EUU, Alm.del - 2022-23 (2. samling) - Bilag 54: Henvendelse af 30/11-22 fra Fagbevægelsens Hovedorganisation vedr. direktivet om passende mindstelønninger og opfordring til anlæggelse af anullationssøgsmål

Europaudvalget 2022-23 (2. samling)
EUU Alm.del Bilag 54
Offentligt

A review of the Directive on ad-

equate minimum wages in the

European Union

Erik Sjödin

Associate professor of private law, Stockholm University

([email protected])

Erik Sjödin has been given the following assignment by Faglig Fael-

les forbund (3F).

•

A review of the legal analysis and the arguments made by Dr

Jur. Jens Kristiansen, supplemented with the legal opinion of

Erik Sjödin on the preliminary political agreement of the

12th of June 2022.

•

An analysis of the legal basis of the political agreement of the

12th of July 2022, including an examination of the political

agreement with reference to the Treaty of the European Un-

ion, including, but not solely art. 153. 5 and art. 153, 1f

TFEU.

•

An analysis of the legal risk connected to filing an annulment

action, as well as not filing an annulment action of the Di-

rective at the European Court of Justice.

In this report, Sjödin carries out the requested analysis. The analysis

is based on documents provided by 3F, primarily ‘Dossier interinsti-

tutional: 2020/0310 (COD)’ and Jens Kristiansen's ‘Notat til CO-

industri’.

EUU, Alm.del - 2022-23 (2. samling) - Bilag 54: Henvendelse af 30/11-22 fra Fagbevægelsens Hovedorganisation vedr. direktivet om passende mindstelønninger og opfordring til anlæggelse af anullationssøgsmål

A review of the Directive on adequate minimum wages in the European Union

Summary

Several arguments can be used to question the choice of legal basis. Three

arguments relate to the exception for pay and the right of association in

article 153.5 TFEU and one relates to the notion that article 153.1 f is a

more appropriate legal basis.

The ECJ has stated that ‘in the present state of EU law’, it was considered

appropriate to exclude determination of the level of pay from harmoniza-

tion’ (author’s emphasis). It can be argued that the state of EU law has not

changed.

The Directive entails direct involvement in the setting of wages by EU law

and is thus covered by the exception for pay in article 153.5 TFEU. For

that reason, it can be argued that the EU does not have the competence

to adopt the directive.

According to article 153.5 TFEU, the right of association is excluded from

the EU’s competences on social policy. The Directive contains articles that

concern protection of the essential parts of the freedom of association and

thus the right of association. Therefore, it can be argued that the Directive

is outside the competences transferred to the EU by the Member States.

The Directive's legal basis concerning working conditions is not correct.

Only one of the articles in the Directive concerns working conditions. The

Directive has a dual aim and the aim of promoting collective bargaining is

not merely incidental to the aim of promoting adequate minimum wages.

Article 153.1 f on representation and collective defence of the interests of

workers and employers appears to be closer to the Directive’s centre of

gravity.

Kristiansen’s note contains many well-reasoned arguments. Regarding

some points, the arguments need to be developed to serve the purpose of

convincing also the judges in the ECJ.

There are several risks with bringing an action for annulment. There is a

substantial risk that the ECJ will dismiss the action for annulment. None

of these risks disappears by not bringing an action for annulment. Not

bringing an action for annulment will not put an end to the discussion. By

bringing such an action the parties will have more control over the first

judgment concerning the Directive. By bringing such an action it will also

be noted in the rolls that there was no consensus among the Member

States on the issue of a minimum wage.

The Directive is the first of its kind and legal predictions concerning the

issues are complex and fraught with uncertainty.

Erik Sjödin

1 Introduction

This report concerns the Directive on adequate minimum wages in the

European Union (hereafter, ‘the Directive’). A political agreement has

been reached between the Council, the Parliament and the Commission.

The Parliament, as well as the Council have now voted in favour of the

Directive. A final directive will thus be published. I will here provide my

analysis of the three themes asked for by 3F.

The report is structured as follows. I will start with an analysis of the legal

basis of the political agreement. After that, the review of Kristiansen’s ar-

guments in his “Notat” will be presented. Finally, the report will address

the risks connected with bringing, as well as not bringing an action of an-

nulment against the Directive before the European Court of Justice (ECJ).

