At present, no rules on minimum wages have been adopted in the EU, which is why regulation of this is left to the individual Member State. But the EU is now considering legislating on a minimum wage. Since October 28 last year, the European Commission has opened its plan to pass a directive on a statutory minimum wage throughout the EU. This article will shed light on what the controversial legal basis is about, the legal situation in the Danish labour market today, why the EU wants a statutory minimum wage, and what a change will mean for you as an employer.
The Controversial Legal Basis Question
The EU’s initiative for a regulated minimum wage in EU countries has sparked a major debate. Article 153 of the Treaty on European Union states that the EU has the authority to propose directives on working conditions. However, the provision mentions in paragraph 5 that the EU does not have the right to interfere in matters relating to, among other things, pay. It is therefore debatable whether the EU has the authority to regulate this.
The Legal Situation in the Danish Labour Market Today
The labour market in Denmark is characterized by the Danish model, which means that there is a division of labour between the state and the social partners. A special feature of the Danish model is that the social partners have a major influence on the regulation of wages and working conditions. This is done, among other things, by entering into collective agreements across the organizations. In Denmark, there is no statutory minimum wage, which is why wages are often central to collective bargaining.
Why Is the EU Planning to Legislate on Minimum Wages?
The European Commission wants to put an end to social dumping, which has become an increasing problem in line with the EU-East enlargement in 2004. It is the interplay between enlargement and the rules on free movement that, among other things, has helped to focus on social dumping, as the result has been a large fall in real wages and thus a large increase in the number of poor workers.
What Does It Mean for You as an Employer That the EU Is Considering Legislating on Minimum Wages?
It is not yet clear whether the Commission will apply Article 153 of the Treaty and, if so, how it will be used for this purpose.
If the EU gets through with the directive, it will mean that the responsibility for the area that in Denmark falls under the competence of the social partners will be transferred to the government, which is why there will not be the same free rein to determine the salary for its employees. An implementation of a directive will also mean that it will be up to the European Court of Justice, in the event of any doubts, to establish a definition.
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