The EU legislator walking a tightrope over thin ice: A comment on the AG’s Opinion in C 19/23 Denmark v Parliament and Council

Rekindling the ultra-vires debate?

Most legal professionals within the discipline of European Union legislation appear to have reached an (unstated) consensus that breaches of the precept of conferral of powers (Artwork. 5(2) TEU) both don’t happen or cannot be efficiently challenged earlier than the ECJ anyway. Opposite to this, Advocate Common (AG) Emiliou’s Opinion from the 14 January 2025 in Case C‑19/23 Denmark v Parliament and Council – surprisingly unmentioned on the Court docket’s press launch website – argues in remarkably clear language that the Directive on Satisfactory Minimal Wages exceeds the Union’s competences and, specifically, that the ECJ mustn’t apply a very slim interpretation of the related exclusion of ‘pay’ from the social coverage competences of the Union beneath Article 153(5) TFEU. He has thus proposed to the ECJ that the Directive needs to be annulled in full.

The aim of this put up is to root AG Emiliou’s Opinion on this particular EU Directive within the broader dialogue on a possible ‘competence creep’. In gentle of this, this put up will (1) contextualize, (2) delve into an in depth evaluation of AG Emiliou’s Opinion, and (3) touch upon its implications throughout the framework of the Court docket’s case legislation.

The context

Directive 2022/2041 on Satisfactory Minimal Wages (AMW Directive), adopted in October 2022, goals at ‘enhancing […] specifically the adequacy of minimal wages for staff with a view to contribute to upward social convergence and scale back wage inequality’ (Article 1), by tackling the statistical hole in month-to-month minimal wages throughout Member States.

Nonetheless, since its proposal by the Fee in October 2020, the AMW Directive has been beneath criticism for a possible breach of competences. From the outset, Denmark and Sweden opposed the authorized act and subsequently voted in opposition to its adoption within the Council. All different Member States except Hungary, which abstained, had been in favour of the Directive. Already in the course of the legislative course of, the Danish parliament questioned compliance of the AMW Directive with the ideas of subsidiarity and proportionality by the use of a reasoned opinion, advocating that wage situations had been greatest regulated at nationwide stage.

Following the adoption of the Directive, in January 2023, Denmark swiftly introduced an motion for annulment of all the Directive beneath Article 263 TFEU earlier than the ECJ, and in its place declare asking for annulment of Articles 4(1)(d) and 4(2) of the Directive. Denmark argues that the Directives breaches the precept of conferral of powers and Article 153(5) TFEU. The latter stipulates that the EU might not legislate within the areas of ‘pay’ and ‘the fitting of affiliation’. Denmark has introduced ahead that each exclusions embedded in Article 153(5) TFEU are encroached upon by the AMW Directive.

The Opinion of AG Emiliou

Essentially the most essential provision of the AMW Directive for AG Emiliou’s reasoning is Article 5. Article 5(1) of the Directive obliges Member States with statutory minimal wages – and solely these – to create a clear ‘process for setting ample statutory minimal wages’. This process shall be guided by standards in relation to nationwide ranges, together with no less than the buying energy of statutory minimal wages, the overall stage of wages, the expansion charge of wages and the long-term nationwide productiveness ranges (Article 5(2)). Statutory minimal wages shall be up to date each two years or if the Member State follows the indexation mechanism set out in Article 5(4) no less than each 4 years (Article 5(5)).

In line with AG Emiliou, the legislator was knowingly ‘strolling on skinny ice’, or, within the phrases of Sacha Garben, a ‘tightrope’ when adopting the AMW Directive (para 50). His central argument is that the Directive as an entire and particularly Article 5 fall beneath the scope of the exclusion in Article 153(5) TFEU as they certainly set necessities for ‘pay’ within the Member States and subsequently finally violate Article 5(2) TEU.

Understanding ‘pay’ in accordance with AG Emiliou

It’s typically accepted and never denied by the AG, that exclusions must be interpreted strictly and that solely a direct interference constitutes an infringement, Article 153(5) TFEU posing no exception. Nonetheless, he argues, ‘exclusions […] should not be interpreted so strictly as to be disadvantaged of their effectiveness’ (para 55). Following this precept, AG Emiliou considers it a ‘fallacy’ to restrict the scope of ‘pay’ to measures that harmonise wages – learn as: the extent of wages – a place advocated by all events to the battle, besides Denmark and Sweden (para 50). In his evaluation, the ‘pay’ exclusion covers – however is just not restricted to – measures that harmonise the extent of pay. For his evaluation, he makes use of two fundamental justifications.

First, since Article 153(5) TFEU, like its earlier variations, makes use of the broad time period ‘pay’ in distinction to merely ‘stage of pay’, different facets of the Member States wage-setting programs additionally fall throughout the scope of stated Article (para 59). He cautions that in any other case the EU legislature might harmonise all facets of the wage-setting system, supplied it stopped wanting harmonising wages (para 55).

