Transfer of Undertakings
Dutch legislation on the transfer of undertakings in employment law constitutes a codification of the European Directive. The purpose of the Directive is to protect employees against the adverse effects of such a transfer.
The legal principle in case of the transfer of an undertaking (or part thereof, e.g. by way outsourcing) requires the transferee to respect any agreements made between the transferor and its employees. All rights and obligations of the employees will in principle be fully transferred to the transferee employer. This could include, e.g.: salary entitlements, competition clauses, holiday leave entitlements, bonuses and commissions. Transferee employers have a lot to gain by being aware of the content and scope of any existing agreements the transferrer may have with his employees. You will have to look into that.
In the event that a Collective Labour Agreement (CLA) are in place for the employees of both companies, this may give rise to a conflict of laws. This situation may require the transferor to offer his new employees a different CLA than currently applicable to his existing employees.
In view of the approximation of employment conditions, the new employer has some rights and options at his disposal to ensure equitable treatment of his new and existing employees. However, regardless of the approximation of employment conditions the main principle in the transfers of undertakings remains in effect: all employees retain their original rights and obligations.
Advisory Procedure Works Council
Diligent assistance during an advisory procedure involving the Works Council and communication with trade unions under the SER Merger Code are key elements in completing and implementing a successful transaction.
In short, it is of the utmost importance to asses in advance the applicability of the Transfer of Undertaking Act, before selling or purchasing any enterprise. If that's the case, you should be aware, that employment conditions of your new employees may not automatically be approximated with those applicable to your current employees. Coercive legislation on this issue will then apply.
Fruytier Lawyers in Business has extensive experience in advising on (proposed) transfers of undertakings. Even if only part of your company is the subject of a transfer, we can help you in assessing the applicable legislation. In addition, Fruytier Lawyers in Business can assist your company in all legal procedures, or procedures involving your internal Works Council, regarding transition related issues. Please contact Mr. M. van Westendorp, Mrs. B.J.C. Boogers-de Haan or Mr. N.Ch. Ellens for any questions/legal issues you may have regarding the transfer of undertakings.
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