Register now! Employment Webinar “Tricky sickness issues” (17 June 2021)

Transfer of undertaking: Do the rules also apply in case of bankruptcy?

Publication date: 21 June 2016
Planning a merger, acquisition or division of (part of) a business in the Netherlands or any other EU country? Be aware of the EU law which sets out the strong position of employees in case of a transfer of undertaking (Directive 2001/23/EC). This time: Do the rules regarding transfer of undertaking also apply in case of bankruptcy?


No transfer of undertaking in case of bankruptcy

The EU-law determines that member states may decide for themselves whether the law regarding transfer of undertaking also applies in case of bankruptcy. The Netherlands determined that this law does not apply in case the employer has been declared bankrupt. This means that in case the company of a bankrupt employer will be transferred, the employees will not automatically be transferred to the transferee (as is the case with transfer of undertaking).

What about pre-pack proceedings?

There is discussion about whether the exception from the law regarding transfer of undertaking in case of bankruptcy also applies for the so-called ‘pre-pack’ proceedings. In pre-pack proceedings a silent trustee is appointed before the formal bankruptcy proceedings in order to prepare a possible (speedy) restart once the company has formally been declared bankrupt. This often enlarges the chances of a successful restart, since more of the company’s value can be preserved. In most pre-pack proceedings part of the employees will be offered a job with the restarting company, but others will lose their job. However, some – in particular unions – are of the opinion that all employees automatically transfer to the restarting company in case of pre-pack proceedings, since these proceedings do not aim at liquidation, but at a restart of the company as soon as possible.

There have been several lawsuits in the Netherlands regarding the question whether the law regarding transfer of undertaking applies in case of a pre-pack proceedings. Most often judges rule that this is not the case. However, in a recent lawsuit regarding the pre-pack of a large Dutch childcare provider the court decided to ask the European Court of Justice for guidance on this subject. Most probably this will lead to more clarity on the scope of the law regarding transfer of undertaking.


For the time being it will still be uncertain whether or not employees will automatically transfer to the restarting company in case of pre-pack proceedings. Therefore, in case you are involved in the transfer of a bankrupt company or in a pre-pack proceeding, it is highly recommended to be well informed on how to handle and minimalize the potential risks.

More information

Would you like to receive more information about the EU law on transfer of undertaking and the consequences thereof? Or do you have any other questions on employment law? Please contact us:

    Share on social media

    • Employment law and dismissal

    Dismissal of sick statutory director

    18 June 2021

    A sick employee may not be dismissed. However, an employee who knows of imminent dismissal, cannot avoid this by reporting sick. But when does the employee know that this is the case? This question was central to the court case concerning the dismissal of a CFO of Volksbank.

    read on
    • Expats
    • Employment law and dismissal

    17 June 2021: Employment Webinar “Tricky sickness issues”

    17 June 2021

    If your employee reports sick, this may raise many difficult questions. What are your reintegration obligations during the sick leave period? What are you allowed to record about your sick employee with regard to the privacy legislation? We answered these and other questions during a webinar. Watch the video!

    read on
    • Employment law and dismissal

    Be careful with the employer’s statement!

    14 June 2021

    Before obtaining a mortgage or rental contract, banks or landlords often ask for an employer’s statement. Such a statement can sometimes have unintended consequences for the employer. What do you need to be aware of?

    read on
    • Employment law and dismissal

    Statutory minimum wage as of 1 July 2021

    2 June 2021

    As of 1 July 2021, the statutory minimum wage and minimum youth wage will be increased. What are the new amounts of the minimum wage?

    read on
    • Works Council
    • Employment law and dismissal

    Works council

    4 May 2021

    Is there already a works council in your company? Are you a member of your company’s works council? What are the advantages of having a works council in your company? Jan Dop and Priscilla C.X. de Leede explain the role of the works council and give an overview of the works council’s most important rights.

    read on
    • Expats
    • Administrative law and the environment

    The Netherlands: Gateway to Europe

    3 May 2021

    The Netherlands likes to present itself as “the gateway to Europe.” And not without reason: excellent travel connections (Schiphol Amsterdam Airport and Rotterdam Seaport) and a highly educated population speaking several languages.

    read on
    • Art
    • Employment law and dismissal

    Russell Advocaten recommended by The Legal 500 2021

    20 April 2021

    Russell Advocaten has for the 17th consecutive year in a row been included in The Legal 500. We are pleased with the recognition for the quality of our legal services by experts and clients. Please read what they say about us:

    read on
    • Employment law and dismissal

    Dismissal and expiry periods

    8 April 2021

    Expiry periods in employment law are strict. If you are too late, you cannot take action against the dismissal and forfeit the right to compensation. What are the deadlines you have to keep in mind?

    read on