Right to Redundancy Pay on a Business Takeover: What You Need to Know

Transition payment in a business takeover

Your employer is being taken over — and now you are wondering what that means for your job and your transition paymentThe good news: the law provides you as an employee with strong protection in the event of a business takeover. The less straightforward news: whether you are immediately entitled to a payment depends on the legal structure of the takeover.

Transfer of undertaking and what it means for you

Not every business takeover works in the same way. The law draws an important distinction. If there is a so-called overgang van onderneming within the meaning of Article 7:662 of the Dutch Civil Code, your employment contract transfers automatically to the new owner. You do not need to sign a new contract, and your terms and conditions of employment remain the same in principle.

A transfer of undertaking occurs when an economic entity is transferred by means of an agreement, merger or demerger, and that entity retains its identity. Think of the takeover of the business premises, the trade name, the clients and a substantial part of the staff. If that is the case, the new owner automatically steps into your employer's shoes.

In the event of such a transfer, your employment does not end — and therefore you are not entitled to a transition payment. Your employment contract simply continues with the new employer.

When are you entitled to a transition payment

Precisely because the takeover itself may not serve as grounds for dismissal, the law is clear: the takeover may never be the sole reason for your dismissal. If the new employer dismisses you nonetheless, there must be an independent ground for dismissal, such as economic circumstances or underperformance. Dismissal on such grounds does entitle you to a transition payment, and the years you worked for your previous employer also count towards the calculation.

Suppose you have already worked ten years for the original employer and the acquiring party dismisses you after the takeover: all ten of those years of service count. The new employer cannot restart the count of years of service from the date of the takeover. This is an essential protective mechanism in the law.

In 2026 the maximum transition payment is € 102,000 gross, or a full gross annual salary if that is higher than € 102,000. The amount accrues at one third of a monthly salary for each year worked.

Cooperating with or refusing the takeover

You are not obliged to transfer to the new employer. However, if you refuse, you must do so expressly and unambiguously. In that case your employment ends by operation of law at the moment of the transfer — and you are in principle not entitled to a transition payment.

There is, however, an important exception. If the takeover leads to a significant deterioration of your terms and conditions of employment, a refusal is regarded as a termination at the initiative of the employer. Think of a change of location that results in an unreasonably long commute, or substantially worse terms and conditions of employment. In that case you may still be entitled to a transition payment — and possibly also to a fair compensation.

Successive employership as additional protection

Is there no formal transfer of undertaking, but does a new employer take you on to perform essentially the same work? In that case there may be opvolgend werkgeverschapEven in that situation the years of service with the previous employer count towards the amount of any future transition payment. This protects you against situations in which the structure of the takeover has been arranged in such a way that your accrued rights would be lost.

Practical tips if your company is being taken over

• Keep all documents relating to your employment: contracts, payslips and any additional agreements.
• Check that your original start date is correctly recorded in the new employer's administration.
• Read every new offer from the acquiring party carefully: do not agree too quickly to changes in your terms and conditions of employment.
• Save all communications about the takeover: emails, letters and notes of conversations may prove useful later.
• Are you unsure whether there has been a material deterioration in your terms and conditions of employment? Have this assessed by an employment law specialist before making any decision.
• Is dismissal being threatened following the takeover? If so, check that the correct number of years of service has been taken into account in calculating your transition payment.

Why Employment Lawyer Eindhoven

A business takeover raises legal questions that you cannot simply answer on your own. Whether you want to know whether your years of service will be counted correctly, or you have doubts about a deterioration in your terms and conditions of employment: at Arbeidsjurist Eindhoven we know how employment law works in practice. We are familiar with these kinds of issues in the Eindhoven and Brabant labour market and are happy to think things through with you — personally, concretely and without any fuss.

Get in touch with no obligation. We will look at your situation together and work out what the best next step is.

Frequently asked questions

Am I entitled to a transition payment if my employer sells the business?

Not automatically. In the case of a transfer of undertaking, your employment contract transfers to the new employer and does not come to an end. Only if the new employer dismisses you after the takeover will you be entitled to a transition payment — with your years of service with the previous employer also counting towards that entitlement.

Do my previous years of service count towards the calculation of the transition payment after a takeover?

Yes. In the case of a transfer of undertaking, the new employer takes over all rights and obligations under your employment contract. This means that years of service with the previous employer count in full if the new employer later dismisses you. The clock does not restart from the date of the takeover.

What if I do not want to transfer to the new employer?

You may refuse to transfer, but in that case your employment will in principle end by operation of law at the moment of the transfer and you will have no entitlement to a transition payment. However, if the takeover leads to a material deterioration in your terms and conditions of employment, your refusal may be regarded as a termination at the initiative of the employer. In that case you may still be entitled to a transition payment.

Is the new employer permitted to change my terms and conditions of employment after the takeover?

Not as a rule. Upon a transfer of undertaking, your existing terms and conditions of employment transfer to the new employer. The employer may not unilaterally impose changes that are to your detriment. Are you unsure whether a proposed change is lawful? Have it assessed by an employment law specialist.

Does the protection upon a transfer of undertaking also apply when only part of the business is taken over?

Yes. The law also protects employees in the event of a transfer of a part or branch of an undertaking, provided that part can be regarded as an autonomous economic entity that retains its identity after the transfer. Whether this is the case depends on the facts and circumstances of the specific situation.

We are happy to think along with you. For advice tailored to your situation, we would be glad to talk. No rights can be derived from the content of this page and it may contain inaccuracies.