WEEK 2 – TUTORIAL: CHALLENGING THE EXISTENCE OR EXERCISE OF

EU COMPETENCE
1. THE SCOPE OF INTERNAL MARKET COMPETENCES AND THE SUBSIDIARITY
MECHANISM: POSTED WORKERS.
1. Examine the text of the 1996 directive to find out the extent to which it offers social
protection to the posted workers.
Art. 3(1): Member States shall ensure that, whatever the law applicable to the employment
relationship, the undertakings referred to in Article 1 (1) guarantee workers posted to their territory
the terms and conditions of employment covering the following matters which, in the Member State
where the work is carried out, are laid down:
— by law, regulation or administrative provision, and/or
— by collective agreements or arbitration awards which have been declared universally applicable
within the meaning of paragraph 8, insofar as they concern the activities referred to in the Annex:
(a) maximum work periods and minimum rest periods;
(b) minimum paid annual holidays;
(c) the minimum rates of pay, including overtime rates; this point does not apply to supplementary
occupational retirement pension schemes;
(d) the conditions of hiring-out of workers, in particular the supply of workers by temporary
employment undertakings;
(e) health, safety and hygiene at work;
(f) protective measures with regard to the terms and conditions of employment of pregnant women
or women who have recently given birth, of children and of young people;
(g) equality of treatment between men and women and other provisions on non-discrimination.
For the purposes of this Directive, the concept of minimum rates of pay referred to in paragraph 1 (c)
is defined by the national law and/or practice of the Member State to whose territory the worker is
posted.
Within the deadline laid down in Article 6 of Protocol No 2 to the Treaties on the application of the
principles of subsidiarity and proportionality, fourteen chambers of national Parliaments sent
reasoned opinions to the Commission stating that the Commission proposal presented on 8 March
2016 does not comply with the principle of subsidiarity, thus triggering the procedure provided for in
Article 7(2) of the aforementioned Protocol. The purpose of this Communication is to respond to
these concerns as far as they relate to the principle of subsidiarity.

2. What did the Commission have to say on the question of subsidiarity when making its
proposal?
The reference from the Commission regarding the principle of subsidiarity was rather succinct, since
this institution stated in point 2.2 of the second explanatory memorandum (“legal basis, subsidiarity
and proportionality”), that “An amendment to an existing Directive can only be achieved by adopting
a new Directive”.
However, as will be discussed in the next question, the Commission later justified that briefness by
affirming that the proper justification of the proposal can be found at the recitals.

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What the Commission said in the proposal is that, if the EU had dealt before with posted workers, an
amendment did not need further justification. The professor thinks that it needs to be justified,
because you should now explain why is necessary to add those rules, interfere in the domain of the
member states competence.

3. What is a “yellow card”, and who waved it in this case? Is the Commission’s decision a
legitimate reaction, in your view? Note how, when insisting on its compliance with the
principle of subsidiarity, the Commission emphasized one of the two policy aims of the
directive.
The proposal sets out that all mandatory rules on remuneration in the host Member State apply to
workers posted to that Member State. Rules set by law or universally applicable collective
agreements become mandatory for posted workers in all economic sectors. Where Member States, in
accordance with their national rules and practices, require undertakings to subcontract only with undertakings
that grant workers the same conditions on remuneration as those applicable to the contractor, the proposal
allows Member States to apply such rules equally to undertakings posting workers to their territory.

