On 11 November 2025, the Court of Justice of the European Union (CJEU/Court) delivered the anxiously awaited judgment in Denmark v Parliament and Council (C-19/23). Save for a small part of it, the Court confirmed that the adoption of the Directive on adequate minimum wages from 2022 falls within the competences conferred on the Union by the EU Treaties. This was the most momentous judgment for the European trade union movement, and for EU labour lawyers, since the Viking and Laval duo in 2008; and it is likely to go down in history as one of the most significant CJEU rulings in the making of ‘Social Europe’.

This two-part blog explores the judgment and its implications. We first outline the main provisions of the Directive, the challenge to its validity before the CJEU, and the outcome in the case. In the second part, we take a closer look at the reasoning of the Court and its implications for future social legislation.

The Directive on adequate minimum wages

Against the background of the euro-crisis, and the deregulation and austerity measures that followed it, the Directive on adequate minimum wages was one of the instruments adopted by the EU with the potential to reassure citizens that the Union can deliver better rights and social standards. It aims to improve living and working conditions, in particular the adequacy of minimum wages, and thus contribute to upward social convergence and reducing wage inequality (Article 1). It rests on three main pillars, expressed in Articles 4-6.

Article 4 requires several measures to promote collective bargaining coverage and facilitate the exercise of the right to collective bargaining on wage-setting. This includes measures to protect trade unions and employers’ organisations participating or wishing to participate in collective bargaining from interference by each other in their establishment, functioning or administration (Article 4(1)(b)), and an obligation for Member States where collective bargaining coverage is less than 80% to provide for ‘a framework of enabling conditions for collective bargaining’ (Article 4(2)).

Article 5 requires Member States with a statutory minimum wage (SMW) to establish a procedure for setting and updating it, guided by criteria that seek to ensure the ‘adequacy’ of SMW levels. While optional, the Directive mentions a ‘double decency threshold’ for minimum wages (60% of gross median wage and 50% of gross average wage) as an indicative reference.

Article 6 provides that variations or deductions in SMW rates for specific workers should respect the principles of non-discrimination and proportionality. Such workers typically include young people, workers with disabilities, and seasonal or domestic workers. The Directive thus promotes several key social rights.

The action for annulment

Even before the end of the transposition period (i.e., the period of incorporating EU directives into the national laws of EU Member States), some Member States had introduced measures responding to the Directive that led to increases in minimum wages.

In 2023, however, Denmark brought an action to annul the Directive, in whole or only Articles 4(1)(d) and/or Article 4(2). Denmark argued that it does not fall within the Union’s constitutional competence to legislate under Article 153 of the Treaty on the Functioning of the EU (TFEU). While Article 153(1)(b) TFEU provides that the EU can adopt directives on ‘working conditions,’ Article 153(5) excludes EU measures on ‘pay, the right of association, the right to strike or the right to impose lock-outs.’ The Directive, Denmark argued, concerned ‘pay’ and ‘right of association’. In his controversial advisory opinion of January 2025, Advocate General Emiliou recommended that the Directive be fully annulled as directly interfering with the exclusion of ‘pay’.

The Court’s verdict: A minimal partial annulment

By contrast, the CJEU held that only part of Article 5 could be considered a ‘direct interference of EU law in the determination of pay’ within the EU, establishing this as the criterion determining the exclusion of competence relating to pay (paras 68-70).

The Court annulled Article 5(2), which contains compulsory elements to be included in national criteria to ensure the ‘adequacy’ of SMW. This fell within the exclusion since it concerned EU requirements relating to constituent elements of SMW that would have a direct effect on their level. For the same reason, the Court annulled the last clause of Article 5(3), which specifies that, where used, an automatic mechanism for indexation adjustments of SMW cannot lead to a decrease in SMW.

While these provisions would have made procedures for setting adequate SMW more robust, their annulment does not compromise the core obligation in Article 5. Their annulment may also be of little practical significance, as Member States have already transposed the compulsory criteria in national regulations, and few Member States use an automatic mechanism for indexation.

The Court upheld the rest of the Directive. In the second part of this blog, we analyse more closely the Court’s reasons for reaching this outcome and the broader implications of the judgment.