The EU court of justice partially annuls the EU minimum wage directive - CASE C-19/23

On 11 November 2025, the Court of Justice of the European Union (CJEU) delivered its judgment in Case C-19/23, Denmark v Parliament and Council, concerning the EU's “Minimum Wage Directive”. 

The Court partially annulled parts of Article 5 of the Directive, finding that the EU legislature had overstepped its competences by directly intervening in wage-setting. However, the Court upheld the validity of the Directive in all other respects. The judgment is significant from a constitutional and competence perspective, yet its immediate impact on the Danish labor market model is limited. 

Denmark brought an action for annulment of the Directive in January 2023, supported by Sweden. Both argued that the Directive interfered with their collective-bargaining-based wage-setting systems. In January 2025, the Advocate General proposed full annulment, but the Court ultimately opted for a more limited approach.

The key question was whether the EU legislature had competence to adopt the Directive. Under Article 153(5) TFEU, pay and association rights fall outside EU competence, and under the principle of conferral the Union may only act within powers granted by the Treaties.

Denmark argued that the Directive did not merely regulate working conditions in a broad sense but directly interfered with wage-setting and with organizational autonomy.

The Court distinguished between measures that directly intervene in pay or association rights - which fall outside EU competence - and measures with only indirect effects. Applying this distinction, the Court examined Article 5.

The CJEU found that two elements of Article 5 – which concerns statutory minimum wages – amounted to a direct intervention in wage-setting and therefore went beyond the EU’s competences:

1. The mandatory criteria for adequacy
   The Directive required Member States with statutory minimum wages to apply at least a fixed set of binding criteria when setting statutory minimum wages (e.g. purchasing power). The Court held that, by harmonizing elements that directly determine the level of minimum wages, these provisions had a direct impact on wage levels.
    
2. The condition on automatic indexation
   Article 5(3) allowed Member States to use automatic indexation mechanisms to adjust statutory minimum wages but made this conditional on such mechanisms not leading to any reduction in the statutory minimum wage. The Court found that this condition also constituted a direct intervention in wage-setting, as it constrained how Member States could design their indexation systems.
    

These parts of Article 5(1)-(3) were therefore annulled. The remainder of Article 5 - and of the Directive - was upheld.

The CJEU found no direct interference with association rights, as the Directive did not regulate the internal functioning of social partners.

The partial annulment is unusual and therefore significant, as it draws a line limiting how far the EU may intervene in wage-setting under Article 153(5) TFEU and the principle of conferral. Nevertheless, the impact is narrow: the core of the Directive remains intact, and the annulled provisions have limited practical relevance for Denmark, where wages are set through collective agreements.

The judgment does not remove the broader pressure on Member States to demonstrate adequate wage protection. Denmark is still required to comply with the Directive’s horizontal reporting obligations, even though it is exempt from the main procedural rules on statutory minimum wages.

Overall, the ruling confirms that the Danish model can coexist with EU minimum wage regulation, while reinforcing the boundary against EU measures that would directly harmonize wage levels. The case is likely to remain central in future debates on EU competences in labor law.

If you have any questions regarding the Minimum Wage Directive or the implications of the judgment for your organization, please feel free to contact us.