The yellow card procedure is a procedure under which the national parliaments of EU Member States
can object to a draft legislative act (from the Commission) on grounds of the principle of
subsidiarity. That is, they can warn the commission it may be violating subsidiarity, a principle saying
that decisions should be taken at lower levels whenever possible. Under Article 5(3) and Article 12(b)
of the TEU, national parliaments monitor compliance with the principle of subsidiarity in accordance
with the procedure set out in Protocol (No 2) on the application of the principles of subsidiarity and
proportionality. That procedure is detailed in arts. 6 and 7 of the mentioned Protocol (art. 6: “ Any
national Parliament or any chamber of a national Parliament may, within eight weeks from the date
of transmission of a draft legislative act (…) send to the Presidents of the European Parliament, the
Council and the Commission a reasoned opinion stating why it considers that the draft in question
does not comply with the principle of subsidiarity (…)”). They need to gather at least a third of the EU
parliaments to trigger the procedure.
The yellow card procedure issued about the proposal for amendment of the Posted Workers
directive was the third one issued since the procedure was established (because of the difficulty of
mobilising national parliaments). In this case, Within the time limit laid down in Article 6 of Protocol
No 2, fourteen chambers of eleven Member States issued reasoned opinions, thus triggering the
procedure laid down in Article 7(2) of Protocol No 2. The chambers are the following (number of
votes in brackets): Romanian Chamber of Deputies (1), Romanian Senate (1), Czech Chamber of
Deputies (1), Czech Senate (1), Polish Sejm (1), Polish Senate (1), Seimas of the Republic of Lithuania
(2), Danish Parliament (2), Croatian Parliament (2), Latvian Saeima (2) Bulgarian National Assembly
(2), Hungarian National Assembly (2), Estonian Parliament (2) and the National Council of the Slovak
Republic (2). These reasoned opinions represent 22 votes.
In addition, six national Parliaments (the Spanish Cortes Generales, the Italian Camera dei Deputati,
the Portuguese Assembleia da República, the House of Commons of the United Kingdom, the French
Sénat and the Italian Senato della Repubblica) sent opinions in the framework of the political
dialogue mainly considering the proposal as compatible with the principle of subsidiarity.
There were diverse reasons advanced by those countries that considered that the amendment from
the Commission did not respect the subsidiarity principle:
1. Existing rules are sufficient and adequate: The objective of the proposal is to provide a more
level playing field between national and cross-border service providers and to ensure that
workers carrying out work at the same location are protected by the same mandatory rules,
irrespective of whether they are local workers or posted workers, in all sectors of the
economy. What the Commission argues is that it is true that MS have the possibility, but not

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 the obligation, to apply such rules in sectors other than the construction sector, and the fact
that this is not a binding obligation makes that the objective of establishing a more level
playing field is not fully achieved.

The obligation for all Member States to apply the rules in all sectors of the economy cannot
be established at national level but must be laid down at Union level. Therefore, the
Commission considers that the objective of the proposal on this point can be better
achieved at Union level (that is one of the requirements to respect the subsidiarity
principle).

The same holds true for the obligation on Member States to apply the same conditions to
cross-border temporary agency workers and national temporary agency workers.

The argument that the alignment of wages across Member States should come as a
consequence of further economic development and not from the Union's legislative action is
not valid either, because “The proposal merely ensures that mandatory rules on
remuneration in the host Member State are applicable also to workers posted to that
Member State. Moreover, the fact that economic development may bring more convergence
in the wages over time does not exclude the need to ensure - also in the interim - a level
playing field for companies and an appropriate protection for posted workers.”

2. Adequate level of protection: All reasoned opinions argue that the objective of the action
could be better achieved at Member State level or that the Commission has not sufficiently
proved that the action should be achieved at Union level.

As recalled in section 3, the objectives of the proposal are to facilitate the correct functioning
of the Internal Market, in particular to facilitate the freedom to provide services, while
ensuring a better level-playing field between national and cross-border service providers, an
adequate protection of posted workers and clarity and predictability in the legal framework
applicable to posted workers. The Commission considers that these objectives are
interdependent and can be better achieved at Union level. If the Member States acted
unilaterally, at State level, on the targeted changes proposed by the draft legislative act, their
action could lead to a fragmentation of the Internal Market as regards the freedom to
provide services.

By making its proposal, the Commission facilitates the exercise of the rights enshrined in
Article 57 TFEU, according to which any person providing a service may, in order to do so,
temporarily pursue his or her activity in the Member State where the service is provided,
under the same conditions as are imposed by that State on its own nationals.
Individual action by the Member States could not achieve another important objective of the
measures: bringing legal consistency throughout the Internal Market and clarity to the legal
framework applicable to posted workers since the protection afforded to them would vary
depending on the host Member State's approach. Indeed, the fact that the legal framework
at Union level is not sufficiently harmonised contributes to a lack of knowledge of the rights
both by workers, user undertakings and temporary agencies.

3. Lack of express recognition of Member States' competences: For the Danish Parliament.

However, the Commission proposal fully and unequivocally respects the competence of the
Member States to set the remuneration and other terms and conditions of employment, in
accordance with their national law and practice and it states this explicitly. Recital No 12
confirms that "it is within Member States' competence to set rules on remuneration in
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 accordance with their law and practice". In addition, the text proposed to amend Article 3(1),
in its first paragraph, makes clear that the terms and conditions of employment to be applied
to posted workers are those which are, in the Member State where the work is carried out,
laid down by law or universally applicable collective agreements.

