Your Dutch employer is bankrupt: your job, your unpaid wages and your severance

Your employer has been declared bankrupt and there is talk of a restart. In that uncertain period two questions matter for you as an employee: do you transfer automatically to the new business, and what will you still receive of the wages, holiday days and holiday allowance you had earned?

The short answer to the first question is more nuanced than is often assumed. Dutch law does contain an exception for bankruptcy to the ordinary rules on business transfers, but that exception is not a free pass: where the restart amounts in fact to the continuation of the same economic entity, employees may still transfer by operation of law. The answer to the second question is often better than feared, thanks to the wage guarantee scheme operated by UWV, the Dutch employee insurance agency, although it has strict statutory limits. What follows sets out what the law and the most recent case law actually provide.

The main rule: transfer of undertaking

On an ordinary business transfer the rights and obligations under your employment contract pass to the buyer by operation of law. That follows from article 7:663 of the Dutch Civil Code. The condition is that an economic entity transfers by agreement, merger or demerger while retaining its identity. Whether that is so is assessed on all the factual circumstances taken together: the assets transferred, the customer base, goodwill, continuation of the activities, the staff taken over and the length of any interruption. None of those factors is decisive on its own.

Do you transfer automatically to the buyer?

Dutch law makes an exception for bankruptcy: article 7:666 of the Civil Code provides that articles 7:662 to 7:665 and article 7:670(8) do not apply where the employer has been declared bankrupt and the undertaking forms part of the estate.

That does not mean every restart falls outside employee protection. The correct order is:

1. First it is established whether there is a transfer of undertaking at all.
2. Only if there is, and the undertaking belongs to a bankrupt estate, does the bankruptcy exception in article 7:666 come into play.

Put differently: on a restart out of bankruptcy you do not transfer automatically merely because the business is being continued. But there may nonetheless be a transfer of undertaking where an economic entity retains its identity. In that case the rights and obligations under the employment contract pass to the acquirer by operation of law, and the bankruptcy exception simply does not arise, because it only becomes relevant once a transfer of undertaking has been established.

Where there is no transfer of undertaking, the position is essentially this:

• The buyer is under no statutory obligation to take anyone on and may in principle decide for itself to whom it makes an offer.
• If you receive an offer, it will as a rule be a new employment contract with a new employer, not an automatic continuation of your old one.
• The buyer may in that case propose different terms and conditions.

That freedom to select therefore does not follow from the existence of a bankruptcy as such, but from the qualification of the transaction. Where there is a transfer of undertaking, the freedom to select does not exist and the workforce transfers in principle by operation of law.

Suspension of payments, and transfer despite bankruptcy

The bankruptcy exception in article 7:666 applies to bankruptcy only. Where a business is transferred during a suspension of payments, the transfer of undertaking rules apply in full and you transfer in principle automatically, keeping your terms and conditions.

Within a bankruptcy, too, the outcome is not set in stone. Recent case law shows that the facts decide, not the label “bankruptcy restart”:

• The Court of Appeal in The Hague held that taking over only a customer portfolio and a limited number of employees did not amount to a transfer of undertaking, and reasoned that the relevant elements are only partial aspects of the overall assessment to be made and may not each be judged in isolation (ECLI:NL:GHDHA:2026:255).
• The District Court of Amsterdam did provisionally find a transfer of undertaking where the activities, customer base and operations were continued with the same employees (ECLI:NL:RBAMS:2025:9893).
• The District Court of Rotterdam held that a transfer is possible without any tangible assets being taken over, where the customer portfolio, goodwill, activities and part of the workforce pass (ECLI:NL:RBROT:2025:4787).
• The District Court of Amsterdam held that an employee could enter the acquirer’s employment by operation of law where the acquirer took over fixtures and stock and continued the business after a short interruption. The absence of transferred staff weighed less heavily there, because the employees had themselves indicated that they did not wish to work for the acquirer (ECLI:NL:RBAMS:2026:4234).
• The cantonal court in Limburg held that an employee did not have to sign a new employment contract after painting work and colleagues had transferred: the employment contract passed by operation of law (ECLI:NL:RBLIM:2026:6422).

The core message: what decides is not the bankruptcy or the name given to the transaction, but the factual question whether a durably organised economic entity has transferred while retaining its identity. “No staff were taken over” is not automatically decisive. Always distinguish, therefore, between a new employment contract after a restart to which the bankruptcy exception genuinely applies, and an employment contract that continues with the acquirer automatically through a transfer of undertaking.

