Mergers, acquisitions, and internal restructurings are commonplace in the corporate world. For employees, however, a “transfer of undertaking” (overgang van onderneming) often brings uncertainty. Will my role change? Do I have to move to a new location? And most importantly: Do I have to go?
Under Dutch law, the starting point is clear: employees transfer automatically to the acquirer. However, employees are not indentured servants; they have the right to refuse this transfer. But exercising this right is a legal minefield. A refusal can trigger immediate unemployment, the loss of severance pay, and even liability for damages if not handled correctly.
This guide provides a comprehensive analysis of the rights and obligations for both employees and employers when a transfer is refused, based on the Dutch Civil Code (Burgerlijk Wetboek or BW) and recent case law.
The Legal Baseline: Automatic Transfer (Article 7:663 BW)
To understand refusal, one must first understand the rule. According to Article 7:663 BW, when a company (or part of it) is transferred, the rights and obligations arising from the employment contract transfer by operation of law to the acquirer.
This means that:
- The employee does not need to sign a new contract.
- The new employer cannot pick and choose which employees to keep.
- Employment conditions (salary, seniority, etc.) remain unchanged in principle.
However, the law acknowledges the employee’s fundamental right to choose their employer. An employee cannot be forced to work for the acquiring company.
The Right to Refuse: A High-Stakes Decision
If an employee does not wish to join the new company, they must make this known. Case law (e.g., ECLI:NL:RBZWB:2022:1023) dictates that this refusal must be unambiguous. A vague expression of doubt is insufficient. The employee must clearly state their intention not to continue with the acquirer.
If an employee unambiguously refuses the transfer, the employment contract with the old employer ends by operation of law on the date of the transfer. The employee does not stay with the old employer; they simply exit the arrangement entirely.
Whether this exit is financially safe or disastrous depends entirely on the reason for the refusal. We must distinguish between two critical scenarios.
Scenario A: Refusal Due to Deteriorated Conditions (Article 7:665 BW)
This is the protective shield for employees. If the transfer leads to a substantial change in employment conditions to the detriment of the employee, and the employee resigns or refuses the transfer because of this, Article 7:665 BW applies.
In this scenario:
- The employment contract ends.
- However, the termination is deemed to be on the initiative of the employer.
- The employee retains the right to a transition payment (transitievergoeding).
- The employee generally retains the right to unemployment benefits (WW-uitkering), as the unemployment is not considered culpable.
Examples of substantial deterioration:
- A significant reduction in salary or removal of bonuses.
- A dramatic increase in travel time (e.g., the office moves from Amsterdam to Maastricht).
- A fundamental change in the job description or rank.
Scenario B: Refusal for Personal Reasons
If the employment conditions remain largely the same, but the employee simply dislikes the new company, disagrees with the culture, or personally prefers not to join, the legal landscape shifts dramatically.
In this scenario:
- The refusal is treated as a voluntary resignation (termination on the initiative of the employee).
- The employee generally forfeits the right to a transition payment.
- The UWV (Employee Insurance Agency) will likely classify this as culpable unemployment, meaning the employee will representatively be denied unemployment benefits (WW).
Notice Periods and Procedural Obligations
A common misconception is that refusing a transfer allows an employee to walk away instantly. This is incorrect. Even when refusing a transfer, the rules of proper termination apply.
The Obligation to Give Notice
The employee who refuses the transfer must in principle observe the statutory or contractual notice period (Article 7:672 lid 4 BW). This notice period is typically one month, unless agreed otherwise.
This creates a procedural headache. If the transfer happens on January 1st, and the employee refuses on December 31st without prior notice, they technically fail to observe the notice period.
Damages for Incorrect Notice
If an employee terminates the contract (by refusing transfer) without observing the proper notice period, they may be liable for damages.
- Fixed Damages: Under Article 7:672 BW, the employer can claim a fixed compensation equal to the wages the employee would have earned during the notice period.
- Mitigation: The Sub-district Court (kantonrechter) can mitigate this amount, but never to less than the wages of three months or the statutory notice period (Article 7:672 lid 12 BW).
