An employee in the Netherlands may refuse to transfer to the acquirer in a transfer of undertaking (overgang van onderneming), but the refusal ends the employment contract with the transferor by operation of law on the date of the transfer. There is no third option: the employee cannot stay behind with the old employer. Whether that ending is financially safe depends on one distinction, drawn by article 7:665 of the Burgerlijk Wetboek (BW), between a refusal prompted by a substantial deterioration of the terms of employment and a refusal for any other reason.
Mergers, acquisitions, outsourcing and internal reorganisations all regularly qualify as a transfer of undertaking, and for the staff involved they raise the same three questions: does my role change, do I have to move, and do I have to go at all. This article sets out what the law provides, what a refusal costs, and what both sides should put in writing before the transfer date.
The starting point: automatic transfer under article 7:663 BW
Where an undertaking or an identifiable part of it passes to another party, article 7:663 BW transfers the rights and obligations under the employment contracts to the acquirer by operation of law. Nothing needs to be signed. The acquirer cannot select which employees it wants, terms such as salary and length of service carry over unchanged in principle, and the transferor remains jointly liable for a year for obligations that arose before the transfer. Dismissal because of the transfer itself is prohibited under article 7:670 BW, which is why reorganisations are usually presented as separate from the deal even when the two are obviously connected.
The rule has limits that decide many disputes before the refusal question is ever reached. Pension entitlements follow their own regime under article 7:664 BW, and the protection does not apply where the transfer takes place from an estate in bankruptcy, as article 7:666 BW provides, which is why a restart after bankruptcy works out so differently for staff. A works council also has to be given the opportunity to advise on a decision to transfer control of the undertaking.
The right to refuse and what it does to the contract
Nobody can be compelled to work for a company they did not choose, and the Court of Justice of the European Union has read that freedom into the transfer directive. The refusal must, however, be unambiguous. The subdistrict court in Zeeland-West-Brabant confirmed on 8 February 2022 (ECLI:NL:RBZWB:2022:1023) that an employee who unequivocally refuses to go across has no employment relationship with the acquirer and cannot be received in claims against it, and equally has no right to remain with the transferor: the contract with the transferor ended by operation of law on the date of the transfer.
Hesitation is therefore the worst position to be in. An employee who expresses doubts, asks for time, or simply stops appearing has not refused in the legal sense and may find that the contract transferred after all, with the acquirer entitled to treat continued absence as a matter for its own disciplinary process. Anyone who intends to refuse should say so in writing, to both companies, and state the date on which the refusal takes effect.
Refusal because the terms get worse: article 7:665 BW
Article 7:665 BW is the provision that decides the money. If the transfer results in a substantial change of the terms of employment to the detriment of the employee, and the contract ends for that reason, it counts as having been ended on the initiative of the employer. The consequences follow from that characterisation: the employee is entitled to the transition payment under article 7:673 BW, and the unemployment is not attributable to the employee, so entitlement to unemployment benefit under the Werkloosheidswet is in principle preserved. In a serious case the subdistrict court can award additional fair compensation on top.
What counts as a substantial detriment is assessed on the facts rather than by a list. A material cut in pay or the withdrawal of a structural bonus qualifies, and so does a relocation that turns a short commute into a daily journey across the country, or a reassignment that changes the nature and level of the job. A change of employer logo, a new IT system or a different reporting line will not. The burden of showing the deterioration rests on the employee, which is why the comparison between the old and the new terms belongs in writing before the transfer date rather than in a witness statement afterwards.
Refusal for any other reason
Where the terms carry over substantially unchanged and the employee simply prefers not to work for the acquirer, article 7:665 BW does not apply and the ending of the contract is attributed to the employee. There is then no transition payment, because the statutory entitlement presupposes an ending at the employer initiative or an ending prompted by seriously culpable employer conduct. The UWV will also examine whether the employee became unemployed culpably within the meaning of the Werkloosheidswet; giving up work that was still available, without an objectively justified reason, is a classic ground for refusing benefit. A dislike of the acquirer, disagreement with its culture or a preference for the old team is unlikely to meet that threshold on its own.
Timing, notice and the risk of a claim
Because the refusal ends the contract by operation of law on the transfer date, it is not an ordinary notice of termination, and a transferor cannot automatically treat it as an irregular resignation. That does not make timing unimportant. An employee who announces the decision only on the eve of the transfer leaves room for the argument that the employment in fact ended earlier and at the employee initiative, in which case the transferor may claim the fixed compensation of article 7:672 lid 11 BW, equal to the wages over the period the contract should still have run. The subdistrict court can mitigate that compensation under article 7:672 lid 12 BW, but not below three months of wages or below the wages over the statutory notice period.
The practical rule that follows is simple: decide early and record the decision. The statutory notice period for an employee is one month under article 7:672 lid 4 BW, so a refusal communicated at least a month before the transfer date leaves nothing to argue about, whichever legal characterisation is later preferred. It also gives the employee time to test the deterioration argument before the exit is irreversible, and it gives the employer time to arrange a handover.
