The Court of Justice clarifies when a minimum wage can be imposed as a special condition under which a public procurement contract is executed

The Court of Justice clarifies when a minimum wage can be imposed as a special condition under which a public procurement contract is executed

In the RegioPost [1] decision of 17 November 2015, the European Court of Justice (hereafter "ECJ") ruled that a contracting authority may impose the requirement of a minimum wage as a special condition of the execution of a public procurement contract.

In the case lying at the basis of the above-mentioned decision, the contracting authority (the German city of Landau) had referred in the documents of a public procurement contract for postal services to the law of the federal state of Rhineland-Palatinate. The reference concerned specifically a law on the basis of which public procurement contracts may only be awarded to companies (and subcontractors) which, when submitting their tender, undertake to pay a minimum wage of 8.70 EUR/hour to the personnel that would actually be performing the contract.

According to the ECJ, the obligation imposed by the federal state of Rhineland-Palatinate (and the reference to it by the city of Landau), as a result of which tenderers are obliged to pay a minimum wage, was admissible, given that it must be regarded as a special condition for the execution of a public procurement contract that relates to social considerations as understood in art. 26 of Directive 2004/18.

The ECJ clarified in RegioPost why it accepted the national measure in the RegioPost case, but not the similar social measure in the Rüffert case. In the latter case the ECJ decided on 3 April 2008 that the participation of tenderers in a public procurement contract could not be made dependent on a declaration of payment of a minimum wage established by a collective labour agreement.

The ECJ differentiates between the RegioPost and Rüffert[2] cases on two points:

  • The obligation in RegioPost is compatible with Directive 96/71[3] concerning the posting of employees, given that it derives from a statutory provision. By contrast, the collective labour agreement in Rüffert was not declared to be generally binding by a legislative measure and thus was not compatible with Directive 96/71.
  • Although the requirement of a minimum wage for foreign tenderers can be an economic burden that impedes or prevents them from participating in a foreign public procurement contract, the national measure in RegioPost is justified (see article 56 TFEU) by the objective of protecting employees. This was not the case in Rüffert, given that the collective labour agreement was only applicable to the construction sector, not applied for private contracts and was not declared to be generally binding.

In our view, the RegioPost decision offers an important clarification of how and to what degree sustainability considerations (in this case, social requirements) can play a role in the execution conditions for a public procurement contract.

 [1]ECJ 17 November 2015, no. C-115/14, ECLI:EU:C:2015:760

[2]ECJ 3 April 2008, no. C-346/06, ECLI:EU:2008:189

[3]Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services, OJ L no. L 018 of 21/01/1997, 1-6

For more information on this topic, you can consult Jan de Leyn (author) and Kris Lemmens (head of department).