Under the EU Treaties, which define what the Union may and may not do, the EU has no competence to adopt rules on “pay”. This is an important restriction from the perspective of the Nordic countries, where wages are regulated exclusively through collective agreements and where the state does not intervene in wage-setting in the same way as in many other EU countries.
Read this article in Swedish on Arbeidsliv i Norden
When the EU adopted a directive on adequate minimum wages in the European Union, Denmark therefore brought an action before the EU Court of Justice, requesting that the directive be annulled. Sweden supported the Danish position.
In November 2025, it became clear that Denmark had lost.
The directive was largely upheld by the EU Court of Justice. Despite this, to the surprise of many, the judgment was received overwhelmingly positively by employers, trade unions and politicians across the Nordic countries.
This is because the Court drew a clear line between what the EU may interfere in and what is for the member states themselves to decide. Among other things, it confirmed that the member states themselves determine what constitutes “adequate” minimum wages, and that in one respect the directive went too far.
Read more articles abot this ruling (in Swedish) in EU & arbetsrätt’s newsletter number 4, 2025
The Court therefore annulled two of the directive’s articles. One referred to various factors that member states were required to take into account when calculating the level of minimum wages, and the other stipulated that any indexation of a country’s minimum wages must never result in a reduction of these.
Those provisions would have directly interfered in the setting of wages, which the EU is not permitted to do, the EU Court of Justice concluded.
The Court also stressed that it is for the member states themselves to decide whether wages are regulated through collective agreements or legislation, and that the directive fully respects the autonomy of the social partners.
“A well-drafted judgment,” summarised Mattias Dahl, the deputy CEO of the Confederation of Swedish Enterprise, when the Swedish Labour Market Council for EU Affairs held a seminar a few days after the ruling was delivered.
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