Successive employership explained

What happens to the years of service accrued when an employee transfers to another employer? What if that successor employer is another company within the same (international) group? And what if the employee continues to do the same work for their “new employer”? When is there successive employership within a group and what are the obligations associated with this for an employer? I will answer these questions in this blog.

What is successive employership?

Successive employership is the legal term for a takeover of a company by another company and an employee performing the same or similar work at the new company. When offering an employment contract, the new employer is obliged to take into account the employee’s previous contracts or periods of employment at the company that has been taken over when choosing the contract proposal.

When does successive employership apply?

Successive employership applies when an employee performs or will perform the same or similar work for a “new” or successive employer. This is legally referred to as “successive employment contracts between an employee and different employers, which, regardless of whether there is insight into the capacity and suitability of the employee, must reasonably be considered to be each other’s successors with regard to the work performed”.

This applies when the successive employers are not legally the same employer. Based on the legal definition of successive employership, a number of conditions can be outlined that must be met in order to speak of successive work:

• There must be two different employers. This could be a successive employer following a company takeover, but also two employers operating within the same group or concern.

• The new employment contract must refer to a similar or identical position. The law stipulates that the employee must have “the same skills and responsibilities” as specified in the old employment contract.

• The employer must have taken the initiative for the transition to a successive employer. If an employee chooses a similar position with another employer, this does not constitute successive employment.

• A transfer of work often occurs in the event of a company takeover, sale or merger, whereby business activities, work or customers are transferred to another employer.

Examples of successive employers

• Temporary worker

A well-known example of successive employership is a temporary worker who, after being employed by a temporary employment agency, signs a permanent contract with the company where he or she was working to perform similar work. In this case, the company that employs the temporary worker is the successive employer.

If the work changes when a temporary worker is hired and differs from the work performed in the role of temporary worker, there is no successive employment. The employer must take into account the duration, the number of temporary contracts and the number of hours of the hiring period.

• Contract change

A contract change, for example a transport concession, whereby a client awards the same contract (concession) to another contractor and employees enter into the service of the new transport operator.

• Tendering of contract

A contract that was performed by the old employer is put out to tender to a new employer, with the result that the employee enters into the service of the new legal entity.

• Restart after bankruptcy

A company makes a restart after bankruptcy. The restarting company offers employees of the bankrupt company an employment contract. The chain of contracts in the event of a restart after bankruptcy remains in force. If an employee performs the same or similar work, this constitutes successive employership in the event of bankruptcy and the restarting company is considered the successive employer within the framework of the chain provision.

Successive employership and transition allowance

When employees are dismissed, the amount of the transition allowance is part of the negotiations. The amount of the allowance depends on various factors. The employment history is an important factor in this regard. The longer the employment history, the higher the allowance. It is therefore important to accurately determine this employment history.

Since the introduction of the Work and Security Act, employees are generally entitled to a transition payment if they have been employed for at least 24 months and the employer takes the initiative to terminate the employment contract. When calculating the transition payment in the case of successive employership, the years of service accrued are taken into account in the event of a contract change or employer change.

Is a transition payment due? The calculation of the transition payment in the case of successive employership is based on three factors:

• the age of the employee

• the number of years of service accrued by the employee

• the gross salary of the employee

Transition payment for temporary workers

For temporary employees, such as temporary workers, who were first employed by a company as temporary workers before joining the company, this period also falls under successive employership. Provided that they have performed comparable work during this period. This period must be included in the calculation of the transition payment. Payroll employees are also entitled to a transition payment.

Successive employership chain provision

In employment law, the chain provision determines when a temporary contract is converted into a permanent contract. The employer may offer an employee a temporary contract a maximum of three times in a period of 24 months. Upon the fourth fixed-term employment contract or upon exceeding the specified period, fixed-term employment contracts are automatically converted into permanent employment contracts.

The chain is broken if there is a period of six months during which the employee is not employed by the employer. In the case of successive employership, the chain continues. According to the chain provision on successive employership, the employee retains the accumulated chain when employed by the successive employer.

