With the judgment of November 12, 2025, the Court of Justice of the European Union (CJEU) declared key provisions of the EU directive on minimum wages invalid. The decision primarily concerns fundamental regulations regarding the definition and implementation of minimum wages in the member states. The CJEU’s decision followed a submission by the Federal Constitutional Court in the context of a specific review of norms and has an immediate effect on the validity of individual norms of the minimum wage directive.
Background of the proceeding
In October 2022, the European Union adopted Directive (EU) 2022/2041 to promote adequate minimum wages. The aim was European-wide harmonization and ensuring minimum standards in working life. However, in the Federal Constitutional Court’s view, it was necessary to examine whether certain provisions of the directive, particularly concerning binding minimum rights, respect the competence division of the European Union.
At its core, the submission focused on the extent to which the European Union is authorized to make binding specifications for the national configuration of minimum wages and to demand minimum standards of wage determination even in member states where systems of collective bargaining autonomy exist.
Key legal questions
Competence of the European Union
The central issue of contention was the compatibility of the minimum wage directive with Article 153 paragraph 5 of the TFEU. According to this provision, it is reserved for member states to determine remuneration and to protect collective bargaining autonomy. The CJEU has now decided that the Union’s competence does not extend to intervening in national wage setting when it comes to determining minimum wages or their modalities.
Impacts on national regulations
With the CJEU’s decision, key provisions of the minimum wage directive are considered invalid insofar as they directly regulate national wage setting or contain binding requirements for the level or integration method of national minimum wages. This particularly affects Article 4 (promotion of collective minimum wages) and Article 5 of the directive, to the extent that specific thresholds or requirements for the configuration of national minimum wage systems were demanded.
Regulations that merely encourage the promotion of social partner dialogues and the facilitation of collective bargaining autonomy, without intervening in them, were not objected to.
Practical relevance for economy and labor relations
The judgment clarifies that the member states of the European Union still have extensive autonomy in designing national minimum wage regulations and are not subject to a European minimum wage dogma. At the same time, it remains the responsibility of national legislation to maintain protection standards for employees and to determine the relationship between statutory minimum wages and collective bargaining autonomy.
Although the judicial annulment of certain directive provisions removes the binding effect of these parts for national legislation, companies must still keep in mind existing national requirements and prevailing European fundamental freedoms.
Continuation of legal development
It should be noted that the impact of the judgment will be further developed and specified by the Union, member states, and national courts in due course. The CJEU’s ruling exclusively affects the provisions mentioned in the judgment formula and does not have direct retroactive effects on already implemented national law, provided that this law is not directly based on the criticized directive provisions. The further legal development remains to be seen and should be closely monitored.
Note on the procedure
The procedure was conducted on referral by the Federal Constitutional Court. During ongoing court proceedings, the presumption of innocence and the requirement for factual reporting apply. You can find the full decision at: CJEU, Judgment of 12.11.2025, C-1923/23.
Outlook
Companies and employees face new challenges and questions in connection with minimum wage regulations in light of the recent decision. Those who wish to delve deeper into the labor law implications or have legal uncertainties regarding further development can find additional information and support on the MTR Legal website under labor law advice.
