Reorganisation following a transfer of undertaking: Netherlands Supreme Court clarifies rules

Reorganisation following a transfer of undertaking after a transaction often appeared impossible due to the prohibition on employment terminations arising from the transfer. Integration, however, after such a transaction was also equally unrealistic.

On 6 February 2026, a Netherlands Supreme Court ruling provided, for the first time, a guiding principle for employers on the scope of reorganisation following a transfer of undertaking.

This judgment touches on the tension that arises in many of these transactions between the statutory prohibition on dismissal due to a transfer of undertaking and the transferee’s need to integrate the acquired activities into its own organisation.

The following article examines the Supreme Court’s judgment and considerations for employers. 

Background: when does a transfer of undertaking occur?

Under Dutch law, a transfer of undertaking takes place when (i) an economic entity (ii) is transferred as a result of an agreement, merger or demerger and (iii) retains its identity in the process. 

In practice, this means that when individual assets are transferred (e.g. customer databases, stock, intellectual property or business assets), it must always be assessed whether these components together form an organised whole that functions as an independent economic entity. If an economic entity is transferred, there is a real risk that a transfer of undertaking has taken place. 

Classification as a transfer of an undertaking has the following far-reaching consequences for a transferee: 

• Transfer by operation of law: All employees associated with the transferred economic entity are automatically transferred to the transferee. The transferee cannot 'cherry-pick' which employees are transferred and which are not.
• Retention of rights: Employees are transferred while retaining all their rights and obligations. (Unilateral) harmonisation of terms and conditions of employment is not automatically permitted.
• Prohibition on dismissal: Employers may not dismiss employees on the grounds of the transfer of an undertaking. This prohibition, however, is not absolute. The Supreme Court has now provided further clarification on the scope of this prohibition on dismissal. 

The case before the Supreme Court: a role that did not fit anywhere

The case concerned the takeover of an independent Jumbo supermarket by the Maripaan Group. One of the employees taken over held a unique position at the Jumbo supermarket as HR/Personnel Manager. 

Shortly after the takeover, the employer and Maripaan concluded that the role did not exist within the organisational structure of a typical Jumbo store, could not be integrated and was redundant. 

From 17 May 2023, discussions took place regarding the (as it turned out, impossible) continuation of her employment in a different position, and on 16 June 2023, an application for dismissal permit was submitted to the UWV. On 5 September 2023, the UWV refused to grant permission, stating it had not been demonstrated that the dismissal was separate from the transfer. The case escalated to the Supreme Court. 

The Supreme Court’s criterion: no intrinsic link

The Supreme Court ruled that the prohibition on dismissal must be interpreted in conjunction with the underlying European Directive. That Directive prohibits dismissal on the grounds of the transfer, but expressly allows for dismissal on economic, technical or organisational grounds (ETO-grounds), provided that these grounds are not intrinsically linked to the transfer. 

By applying the criterion of 'no intrinsic link', the Supreme Court makes it clear that not every connection between the transfer and a subsequent reorganisation is, by definition, prohibited.
 
The relevant factor is not whether a connection exists, but whether the transfer is the actual underlying reason for the dismissal. If the primary grounds are based on independent economic, technical or organisational reasons, then the prohibition on dismissal does not stand in the way of dismissal. The length of time that has elapsed since the transfer is not decisive, but it does play a role. The shorter the period between the transfer and the reorganisation, the more likely the employer can provide a sufficient explanation for the absence of an intrinsic link with the transfer.

In the Maripaan case, the employer ultimately passed that test. The role of HR/P&O manager did not exist anywhere else within the Maripaan organisation. HR administration was carried out centrally at the service office, the remaining tasks were performed at branch level by the supermarket manager and team leaders, and there was no justification for making an exception for a single branch. The fact that the dismissal took place shortly after the transfer was not decisive.

What does this mean in practice?

The lower courts must clarify the specific circumstances under which the 'intrinsic link' test is passed or failed. Nevertheless, this judgment confirms that employers – subject to certain conditions – have a certain degree of leeway to reorganise, even immediately following a transfer of undertaking.

The key practical considerations:

• Document the organisational structure in advance: Before or immediately after the transfer, map out how the existing organisation is structured and where the taken-over roles and tasks do or do not fit. This clarifies the distinction between the transfer and the independent business assessment.
• Substantiate the ETO reasons specifically: Carefully document and explain that the reorganisation is based on the company’s own independent ETO, and is not a consequence of the transfer.
• Consider the increased burden of proof when a reorganisation closely follows a transfer: the sooner the reorganisation takes place after the transfer of undertaking, the more robust the evidence must be to demonstrate there is no intrinsic link between the reorganisation and the transfer.

For more information on this ruling and reorganisations following a transfer of undertaking in the Netherlands, contact your CMS client partner or the CMS experts who wrote this article.