The ECJ is the final interpreter of EU law and the Court is known to be

innovative and to some extent also sensitive to the current political situa-

tion. The Directive has no antecedent and content has been added to it in

the legislative process. Predictions of the outcome of a procedure are

therefore associated with uncertainty. It is the ECJ that has to be con-

vinced, however, and therefore it is necessary to attempt to show how the

arguments relate to previous judgments of the Court. The analyses will

focus primarily on types of arguments that can be used concerning the

choice of legal basis rather than certain conclusions of the outcome of the

action of annulment. Regardless of the strength of legal arguments, the

outcome will be uncertain, given that it is such a sensitive issue with high

political stakes.

The Directive is the first of its kind. This adds to the necessary caution

needed when drawing conclusions from existing ECJ case law.

A review of the Directive on adequate minimum wages in the European Union

2 The legal basis of the Directive

2.1 Introduction

Directives and other legislative acts must have a legal basis in the treaties.

This is an expression of the fact that the EU may legislate only on matters

concerning which the Member States have transferred competence over

to the EU (see article 5.2 Treaty of the European Union, TEU). The legal

basis defines the procedure by which a legislative act may be adopted, the

type of legislative act that can be adopted, and the majority by which the

Council shall make decisions. The boundaries between legal bases are not

completely clear, and can overlap. Because certain articles in the Treaty are

relatively open to interpretation (see articles 115 and 352 Treaty of the

Functioning of the European Union, TFEU), the outer limits of the EU’s

competences are not clearly defined. EU measures may be taken only if

the objectives cannot be achieved at the Member State level (subsidiarity),

and such measures must be in

proportion

to the Union’s objectives (articles

5.3 and 5.4 TEU).

The legal basis of the Directive is article 153.2 point b in conjunction with

article 153.1 point b. According to the mentioned articles, the EU may

adopt

minimum directives

for the gradual implementation of

working conditions.

Such directives concerning working conditions may, according to article

153.2, be adopted via ordinary legislative procedure. That procedure is

regulated in article 294 TFEU, according to which the Council can adopt

such acts by a qualified majority.

The fifth paragraph in article 153 contains special exceptions for, among

other things,

pay

and the

right of association.

To my knowledge, only Directive (2019/1152) on transparent and pre-

dictable working conditions in the European Union has been adopted with

the same legal basis.

In what follows, I will present arguments that question the choice of legal

basis. These are arguments that can be used in an action for annulment of

the Directive by a Member State.

Directive (EU) 2019/1152 of the European Parliament and of the Council of 20 June 2019

on transparent and predictable working conditions in the European Union, OJ L 186,

11.7.2019, pp. 105–121

Erik Sjödin

10.

Such analysis is dependent on the content of the Directive, which is pre-

sented in the table below:

Overview of the directive

Article 1 Subject matter

Article 2 Scope

Article 6 Variations

and deductions

Article 7 Involvement of

social partners in the set-

ting of statutory mini-

mum wages

Article 11 Information on

minimum wages

Article 12 Right to redress

and protection against ad-

verse treatment or conse-

quences

Article 3 Definitions

Article 8 Effective access Article 13 Penalties

of workers to statutory

minimum wages

Article 9 Public procure- Articles 14–18 Final pro-

ment

visions

Article 10 Monitoring

and data collection

Article 4 Promotion of col-

lective agreement coverage

Article 5 Procedure for set-

ting adequate statutory

minimum wages

A review of the Directive on adequate minimum wages in the European Union

2.2 Is the Directive covered by the exception in article 153.5

TFEU

2.2.1 Introduction

The first line of arguments concerns the exception in article 153.5 TFEU.

The decisive factor in assessing whether the proposal can be adopted with

the stated legal basis is how the exception in Article 153.5 is to be inter-

preted. The wording of the exception is (italics added):

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.

11.

12.

13.

14.

Collaboration on social policy first took place in intergovernmental form

with the support for the Social Agreement. The exception was also in-

cluded in that agreement. This agreement was, through the Treaty of Am-

sterdam, inserted in the treaties in the 1990s.

EU cooperation on social

policy has thus always included an exception for pay and also the right of

association. This was justified mainly for reasons of subsidiarity; that is,

that it was more appropriate to settle issues of pay at the Member State

level. Pay was also something determined by the social partners.

In my view, three lines of argument in particular can be made regarding

the exception in article 153.5 TFEU. The first concerns the state of EU

law; the second is that the Directive is covered by the exception for pay;

and the third is that the Directive concerns the exception for the ‘right of

association’.

The fact that article 1.3 states, in accordance with article 153.5, that the

Directive shall be without prejudice to the competence of Member States

in setting the level of minimum wages, and so on, does not mean that the

material content cannot be contested.