The proposal hence does not regulate remuneration, nor does it define remuneration or the
constituent elements of remuneration at Union level. It merely provides that mandatory
rules on remuneration, as set by the Member States, should apply in a non-discriminatory
manner to local and cross-border service providers and to local and posted workers.

4. Lack of justification: Several national Parliaments argue that the Commission has failed to
comply with the requirement of Article 5 of Protocol No 2 to the Treaty, which provides
that drafts legislative acts shall be justified with regards to the principles of subsidiarity and
proportionality, considering that the justification in the explanatory memorandum of the
proposal is too succinct.

According to the case law of the Court of Justice, the obligation under Article 296, second
subparagraph, TFEU to give reasons underpinning legal acts requires that the measures
concerned should contain a statement of the reasons that led the institution to adopt them,
so that the Court can exercise its power of review and so that the Member States and the
nationals concerned may learn of the conditions under which the Union institutions have
applied the Treaty. In the same judgment, the Court accepted an implicit and rather limited
reasoning as sufficient to justify compliance with the principle of subsidiarity. The Court
examines, in particular, whether the Commission’s proposal and its impact assessment
include sufficient information showing clearly and unequivocally the advantages of taking
action at Union level rather than at Member State level.

In the present case, as regards subsidiarity, the explanatory memorandum stated: “An
amendment to an existing Directive can only be achieved by adopting a new Directive.”
While this statement is succinct, it is completed by the recitals of the draft Directive and by
the Impact Assessment Report accompanying it.

The recitals of the draft Directive make clear why action at Union level is required to
improve the Union regulatory framework concerning the posting of workers in some
regards. As already stated, recital No 12 clarifies that it remains “within Member States’
competence to set rules on remuneration in accordance with their law and practice”.
Moreover, the Impact Assessment Report, which accompanies the proposal, gives a more
detailed assessment of respect for the principle of the subsidiarity and proportionality of the
proposal.
In the light of the above, the Commission concludes that its proposal of 8 March 2016 for a targeted
revision of Directive 96/71/EC on the posting of workers complies with the principle of subsidiarity
enshrined in Article 5(3) TEU and that a withdrawal or an amendment of that proposal is not
required. The Commission therefore maintains it.
Thus, in my view, the reaction of the Commission is legitimate, since I consider that the reasons it
puts forward for having advanced the proposal are sufficient and hence do not infringe the
subsidiarity principle. The Commission focuses, indeed, in one of the two policy aims of the
directive, which is providing a more level playing field between national and cross-border service
providers.
Objective of the directive amendment  to prevent social dumping, the unfair wage competition
between workers from different EU countries.

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The directive is an internal market directive (posted workers). The argument to say that the
functioning of the internal market needed this directive was the fundamental freedoms (freedom to
provide services, more concretely). The freedom that is being encouraged is the right not of the
workers, but of the companies to provide their services in another EU country. This directive tries to
facilitate that by regulating the rights of the posted workers.
Home country and host country. Host countries tried to apply their own regulations to the posted
workers. During the period, they had to comply both laws, which was an obstacle. The host country
can only apply now the rules that are on the directive. There is a floor of protection. If the host
country has a minimum wage system, that should also be applied to the posted workers.
The directive is a combination of the essence of internal market, and social dispositions. It always has
been controversial, but has become much more in recent years, because the composition of the EU
has changed dramatically, and the differences between the average wages has become much bigger
than before, due to the annexation of the Eastern countries. There is more an attractive option for
posting workers, but there is also campaign from the union trades in those host countries saying that
it is social dumping. The concern is not on the rights of the posted workers, but on the local workers
(if you want to compete, you have to accept lower wages). It is a meaningful evolution in certain
sectors. The governments from the countries started to put pressure on the Commission. This is the
reason it proposed an amendment in 2016.
The main change is that posted workers should receive equal pay for equal work with the domestic
workers of the host countries during the posting. If there is a collective agreement on that particular
sector in the host country, it will set more or less the salary. If there is such an agreement, the rules
could be applied to the posted workers. But, what if there is not such an agreement? There is an
issue with equal remuneration, because it depends on how in practice this can be realized.
Denmark is usually reluctant to expand the competences of the EU, especially in the field of labour
law. What is the reason why Eastern countries protested? Because they become less competitive,
since maybe they cannot pay the salaries of the Western countries. Maybe it is not in the interest of
the workers even, because if the companies become less competitive, workers may lose their job.
However, there is still a competitive advantage even after this directive, because of the social
security, which is a labour cost.
They just wanted to protect their own workers.
One of the objectives of the directive is to improve the functioning of the internal market. The level
playing argument means for undertakings in different countries. The argument is that competition
between companies is distorted, it is not fair, and it needs to become fairer. The counter argument
is that internal market is precisely letting undertakings compete, so it is the essence of market. So,
the argument of the level playing field is an ideological argument, as opposed to the other ideological
view that the market is the market, and it should work like that.
The Commission says that there is a double aim: the one of protecting the functioning of the internal
market (level playing field), and the one of social protection. Both aims are interdependent. Thus, in
the view of the Commission, only the EU can do it. If the objective was only social protection, the
situation would be different, because internal market can only be regulated at EU level, but that is
not the case for social protection.
Subsidiarity does not work in internal market (exclusive competence), but it does in other fields. In
internal market, there is no option, it has to be the EU the one that regulates about it. So, the work
of the national parliaments here was a little useless, because they mobilized themselves for
something that was EU’s competence.