The differences between the two insolvency routes:

The pre-pack: Smallsteps and Heiploeg

Was the restart prepared before the declaration of bankruptcy under the supervision of a prospective trustee, in what the Dutch call a pre-pack? Then the bankruptcy label is not automatically decisive. The Court of Justice of the EU has held that the insolvency exception in article 5(1) of Directive 2001/23/EC applies only where three conditions are cumulatively met: the transferor must be the subject of bankruptcy proceedings or analogous proceedings; those proceedings must have been instituted with a view to the liquidation of the transferor’s assets; and they must be under the supervision of a competent public authority.

• In Smallsteps the Court held that a pre-pack aimed primarily at continuing the business as a going concern did not satisfy the second condition, so that the insolvency exception did not apply and the workforce transferred by operation of law (CJEU 22 June 2017, C-126/16).
• In Heiploeg the Court clarified that a pre-pack ultimately aimed at maximising the return for creditors can satisfy the conditions, provided the procedure is genuinely governed by legislative or administrative provisions (CJEU 28 April 2022, C-237/20).

There is therefore no simple rule under which only the formally stated purpose of the procedure decides. The legal assessment looks at the nature and the actual purpose of the procedure. The literature also stresses that a pre-pack involving the former shareholder and a pre-pack with an external buyer may work out differently in law, not least because the Dutch pre-pack has so far had no statutory basis of its own. The Dutch Supreme Court held in the Heiploeg case that the position of the prospective trustee is not regulated by statute, so that the pre-pack procedure followed did not meet the Court of Justice’s conditions (Supreme Court 6 October 2023, ECLI:NL:HR:2023:1372). The bill that would provide that basis, the Business Continuity Act I, is still before the Senate. What this means for the buyer and for the structure of the transaction is set out in Restarting a business out of a Dutch bankruptcy. Where a bankruptcy is in fact being used to shed staff or terms and conditions cheaply while the management and the activities remain substantially the same, it is worth having that tested legally.

Your contract and the trustee’s notice of termination

Your employment contract does not end automatically on the declaration of bankruptcy. Until it actually ends the employment obligations remain in place, and from the declaration of bankruptcy wages and the related contributions are debts of the estate.

The trustee (curator) may, however, terminate the contract. Article 40 of the Bankruptcy Act provides that this is done observing the agreed or statutory notice period, “on the understanding, however, that the employment contract may in any event be terminated on six weeks’ notice”. That is not a six-week ceiling but a floor: the trustee may shorten the notice period to no less than six weeks, even where the agreed or statutory period, for instance under article 7:672 of the Civil Code, would be longer. In practice this often means a reduction to six weeks for long-serving employees, but the precise outcome depends on your contract.

Termination also requires the supervisory judge’s authorisation: the trustee administers and liquidates the estate under that judge’s supervision (article 68(1) and (3) Fw). Where that authorisation is missing, this may affect the validity of the termination. A comparable but not identical regime applies during a suspension of payments: there too the supervisory judge’s authorisation is required, but the longer statutory period under article 7:672(2) must in principle be observed where it exceeds six weeks (article 239 Fw).

The UWV wage guarantee scheme

To prevent employees being left empty-handed, Dutch law provides a wage guarantee. It does not apply to bankruptcy alone: article 61 of the Unemployment Insurance Act also grants entitlement to employees of an employer that has been granted a suspension of payments, to whom the debt restructuring scheme for natural persons applies, or who is otherwise in the permanent condition of having ceased to pay.

That the scheme also applies during a suspension of payments does not mean you get as far there. Article 64(1)(b) reimburses wages over the notice period only up to the period applicable under article 40 Fw, and the statute says expressly “both in and outside bankruptcy”. Because a suspension of payments may attract the longer statutory notice period under article 7:672(2), a gap opens there between what you can claim from your employer and what UWV actually pays. That difference is borne by the estate.

Article 64 provides, in short, that UWV covers:

• wages over no more than the thirteen weeks preceding the relevant end date or date of notice;
• wages over the applicable notice period, subject to the insolvency limit described above;
• holiday allowance, holiday pay and certain amounts owed by the employer to third parties over no more than the preceding year.

Two points matter. The benefit is capped by statute, so the wage guarantee can in practice come out below your actual contractual salary. And claims falling outside these periods, such as older arrears of salary, can be filed with the trustee as an ordinary unsecured claim, though in practice a bankrupt estate rarely pays anything on those.