Extended notice periods in the contract
Contracts often extend the employee notice period to two, three or six months, and that extension is only valid if three cumulative conditions from article 7:672 lid 8 BW are met:
- the deviation has been agreed in writing;
- the period for the employee does not exceed six months;
- the period for the employer is at least double the period for the employee.
A clause that gives both parties three months therefore fails the third condition. The employee can invoke the defect, and the prevailing approach in the case law is that the statutory period of one month then applies to the employee, rather than the employer period being read up to six months. For an employer this matters twice over: a defective clause offers no protection against a sudden departure, and a claim for compensation built on it is unlikely to survive. Checking the standard contract before a transaction is announced is considerably cheaper than litigating the clause afterwards.
What the employer still owes on departure
However the relationship ends, article 7:656 BW obliges the employer to provide a reference (getuigschrift) at the employee request. It states at least the nature of the work performed and the duration of the employment, and, only if the employee asks for it, how and by whom the contract was ended and an assessment of the way the work was carried out. A reference cannot be withheld as leverage in a dispute about the transfer, and a refusal to issue one can itself give rise to liability. Alongside the reference, the final settlement covers accrued holiday entitlement, holiday allowance and any variable pay earned up to the end date.
What to do when a transfer is announced
For an employee the sequence is: obtain the new terms in writing, compare them item by item with the current ones, and form a view on whether the difference is substantial and detrimental within the meaning of article 7:665 BW. If it is, say so in writing before the transfer date and keep the evidence, because the transition payment and the unemployment benefit both hinge on that reasoning being on the record. If the terms are equivalent and the objection is a matter of preference, weigh the loss of the transition payment and the risk to benefit entitlement against the alternative of transferring and negotiating an exit afterwards, if necessary through a settlement agreement.
For an employer, the corresponding steps are to communicate the new terms early and in full, so that no argument about a deterioration can be built on silence; to check that any extended notice periods meet the double-term rule; and to ask an employee who indicates a refusal for an unambiguous written confirmation, so that no dispute arises later about whether the contract transferred after all. Where a genuine reorganisation follows a transfer, keep it separate from the transaction in time and in documentation, since dismissal on account of the transfer itself is prohibited.
Advice on a transfer of undertaking
Refusing a transfer is a genuine right, but it is exercised once and cannot be undone. The line between a protected refusal and a resignation runs through article 7:665 BW, and it is drawn on the evidence available at the moment of the refusal. Our employment law team advises employees and employers on transfers of undertaking, on the comparison of terms, and on the wording of a refusal or of a settlement. If a transfer has been announced in your organisation, contact us before the date passes.
Frequently asked questions
Is an employee entitled to unemployment benefits (WW) if they refuse a transfer?
It depends on the reason. If the refusal is due to a substantial deterioration of employment conditions (Article 7:665 BW), the UWV generally considers the termination non-culpable, granting WW rights. However, if the refusal is for personal reasons without objective justification, the UWV will likely deem it “culpable unemployment” and deny benefits.
Can an employee claim a transition payment (transitievergoeding) if the contract ends due to refusal?
Yes, but only if the refusal is caused by a substantial deterioration of working conditions (Article 7:665 BW). In this case, the termination is attributed to the employer. If the employee refuses for personal reasons, they are legally resigning voluntarily, which typically extinguishes the right to the transition payment.
What notice period applies to an employee terminating the contract due to refusal of transfer?
The refusal itself ends the contract by operation of law on the date of the transfer, so it is not an ordinary notice of termination. Even so, announce the refusal in writing at least a month before that date: it removes any argument that you resigned irregularly.
Can the employer claim damages if the employee does not observe the correct notice period?
Only where the departure is treated as an irregular resignation rather than as a refusal that ends the contract on the transfer date. In that situation article 7:672 BW provides fixed compensation equal to the wages over the remaining period, which the subdistrict court may mitigate but not below three months of wages.
Is the employee entitled to a reference (getuigschrift) upon termination due to refusal?
Yes. Article 7:656 BW mandates that employers must provide a reference upon request at the end of employment, regardless of the reason for termination or who initiated it.
Can an employer contractually extend the notice period in the context of a transfer?
Yes, provided it meets statutory requirements: it must be in writing, the employee’s term cannot exceed six months, and the employer’s term must be at least double that of the employee. If the employer’s term is not double, the extension is voidable, and the statutory term applies.
What is the difference between refusal due to deteriorated conditions vs. other reasons?
This is the most critical distinction. Refusal due to deteriorated conditions (Art 7:665 BW) is treated as employer-initiated termination, protecting rights to severance and benefits. Refusal for other reasons (culture, dislike of new owner) is treated as voluntary resignation, usually stripping the employee of severance and unemployment benefits.