2.2.2 The state of EU law has not changed

A first remark based on the present case law on the exception found in

article 153.5 concerns the state of EU law. In the judgment

Impact,

deliv-

ered on 18 April 2008, the Court's Grand Chamber made the following

statement (emphasis

added):

In other language versions: Swedish, ‘löneförhållanden’, German, ‘das

Arbeitsentgelt’,

and French,

‘rémunérations’.

See, eg, Bercusson, B (2009)

European Labour Law,

Cambridge University Press, pp 141 ff.

See also Ryan, B (1997) Pay, Trade Unions Rights and European Community Law.

International Journal of Comparative Labour Law and Industrial Relation

13(4): 305–325.

15.

Erik Sjödin

More particularly, the exception relating to ‘pay’ set out in Article

137(5) EC is explained by the fact that fixing the level of pay falls within

the contractual freedom of the social partners at a national level and

within the relevant competence of Member States. In those circum-

stances,

in the present state of Community law,

it was considered appropriate

to exclude determination of the level of wages from harmonisation.

16.

This statement was repeated after the political agreement on the Directive

in June 2022 in a preliminary ruling delivered on 7 July 2022 in cases

C-257/21 and C-258/21

Coca-Cola European Partners Deutschland GmbH

(em-

phasis added):

Furthermore, pursuant to paragraph 5 thereof, Article 153 TFEU does

not apply to pay, the right of association, the right to strike or the right

to impose lock-outs. That exception is explained by the fact that fixing

the level of pay falls within the contractual freedom of the social part-

ners at national level and within the relevant competence of Member

States. In those circumstances,

in the present state of EU law,

it was con-

sidered appropriate to exclude determination of the level of pay from

harmonization under Article 136 EC et seq (now Article 151 TFEU et

seq).

17.

18.

19.

20.

The first question in relation to the statement made in the judgments is

whether the state of EU law has changed.

The exception is found in the Treaties and has been there since the Mem-

ber States transferred competence to adopt legislative acts on issues of

social policy. The statement concerning the ‘state of EU law’ has been

repeated by the ECJ after the latest revision of the Treaties (Treaty of Lis-

bon).

The ECJ opinion in the summer of 2022 appears to be that in the present

state of EU law it is appropriate to exclude the determination of pay from

harmonisation. In the next chapter, I will show how the Directive contains

provisions that determine wages.

The state of EU law has not changed since the exception concerning pay,

as well as the right of association was introduced into the Treaties. It can

be argued that to change the state of EU law it is necessary to reform the

provisions on social policy in the TFEU.

C-268/06 Impact, EU:C:2008:223, p. 123.

C-257/21 and C-258/21

Coca-Cola European Partners Deutschland GmbH,

EU:C:2022:529, p. 47.

A review of the Directive on adequate minimum wages in the European Union

21.

22.

23.

24.

25.

26.

2.2.3 The exception for pay: direct involvement in the setting of

wages

From the existing case law of the ECJ, which partially applies to other

issues, the following conclusions concerning the exception in article 153.5

can be drawn:

- Article 153.5 must be interpreted strictly. The exception does not pre-

vent all measures connected with wages.

- The exception in Article 153.5 applies to the equivalence of all or some

of the constituent parts of pay and/or the level of pay, or the intro-

duction of a minimum wage at the Community level. It therefore in-

volves measures that comprise direct involvement in determining

wages.

For the Directive to be covered by the exception it must be established

that it constitutes a direct involvement in the setting of wages.

In my opinion, article 5 is one article that may be considered to entail

direct involvement in the setting of wages. Article 5 concerns a procedure

for setting adequate statutory minimum wages. The procedures for setting

and updating statutory minimum wages shall be guided by the criteria that

contribute to the adequacy of minimum wages with regard to achieving a

decent standard of living, reducing in-work poverty, as well as promoting

social cohesion and upward social convergence. The second paragraph

concerns elements that the national criteria must include: (a) the purchas-

ing 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; and (d) long-term national productivity levels and develop-

ments.

According to article 5.4, Member States may use indicative references

when determining the adequacy of minimum wages, such as 60 per cent

of the gross median wage or 50 per cent of the gross average wage.

The detailed demands laid down in article 5 mean that the provisions con-

stitute direct involvement in the setting of wages.