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If you look at the content of this directive, it is about social issues, but if you look at the aim, double
aim. The court analysed the double aim, and the court had to do a trick: for choosing the legal basis,
you should look not at the aim of the amendment its own, but at the whole text (the original
directive plus the amendment). So, the whole thing is about facilitating the provision of services. The
balance has changed a bit, because there is more protection than before, but according to the court,
the main aim continues to be the protection of the functioning of the internal market.
Hungary had a particular reason to claim that 153 was the adequate legal basis. The decision
procedure would have been the same, except for one factor (paragraph 5). One of the core
provisions of the new directive is about remuneration. The court finally said that 153 is not the legal
basis for this act, it insists that the provisions of this article should not be applied to pay. So, the
article is not saying that the EU should not regulate on that, it does not exclude the possibility that
other legal basis deal with pay.

4. How do you explain that the text was adopted despite the massive opposition from
Central and East European Member States?
Although national parliaments/chambers from eleven Member States issued a yellow card and the
European Commission decided to still pursue the revision of the Directive, the dialogue between the
European Parliament, the Commission and national parliaments from all 28 Member States has
continued.
I think it is due to the hard pressure from the “old Member States” that it was finally adopted.
Employment ministers from Belgium, France, Germany, Luxembourg, the Netherlands, Austria and
Sweden publicly called for an ambitious reform of the Directive.
“While such divisions have often been observed in the process of European integration, it is striking
to see that in this case the left-right cleavage exists, but some political actors seem to take their
positions according to nationality (rather than to their affiliation to Pan-European political parties),
including in the European Parliament, while other actors have aligned themselves along the 'capital
versus worker' dimension.”
The Juncker Commission is committed to a more “social” Europe and sees itself as a 'political'
Commission that pushes its policy priorities. In his State of the Union speech of September 2016,
Jean-Claude Juncker emphasised that '[w]orkers should get the same pay for the same work in the
same place. Europe is not the Wild West, but a social market economy.' One would therefore
currently assume that the 11 Member States whose national parliaments objected to the revision of
the PWD by issuing reasoned opinions will also oppose the proposal in the Council and vote against
it. However, they do not carry enough weight to stop it: if these 11 Member States vote against it
(and all other 17 Member States in favour of the proposal), the 'double majority' will be reached, as
more than 55% (16) of the EU's Member States representing 79.1% of the population (requirement:
65%) will have voted for the revision of the Directive. Only under the transitional provision of
Protocol No 36 annexed to the EU Treaties, Title II, Article 3(2), according to which between 1
November 2014 and 31 March 2017 a member of the Council may request to calculate the majority
following the (old) voting rules of the Treaty of Nice, the situation would have been different: The
proposal would not reach the necessary 260 votes, but only 241 votes (if we assume 111 votes
against it – constituting a blocking majority of weighted votes in the Council).
The proposal, however, had not been tabled and voted in the Council before 31 March 2017 as it
proved impossible to reach a political agreement in the Council. The proposal has also been subject
to parliamentary scrutiny reserves expressed by several national parliaments.
The Member States that objected to the proposal when their parliaments submitted reasoned
opinions will be unable to stop it in the Council. The same applies to MEPs from these countries in
the European Parliament where the institutional position is usually determined by the two major

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political groups EPP and S&D, which support the proposal. It would be even more difficult for the
opponents of the revision of the Posted Workers Directive to mobilise enough MEPs to block it.
The reason that the amendment was finally accepted is, indeed, that there were 17 countries on the
other side, which is more than 55%. So, there was a qualified majority in the Council.
Finally, only two of the countries (Poland and Hungary) of the 11 that issued the yellow card voted
against, because they knew they could not block it, so they just decided to go with the flow for
diplomatic reasons.

