Transfer of Undertaking (corporate employment law)

When is there a transfer of undertaking?

When a company takes over certain activities — personnel, machinery, inventory, customer base or goodwill — a transfer of undertaking may apply. Whether that is the case is assessed on the facts of each situation: economic unit, continuity of activity and identity.

There is no standard checklist; we analyse your transaction on its specifics.

Consequences for employees

On transfer, employees automatically become employed by the acquiring employer by operation of law. They retain the rights and obligations from the existing employment contract — pay, seniority, pension and terms of employment.

Dismissal by reason of the transfer is in principle not permitted; we advise both the acquirer and the employee.

Liability of the former employer

For one year after the transfer, the former employer remains jointly liable with the new employer for obligations that arose before the transfer.

In due diligence and SPAs, you need to account for indemnities, warranties and employee claims.

Acquisition, merger and asset deal

Whether a transfer of undertaking applies, and which employees transfer automatically, differs between a share deal and an asset deal. We coordinate with reorganizations and mergers and the broader corporate law practice.

Transfer also regularly arises when outsourcing activities or transferring a department.

Employee participation and the works council

The works council has a right of consent regarding a transfer of undertaking in certain situations. Timely information and documentation prevent delay and invalid decision-making.

See right of participation for the broader works-council framework.

Pension and social security

A transfer affects pension schemes, reserving obligations and enrolment in social insurance. We work together with pension advisers and tax specialists in transactions.

Mistakes here lead to back-assessments or claims years later.

Contracts and the supply chain

Supplier, lease and customer contracts can contain change-of-control clauses. In a transfer of undertaking, we review contract portfolios and personnel-related obligations.

See contracts for the commercial contractual aspects.

Due diligence and transaction documentation

During due diligence, we map employment-law risks: pending proceedings, works-council resolutions, the collective labour agreement, management agreements and transition payments.

We provide input for the SPA, disclosure schedules and post-closing integration.

Outsourcing and asset-liability transactions

Not every transfer is a full acquisition. In asset-liability transactions we assess which part of the business transfers and whether the identity of the economic unit is retained.

That determines whether employees transfer automatically.

For acquirers

As an acquirer, you want to know which employees transfer, what the costs are and what reorganisation options exist afterwards — within legal limits.

We guide integration, communication to personnel and any reorganisation after closing.

For employees

Employees affected by a transfer are entitled to information and retention of their terms of employment. In the event of an unwanted transfer or threatened dismissal after an acquisition, we assess your position.

See also dismissal and employment contract.

Disputes after transfer

Disputes over recognition of a transfer, the application of terms of employment or liability come before the subdistrict court. We litigate and negotiate.

Where mediation works faster between parties, we steer toward it.

Inform and communicate in good time

Employees, the works council and directors involved must be informed accurately and in good time about an intended transfer. Incorrect or late communication increases the risk of proceedings and demotivation.

We help with timelines, FAQs for personnel and legally correct letters to individual employees.

Collective dismissal and reorganisation after transfer

A transfer does not automatically rule out collective dismissal — but it does determine which routes remain open afterwards. In a reorganisation after closing, we coordinate the social plan, the Employee Insurance Agency (UWV) and works-council procedures.

Plan personnel integration into the transaction early, not only after signing.

International transactions

Cross-border deals have their own employment-law regimes alongside the Dutch transfer-of-undertaking rules. We coordinate with foreign counsel and translate local obligations for your holding company.

We provide English-language documentation and due diligence lists where needed.

Why timely advice is essential

Given the significant interests involved — personnel, liability, the works council and deal structure — it is advisable to obtain legal advice early when an acquisition or asset-liability transaction is being considered.

Don’t wait until the SPA is signed: many risks can be allocated or mitigated in advance during negotiation.

First step

Get in touch via contact or call +31 10 249 24 44. We discuss your transaction, timeline and which documents you already have — term sheet, due diligence or works-council advice.

Terms of employment and the CLA on transfer

On transfer, the collective labour agreement (CLA) and company regulations in principle remain applicable until the new employer implements changes within legal limits.

We assess which terms of employment transfer, what you may harmonise after the transfer, and when a collective revision is possible.

Management and directors on transfer

Statutory directors and management board members do not automatically fall under the same rules as employees — but management agreements and golden parachutes are reviewed in transactions.

See directors’ resignation for director-specific aspects.

Checklist before closing

Before closing, we want insight into: which employees transfer, the works-council position, pending proceedings, pension and CLA, management contracts and indemnities in the SPA.

A short checklist early in the process prevents having to renegotiate personnel costs or claims after signing.

We work together with your M&A adviser, notary and tax specialist — timely employment-law input prevents deal delay.

Due diligence on personnel files

In due diligence we assess pending proceedings, collective claims, works-council positions and terms of employment that affect the purchase price or warranties. Early signalling prevents post-closing disputes.

Outsourcing and asset transfer

Not every transaction is a share transaction: an asset-liability deal or entry and outsourcing can also trigger a transfer. We analyse which structure carries the least employment-law risk.

Warranties and indemnities in the SPA

Sellers and buyers agree warranties on personnel claims, CLA compliance and pending proceedings. We review employment-law clauses in purchase agreements.

Employees refusing the transfer

Employees may in principle refuse the transfer; the consequences for pay, seniority and dismissal differ per case. We advise employers and employees on their choices before closing.

Pension on transfer

Pension and secondary benefits often remain a point of discussion after transfer. We liaise with the pension fund and HR.

Sørensen on transfer of undertaking

A transfer of undertaking in an M&A deal or outsourcing calls for timely advice. We coordinate corporate, HR and the works council — contact via contact or +31 10 249 24 44.

Post-closing personnel

After closing, integration, pension and individual dismissals can still play a role. We provide follow-up support so the transfer is legally concluded.

When do you need a lawyer?

In the case of a planned acquisition, outsourcing, asset-liability transaction, or when you are unsure whether a transfer of undertaking applies and what that means for personnel and liability.

Our approach

Tailored analysis, coordination with corporate and employment law, and documentation that holds up at closing and afterwards.