Two recent Supreme Court judgments are relevant here:

• If you enter the buyer’s employment after the declaration of bankruptcy on equivalent terms, the trustee may infer from this that you are no longer willing to work for the bankrupt employer. From that moment you have no wage claim against the bankrupt employer, and therefore no claim on UWV for that period either (ECLI:NL:HR:2022:823). You cannot, in other words, claim wages from the estate, wages from the buyer and the wage guarantee at the same time.
• Where wages that are debts of the estate are not paid on time, the statutory increase for late payment may also rank as a debt of the estate and enjoy priority, whereas statutory interest on the wages does not have the same priority. The statutory increase may be moderated by the court (ECLI:NL:HR:2026:239). These claims stand apart from, and are therefore not limited by, the capped scope of the UWV wage guarantee.

Apply to UWV for the wage guarantee as soon as the trustee has given notice; do not wait for the bankruptcy to be wound up. Whether you can claim ordinary unemployment benefit immediately after the notice period expires depends on the normal conditions for entitlement, and on whether you are ill at that point.

Ill or pregnant during a bankruptcy

Outside bankruptcy you enjoy protection against dismissal during illness and pregnancy, and as a works council member, through the statutory prohibitions on termination. Article 7:670(8) of the Civil Code specifically prohibits termination by reason of a transfer of undertaking.

The frequently heard proposition that article 40 Fw always “prevails” over all prohibitions on termination for illness, pregnancy or works council membership should be treated with caution. The trustee does have a broad power to terminate, but that does not mean without more that every prohibition is set aside in every situation. This deserves case-by-case legal assessment rather than being presented as a general rule.

If you are ill when your employment ends, a sickness benefit route may apply. Article 38b of the Sickness Benefits Act does not, however, apply generally to every employee leaving employment while ill, so it cannot simply be assumed that the trustee will always report you as leaving employment ill and that sickness benefit automatically follows. Whether it works that way in your situation depends on the specific conditions. In the case of pregnancy you may, depending on your circumstances, qualify for benefit under the Work and Care Act.

Severance: is there a transition payment?

Under Dutch law the statutory severance payment is the transitievergoeding, the transition payment. Article 7:673c(1) and (2) of the Civil Code provides that the transition payment is “no longer owed” where the employer has been declared bankrupt, has been granted a suspension of payments, or is subject to the debt restructuring scheme for natural persons. For most restarts out of bankruptcy this does indeed mean that the bankrupt employer itself no longer owes a transition payment.

That does not mean every claim to a transition payment is excluded. Where there is a transfer of undertaking and your employment contract later ends with the acquirer, the acquirer may in certain circumstances owe a transition payment. Article 7:673 provides that previous employment contracts and successive employers are, subject to conditions, aggregated for the purpose of length of service, so that accrued service is not simply lost when the acquirer later dismisses you.

It also matters that a material change of terms and conditions to the employee’s detriment may, under article 7:665 of the Civil Code, in certain circumstances be treated as a termination or non-continuation on the employer’s initiative. Where the transfer of undertaking rules apply directly, a buyer cannot therefore simply impose lower terms unilaterally.

If you are being offered a settlement agreement (vaststellingsovereenkomst) rather than being dismissed by the trustee, different rules apply again, and the amount is a matter of negotiation rather than statute. Our employment lawyers can review a proposal before you sign.

Summary dismissal by the trustee

An ordinary termination by the trustee is a different thing from summary dismissal for urgent cause. On a summary dismissal the trustee must, like any employer, state and where necessary prove the urgent cause (ECLI:NL:RBNHO:2021:6685). An application to have such a dismissal set aside may be treated as a non-verifiable claim, partly with a view to the employee’s benefit entitlements (ECLI:NL:RBZWB:2023:8535). This case law shows that not every dismissal by a trustee is beyond challenge.

You are offered a job on worse terms. What now?

Where there is no transfer of undertaking, a buyer is in principle free to offer a role at a lower salary, with fewer hours or without secondary benefits. You are not obliged to accept. If you do want to sign, check these points first:

• Length of service and seniority: with a genuinely new contract, so outside a transfer of undertaking, your counter starts at zero in principle, although the chain rule may continue to run where there is successive employment, and you can negotiate for recognition of earlier service.
• Probationary period: a new probationary clause may be void where you perform substantially the same work for the buyer and there is successive employment.
• Non-competition clause: unlike on an ordinary transfer of undertaking, an old non-competition clause does not automatically pass to the buyer. Look critically at whether you want to agree to a new one.
• Chain rule: the chain of earlier fixed-term contracts may, in certain circumstances, continue to run where there is successive employment.