2. ARTICLE 114 TFEU AS A BROAD LEGAL BASIS.

Do you find a justification, either in the directive itself or in its preamble, for why art. 114
TFEU was considered to be an appropriate legal basis? Do you consider that art. 114 has
been overstretched in this case? Could another Treaty article have been considered as an
alternative legal basis?
Recital 9 states that “This Regulation should set out rules to address the misuse of hosting services
for the dissemination of terrorist content online in order to guarantee the smooth functioning of the
internal market. Those rules should fully respect the fundamental rights protected in the Union and,
in particular, those guaranteed by the Charter of Fundamental Rights of the European Union (the
‘Charter’).”
The proposal is based on Article 114 TFEU on the establishment and functioning of the internal
market and not on the provisions defined in Title V of the Treaty, relating to the area of freedom,
security and justice, and in particular in Article 83(1). According to the proposal, Article 114 is
appropriate as the proposal is designed to harmonise the conditions for HSPs to provide cross-
border services in a way that will address the differences between Member States without impacting
on the functioning of the internal market. Under Article 114 it would also be possible to impose
obligations on HSPs established outside the EU, in cases where their activities affect the internal
market. The Commission chose to propose a regulation as this will avoid divergent transposition and
provide for uniform application across the Union.
The German Bundesrat shares the apprehension of the European Commission on the dissemination
of terrorist content online and welcomes the principle of such a proposal. However, it casts doubt on
the legal basis of the proposal, given that, in its opinion, Article 114 TFEU relates to the internal
market and does not cover the security issues covered by the proposal; it also criticises the fact that
there is a risk that the future regulation could only apply to the most important players in the sector,
and suggests that derogations to the one-hour rule should apply to SMEs. The Bundesrat also has
doubts as to the compliance of the proposal with the e-Commerce Directive.
The companies that provide online services, the host companies, are the ones to whom the regulated
is directed. The real aim is to protect society, it is a security issue, but since art. 114 has been
considered the legal basis, in competence terms it is an internal market regulation.
First paragraph of the preamble (smooth functioning of the digital market). The text itself does not
spell out, we have to believe it because there are no real arguments. 114 has become such a routine,
it has been accepted that this can be used for other issues, and probably nobody opposes it.
The problem is that, otherwise, the companies would have to follow 27 regulations regarding what
they should do regarding terrorism, so compliance would be much more difficult. Now there is just
one rule for the whole EU. They must follow it even if it imposes a burden, but at least there is only
one. So, there is a good argument for maintaining that it contributes to the better functioning of the
internal market, but the legislator did not spell it out, because nobody challenged or opposed it.

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Directive of terrorist offences: harmonises national criminal law, that says that all member states
should punish and sanction certain behaviours, terrorist ones. This directive has used art. 83 TFEU as
a legal basis, but this regulation is not about criminal law, it does not define terrorist offences. It does
not harmonize national criminal law. There is art. 84. This regulation could really be seen as crime
prevention. What is the problem with 84? It is a basis for complementary regulation (“excluding any
harmonisation of the laws and regulations of the Member States”), so the EU cannot harmonise
legislation regarding crime prevention. The only thing that can be done is support the states, but not
legislate.

