On 19 October 2022, the European Parliament and the Council adopted a directive on appropriate minimum wages in the European Union, which the Danish government is now trying to annul at the European Court of Justice.
In October 2022, the European Parliament and the Council adopted Directive (EU) 2022/2041 on appropriate minimum wages in the European Union (Minimum Wage Directive), which must be implemented in national legislation no later than 15 November 2024.
In Member States where statutory minimum wages have already been set, the Minimum Wage Directive obliges the Member State, among other things, to establish procedures for setting and continuously updating the minimum wage with a purpose of achieving adequate living standards, reducing poverty, and reducing the gender pay gap.
However, the Minimum Wage Directive does not require Member States to introduce statutory minimum wages if the Member State does not already have statutory minimum wages. In Denmark, where minimum wages are set in collective agreements and not by legislation, the Minimum Wage Directive will therefore not oblige Denmark to introduce statutory minimum wages. However, the Minimum Wage Directive obliges all Member States with a collective agreement coverage rate of less than 80% to draw up an action plan to promote collective bargaining. According to a calculation made by the Danish Employers’ Association in December 2020, 82% of Danish employees are covered by a collective agreement.
In accordance with the Minimum Wage Directive, Denmark will have to report to the Commission every two years on the rate of collective bargaining coverage, lowest pay rates set by collective agreements and on the wages of those not covered by collective agreements.
Denmark’s annulment action
Regardless of the fact that the Minimum Wage Directive will not affect the determination of wages in Denmark, the Danish government issued a claim against the European Parliament and the Council on 18 January 2023 to annul the Minimum Wage Directive.
In a statement from the Ministry of Employment, Employment Minister Ane Halsboe-Jorgensen stated that the determination of wages must take place in Denmark and not in the EU and that the government therefore has decided that the EU Court must rule of the case. The annulment action has great support from the social partners.
The European Parliament and the Council must submit a reply to Denmark’s subpoena, and then the Commission and the other Member States will have the opportunity to support either Denmark or the European Parliament and the Council in the case.
The Member States are obliged to implement the directive, regardless of annulment action issued by Denmark.
You can read the press release from the Ministry of Employment here.
The Minimum Wage Directive can be read in its entirety here.
This article was first published on 30 January 2023 by our Danish member firm Mette Klingsten Law Firm. Reach out to our representative Mette Klingsten for questions and visit their website for more information.