Article 6 concerns variations and deductions. According to the article, var-

iations and deductions shall respect the principles of non-discrimination

and proportionality. Also, regulation of possible variations and deductions

See Judgements C-307/05 Del Cerro Alonso, EU:C:2007:509, C-268/06 Impact,

EU:C:2008:223. See also C-501/12, C-506/12, C-540/12 and C-541/12 Specht

EU:C:2014:2005, p. 32-34, C-395/08 and C-396/08 Bruno EU:C:2010:329, C-518/15 Matzak

EU:C:2018:82, p. 49.

Also, wage discrimination can be covered by the EU directives.

Erik Sjödin

27.

28.

29.

30.

from the minimum wage is a regulation of ‘pay’. The Member States with

statutory minimum wages need to take measures to implement article 6.

Such provisions will directly affect the regulation of pay in the Member

States.

Article 12 concerns the right of redress and the protection against adverse

treatment or consequences, and article 13 concern penalties. The Member

States shall ensure, among other things, the ‘right of redress’ in the case of

infringements of the minimum wage, regardless of whether it is set by law

or collective agreement.

According to article 13, the penalties must be effective, proportionate and

dissuasive. In the Member States without statutory minimum wages, this

‘may contain or be limited to a reference to compensation and/or con-

tractual penalties provided for, where applicable, in rules on enforcement

of collective agreements’. A right of redress read together with demands

on effective sanctions can be interpreted in the following way. If the right

to a minimum wage has been infringed, the worker shall be entitled to

redress and this means an ability to claim the minimum wage not received.

In Sweden, the right to claim a minimum wage is dependent on member-

ship of the trade union that has concluded the collective agreement that

contains provisions on minimum wages. A worker not organized in a trade

union with a collective agreement cannot make claims based on the col-

lective agreement and will not be entitled to compensation when provi-

sions in the collective agreement are infringed. In Sweden, implementation

of the Directive will – probably – result in statutory regulation of the right

to claim minimum wages according to a collective agreement regardless of

trade union membership. This is because otherwise the sanctions will not

be effective, proportionate and dissuasive. The Directive will thus result

in regulations that give workers the right to Claim minimum wages who

previously did not have that right. This can be seen as direct involvement

in the setting of wages.

It can be argued that several articles of the Directive entail direct involve-

ment in the setting of wages by EU law. Therefore, it is excluded from the

competence transferred to the EU from the Member States according to

article 153.5 TFEU.

A review of the Directive on adequate minimum wages in the European Union

31.

32.

33.

34.

2.2.4 Does the directive contain provisions on the ‘right of associa-

tion’?

The exception in article 153.5 TFEU also concerns the ‘right of associa-

tion’.

International conventions on human rights generally speak of ‘free-

dom of association’. See, for example, article 11 of the European Conven-

tion of Human Rights, as well as article 12 of the Charter of Fundamental

Rights of the European Union. It is thus necessary to make a remark on

the difference between the ‘freedom’ and the ‘right’ of association. If the

conclusion is to be drawn that the Directive concerns the ‘right’ of asso-

ciation it must be explained how this relates to ‘freedom’. In order for the

argument not to be disregarded because it is the only right that is excluded

from the EU’s competence. The exception must also be related to the

competence provided for in article 153.1 p f on representation and collec-

tive defence of the interests of workers and employers, including co-de-

termination, subject to paragraph 5.

There are several possible interpretations of what ‘the right of association’

means. Barnard in her textbook on EU Employment Law seems to disre-

gard the distinction and concludes that the exception concerns ‘freedom

of association’.

Risenhuber claims that the right of association ‘denotes

regulation on the formation, dissolution and activity and membership of,

employee associations (trade unions) and employers’.

An even more nar-

row interpretation is found in a commentary on European labour law, ac-

cording to which the right of association comprises rules concerning the

constitution and internal organisation of a trade union and employer fed-

eration.

An interpretation inspired by Swedish law is that freedom consists of pro-

tection from the state, whereas the right concerns mutual protection in the

horizontal relationship between employer and employee. The right of as-

sociation is regulated in sections 7–9 of the Swedish Co-determination act

and contains protection from violations of the right of association within

the employment relationship.

Another possible interpretation is inspired by the case law of the Euro-

pean Court of Human Rights. According to this interpretation ‘the right

of association’ concerns the essential parts of the freedom of association

Das koaliationsrecht (de.), föreningsrätt (sv.), ni au droit des associations (fr.)

Barnard C (2012) EU Employment Law (4th ed.), Oxford University Press, pp. 705f.

11 Risenhuber K (2021) European Employment Law (2nd ed.), Intersentia, p. 181.

12 Franzen M, Gallner I, and Oetker H (2022) Kommentar zum europäischen Arbeitsrecht (4

Aufgabe), CH Beck, p. 49.

