Minimum wages in the EU

SUMMARY OF:

Directive (EU) 2022/2041 on adequate minimum wages in the European Union

WHAT IS THE AIM OF THE DIRECTIVE?

It aims to improve working and living conditions in the European Union (EU) by establishing a framework for:

adequacy of statutory minimum wages*;
promoting collective bargaining* on wage-setting;
enhancing the effective access of workers to their rights to minimum wage* protection where provided for under national legislation and/or collective agreements.

KEY POINTS

Scope

The directive applies to workers in the EU who have an employment contract or relationship as defined by law, collective agreement or practice in force in each EU Member State, with consideration to the case-law of the Court of Justice.

To increase collective bargaining on wage setting, Member States, involving social partners, must:

promote the building and strengthening of social partners’ capacity to engage in collective bargaining, especially at sector and cross-industry level;
encourage constructive, meaningful and informed wage negotiations between social partners;
act to guarantee the right to collective wage bargaining and prevent workers and trade union representatives suffering any employment discrimination;
take measures to protect workers and trade union representatives, along with trade unions and employers’ organisations, from any interference by each other or each other’s agents or members in their establishment, functioning or administration;
where the collective bargaining coverage rate is below a threshold of 80%, provide for enabling conditions, either by law or after consulting social partners, and establish an action plan to increase that coverage.

Member States with statutory minimum wages shall put certain procedures in place in order to ensure they are adequate, with the aim of:

achieving a decent standard of living;
reducing in-work poverty;
promoting social cohesion and upward social convergence;
reducing the gender pay gap.

They shall:

use criteria that must include at least the following:
- the purchasing power of statutory minimum wages, taking account of the cost of living,
- the general level of wages, their growth rate and their distribution,
- long-term national productivity levels and trends;
apply indicative reference values to assess if statutory minimum wages are adequate – Member States may use automatic indexation adjustments provided that this does not lead to a decrease of the statutory minimum wage;
update statutory minimum wages every 2 years at least or, for Member States which use an automatic indexation mechanism, at least every 4 years;
designate one or more consultative bodies to provide advice;
involve social partners in setting and updating statutory minimum wages;
ensure, with the involvement of social partners, that workers have effective access to existing statutory minimum wage protection by providing:
- effective, proportionate and non-discriminatory controls and field inspections;
- sufficient resources, training and guidance for enforcement authorities to target and pursue non-compliant employers.

Additional rules require Member States to:

collect accurate data to monitor minimum wage protection;
make publicly available all relevant information on statutory minimum wages and make workers and employers aware of the measures;
ensure workers have access to effective, timely and impartial dispute resolution and right to redress;
protect workers and their representatives from any adverse treatment by an employer;
apply penalties for violations of the obligation under the directive.

The directive does not:

infringe on the autonomy of social partners or their right to negotiate and conclude collective agreements;
oblige Member States to:
- introduce a statutory minimum wage,
- make any collective agreement universally applicable;
affect the right of Member States to:
- decide on the setting of statutory minimum wages, their level and the access to that protection,
- introduce more favourable measures or collective agreements for workers;
provide grounds to reduce, by lowering or abolishing minimum wages, the general level of protection workers already enjoy.

FROM WHEN DO THE RULES APPLY?

The directive has to be transposed into national law by 15 November 2024. These rules should apply from 15 November 2024.

BACKGROUND

Minimum wages vary widely across the EU, leaving many workers unprotected. This is an area of national jurisdiction where the EU has a supporting and complementary role. The directive does not aim to harmonise the level of minimum wages across the EU, nor to establish a uniform method for setting them.

The directive is based on Article 153(1)(b) of the Treaty on the Functioning of the European Union with its specific reference to working conditions.

For further information, see:

Adequate minimum wages in the EU (European Commission)
Adequate minimum wages in the EU (Council of the European Union).

KEY TERMS

Statutory minimum wage. Minimum wage set by law, apart from those set by a collective agreement and universally applicable.

Collective bargaining. All negotiations according to national laws and practices between employers and unions to determine working conditions and terms of employment.

Minimum wage. Minimum remuneration, set by law or collective agreement, that an employer must pay for work during a given period.

MAIN DOCUMENT

Directive (EU) 2022/2041 of the European Parliament and of the Council of 19 October 2022 on adequate minimum wages in the European Union (OJ L 275, 25.10.2022, pp. 33–47).