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Alignment of employment conditions

Alignment of employment conditions

Suppose your company merges with another company. Or you want to take over a company. Different terms of employment apply in both companies, so that employees are rewarded differently for the same work. Can you align the terms of employment to eliminate this inequality?

Transfer of undertaking

If there is a transfer of undertaking in the legal meaning of the word (Article 7:662 et seq. of the Dutch Civil Code), the terms of employment are transferred at the time of the transfer (merger). In that case, the terms of employment cannot be harmonised.

Thereafter, the terms of employment can be amended within the same limits as is normally possible. However, the transfer of undertaking cannot in itself constitute grounds for a change. The difficult part of this is that the reason for wanting to align/change the terms of employment after a merger often has to do with the transfer of undertaking. After all, as a result of the transfer there are different terms of employment packages within one company.

Can alignment never take place?

There are indications in the literature and lower case law that economic, technical or organisational reasons (‘ETO reasons’) could under certain circumstances provide grounds for the change. The ‘normal’ rules of unilaterally changing terms of employment would then apply.

If an unilateral amendment clause (Article 7:613 of the Dutch Civil Code) is laid down on paper, the employer must have an objectively determinable important interest and the interest of the employee must, according to standards of reasonableness and fairness, give way to the interest of the employer, a term of employment may be amended.

Changed circumstances

Alignment is also possible if there are changed circumstances at work and the employer makes a reasonable proposal, which cannot reasonably be rejected by the employee. In that case, you invoke good employee status (Article 7:611 of the Dutch Civil Code).

Of course, you can always ask the employees to agree to aligned terms of employment.

What is useful to do in a specific case depends on several factors, including the impact of the changes. That is why, well in advance of the merger, together with Valegis, you should map out which terms of employment are used in which company and what possible changes will be made. We will also pay attention to the involvement of the works council and offer a transition period or compensation scheme. This increases the chance that the change is reasonable!

Valegis’ corporate lawyers will also gladly assist you in drawing up all the necessary agreements concerning a merger and takeover and conducting a due diligence investigation.

Our experienced lawyers will gladly think along with you.

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