What is a transfer of undertaking (overgang van onderneming) under Dutch law?

Dutch term: Overgang van onderneming | Legal basis: Articles 7:662-7:666 BW

A transfer of undertaking (overgang van onderneming) under articles 7:662 to 7:666 of the Dutch Civil Code, implementing EU Directive 2001/23/EC, occurs when an economic entity retains its identity and is transferred to a new employer. The consequence is that all employees of the transferred entity automatically transfer to the new employer on their existing terms and conditions.

The transfer applies to asset deals and business unit transfers, not to share deals (where the employer entity itself does not change). The transferor and transferee are jointly liable for employment obligations arising before the transfer for one year after the transfer date. Dismissal solely because of the transfer is prohibited.

Why it matters for international businesses

For international buyers acquiring Dutch business operations through an asset deal, the automatic transfer of employees is one of the most significant legal consequences. Understanding which employees transfer and on what terms is essential for deal structuring and pricing.