Therefore, employees intending to refuse should give notice well in advance of the transfer date to ensure the notice period aligns with the transfer date.
Extended Notice Periods: A Contractual Trap?
Employers sometimes include clauses extending the notice period for employees, for example, to three or six months. Is this valid?
Under Dutch law, an extended notice period for the employee is valid only if:
- It is agreed upon in writing.
- It does not exceed six months.
- The notice period for the employer is double that of the employee (Article 7:672 BW).
Example: If the employee must give 3 months’ notice, the employer must give 6 months’ notice.
If these conditions are not met (e.g., both parties have 3 months), the extension is voidable (vernietigbaar). The employee can annul the clause, causing the notice period to revert to the statutory one month. If an employer tries to enforce an invalid extended period, or claim damages based on it, the employee has strong legal grounds to resist.
Financial Consequences: A Summary
The financial outcome of refusing a transfer hinges on the distinction between Article 7:665 BW and voluntary refusal.
1. Transition Payment (Transitievergoeding)
- Deteriorated Conditions: Yes. Because the termination is attributed to the employer, Article 7:673 BW grants the right to a transition payment.
- Personal Reasons: No. The Supreme Court (Hoge Raad) dictates that if an employee voluntarily ends the contract without serious cause (like deteriorated conditions), they forfeit this payment.
2. Unemployment Benefits (WW-uitkering)
- Deteriorated Conditions: Yes. The UWV assesses whether the refusal was “objectively justified.” Substantial negative changes provide this justification.
- Personal Reasons: No. Resigning without good cause is considered culpable unemployment (verwijtbare werkloosheid), resulting in a denied benefit application (ECLI:NL:RBROT:2025:12700).
The Employment Reference (Getuigschrift)
Regardless of how the relationship ends—bad blood, refusal, or resignation—Article 7:656 BW is clear: the employer must provide a reference (getuigschrift) upon request.
This document must state:
- The nature of the work.
- The duration of employment.
- (Only if requested by the employee) The manner in which the contract ended.
An employer cannot withhold a reference as leverage during a transfer dispute.
Practical Recommendations
For Employees
- Analyze the Offer: meticulous comparison of your current terms vs. the acquirer’s terms is vital. Is the change “substantial” and “detrimental”?
- Document Everything: If you refuse due to Article 7:665 BW, ensure you have written proof of the deteriorated conditions.
- Mind the Clock: Give notice in time. Refusing the day before the transfer can cost you a month’s salary in damages.
- Consult Legal Counsel: Before refusing, verify if your reasons will stand up to UWV scrutiny to safeguard your unemployment benefits.
For Employers
- Communicate Early: Transparency about new conditions prevents Article 7:665 BW claims.
- Check Contracts: Ensure any extended notice periods in your contracts comply with the “double term” rule for employers.
- Formalize the Refusal: If an employee refuses, ask for a written, unambiguous confirmation to prevent later claims that they technically transferred.
Conclusion
Refusing a transfer of undertaking is a fundamental right, but it is not without consequence. For the employee, it is often a choice between accepting a new reality or facing unemployment without benefits. The crucial dividing line is Article 7:665 BW: is the refusal a choice of preference, or a forced reaction to worsening conditions?
For both HR professionals and employees, understanding this distinction—and the strict procedural rules regarding notice periods—is the only way to navigate a transfer without costly legal repercussions.
Frequently Asked Questions (FAQ)
1. 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.
2. 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.
3. What notice period applies to an employee terminating the contract due to refusal of transfer?
In principle, the standard statutory notice period of one month applies, unless a valid longer term has been agreed upon in writing. Even though the termination is forced by the transfer, procedural rules for notice must be observed to avoid liability.
4. Can the employer claim damages if the employee does not observe the correct notice period?
Yes. Under Article 7:672 BW, if an employee quits immediately (irregular termination) without observing the notice period, they owe the employer a fixed compensation equal to the wages of that period. The court can mitigate this, but it is a real financial risk for the employee.
5. 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.
6. 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.
7. 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.
