SER Merger Code: when must you consult trade unions on a merger?

The SER Merger Code 2015 (SER-Fusiegedragsregels 2015) requires parties to a merger or acquisition to inform the trade unions involved and give them a real chance to give their opinion before agreement on the deal is reached. The Code applies to undertakings in the business community where at least 50 people work in the Netherlands, but not to intra-group transactions or to transfers of undertakings with fewer than 10 people.

The Code is self-regulation adopted by the Social and Economic Council (SER) under Article 2 of the SER Act, in force since 1 October 2015 and last amended with effect from 13 September 2022. It does not judge whether a merger is economically sound and cannot block it, but a breach can lead to a public ruling by the Merger Code Disputes Committee (Geschillencommissie Fusiegedragsregels).

When does the Merger Code apply?

Under Article 2(1) of the Code, the conduct rules apply to undertakings in the business community (bedrijfsleven) when at least one Dutch undertaking involved in the merger normally employs 50 or more people, or when Dutch undertakings in the same group together normally employ 50 or more people.

A collective labour agreement (cao) can declare the Code applicable to other undertakings as well (Article 2(2)). Temporary agency workers count as people working in the undertaking once they have worked there for at least 15 months (Article 1). The SER interprets “business community” broadly, so non-profit organisations that operate on a market should check the Code too.

What counts as a merger?

Article 1(1)(e) defines a merger as the direct or indirect acquisition or transfer of control over an undertaking or part of it, and the formation of a group of undertakings. In practice this covers a share deal, an asset deal, a legal merger or demerger, and a change of control based on statutory or contractual powers.

The Code also covers public offers (Article 5) and the gradual acquisition of shares on the stock exchange (Article 6). In both cases the rules on informing trade unions must be applied as far as possible.

Which transactions are excluded?

Article 2(3) lists four exclusions. The conduct rules do not apply when:

• all undertakings involved belong to the same group;
• the merger is based on the law of persons, family law, insolvency law or inheritance law;
• fewer than 10 people normally work at the undertaking or undertakings whose control passes;
• the merger does not fall within the Dutch legal sphere.

In cross-border deals, the last exclusion requires a careful assessment of the Dutch activities, the number of people working in the Netherlands and the expected consequences for them.

What must merging parties do?

Before agreement on the merger is reached, the parties must notify the trade unions of the preparation of the merger (Article 4(1)). The trade unions’ opinion must be able to have a real influence on whether the merger goes ahead and on its terms (Article 4(6)).

The parties must give a written explanation of the reasons for the merger, the intended business policy, the expected social, economic and legal consequences, and the measures planned in response (Article 4(2)). The trade unions may then give their opinion from the perspective of the people working in the undertaking (Article 4(3)).

In a meeting, the parties must also discuss the policy after the merger, measures to prevent or limit adverse consequences for staff, including financial compensation, and when and how staff will be informed (Article 4(4)). On request they provide further information that is reasonably necessary for the trade unions’ opinion (Article 4(5)).

How does the Code interact with the works council?

The parties must give the works councils involved the opportunity to take note of the trade unions’ opinion, so that they can take it into account in their advice under Article 25 of the Works Councils Act (Wet op de ondernemingsraden, WOR). This is laid down in Article 4(7) of the Code.

What about press releases?

Before any public announcement on the preparation or conclusion of a merger, the trade unions must be informed of its content (Article 3(1)). If securities rules prevent prior notification, the notification must take place at the latest when the announcement is made (Article 3(2)).

Must the SER be notified?

Yes. At the same time as the notification to the trade unions, the parties send a corresponding notification to the SER secretariat (Article 8(1)). This also applies if no trade union is involved. If the parties believe the Code does not apply, the secretariat can send a shortened notification to the trade unions (Article 8(3)).

Which trade unions must be informed?

Article 1(1)(f) covers associations with full legal capacity whose purpose is to represent their members working in the undertaking, and which, for a Dutch undertaking involved in the merger:

• had at least one candidate elected to the works council at the last elections;
• are involved in a regulation of pay and terms of employment that applies to it; or
• have regularly acted for their members there in the two preceding calendar years.

