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Dutch Civil Code (Employee Rights in case of a Transfer of Undertaking)

Dutch Civil Code (Articles 7:662– 666) (Employee Rights in case of a Transfer of Undertaking)

The Directive on employee rights and obligations in connection with a transfer of undertaking is implemented in Articles 7:662– 666 of the Dutch Civil Code. According to these articles, a transfer of undertaking is “a transfer resulting from an agreement, merger or split of an economic entity, which entity maintains its identity.” It is explicitly stipulated that a part of a company may also be regarded as an economic entity. In other words, the applicability of Articles 7:662666 of the Dutch Civil Code depends on whether or not the identity of the transferred entity remains the same.

A direct contractual relationship between the transferor and the transferee is not required for the Directive to be applicable: the transfer may take place through the mediation of a third party, such as the owner or the person putting up the capital. It is necessary to assess the facts in order to conclude whether or not the identity of the entity will transfer.

According to case law, the identity of (part of) a company can be determined by various factors, including (but not limited to):(a)the type of business; (b) whether or not its tangible assets, e.g. buildings and movable property, are transferred; (c) the value of its tangible assets at the time of the transfer; (d) whether or not the majority of its employees are taken over by the new employer; (e) whether or not its customers are transferred; (f) the degree of similarity between the activities carried on before and after the transfer; and (g) the period, if any, for which those activities were suspended.

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