Erik Sjödin

insofar as they relate to trade unions. The European Court of Human

Rights has made a non-exhaustive list of the essential parts of the ‘right to

the freedom of association’:

the right to form and join a trade union; the prohibition of closed-shop

agreements; the right for a trade union to seek to persuade the em-

ployer to hear what it has to say on behalf of its members, and, in prin-

ciple, the right to bargain collectively with the employer.

35.

Article 4.1 c and b were not included in the Commission's original pro-

posal and seem to have been inserted on the initiative of the European

Parliament. They were inserted into the Directive late in the process and

have thus not been discussed to the same extent. The provisions were

inserted after the Danish parliament made a “subsidiaritetsindvending“ in

February 2021. They have the following wording:

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 because they participate or wish to partic-

ipate in collective bargaining on wage setting.

(d) For the purpose of promoting collective bargaining on wage-set-

ting, take measures, as appropriate, to protect trade unions and em-

ployers' organisations participating or wishing to participate in collec-

tive bargaining against any acts of interference by each other or each

other’s agents or members in their establishment, functioning or ad-

ministration.

36.

37.

These articles resemble classic protection of the most essential parts of the

freedom of association. One situation that appears to be covered by article

4.1 c concerns when a worker wants to join a trade union and claim min-

imum wage and that as a result of this action the worker is ‘discriminated

against’ in some way.

From the wording of article 4.1 c, it is clear that only workers and trade

union representatives receive protection from discrimination. Article 4.1

d concerns measures to protect trade unions and employers' federations.

See case

Association of Civil Servants and Union for Collective Bargaining and others v Germany

(Appli-

cations nos 815/18 and 4 others – see appended list), 5 July 2022, p 67 with reference to previ-

ous case law.

A review of the Directive on adequate minimum wages in the European Union

38.

39.

40.

41.

42.

43.

Individual employers are not awarded any protection according to the Di-

rective.

One guarantee found in article 1 is that the Directive shall be without prej-

udice to the full respect for the autonomy of social partners, as well as

their right to negotiate and conclude collective agreements. According to

article 28 EU Charter, both workers and employers have the right to en-

gage in collective bargaining.

A first remark concerning the provision is that it does not respect the au-

tonomy of the social partners because the protection affects only one side

and therefore tilts the balance between the parties. According to the Di-

rective's definition of collective bargaining it is something that also indi-

vidual employers may take part in. Also, compatibility with article 28 Char-

ter could be called into question because the Charter concerns both sides.

As stated above there are different understandings of the ‘right of associ-

ation’. In relation to the judgments of the European Court of Human

Rights it is evident that provisions in articles 4.1 c and d will protect es-

sential parts of the freedom of association. Potentially, these provisions

cover many disputes related to the exercise of freedom of association in

the labour market and disputes concerning these rights can be transformed

into questions to the ECJ.

There is no ECJ case law on the meaning of the ‘right of association’. If

reasoning is applied similar to the reasoning the ECJ has used concerning

‘pay’ it is likely that the ECJ will take the view that the exception for the

‘right of association’ should be interpreted strictly in order that it does not

prevent EU action in the areas in which the EU has competence. From

that starting point, the most extensive interpretation is ruled out, namely

that the right of association is the same as freedom of association.

The strictest interpretation of the ‘right of association’ is that it concerns

only internal questions, that is, who can become a member and a member's

relationship with the organisation. If such an interpretation is accepted,

then the mentioned provisions are not covered by the exception in article

153.5 TFEU.

It would at least be possible to argue that because the provisions in articles

4.1 c and d concern the most essential parts of freedom of association and

thus the right of association, this could also cast light on the interpretation

of article 153.1 f TFEU and add to what the EU can regulate and what is

excepted from such regulation. Based on such an argument it can be

claimed that article 4 concerns the right of association and that it is there-

fore excluded from EU competence.

Erik Sjödin

2.3 Is article 153.1 b on working conditions the correct legal

basis?

44.

Article 153 contains a list of several points. The EU may, with the appli-

cation of different legal procedures, adopt minimum directives. For the

article to have the foreseen effect it must be possible to separate the points

from each other. If the different points in article 153.1 are interpreted ex-

tensively it will not be possible to uphold the distinction between the dif-

ferent points.

The point that is used concerns ‘working conditions’. Working conditions

occur also in article 31.1 EU Charter of Fundamental Rights, according to

which every worker has the right to working conditions that respect their

health, safety and dignity. Previously, a directive was adopted concerning

the same article 153.1 b, namely Directive 2019/1152 on transparent and

predictable working conditions in the European Union.