3. RESERVED COMPETENCES FOR THE MEMBER STATES?

The question of ‘reserved competences’ under Article 153(5) TFEU is also central to the debate about
the proposed directive on minimum wages. Its legal basis is Article 153(1) and (2). Read also the
article by Aranguiz and Garben for the general background of the proposal and for discussion of the
legal basis question.
How does the Commission, in its explanatory memorandum, meet the objection that harmonising
national rules on minimum wages might be excluded by Art. 153 (5)? Are you convinced about the
soundness of the chosen legal basis? And, on the substance of the proposal, do you think that the EU
should make the introduction of a minimum wage compulsory in all member states?
The proposed Directive aims to ensure that the workers in the Union are protected by adequate
minimum wages allowing for a decent living wherever they work  it establishes a framework to
improve the adequacy of minimum wages and to increase the access of workers to minimum wage
protection. According to the Commission, it is designed to achieve these objectives while taking into
account and fully respecting the specificities of national systems, national competencies, social
partners’ autonomy and contractual freedom.
In order to reach these objectives, the proposed Directive aims at promoting collective bargaining
on wages in all Member States. For the countries where statutory minimum wages exist, the
proposed Directive aims at ensuring that Member States put in place the conditions for statutory
minimum wages to be set at adequate levels. Finally, workers may not be adequately protected by
minimum wages due to lack of compliance with the existing collective agreements or national legal
provisions. Therefore, the proposed Directive aims at promoting compliance as well as strengthening
enforcement and monitoring in all Member States.
Art. 153(1)(b) TFEU allows the EU to adopt legislation in the field of working conditions. However,
art.153(5) TFEU states unequivocally that the "provisions of this Article shall not apply to pay".
The Court has upheld the interpretation that art.153(5) TFEU cannot hollow out the competence
under social policy, particularly, as regards the field of working conditions that would otherwise be
deprived of much of its substance. The limitation instead refers to “the equivalence of all or some of
the constituent parts of pay and/or the level of pay in the Member States, or the setting of a
minimum guaranteed wage”.
The case law of the Court thus indicates that para.5 does not preclude art.153 TFEU measures from
covering issues related to “pay”, as long as they do not directly regulate the level of “pay”. Neither
does the exclusion of “pay” preclude the legislator from adopting measures that have financial
consequences, provided that a provision does not establish the level of some of the constituent parts
of pay.
COMMISSION: The proposal respects well-established national traditions in minimum wage setting.
In particular, it fully respects the competences of Member State and social partners to determine the
level of their minimum wages in line with Art 153(5) TFEU. Minimum wage protection will continue

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to be provided through collective agreements or through legal provisions, in full respect of national
competences and social partners’ contractual freedom.
In line with Article 153(2) (b) TFEU, the proposed Directive will support and complement the
activities of the Member States through minimum requirements for gradual implementation.
Regarding the proposal from the Commission, the mere fact that the measure’s main aim is to
regulate wages, not in terms of equal treatment for a specific group of workers or merely incidentally
to guarantee the effectiveness of a right to leave from work, but as a matter of social protection for
all workers, means that it raises tensions with the letter and spirit of art.153(5) TFEU. At a stretch,
an argument could be made that a minimum wage instrument under art.153 TFEU could set the
conditions under which individuals are awarded a certain level of pay insofar as the level of pay has
been determined beforehand by the national competent authority, and that it could set procedural
and transparency provisions. This is what the Commission argues.
However, the provision on "adequacy", which only applies to statutory minimum wages, is rather
weak. Given the chosen legal basis, this was to be expected because the Commission was bound to
limit its intervention to the establishment of clear and stable criteria for the setting of minimum
wages. How these criteria are to be interpreted and implemented, however, is left to the Member
States. The elements on adequacy that the proposal presents might very well be necessary for
installing fair and transparent wage setting mechanisms, but without setting clear core standards or a
certain threshold, this Directive can hardly be argued to strive for "adequate" minimum wages.
However, defending that a more robust provision relating to adequacy of the level of wages would
not fall foul of art.153(5) TFEU would arguably over-stretch a reasonable interpretation of the latter.
It is difficult to argue that a more detailed directive, which set standards or thresholds, would not
represent a direct interference with "pay", vulnerable to a viable action for annulment. Not only
would such an ultra vires action endanger a much-needed conversation on wages at the EU, but risks
adding another crack onto the delicate base of EU legitimacy and credibility. On the other hand, if
the measure does not include a strong provision on adequacy or wage levels, and merely stays on the
procedural side of bargaining and wage setting, it cannot live up to the expectations raised by the
idea of a true minimum wage measure, and may even be counter productive, as putting potential
pressure on the socially highly effective but not very transparent Nordic systems of collective
bargaining.
The proposal may have mitigated the latter risk by excluding countries without a statutory minimum
wage from the adequancy requirements, but with its weak overall engagement with adequacy, the
measure is bound to disappoint as something of a damp squib. Even as it currently stands, with only
a weak provision on adequacy, the proposal still straddles the borders of art.153(5) in a precarious
way, it not at all being certain that the proposed Directive, when adopted on the basis of art.153
TFEU, would be upheld in Court if challenged.
Can these limitations be overcome by resorting to an alternative or additional legal basis?  does
art.153(5) TFEU apply to any EU (legal) action, or instead only to action on the basis of art.153 TFEU?:
A "horizontal" application of art.153(5) TFEU across all legal bases in the Treaties is inappropriate.
The provision states that "the provisions in this Article shall not apply to pay".
 Art. 175 TFEU: It would be possible to use a dual legal basis (case-law  when there is a dual
aim, a dual basis has to be used). An attractive option the legal basis of social cohesion.
Article 175 TFEU gives the EU competence to adopt measures to strengthen the economic,
social and territorial cohesion of the EU. Because a minimum wage instrument would have
the objective to reduce socio-economic disparities across the EU by promoting upward
convergence and a more harmonious development of the EU, a textual reading of the