For internationally mobile employees there is a further point. Where your residence permit is tied to your employer as a recognised sponsor, or where you benefit from the 30% ruling, a change of employer has consequences of its own that run on separate deadlines. See our page on services for expats.

A practical checklist

1. Ask the trustee for the letter of termination, showing the exact end date of your notice period.
2. File your UWV application for the wage guarantee straight away; do not wait for the bankruptcy to be wound up.
3. Gather your evidence: your employment contract, your most recent payslips, recent annual statements and an overview of accrued leave.
4. Do not sign anything in haste. Have any new contract proposed by the buyer checked, and first establish whether there may be a transfer of undertaking, because that changes the entire legal position.

Winners and losers

A restart can preserve employment while at the same time leaving part of the workforce behind. A bankruptcy can create room for the business to continue its activities with a lighter debt burden and a selected workforce. That makes a restart economically attractive, but for employees it can mean that accrued employment rights, seniority and the prospect of a transition payment are lost. The statutory wage guarantee compensates only part of that risk. The Dutch literature describes this as a structural tension between insolvency law, employment law and wider social interests, rather than as a situation in which selecting staff is by definition unlawful: whether selection is lawful depends on the regime that applies, on how it is carried out in practice, and on any indications of abuse.

The role of the works council on a restart remains under discussion. The Supreme Court has not ruled on the extent to which a trustee must respect the works council’s right to be consulted on a restart, so it cannot simply be said either that the works council has no such right or that the trustee must always seek its advice.

Frequently asked questions

Do I transfer automatically to the new owner on a restart?

That depends on the facts. Where there is a transfer of undertaking, meaning the economic entity retains its identity, you transfer in principle by operation of law, even after a bankruptcy. Where there is not, the bankruptcy exception in article 7:666 of the Civil Code applies and the buyer may decide for itself to whom it offers a new contract. On a transfer during a suspension of payments the transfer of undertaking rules apply in full.

Will I still be paid my outstanding wages and holiday allowance?

Largely, but within statutory limits. Under article 64 of the Unemployment Insurance Act, UWV reimburses wages over at most the thirteen weeks before notice, wages over the notice period subject to the insolvency limit, and holiday allowance and holiday pay over at most the preceding year, up to a statutory maximum. Older claims must be filed with the trustee as an ordinary unsecured creditor.

Can the trustee dismiss me while I am ill or pregnant?

The trustee has a broad power to terminate employment contracts, but that does not automatically mean that every prohibition on termination is set aside in every situation; this requires assessment of the individual case. If you are ill when the employment ends, a sickness benefit route may apply under the relevant conditions; in the case of pregnancy, benefit under the Work and Care Act may apply.

Am I entitled to severance if my employer goes bankrupt?

As a rule not from the bankrupt employer: article 7:673c(1) of the Civil Code excludes the transition payment in bankruptcy, suspension of payments and the debt restructuring scheme. Where there is a transfer of undertaking, however, and your employment later ends with the acquirer, the acquirer may in certain circumstances owe a transition payment, with your earlier service counted towards it.

Do you want your position assessed, or a contract or settlement agreement from a buyer reviewed before you sign? Our employment lawyers act for employees throughout the Netherlands, in English. Our hourly rates are set out on lawyer fees in the Netherlands.

This article gives general information on the main lines of Dutch law concerning a restart out of bankruptcy, based on legislation and case law up to and including 24 August 2026. It is not legal advice for your specific situation.

Legislation and case law

• Article 7:663, 7:665, 7:666, 7:670(8), 7:672, 7:673 and 7:673c of the Civil Code
• Article 40 and article 68 of the Bankruptcy Act; article 239 of the Bankruptcy Act
• Article 61 and article 64 of the Unemployment Insurance Act
• Article 38b of the Sickness Benefits Act
• CJEU 22 June 2017, C-126/16 (Smallsteps); CJEU 28 April 2022, C-237/20 (Heiploeg); Supreme Court 6 October 2023, ECLI:NL:HR:2023:1372
• ECLI:NL:HR:2022:823; ECLI:NL:HR:2026:239
• ECLI:NL:GHDHA:2026:255; ECLI:NL:RBAMS:2025:9893; ECLI:NL:RBROT:2025:4787; ECLI:NL:RBAMS:2026:4234; ECLI:NL:RBLIM:2026:6422
• ECLI:NL:RBNHO:2021:6685; ECLI:NL:RBZWB:2023:8535