The ECJ has, when adjudicating whether the correct legal basis has been

used, adopted the

centre of gravity

test.

In one of its latest judgments, this

is expressed as follows (italics

added):

As a preliminary point, it must, first, be recalled that the choice of the

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 the measure concerned reveals that it pursues a

twofold purpose or that it has a twofold component and if one of those is identifiable

as the main or predominant purpose or component, whereas the other is merely inci-

dental, that measure must be founded on a single legal basis, namely that required

by the main or predominant purpose or component.

45.

46.

47.

A first review of whether the correct legal basis has been chosen thus in-

cludes a test of the Directive’s ‘centre of gravity’ or, in the words of the

Court, whether one purpose is the main or predominant purpose. As al-

ready mentioned, the Directive has eighteen articles. The aim is to improve

working and living conditions, in particular the adequacy of minimum

wages. To achieve this aim the Directive establishes a framework for:

- the adequacy of statutory minimum wages for achieving decent living

and working conditions;

- promoting collective bargaining on wage setting;

Franzen M, Gallner, I, and Oetker A (2022)

Kommentar zum europäischen Arbeitsrecht

(4 Auf-

gabe), CH Beck, p. 135 ff.

Engel A (2018)

The Choice of Legal Basis for Acts of the European Union,

Springer, pp 13ff.

C-620/18

Hungary v European Parliament,

ECLI:EU:C:2020:1001, p 38.

A review of the Directive on adequate minimum wages in the European Union

48.

49.

50.

51.

52.

53.

54.

55.

56.

enhancing effective access of workers to rights to minimum wage pro-

tection where provided for by national law and/or collective agree-

ments.

The adequacy of statutory minimum wages and the promotion of collec-

tive bargaining are separate purposes. The aim of enhancing access can be

perceived as merely incidental to the other two.

Regarding choice of legal basis, a quick review of the material content

shows that few articles concern working conditions.

Directives often contain a general provision that establishes their aim,

scope and definition necessary for the Directive. Articles 1–3 are such

provisions.

The material content of the Directive is found in articles 4–13.

Article 4 on the promotion of collective bargaining does not concern

working conditions. The same applies to article 7 on the involvement of

the social partners in the setting and updating of statutory minimum

wages. Article 9 on public procurement and article 10 on monitoring and

data collection, and article 11 on information on minimum wages also

clearly do not concern working conditions. The mentioned articles con-

cern only obligations for the Member States.

Article 5 concerns the procedure for setting an adequate statutory mini-

mum wage. The article concerns obligations for the Member States con-

cerning a procedure and certain criteria. All of the obligations in the article

are directed towards the Member States and none of them necessarily af-

fect an employer or employee. Article 7 concerns the involvement of the

social partners in the setting of wages and thus, again, not working condi-

tions.

Article 6 on variations and deductions concerns the employment relation-

ship and working conditions.

Articles 8, 12 and 13 concern workers’ access to statutory minimum wages

and the right of redress and protection against adverse treatment or con-

sequences. The articles mentioned only indirectly concern working condi-

tions

In my opinion, the only article that concerns working conditions is article

6. Article 4, with its protection from discrimination of workers and trade

union representatives, comes under article 153.1 f. The same can be said

concerning article 7 on the involvement of the social partners in the setting

of statutory wages.

Erik Sjödin

57.

One argument that may contest whether article 153.1 b is the correct legal

basis is that

the centre of gravity of the Directive does not concern working conditions.

The Directive has several other purposes and therefore it is not the correct

legal basis. There are other points in article 153.1 that are closer to the

Directive’s centre of gravity. They are, primarily, article 153.1 f on repre-

sentation and collective defence of the interests of workers and employers,

including codetermination, subject to paragraph 5; and point j, the latter

concerning combating social exclusion. The adoption of directives with

Article 153.1 f TFEU as their legal basis requires unanimity in the Council,

in accordance with article 153 TFEU.

2.4 Subsidiarity and proportionality

58.

Articles 5.3 and 5.4 TEU contain the general obligations of subsidiarity

and proportionality of EU actions. These obligations are relevant in the

context of the Directive. From the abovementioned case law, it is clear

that the exception in article 153.5 TFEU is motivated by reasons of sub-

sidiarity. EU shall act ‘only if and in so far as the objectives of the proposed

action cannot be sufficiently achieved by the Member States’. Arguments

concerning subsidiarity can be developed in relation to the Directive.