If the Code applies only because a collective labour agreement declared it applicable, the parties to that agreement are the trade unions concerned (Article 1(2)).

How does confidentiality work?

Trade unions must keep the notifications confidential until the merger is public, unless otherwise agreed (Article 7(1)). For information provided during consultation, confidentiality applies if it was requested in writing beforehand, stating how long it should last (Article 7(2)).

A trade union can refuse confidentiality within three working days of the request. The parties then do not have to consult that union under Article 4, unless it accepts confidentiality later in time and in writing (Article 7(3)).

What happens if the Code is not followed?

A trade union, or a party to the merger, can bring a dispute before the Merger Code Disputes Committee (Article 18). The written request must be filed within one month after the parties have announced whether or not the merger goes ahead (Article 19(1)).

The request states the names and addresses of the parties, the circumstances of the dispute and the decision sought (Article 20). The chair first checks admissibility; an applicant declared inadmissible can object within 14 days (Article 21(4)). The other party may file a written defence within one month (Article 22(2)), followed by an oral hearing that is in principle public (Articles 23 and 28).

The Committee can rule that a party did not, or not properly, comply with the Code (Article 32). If the breach is serious and seriously culpable, it may issue a press release naming the parties (Article 32(3)). Its decisions are public (Article 33). The Committee cannot impose a fine or stop a merger, so reputational damage is the main sanction. It can also mediate in an existing or threatened dispute (Article 19(2)).

How does the Code relate to other merger rules?

The Merger Code applies alongside statutory procedures; a notification to the SER does not replace them. Depending on the deal, you may also need to notify the Netherlands Authority for Consumers and Markets (ACM), the Dutch Healthcare Authority (NZa) or the Netherlands Authority for the Financial Markets (AFM).

The works council’s right of advice under Article 25 WOR runs in parallel. Plan both processes in the same timetable, alongside the due diligence and the points in our legal checklist for mergers and acquisitions.

What should you check as a merging party?

• Check whether the transaction transfers control and whether 50 or more people work at the Dutch undertakings involved.
• Check the exclusions of Article 2(3), including the 10-person threshold and the Dutch legal sphere.
• Identify the trade unions involved through the works council elections, the applicable cao and recent union activity.
• Notify the trade unions and the SER secretariat before signing, and before any press release.
• Request confidentiality in writing before sharing deal information.
• Include completion of the consultation as a condition in the letter of intent or term sheet, and document every step.

What should you check as a trade union or works council?

• Check whether you qualify as a trade union involved under Article 1(1)(f) of the Code.
• Decide within three working days whether to accept a written confidentiality request.
• Ask in writing for the further information you reasonably need to form your opinion.
• Give your opinion before agreement on the merger is reached, so it can still influence the deal.
• As a works council, ask for the trade unions’ opinion before giving advice under Article 25 WOR.
• Note the one-month deadline for bringing a dispute after the merger is announced.

What can we do for you with the SER Merger Code?

Our corporate lawyers advise companies, institutions, trade unions and works councils on merger consultation.

• We assess whether the Merger Code applies to your transaction and which exclusions may be relevant.
• We identify the trade unions involved and draft the notification to them and to the SER secretariat.
• We prepare the written explanation of the reasons and consequences of the merger.
• We align the trade union consultation with the works council advice procedure and the deal timetable.
• We draft confidentiality requests and the consultation clauses in the letter of intent.
• We act for you in proceedings before the Merger Code Disputes Committee.

Summary

• The SER Merger Code 2015 applies to mergers involving Dutch undertakings in the business community with 50 or more people.
• Trade unions and the SER secretariat must be notified before agreement on the merger is reached, and before any public announcement.
• Intra-group deals, transfers of undertakings with fewer than 10 people and deals outside the Dutch legal sphere are excluded.
• A dispute must be brought within one month after the merger is announced; the main sanction is a public ruling.

Frequently asked questions