The CJEU has declared parts of the EU Directive on Adequate Minimum Wages invalid

In November 2025, the Court of Justice of the European Union (CJEU) struck down certain provisions of the EU Directive on Adequate Minimum Wages. The directive remains in force, but the CJEU found that the EU exceeded its competences in certain respects, and those parts of the directive are now invalid.

In previous newsletters we reported on the EU Directive on Adequate Minimum Wages, adopted in October 2022 (link to the previous article in Swedish here). Since its adoption, the directive has faced criticism. The directive has primarily been criticized by Sweden and Denmark, both of which voted against it when the proposal was first presented. After the directive was adopted, Denmark brought an action for annulment before the CJEU, which Sweden chose to support. Denmark and Sweden argue that the EU Directive on Adequate Minimum Wages should be declared invalid in its entirety because the legislation is not compatible with the EU Treaties, on the basis that the EU lacks competence to legislate in this area; matters relating to wage conditions and freedom of association should be regulated at the national level (in Sweden, this is done through negotiations between the labor market parties and collective bargaining agreements).

In November 2025, the CJEU issued its judgment, granting Denmark and Sweden partial success by declaring the directive invalid in certain, but not all, parts. The provisions annulled concern the regulation of criteria for how EU Member States with statutory minimum wages are to set and update those wages, as well as the automatic indexation of minimum wages. In other words, the directive as a whole is not declared invalid, as Denmark, supported by Sweden, sought, but certain parts are removed.

Setterwalls’ comments: For Sweden, the implementation of the EU Directive on Adequate Minimum Wages has had limited significance and has not led to any direct legislative measures. This is partly because the Swedish model for wage formation is already considered to fulfill the directive’s overarching purpose, and because collective bargaining agreement coverage in Sweden is sufficiently high (over 80 %) that we are not subject to the directive’s requirement for additional measures. Nor is the CJEU’s judgment, which annuls certain provisions of the directive, considered to have any practical significance for Sweden. We nevertheless consider the judgment important. It confirms that the EU, in certain respects, exceeded its competences through the legislation. The judgment also clarifies the limits of what the EU may and may not regulate concerning wages and emphasizes, among other things, that wage setting is fundamentally a national matter. The judgment indicates that the EU may not harmonize the minimum wage level in the Union or establish a uniform method for setting minimum wages.