pay’ and the ‘right of association’ laid down in Article 153(5) TFEU, the Parliament and the Council could not validly adopt it on the basis of Article 153(1)(b) TFEU, in accordance with the decision-making procedure laid down in that field in Article 153(2) TFEU.
130 The contested directive pursues two objectives of equal importance, as it seeks not only to regulate ‘working conditions’, referred to in Article 153(1)(b) TFEU, but also the ‘representation and collective defence of the interests of workers’, referred to in Article 153(1)(f) TFEU. Each of those legal bases requires a different legislative procedure to be followed and those procedures are incompatible. Article 153(1)(f) TFEU requires unanimity within the Council, unlike Article 153(1)(b) TFEU, which requires a qualified majority within the Council.
131 The Parliament and the Council, the Commission and the Member States intervening in support of the form of order sought by the defendant institutions dispute the Kingdom of Denmark’s arguments in the context of the second plea in law.
132 As is recalled in paragraph 56 of the present judgment, according to settled case-law, the choice of legal basis for an EU measure must rest on objective factors that are amenable to judicial review; these include the aim and the content of the measure. If examination of an EU measure reveals that it pursues several purposes or that it comprises several components and if one of those purposes or components is identifiable as the main or predominant purpose or component, whereas the others are merely incidental or are only extremely limited in scope, the legal basis for adopting that measure must be determined in accordance with that main purpose or component. It is only exceptionally that an EU measure must be founded simultaneously on several legal bases, that is to say, when it simultaneously pursues a number of objectives or has several components that are inseparably linked, without one being incidental to the other (see, to that effect, judgments of 19 July 2012, Parliament v Council, C‑130/10, EU:C:2012:472, paragraphs 43 and 44, and of 20 November 2018, Commission v Council (Antarctic MPAs), C‑626/15 and C‑659/16, EU:C:2018:925, paragraphs 77 and 78).
133 However, recourse to a dual legal basis is not possible where the procedures laid down for each legal basis are incompatible with each other (judgment of 11 June 1991, Commission v Council, C‑300/89, EU:C:1991:244, paragraph 21, and Opinion 1/15 (EU-Canada PNR Agreement) of 26 July 2017, EU:C:2017:592, paragraph 78).
134 As regards the respective scopes of points (b) and (f) of Article 153(1) TFEU, it follows from the reasoning set out in paragraphs 72 and 109 of the present judgment that (i) Article 153(1)(b) TFEU, which refers to ‘working conditions’, is capable of covering measures to improve the adequacy of minimum wages and, thereby, to improve living and working conditions in the Union and (ii) Article 153(1)(f) TFEU, which refers to ‘representation and collective defence of the interests of workers and employers, including co-determination’, is capable of covering measures to promote collective bargaining, provided that the measures thus adopted comply with Article 153(5) TFEU.
135 Although, in each of those two fields, the Parliament and the Council may, in accordance with Article 153(2)(b) TFEU, adopt ‘minimum requirements’, they act, in the first field, in accordance with an ordinary legislative procedure, the Council acting by a qualified majority, and, in the second field, in accordance with a special legislative procedure, which requires unanimity within the Council.
136 In the present case, as regards the main provisions of the contested directive set out in Articles 4 to 8 thereof, first of all, Article 4 provides, as is apparent from paragraphs 63 and 64 of the present judgment, for measures to promote collective bargaining on wage-setting. Such measures are indeed capable of falling within the field of ‘representation and collective defence of the interests of workers and employers, including co-determination’, referred to in Article 153(1)(f) TFEU. However, as the Advocate General observed, in essence, in point 119 of his Opinion, account must be taken of the link which that directive establishes, in Article 1(1), read in the light of recitals 16 and 22 thereof, between the promotion of collective bargaining on wage-setting and the main objective of that directive, which is to improve living and working conditions in the European Union and, in particular, the adequacy of minimum wages for workers. In that context, Article 4 of that directive is merely a means of achieving the main objective of the Directive, rather than an autonomous and distinct purpose or component thereof. Article 4 therefore also falls within the scope of ‘working conditions’ referred to in Article 153(1)(b) TFEU. In any event, Article 4 constitutes, at most, a distinct purpose or component in the field of ‘representation and collective defence of the interests of workers and employers’ which is merely ancillary to the main purpose or component falling within the field of ‘working conditions’.
