People first: Why HR should always be on the deal table — A Dutch perspective

1. Deal structure drives HR impact

The legal structure of the transaction—share deal versus asset deal—directly affects the treatment of employees under Dutch employment law:

• In a share deal, employees remain with the same legal employer. While their terms of employment stay unchanged, post-deal integration challenges—such as aligning benefits, harmonizing policies, and managing cultural transitions—require careful planning.
• In an asset deal, the transaction may qualify as a transfer of undertaking under Dutch law (TUPE). In that case, employees transfer automatically to the new employer with all rights and obligations intact. A key consequence is that dismissals linked to the transfer are prohibited for up to a year. This significantly constrains the buyer’s ability to restructure in the short term.

2. Dutch consultation obligations and works council involvement

Under the Dutch Works Councils Act (Wet op de Ondernemingsraden), transactions—whether structured as share or asset deals—can trigger mandatory consultation with the Works Council. Timing is critical: consultation must occur early enough for the Works Council’s advice to influence the decision-making process. Where employment terms or internal policies are impacted, Works Council consent may also be required.

Poorly managed consultation processes can result in delays, reputational risk, or even proceedings before the Dutch Enterprise Chamber (Ondernemingskamer).

3. Harmonization of terms and conditions

Following a transaction, the acquiring entity may wish to harmonize employment terms across jurisdictions or business units. In the Netherlands, this is not straightforward. Changes require either:These exemptions are repealed;

• Employee consent, or
• A compelling business interest that outweighs the employee’s right to maintain existing conditions.

A transitional arrangement and well-structured communication can increase acceptance, particularly if the overall compensation package is preserved or improved.

4. Redundancy and restructuring under Dutch rules

Any restructuring post-deal must comply with strict Dutch redundancy laws:

• Dismissals must be based on objective business grounds.
• Employers must apply the “age reflection” principle (afspiegelingsbeginsel), ensuring proportional layoffs across age groups for employees in interchangeable roles.
• Prior approval from the Dutch Labour Authority (UWV) is generally required unless dismissals are agreed via settlement.

In cases of collective dismissal (20+ employees within three months), further obligations arise:

• Notification to relevant trade unions and the Social Economic Council (SER);
• A one-month waiting period;
• Consideration of a social plan (typically covering severance, legal fees, and outplacement support).

These rules apply uniformly across sectors—from energy to pharma, and from industrial manufacturing to high-growth tech.

5. A practical, people-centric Dutch approach

While the Dutch legislative framework is robust, Dutch practice is often pragmatic. Works Councils are generally open to facilitating transactions that preserve employment conditions, and employees are typically cooperative when treated with transparency and fairness. Offering reasonable transition packages or social plans can ease integration and mitigate risk.

Conclusion: Employment law in the Netherlands is not a side note

HR is not an isolated workstream. It intersects with every element of a transaction—from due diligence and valuation to post-closing integration. Under Dutch law, overlooking employment matters can lead to legal non-compliance, consultation delays, and reputational harm.

In short: HR is not just relevant—it’s decisive.

Recognising this, employment legal support is fully integrated into Hogan Lovells’ international deal teams—ensuring that people-related issues are addressed from day one, alongside corporate, tax, and regulatory workstreams. This multidisciplinary approach enables our clients to execute transactions with confidence, clarity, and compliance.

Clients across all industries are very welcome to reach out for a complementary conversation to explore the Dutch employment and HR implications of any contemplated transaction. We would be delighted to assist in ensuring a smooth and compliant process, tailored to your sector, strategy, and workforce.

And above all, HR should be part of your transaction strategy — from the very start.

Authored by Maria Benbrahim.