The same can be said regarding proportionality. EU action shall not ex-

ceed what is necessary to achieve the objectives of the Treaties.

The fact that it is stated in the Directive that subsidiarity, as well as pro-

portionality are respected does not make that the case.

In an action of annulment, the arguments related to subsidiarity as well as

proportionality need to be developed further. If an action annulment is

filed the arguments concerning subsidiarity must be developed by the

claimant. That is the Member State that make an action for annulment

needs to present arguments as to why this is a question better handled at

Member State level.

59.

60.

61.

2.5 Conclusions

62.

Several arguments can be made to call into question the choice of the legal

basis of the Directive. Because it is the ECJ that has to be persuaded by

such arguments it is therefore necessary, at least in my opinion, to find

support – if possible – in ECJ case law.

A review of the Directive on adequate minimum wages in the European Union

63.

64.

65.

66.

First, it can be argued that the Directive is covered by the exception in

article 153.5, in two ways. It would constitute direct involvement in the

setting of wages by EU law. Also, article 4.1 c d of the Directive concerns

the right of association. What is meant by ‘right of association’ has not, to

my knowledge, previously been considered by the ECJ.

The second argument is that there are several purposes in the Directive,

but the Directive’s centre of gravity does not concern working conditions.

A majority of the articles in the Directive instead concern article 153.1 f

on representation and collective defence of the interests of workers and

employers, including codetermination, subject to paragraph 5.

The Directive’s aims can be achieved at the Member State level and there-

fore it is not in compliance with the principle of subsidiarity in article 5.3

TEU.

Several legal arguments can be presented against the chosen legal basis in

the Treaty. Even if I consider that the arguments have weight, however,

the outcome of an action of annulment, if brought, is far from certain.

Erik Sjödin

3 Review of Kristiansen’s Notat

67.

I will here review the arguments presented by Kristiansen. The review will

focus primarily on section 4 b) TEUF artikel 153, stk 5 om lønforhold and

section 4 c) TEUF artikel 153 stk. 2 smh. med stk.1 litra b om kollektiv

interessevaretagelse in his Notat.

I concur with many of the arguments made by Kristiansen. He also men-

tions that the Directive is the first of its kind and that there is great uncer-

tainty regarding the relevance of previous case law.

4 b) TEUF artikel 153 stk 5 om lønforhold

As already mentioned, the body that must be convinced is the ECJ. The

ECJ’s legal methodology includes a linguistic interpretation of the mean-

ing of ‘pay’. A mere statement that it is evident from the meaning of the

words that the Directive concerns pay and is therefore excluded from EU

competence under article 153.5 TFEU will not by itself convince the ECJ.

The Commission, the European Parliament as well as the Council support

the Directive. Thus the very actions of EU institutions make it far from

evident that the Directive will be excluded from the EU's competence.

An argument based on article 153.5 TFEU must show in detail how and

why the Directive concerns pay within the meaning of ECJ case law.

This is something that needs to be based on the material content of the

articles of the Directive; it cannot be established by reference to the Com-

mission's opinion about what the effects of an earlier proposal could be.

The focus of such an argument should be on the points that Kristiansen

makes on p. 11, second to last paragraph, where he argues why the Di-

rective constitutes direct EU involvement in the setting of wages.

The argument as to why the directive constitutes direct involvement in the

setting of wages is related primarily to the obligations of Member States

that have statutory minimum wages.

It is not that I have a different opinion from Kristiansen, but rather that I

believe the order of arguments should be structured differently. It is not

stakeholders in the Nordic countries who have to be convinced, but the

judges on the bench in Luxembourg. My guess, and I must emphasize that

this is a guess, is that it is best to start with arguments based in the case

law from the ECJ. And finish with those concerning the obvious meaning

of the words. This in order to show knowledge of the Courts reasoning

68.

69.

70.

71.

72.

73.

74.

A review of the Directive on adequate minimum wages in the European Union

and try to use it in order to convince the ECJ that the conclusions follow

from the Courts own reasoning. The arguments about the meaning of the

words should however also be included.

4 c) TEUF artikel 153 stk. 2 smh. med stk.1 litra b om kollektiv interessevaretagelse.

Kristiansen in this section presents convincing arguments as to why article

4 does not concern working conditions. He also points out that in article

4 but also articles 5–8 the Directive has several different objectives. I also

agree that article 4 on the promotion of collective bargaining cannot be

seen as ‘merely incidental’ to other aims of the Directive.

