Refusing a transfer of undertaking: your rights and the consequences

Refusing a transfer of undertaking (overgang van onderneming) is your right as an employee, but the refusal ends your employment contract with the old employer by operation of law on the transfer date. You cannot stay behind with the transferor. Whether you keep your transition payment depends on Article 7:665 of the Dutch Civil Code (BW): only if the transfer substantially worsens your terms of employment does the ending count as employer-initiated.

A refusal for any other reason is treated much like a resignation: no transition payment, and a real risk that the UWV refuses unemployment benefit (WW). This article explains the rules for both sides and what to put in writing before the transfer date.

What happens to your contract in a transfer of undertaking?

Under Article 7:663 BW your rights and obligations under the employment contract pass to the acquirer by operation of law. Nothing needs to be signed, and the acquirer cannot choose which employees it takes over.

Salary, length of service and other terms carry over in principle. The transferor remains jointly and severally liable with the acquirer for one year after the transfer for obligations that arose before it. Under Article 7:670(8) BW the employer may not give notice because of the transfer itself. Mergers, acquisitions, outsourcing and internal restructurings can all qualify; they often raise the question whether you must accept a role change at work.

There are limits. Pension rights follow a separate regime under Article 7:664 BW. Under Article 7:666 BW the protection does not apply if the employer is bankrupt and the undertaking belongs to the bankrupt estate, which is why a restart after bankruptcy works out differently for staff. Under Article 25(1)(a) of the Works Councils Act (WOR) a works council must be asked for advice on a proposed transfer of control.

Can you refuse to transfer?

Yes. Nobody can be forced to work for an employer they did not choose, and the Court of Justice of the EU has read that freedom into the transfer directive. But the refusal must be unambiguous, and its consequence is that your contract ends.

On 8 February 2022 the subdistrict court in Bergen op Zoom (ECLI:NL:RBZWB:2022:1023) held that an employee who had unambiguously refused, through his lawyer’s letter, had no employment relationship with the acquirer. His claims against the acquirer were declared inadmissible. He could not stay with the transferor either: that contract had ended by operation of law on the transfer date, 31 December 2021.

Hesitation is the worst position. An employee who expresses doubts, asks for time or simply stays away has not refused in the legal sense, and the contract may have transferred after all. If you intend to refuse, say so in writing to both companies and state the date on which the refusal takes effect.

When does a refusal keep your transition payment?

Article 7:665 BW decides this. If the transfer results in a substantial change of your terms of employment to your detriment, and your contract ends for that reason, it counts as ended at the employer’s initiative for the purpose of the transition payment under Article 7:673 BW.

What counts as substantial is assessed on the facts. A real pay cut, the loss of a structural bonus, a relocation that turns a short commute into a long daily journey, or a change in the nature and level of your job can qualify. A new logo, IT system or reporting line will not. You must prove the deterioration, so compare the old and new terms in writing before the transfer date.

The same reasoning matters for unemployment benefit. Under Article 24(2)(b) of the Unemployment Insurance Act (WW) you are culpably unemployed if your employment ended at your initiative without objections so serious that continuing could not reasonably be expected of you. A substantial deterioration can be such an objection; the UWV decides on the facts.

What if you refuse for another reason?

If your terms carry over substantially unchanged and you simply prefer not to work for the acquirer, Article 7:665 BW does not apply. The ending is then attributed to you and there is no transition payment, because Article 7:673(1) BW requires an ending at the employer’s initiative or because of seriously culpable conduct by the employer.

The UWV will also assess whether you became unemployed culpably under Article 24(2)(b) WW. A dislike of the acquirer, its culture or the new team is unlikely to be enough. In that situation it is usually better to transfer and negotiate an exit afterwards, for example through a settlement agreement.

Does timing matter?

Yes. A refusal ends the contract on the transfer date and is not an ordinary notice of termination. But if you announce it only on the eve of the transfer, the employer may argue that you in fact resigned without observing the notice period.

In that case Article 7:672(11) BW gives the employer a claim for compensation equal to your wages over the notice period not observed. The subdistrict court can reduce it under Article 7:672(12) BW, but not below the wages over the employer’s notice period nor below three months’ wages. The statutory notice period for an employee is one month (Article 7:672(4) BW), so communicating your refusal at least one month before the transfer date avoids that discussion.

Is a longer contractual notice period valid?

Only if it meets Article 7:672(8) BW: it is agreed in writing, the employee’s period is at most six months, and the employer’s period is at least twice as long. A collective agreement (cao) may shorten the employer’s period, but not below the employee’s (Article 7:672(9) BW).

A contract that gives both parties three months fails the double-term rule. In that case the case law generally applies the statutory one-month period to the employee. Employers should check their standard contracts before a transaction is announced.

What does the employer still owe when you leave?

Under Article 7:656 BW the employer must give you a reference (getuigschrift) at the end of employment if you ask for it. It states the nature of the work, working hours and start and end date; how you performed and how and why the contract ended are included only if you ask.

The final settlement also covers unused holiday entitlement, holiday allowance and variable pay earned up to the end date.

What should you check as an employee?

• Ask for the acquirer’s terms of employment in writing before the transfer date.
• Compare pay, bonus, working hours, location and job content item by item with your current terms.
• Assess whether the difference is substantial and to your detriment under Article 7:665 BW.
• If you refuse, do so unambiguously and in writing to both employers, preferably at least one month before the transfer date.
• Record your reasons for refusing, because the UWV will assess them under Article 24 WW.
• Check your contractual notice period against the double-term rule of Article 7:672(8) BW.

What should you check as an employer?

• Check whether the transaction qualifies as a transfer of undertaking under Article 7:662 BW.
• Ask the works council for advice on the transfer of control under Article 25 WOR.
• Communicate the new terms early and in full, so no deterioration argument can be built on silence.
• Ask an employee who indicates a refusal for an unambiguous written confirmation with the effective date.
• Keep any reorganisation separate from the transfer, because dismissal because of the transfer is prohibited (Article 7:670(8) BW).
• Check that extended notice periods in your contracts meet Article 7:672(8) BW.

What can we do for you with a transfer of undertaking?

Our employment lawyers and employment law team advise employees and employers before and after a transfer.

• We assess whether the transaction is a transfer of undertaking and which terms transfer.
• We compare the old and new terms of employment and assess whether Article 7:665 BW applies.
• We draft the written refusal or the employer’s confirmation request.
• We calculate the transition payment and assess the WW risk.
• We negotiate a settlement agreement if a refusal is not the best route.

Summary

• In a transfer of undertaking your contract passes to the acquirer automatically (Article 7:663 BW).
• You may refuse, but your contract with the transferor then ends on the transfer date.
• Only a refusal because of a substantial deterioration of terms keeps the transition payment (Article 7:665 BW).
• A refusal for other reasons risks culpable unemployment and loss of WW (Article 24(2)(b) WW).
• Refuse unambiguously and in writing, preferably at least one month before the transfer date.

Frequently asked questions