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 provision does not seem to object using this legal basis. in that case it would have to be
proven that the measure or additional provision on adequacy would be likely to significantly
contribute to social cohesion, but this is easy, since the Court has acknowledged the
extensive discretion of the EU to act under this basis, due to the fact that social cohesion is
considered "a broad and overall concept with imprecise contours" that are difficult to define.

Even if the Directive satisfies the "social cohesion" criteria, it may be argued that art.153
TFEU is the more specific provision, and that following the lex specialis principle, the use of
social policy legal basis should prevail. While in several cases the Court has recognized this
principle, this has not precluded it from allowing the use of a more general and indirect basis
insofar as the conditions have been met.

All things considered, there is no reason to believe that art.175 TFEU would not serve as a
solid and sound legal base for the adoption of a comprehensive instrument on minimum
wages that could interfere with wages in a way that adequacy levels can be framed, which is
essential for the social cohesion of the EU, to reduce inequalities and in-work poverty, or that
it could be used together with art.153 TFEU to provide competence for a more ambitious
provision on adequacy than is currently proposed.

 Arts. 114 and 115 TFEU: technically, one could argue that a Directive on minimum wages
could be adopted under arts 114 and 115 TFEU, which give the Union a general competence
for the harmonisation of the internal market.

However, the functioning of the internal market can well be argued to necessitate EU wage
legislation, such an approach is dangerous from the perspective of raising social standards.
The Laval judgment evidenced that when a legislative measure is based on the internal
market, even if it also has a social objective, when both objectives conflict, the former will
prevail. The risk would thus be that a minimum wage Directive based on the internal market
provisions could somehow be interpreted not as a floor of rights but as harmonising the
maximum rates of pay that a Member State can require. That would not do justice to the
objective of giving robust protection to the right to fair and adequate remuneration and the
fight against (in-work) poverty.

 Art. 352 TFEU: in times of competence need, the EU has often resorted to its flexibility clause
of art.352 TFEU  the Council may, acting unanimously and after obtaining the consent of
the Parliament, adopt appropriate measures to attain one of the objectives of the Union
where the Treaties do not provide the necessary power  objective to establish a highly
competitive social market economy and to combat social exclusion and discrimination under
art.3 TEU, it could be argued that art.352 TFEU may host a minimum wage Directive.

Main legal obstacle  explicit ban on using this provision where the Treaties expressly
exclude such a limitation. It could be argued, therefore, that the use of this provision is
impossible because art.153(5) TFEU explicitly excludes "pay".
We have statutory minimum wages, but also countries with collective agreements (northern
countries). In every sector, there are trade unions, and since they are very strong, for every sector
the minimum wage is stablished in the collective agreements. There was an immediate protest from
Scandinavian countries because they did not want their traditional system to be changed. The
directive does not set the level of the minimum wage, it only gives some criteria. The most important
provision, art. 5, is called “adequacy”. It is up to the countries to decide what is adequate, but some
criteria must be taken into account, so it is a very cautious approach, for the authors it is not enough.
The Commission realizes that the EU cannot decide on the level of the minimum wage according to

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art. 153(5). They could have done something more ambitious from another legal basis, for example
art. 114 (better functioning of the internal market). If the directive would actually set a level, the
argument could be the same than for posted workers (argument and counter argument, level playing
field and free functioning of the market).
In theory, the argument could have been made that this directive helped to the functioning of the
internal market, but it would have been much more controversial, because there is no provision of
services across borders, there are only workers working at their own country. Is this text good
enough?
Should the EU set a level of minimum wages? Social progress is listed as one of the main objectives of
the EU.
Art. 175 was rediscovered in the COVID recovery plan, because it was a “forgotten” legal basis.

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