Dutch Supreme Court Clarifies Rules on Dismissal Following a Transfer of Undertaking

On 6 February 2026, the Dutch Supreme Court rendered a judgment on the possibility of dismissal after a transfer of undertaking on account of economic, technical or organisational reasons (known as the “ETO reasons”). This judgment is important news for employers who wish to reorganise after a transfer of undertaking. 

In the process of a transfer of undertaking, the undertaking – or a part thereof – is transferred from one employer to another. If it meets certain requirements, the transfer is a ‘transfer of undertaking’ and the employees of the undertaking (or a part thereof) that is transferred will automatically be included in the transfer to the new employer. They will automatically take up employment with the new employer and will keep all their terms of employment. A transfer of undertaking goes hand in hand with a ban on termination. This means that employees cannot be dismissed because of the transfer of undertaking. 

Under EU law, the ban on termination does not apply if a dismissal is based on the ETO reasons. Although this rule is not expressly set out in Dutch law, it is applied by the Dutch courts in case law and, for example, in the Implementation Rules of the UWV. Nevertheless, there has long been a lack of clarity about the connection between the ETO reasons and the transfer of undertaking. 

The Supreme Court has now explained that there can be no intrinsic connection between the dismissal and the transfer as such. However, this does not mean that any connection between the reason for dismissal and the transfer is excluded. Additional circumstances may cause the non-existence of an intrinsic connection. With its judgment, the Supreme Court follows the intention behind the laws on transfer of undertaking, which was to strike a reasonable balance between the interests of employees included in the transfer of undertaking and the interests of the new employer. The new employer must be able to implement such adjustments and changes as the continuation of its activities requires.

Below, we will explain what the case that ended up in the Supreme Court was about. 

In this case, the employee was employed by a supermarket in the job of ‘HR assistant’. There was no formal job description; in practice, it was an all-round administrative role.

The supermarket was first sold to a chain and then resold to a franchisee. In accordance with transfer of undertaking, the employees were transferred as well. After the takeover, the franchisee found that the job of the all-round administrative employee did not exist in its organisation and could not be fitted in either. The new employer argued that this job had therefore become redundant and requested the UWV for an application for dismissal.

The UWV denied the application for dismissal, because the franchisee had made it insufficiently plausible that there was no job within the franchisee’s group with a similar job content as that of the employee concerned. The franchisee then applied to the Subdistrict Court, which rescinded the employment agreement on account of commercial reasons. 

In the subsequent appeal proceedings, the Court of Appeal upheld this decision. The Court of Appeal considered that the franchisee had made an independent analysis of the organisation after the takeover, which had revealed that the employee’s job was neither present nor could be fitted into the corporate structure of the new owner. According to the Court of Appeal, the franchisee had substantiated sufficiently that the dismissal was prompted by organizational reasons and was therefore not prohibited because of transfer of undertaking. The Court of Appeal also held that the shorter the time between the transfer of undertaking and the dismissal, the more compelling reasons a new employer has to give as to why a dismissal is not inspired by the transfer itself, but by separate ETO reasons.

This Supreme Court judgment gives more options to employers who want to reorganise after a transfer of undertaking. In short, a ban on termination still applies to dismissals due to a transfer of undertaking, but reorganising becomes possible if there are independent ETO reasons. Regarding these ETO reasons the following circumstances are relevant: 

•    The more time there is between the transfer and the reorganisation (4-6 months in general), the more likely it will be for ETO reasons to exist.
•    Are there additional circumstances on which the reorganisation is based?
•    Are the ETO reasons intrinsically connected to the transfer of undertaking or not?
•    Are the ETO reasons isolated? This means that they have not been initiated or triggered by another party. 

Would you like to learn more about reorganising after a transfer of undertaking? Please contact Ilse Baijens or Sem Reijnders.