Probationary period in successive employership

In the case of successive employership, the “new” employer is not permitted to agree on a probationary period with the employee. After all, successive employership involves a (new) employment contract for a similar position. Think, for example, of a temporary worker who joins a company and performs similar work. However, there is an exception when it comes to probationary periods and successive employership. If the employee’s employment contract clearly requires and expects different responsibilities, capacities and skills, it is possible to agree on a probationary period.

Seniority and successive employership

The employment history or number of years of service is also referred to as seniority. This includes the number of years an employee has worked for the same employer. To determine seniority, the years of multiple successive employment contracts and also multiple different positions with the same employer can be added together.

What is the seniority date?

The date on which the employee joined the employer is referred to as the seniority date. This is the date on which the employment relationship began and serves as a reference point for calculating the employee’s seniority. The seniority date in the contract is important when determining the duration of the employment contract or setting the notice period – or marking and celebrating employee anniversaries, but that aside. The seniority date can also be stated on the payslip. In practice, this ensures that there is no confusion about the seniority date and the date of commencement of employment.

The exception to the rule

The basic principle is that when entering into an employment contract with a new employer, the length of service starts counting again. This also applies to two different employers that are part of the same group.

However, there is a possible exception. In that case, the duration of the two consecutive employment contracts with different employers will still be added together to determine the employment history. There will then be no “break” in the accumulation of employment history. The decisive factor here is whether there is successive employership.

What are the rights of an employee with regard to seniority if he/she changes employers within the same group?

When an employee changes employers within the same group, he or she retains the right to seniority under certain conditions. This principle falls under what is known as “successive employership”. This means that the employment history at one company counts towards the other, provided that the positions are comparable and the employment relationship is in fact continued. The seniority date remains decisive, even if the employer formally changes. This is important for calculating, among other things, the notice period, transition allowance and the moment at which a permanent employment contract comes into effect. Within a group of companies, this means that employees can claim their accrued rights, as long as there is sufficient continuity between the employers and the successive position. It is advisable to explicitly record this in the new employment contract to avoid confusion or disputes.

Successive employership secondment

The classic example of successive employership is, as already discussed, the temporary worker. After first working for the employer for several months through the temporary employment agency, the employee enters into the service of the employer to continue performing the same work. Under certain circumstances, the new employer can also be regarded as the successive employer of an employee who has been working for a company through a secondment agency. Successive employership in the case of secondment can therefore also have consequences for the chain provision, notice period and transition payment.

Interpretation of the standard

When calculating the transition payment, it may therefore be necessary to add together two different employment contracts with two different employers. This is possible if the employee has been employed by two employers in succession to perform work where it can reasonably be assumed that the employers have succeeded each other with regard to that work.

Employers must be regarded as each other’s successors if the work performed by the employee at the new employer is virtually the same, under virtually the same conditions and for the same remuneration. The classic example of this is when a temporary worker starts working directly for the employer where he was first temporarily placed, but it can also occur under other circumstances.

Alternative agreements

The above shows that successive employership will generally not be readily assumed. However, the risk does exist if the positions are very similar in terms of form and content. Even in cases where the employer attempts to circumvent the rights of its employees by putting forward another entity as the contracting party, or in the event of a company takeover, the court has ruled that seniority status is retained.

Nevertheless, parties should be aware that the rights associated with the employee’s seniority are likely to lapse if the employment contract is “transferred” to another entity, for example in the event that the employee temporarily goes to work abroad. If this is considered undesirable, it is advisable to stipulate in the employment contract that seniority will be retained upon transfer. This is also common practice.

The circumstances of the case

Whether seniority can be retained in a specific case because two employers have succeeded each other depends on the circumstances of the case. Are you unsure about how successive employership applies in your case? Feel free to contact one of our specialists and we will find out for you as soon as possible!

Authors: Employment law solicitors Judy Sliepen and Myrddin van Westendorp