Secondly, the slim interpretation of Article 153(5) TFEU established in present case legislation is just not relevant within the current situation, and must be reconsidered normally, because it originated from the analysis of devices with targets that differ considerably from these of the AMW Directive. Essentially the most outstanding case wherein the query of the interpretation of ’pay’ was raised, is Case C‑268/06 Impression. In line with AG Kokott’s Opinion in that case, ‘solely the extent of pay […] is faraway from the [EU] legislature’s competence by [Article 153(5) TFEU]’ (para 176). Turning to the Court docket’s judgment in Impression, AG Emiliou admits that the wording may appear to counsel that the Court docket was emphasising solely the exclusion of the ‘willpower of the extent of wages’ and the ‘stage of pay’ (para 123 of the judgment), versus ‘pay’ extra typically (para 52).

However, the AG argues that the wording of the judgment in Impression (‘masking measures – akin to […]’) (para 124 of the judgment) leaves the door open for a broader interpretation within the current case (para 53). Moreover, the selections of the Court docket that led to the slim studying of Article 153(5) TFEU, as outlined within the paragraph above, (Case C-307/05 Del Cerro Alonso; Impression; Joined Instances C-395/08 and C-396/08 Bruno and Others; and Joined Instances C‑501/12 to C‑506/12, C‑540/12 and C‑541/12 Specht and Others) all involved devices that, in contrast to the AMW Directive, had as their goal to manage a matter apart from ‘pay’, such because the equal therapy in employment, the precept of non-discrimination to fixed-term staff or the elimination of discrimination in opposition to part-time staff.

Thus, the AG proposes that the Court docket’s traditionally strict interpretation needs to be understood for what it’s: a safeguard to make sure that Article 153(5) TFEU doesn’t forestall the adoption of a authorized act which solely not directly impacts pay (para 58),versus limiting its applicability to solely the extent of wages – finally depriving it of its effectiveness.

Does the AMW Directive immediately intrude with ‘pay’?

To help his conclusion, the AG should show that the AMW Directive immediately interferes with ‘pay’ as he interprets it. Emiliou’s argument revolves across the principle, that the decisive consider figuring out direct interference is whether or not a provision seeks to manage an space that falls throughout the scope of an exclusion (para 62). Consequently, the truth that the Directive’s necessities are loosely worded and could possibly be seen as solely a minor interference with ‘pay’ is irrelevant—no direct interference is permitted in any respect (paras 62-64).

AG Emiliou convincingly argues that, whereas some EU directives have not directly affected pay – such because the Working Time Directive (2003/88/EC) in establishing entitlements to paid annual go away (para 61) – no prior EU laws has sought to impose procedural necessities for setting minimal wages. He illustrates how the devices launched in Article 5 of the AMW Directive are particularly designed to manage pay and subsequently infringe Article 153(5) TFEU (paras 78-87). Specific consideration needs to be given to the factors outlined in Article 5(2), as these standards will play a decisive function in figuring out the extent of wages, probably outweighing priorities of the nationwide legislator.

Furthermore, the AG rejects the notion that the AMW Directive merely units procedural necessities, arguing as an alternative that it capabilities as ‘a substantive obligation in disguise’ (para 84). As an example, linking the statutory minimal wage to the nationwide development charge inevitably guides wage ranges (para 84). Moreover, beneath Article 5(3), the Fee might provoke infringement proceedings if a Member State had been to decrease its minimal wage after introducing an indexation mechanism (para 85). Nonetheless, that is finally not even related: as established earlier, mere procedural obligations can already represent an infringement of Article 153(5) TFEU (para 86).

Following a well-reasoned evaluation, AG Emiliou concludes that the AMW Directive encroaches on the Member States’ unique competence to manage ‘pay’, because the devices it introduces have as their goal to manage pay by way of wage-setting mechanisms (para 87).

And what about the fitting of affiliation?

The query of a possible breach of the fitting of affiliation is commented on comparatively briefly by the AG (paras 97-111). Articles 4(1)(d) and 4(2) require Member States to take measures to guard commerce unions and employers’ organisations from one another’s interference and to supply a framework for collective bargaining if collective bargaining protection within the Member State is lower than 80%.

Opposite to Denmark’s place, AG Emiliou considers these provisions lawful. He recollects that the exclusion in Article 153(5) TFEU have to be interpreted narrowly and thus solely covers the fitting to type associations and never the fitting to collective bargaining (paras 102-103). That is systematically mirrored by the truth that Article 156 TFEU distinguishes between these two distinct rights. Moreover, if 153(5) TFEU had been to be understood as masking all areas of collective bargaining, the competence laid down in Article 153(1)(f) within the discipline of ‘illustration and collective defence of the pursuits of staff and employers’ could be rendered meaningless (para 105). Once more, making use of the direct interference take a look at, Emiliou concludes that Articles 4(1)(d) and 4(2) wouldn’t have as their object the regulation of the fitting of affiliation, since they impose no situations on the institution of or membership of an affiliation (para 108).

