Jan is a specialist in employment law and corporate firstname.lastname@example.org +31 20 301 55 55
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?
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).
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.
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:
Employment law can be a tricky area for internationals in the Netherlands. What do you need to consider when you change jobs? What are your rights if you lose your job? Can you continue to stay in the Netherlands?
As working from home becomes more and more common, there are also employees who want to work remotely from a country other than where the company is located or as a digital nomad without a fixed workplace. What do Dutch employers have to keep in mind when employees want to work from home abroad?
Your employee lives in the Netherlands and wants to work from home while your company is not located there. What do you as an employer have to pay attention to before granting such a request?
What was the most important and interesting legal news of 2022? Check out our top 10 posts from 2022.
The level of the statutory minimum wage will change from 1 January 2023. This time, because of inflation and to make work more attractive, the increase is much larger than usual. What are the new amounts?
The statutory minimum wage and minimum youth wage change every six months. What are the new amounts as of 1 January 2023?