The employees took the position that there was successive employership and argued that they were employed on the basis of an open-ended employment contract. They claimed not only compensation for irregular dismissal (because the employer did not observe the correct notice period), but also a transition payment and fair compensation. According to the employees, the transition payment should be calculated based on their entire employment history, including the period prior to the date of bankruptcy.

The subdistrict court ruled entirely in favor of the employees. Regarding the claimed transition payment, the court ruled that the full period of employment prior to the date of bankruptcy counts toward the calculation of the transition payment. The employer’s reliance on Article 7:673c, paragraph 1 of the Dutch Civil Code (which stipulates that the transition payment is no longer due if the employer has been declared bankrupt) was rejected by the court. In the court’s view, that article is not intended to create a ‘severance’ in successive employership between the periods before and after bankruptcy regarding the length of service that counts toward the transition payment.

In light of this ruling, companies wishing to realize or having realized a restart must be cautious. One must be mindful that years of service from before the bankruptcy count if they wish to part ways with employees who came from the bankrupt enterprise at any point in the future.

At the time of this publication, it is unknown to us whether the employer has filed an appeal against this highly unfavorable first-instance ruling.

Should you have any questions following this report and/or require further clarification, please do not hesitate to call us.