A particular deal with for fanatics of competence doctrine

With its second plea in legislation (the primary being the infringement of Article 153(5) TFEU), the Danish Authorities reinvigorates a basic query mentioned in EU legislation on competences: what’s the appropriate authorized foundation for legislature falling throughout the scope of a number of competence norms? The selection of authorized foundation is necessary, as a result of Article 153(1)(f) TFEU requires unanimity within the Council, whereas Article 153(1)(b) TFEU is topic to the bizarre legislative process.

Denmark claims that the AMW Directive couldn’t be validly adopted merely on the premise of Article 153(1)(b) TFEU, contemplating it offers equal significance to each the regulation of ‘working situations’ (Article 153(1)(b) TFEU) and the ‘illustration and collective defence of staff’ pursuits’ lined by Article 153(1)(f) TFEU.

The AG sides right here with the EU legislator and rejects Denmark’s declare (paras 115-120). By reviewing the related case legislation (akin to Case C-244/17 Fee v Council and Case C-178/03 Fee v Parliament and Council), he assesses that an act which pursues a number of targets have to be primarily based on a single authorized foundation if a kind of targets could be recognized as predominant (para 115). Within the current case, even when it have to be conceded that the duty, set out in Article 4 of the AMW Directive, to ‘progressively enhance the speed of collective bargaining protection’, by adopting and implementing an ‘motion plan’ that must be notified to the Fee, is definitely not fully peripheral, it may be assumed that the central goal of the Directive is the institution of a framework for the adequacy of minimal wages (para 119) and thus predominantly regulating ‘working situations’.

Opposite to this, I imagine that regardless of its title, the AMW Directive places quite a lot of emphasis on enhancing collective bargaining (the phrase seems 60 instances within the textual content of the Directive). Moreover, it may be argued that Article 4, if a Member State doesn’t have a standing custom of selling collective bargaining,  is simply as related as Article 5,by way of the potential affect on nationwide labour legislation. Nonetheless, a lenient method by the ECJ is to be anticipated. It is because figuring out whether or not there’s a predominant goal of a authorized act is usually ambiguous, leaving judicial leeway that’s unlikely for use to the detriment of a Union measure.

Final stance in opposition to the competence creep in Luxembourg?

As Paul Craig urges, one needs to be cautious of a ‘low-intensity evaluate’ when analysing the multi-faceted relationship between the ECJ and the distribution of powers between Member States and the EU, and that finally, it’s also a matter of mere ‘notion and really feel’, whether or not an EU act exceeds its ascribed limits. Regardless of this, or maybe exactly due to this, the problem of a perceived competence creep, i.e. the gradual and principally unnoticed usurpation of an increasing number of competences of the Member States by the European Union by way of legislative and judicial (in-)motion has fuelled a long-running debate (see additionally right here and right here).

The ECJ can affect the way in which Union competences are expanded in two methods: the primary, which was not related within the current case however is of significance to the broader dialogue, is thru a broad software of free motion, state support and non-discrimination guidelines, and even basic ideas of (EU) legislation, declaring nationwide legal guidelines inadmissible and thereby increasing the world wherein present EU norms play a decisive function.

The second means, pertinent to the case introduced by Denmark, is the (overly) Union-friendly interpretation of competence norms and the compliance with such by the European legislator. A sober evaluation exhibits that the ECJ had little alternative in its case legislation to cope with infringements of competences by Union our bodies, as this objection is never raised. Conflicts over competence are typically settled on the political stage by way of the involvement of the Member States within the lawmaking course of. Nonetheless, there are (admittedly, relationship again a while) so far as I can see three examples wherein the ECJ, in the course of the 70 years of its exercise, has declared European authorized acts to be extremely vires: Case 294/83 Les Verts , Joined instances 281, 283, 284, 285 and 287/85 Germany and Others v Fee, and Case C-376/98 Germany v Parliament and Council.

In gentle of this, the current case offers a welcome alternative for the Court docket to make clear the doctrine (or somewhat: develop it) to be employed when deciphering competence exclusions. The pending judgment might also assist to additional refine the take a look at to be utilized when assessing the right authorized foundation for acts with a number of targets; though it appears possible that the judges will endorse Emiliou’s reasoning on this level. Nonetheless, the Court docket ought to seize this chance to sign that competence boundaries, even with one of the best of intentions relating to the fabric results of a legislative act in thoughts, needs to be taken severely by the EU legislature and that the flexibleness of the Treaties has its limits. Nonetheless, it appears unlikely that the Court docket will annul the Directive, as extra restrictive interpretations of the ‘pay’ exclusion or the take a look at of direct interference are throughout the bounds of what’s cheap within the gentle of present case legislation. One other argument in opposition to the Court docket intervening, though not strictly authorized, could be the resounding help of Member States apart from Denmark and Sweden for the AMW Directive, recognising that the judicial analysis of competences and their limits is, in any case, additionally a matter of politics.

Lars Allien is a PhD candidate and analysis assistant on the Chair for Public Regulation (Prof. Ellerbrok) at Freie Universität Berlin.