137 Next, it follows from the examination of the first plea in law that the contested directive contains a provision and two parts of sentences which fall outside the competences of the European Union under Article 153(5) TFEU, namely Article 5(2) and, consequently, the part of the sentence ‘including the elements referred to in paragraph 2’ in the fifth sentence of Article 5(1) and the part of the sentence ‘provided that the application of that mechanism does not lead to a decrease of the statutory minimum wage’ in Article 5(3) of that directive. That provision and those two parts of sentences therefore fall outside the scope of the EU’s legislative competences in the matters referred to in Article 153(1)(b) and (f) TFEU.
138 Lastly, the other provisions of Article 5 of the contested directive and Articles 6 to 8 thereof provide, as is apparent from paragraphs 57 and 66 of the present judgment, for measures establishing a framework for the setting of adequate minimum wages with a view to improving living and working conditions in the Union. Those provisions therefore relate to the field of ‘working conditions’, which is referred to in Article 153(1)(b) TFEU.
139 It follows from all the foregoing considerations that, in the light of its main provisions consisting of Articles 4 to 8 thereof, the contested directive falls within the field of competence referred to in Article 153(1)(b) TFEU and not within that referred to in Article 153(1)(f) TFEU.
140 In those circumstances, the second plea must be rejected as unfounded.
141 In the light of the foregoing, the Kingdom of Denmark’s principal head of claim is well founded in part, in so far as it seeks annulment of Article 5(2) of the contested directive and the part of the sentence ‘provided that the application of that mechanism does not lead to a decrease of the statutory minimum wage’ in Article 5(3) thereof, on the ground that those provisions fall within fields outside the EU’s competences under Article 153(5) TFEU. The annulment of Article 5(2) necessitates the annulment of the part of the sentence ‘including the elements referred to in paragraph 2’ in the fifth sentence of Article 5(1) of that directive.
142 The single plea in law raised by the Kingdom of Denmark in support of its alternative head of claim is directed against Article 4(1)(d) and/or Article 4(2) of the contested directive and is based on the same arguments as those relied on in support of the first plea which is raised in support of the principal head of claim. Since those arguments have been rejected in the context of the assessment of the first plea in law, that single plea in law must therefore also be rejected, in any event, as unfounded, without it being necessary to rule on its admissibility and, accordingly, that alternative head of claim must be rejected.
143 In the light of all of the foregoing, the part of the sentence ‘including the elements referred to in paragraph 2’ in the fifth sentence of Article 5(1) of the contested directive, Article 5(2) of that directive and the part of the sentence ‘provided that the application of that mechanism does not lead to a decrease of the statutory minimum wage’ in Article 5(3) thereof must be annulled. The action is dismissed as to the remainder.
144 Under Article 138(1) of the Rules of Procedure of the Court of Justice, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.
145 Under Article 138(3) of those rules of procedure, where each party succeeds on some and fails on other heads, the parties are to bear their own costs. However, if it appears justified in the circumstances of the case, the Court may order that one party, in addition to bearing its own costs, pay a proportion of the costs of the other party.
146 In the present case, since the Kingdom of Denmark has been unsuccessful in part, it must be ordered to pay two thirds of the costs incurred by the Parliament and the Council and to bear two thirds of its own costs. The Parliament and the Council must be ordered to pay one third of the costs of the Kingdom of Denmark and to bear one third of their own costs.
147 In accordance with Article 140(1) of those rules of procedure, the Kingdom of Belgium, the Federal Republic of Germany, the Hellenic Republic, the Kingdom of Spain, the French Republic, the Grand Duchy of Luxembourg, the Portuguese Republic, the Kingdom of Sweden and the Commission are to bear their own costs incurred as interveners.