13 August 2026
Some time ago, a blog was published on our website about the protection of employees in a restart following bankruptcy. It was relevant then and remains a topical issue now, as the Act on the Transfer of Undertakings in Bankruptcy (Wet Overgang van Onderneming in Faillissement, WOVOF) is approaching.
That first blog (Protection of staff in relaunch from bankruptcy) mainly examined the issue from an insolvency law perspective. Below, we outline in practical terms what the upcoming WOVOF will mean for restart entrepreneurs and employees. A brief preview: additional obligations and risks for restart entrepreneurs, and greater protection for employees.
In the event of bankruptcy, a restart is often the way to preserve (part of) a business or its activities. The starting point is that the insolvency trustee dismisses all employees of the bankrupt company, subject to a notice period of up to six weeks. If the trustee subsequently sells the business activities, restart entrepreneurs (the new owners) are generally free to choose which employees they wish to retain. For employees, this often means uncertainty and the loss of rights. The WOVOF aims to change this. The new legislation strengthens the position of employees and introduces new obligations for restart entrepreneurs.
In employment law, the rules on a “transfer of a business” apply when a business is sold. The core rules (based on EU Directive 2001/23/EC and implemented in Dutch Civil Code) provide that when a business or part of a business is sold or otherwise transferred to another party:
However, these rules do not apply when the employer has been declared bankrupt and the bankruptcy trustee sells or restarts the business. As a result, a restart entrepreneur has considerable freedom to choose which employees to employ (in practice often younger employees rather than older ones), which employment conditions will remain in place, and whether to enforce non-competition clauses.
A restart involves the continuation, whether in the same or a modified form, of the activities of a bankrupt company. Often because another party acquires assets or business operations. The aim is to preserve (parts of) the business, safeguard jobs and protect value. In a “classic” situation, the bankruptcy is declared first, after which the insolvency practitioner sells assets to a restart entrepreneur.
A pre-pack is a restart structure in which the sale or transfer is prepared before the formal declaration of bankruptcy, effectively “behind the scenes”. Negotiations, agreements and planning are put in place so that they can take effect immediately once bankruptcy is declared. The aim is to limit the shock of bankruptcy, avoid delays and preserve value, for example by preventing key customers and employees from leaving during the uncertain first weeks of the insolvency.
Pre-packs are legally sensitive, however: the key question is whether the rules on transfer of a business (with employee protection) do or do not apply in such circumstances.
The bankruptcy exception only applies if the former company is:
In two cases initiated by the trade union FNV regarding whether the transfer of undertaking rules should nevertheless apply in a pre-pack situation, the Court of Justice of the European Union ruled that employees in a pre-pack are entitled to TB-protection. Although an insolvency practitioner is considered a competent public authority, in a pre-pack the court-appointed practitioner has not yet formally been appointed. Exceptions may exist, meaning TU protection might not apply in a pre-pack, but only if there is a clear statutory basis for such an exception (which currently does not exist).
The main elements of the WOVOF include:
Offer to all employees
The restart entrepreneur must in principle make an offer to all employees who were employed on the date of the bankruptcy.
Retention of employment conditions
Employees retain their existing employment conditions. Deviations are permitted only for objective economic reasons.
Selection using objective criteria
If not all employees can be retained, the restart entrepreneur must apply objective selection criteria such as age and years of service, similar to the “reflection principle” used in reorganisations. The supervisory judge will assess whether this process has been carried out properly.
Non-competition clause lapses
Employees who do not receive an offer are no longer bound by a non-competition clause, enabling them to find alternative employment more easily.
Strengthened employee participation
The works council (OR) or staff representation body (PVT) will obtain advisory rights in bankruptcy proceedings. The insolvency practitioner must involve them in advance in the restart process.
Small businesses
An exception may apply to companies with fewer than 20 employees, but transparency about the choices made remains required.
For employees, the WOVOF means significantly greater certainty:
For buyers of bankrupt companies, the WOVOF introduces additional obligations and risks:
As a result, a restart will become more complex and will require careful preparation. There is also an expectation that the WOVOF may lead to fewer restarts, potentially resulting in a loss of business activity and employment. Whether this will actually occur remains to be seen.
The advice by the Raad van State, which contains a number of suggestions for improving the explanatory notes to the bill, was published on 2 April 2026. No date has yet been set for the bill to be tabled in the House of Representatives (and the Senate), so its entry into force is still some way off.
At GMW lawyers, we combine expertise in employment law, insolvency law and corporate law. We advise both employees and restart entrepreneurs on the implications of the WOVOF and assist with negotiations and legal proceedings.
Do you have questions about your position in the event of bankruptcy or a planned restart? Please contact one of our employment law specialists.
