Supreme Court of the Netherlands, 6 February 2026, ECLI:NL:HR:2026:204
On 6 February 2026, the Dutch Supreme Court ruled on the question of when dismissal is possible following a transfer of undertaking. Central to the case was the ban on dismissal on transfer of undertaking and its exception: dismissal for so-called ETO reasons (economic, technical, or organisational reasons). The ruling makes clear that the protection of employees on a transfer of undertaking is not absolute. At the same time, the Supreme Court sets clear requirements for employers wishing to reorganise shortly after a takeover.
Facts
The employee started working for a supermarket on 1 June 1994. During her employment, her working hours were reduced to 8 hours per week and her role changed to HR officer. In May 2023, the employee was informed that she had, by operation of law, transferred to a different franchisee as a result of a transfer of undertaking. The new employer has a service office where HR tasks for all supermarkets are carried out. According to the employer, the employee’s role no longer fits within the organisational structure and had therefore become redundant.
The employer looked into redeployment, but this proved unfeasible given the limited number of hours involved. The UWV (Employee Insurance Agency) then refused permission for dismissal on economic grounds. The employer subsequently asked the subdistrict court to dissolve the employment contract. That request was granted. The Court of Appeal upheld this decision, after which the employee appealed to the Supreme Court.
Ruling of the Supreme Court
On a transfer of undertaking, employees transfer by operation of law to the transferee, retaining their employment conditions. The employment contract may not be terminated because of the transfer itself. There is, however, an exception to this protection. Dismissal is possible where ETO reasons exist. The Supreme Court emphasises that these ETO reasons must have no intrinsic connection with the transfer of undertaking. This does not mean there can be no connection whatsoever between the transfer and the reasons put forward. The employer’s interests must also be weighed. An employer must be able to organise and continue the business efficiently.
According to the Supreme Court, the Court of Appeal correctly examined whether an intrinsic connection between the economic reasons put forward and the transfer of undertaking was absent. The Supreme Court agreed with the Court of Appeal’s reasoning that the sooner a reorganisation takes place after a transfer, the better the employer must be able to explain why the dismissal is not connected to that transfer. In this case, the employer had explained that the role of HR officer did not exist at other supermarkets it operated, that the role did not fit within its operating system, and that it wanted to centralise the administration of personnel data. This meant a genuine reorganisation was at issue, not dismissal because of the transfer itself. The employee’s appeal to the Supreme Court therefore failed.
What does this mean for employers?
This ruling underlines that protection against dismissal on a transfer of undertaking is not absolute. Dismissal following a transfer of undertaking for economic reasons remains possible, provided legitimate ETO reasons exist that have no intrinsic connection with the transfer. Employers would do well to carefully substantiate a reorganisation, especially where it takes place shortly after a transfer. Clear documentation of the organisational necessity and a proper redeployment effort remain essential.
Do you have questions about a business takeover and dismissing your employees? Please feel free to contact one of our employment lawyers.
Click here for the full ruling (in Dutch).