The promotion of collective bargaining concerns something other than

the adequacy of minimum wages. The way in which Kristiansen shows

this, namely by highlighting that they concern different fundamental rights

in the EU Charter, is a good way of strengthening the argument.

In addition to article 4, there are also other articles of the Directive that

concern article 153.1 f on representation and collective defence of the in-

terests of workers and employers. Also article 7 relates to the mentioned

provision.

Kristiansen also concludes that article 4 concerns the right of association.

If this argument is to be used it needs to be developed. Here it is relevant

to make a distinction between the ‘freedom’ and the ‘right’ of association.

d) Naerheds- og proportionalitetsprincippet

These are important arguments and need to be developed further.

Concluding remarks concerning Kristiansen's note

Kristiansen raises several points of relevance if the aim is to question the

chosen legal basis of the Directive. To convince the ECJ some parts of

the arguments must be further elaborated. The fact that it appears to be

clear will not be enough; it must also be shown in relation to the provisions

contained in the articles of the Directive.

75.

76.

77.

78.

79.

80.

Erik Sjödin

4 Risks of an action for annulment

81.

Different kinds of risks are attached to an action for annulment of the

Directive. People more qualified than me may assess the political risks of

such a process.

I will here focus on the legal risks attached to bringing or not bringing an

action for annulment. Another way of putting it is that I will focus on the

pros and cons of such a procedure.

The outcome of an action for annulment can go either way. Even if there

are clear and well-reasoned arguments for the proposition that the Di-

rective is covered by the exception for pay and/or right of association, and

that the legal basis concerning working conditions is not correct, it is not

certain that the ECJ will attach such weight to these arguments that the

Court will annul the Directive. History shows that actions for annulment

are seldom successful and there is a risk that Denmark (and Sweden?)

might lose such a case.

The Directive contains definitions of many central concepts, such as ‘col-

lective agreement’ etcetera. If brought before the Court there is a risk that

the Court's judgment may contain interpretations that could, in due

course, raise different kinds of questions about the corresponding national

interpretations and also the national legal sources on which the national

understanding of these concepts is grounded. This is the most evident risk

with the action for annulment. The ECJ judgment might further

strengthen the problematic parts of the Directive.

If the action is successful the Directive will fully or partially be annulled.

There are well reasoned legal arguments – see above primarily sections 15-

21 concerning the state of EU law, sections 21-43 concerning the excep-

tion in article 153.5 and sections 44-57 concerning that the Directive does

not primarily concern working conditions, as to why such an action could

be successful.

Even if there is a substantial risk that an action for annulment will fail

there are some advantages to initiating such a process. Proceedings for

annulment should be instituted within two months of the publication of

the Directive.

The action for annulment will be the first case before the ECJ concerning

the Directive. Those taking such an initiative will, at least to some extent,

be able to control the questions before the Court and also the kind of

arguments that are presented.

82.

83.

84.

85.

86.

87.

A review of the Directive on adequate minimum wages in the European Union

88.

89.

90.

91.

These proceedings concerning annulment will probably be finished before

the period for implementation runs out. The judgment, even if the action

is not successful, may contain clarification on what measures need to be

taken to implement the Directive. It is hard to estimate the time needed

for such proceeding. In case C-620/18 the action for annulment was filed

in October 2018 and the judgement from the ECJ came in December

2020.

There are several other proposals in the EU pipeline and a judgment can

clarify the room for manoeuvre at the EU level. The proposals concern

wage transparency and platform workers.

The choice of not bringing an action for annulment will not automatically

put an end to the discussion on whether the EU has the competence to

adopt the Directive. This discussion may reappear in the national imple-

mentation process and also in a question for a preliminary ruling. Not

bringing an action for annulment will thus only postpone the relevant risks

of such action. They can reappear in a dispute before a national court that

asks for a preliminary ruling, and in that event someone else would be in

control of the process. History shows that cases concerning disputes in

the Nordic countries may be initiated also by courts in the other Member

States.

The Directive concerns complex questions and there will be other

judgments on the Directive in the future.

If a Member State in the Council votes against a directive for reasons of

lack of competence, it is consistent then to bring an action for annulment.

One consequence of such action for annulment of the Directive is that it

will be noted in the rolls that there was no consensus among the Member

States on the issues in the Directive.

C-438/05 Viking Line EU:C:2007:772, C-18/02 DFDS Torline EU:C:2004:74, see also that

a Court in Sicily refused to recognize a judgment from Arbejdsretten. The Danish case was

AR2015.0254.