WOVOF on the horizon: Increased protection for employees, greater pressure on employers

The Wet Overgang van Onderneming in Faillissement (WOVOF) – the Dutch Act on the Transfer of Undertakings in Bankruptcy – proposes a fundamental revision of employee protection in the event of bankruptcy. Under the current law (Article 7:666 of the Dutch Civil Code), an exception applies to the regular rules on the transfer of undertakings: following a restart after bankruptcy, the buyer may choose which employees to take over. The WOVOF reverses this principle. The proposed legislation requires the restart purchaser, in principle, to take over all employees, maintaining their existing employment conditions. The aim is to prevent abuse of bankruptcy proceedings in restarts and to strengthen employees’ legal position.

Legislative Process: From internet consultation to Council of State

The first internet consultation took place back in 2019 but was postponed pending European case law. A renewed consultation ran from 27 May to 1 September 2024 and resulted in several critical responses. However, on 11 July 2025, the Council of Ministers approved submission of the bill to the Council of State. Parliamentary debate will follow once the Council's advisory opinion becomes available. If adopted, the law is not expected to enter into force before 2026.

Key Provisions of the Proposal

1. All employees transfer, in principle: The restart purchaser must offer all employees an employment contract under the same terms and conditions. An exception applies in case of objective, economic circumstances occurring within 26 weeks of the transfer.
2. Exceptions to full transfer, two selection methods:
a. Mirror method (inspanningsmethode): aligned with the existing ‘last-in, first-out’ selection principle.
b. Alternative objective method: based on an approved business plan. Incorrect application can result in reinstatement or fair compensation via the subdistrict court. In the case of vacancies arising within 26 weeks, previously dismissed employees must be re-approached first.
3. Small businesses: Companies with fewer than 20 employees may choose to opt out of the WOVOF, provided they are transparent about their personnel decisions and selection criteria.
4. Non-compete clauses: These will automatically lapse for employees who are not offered a new contract, allowing them greater freedom to work elsewhere.
5. Employee participation: The powers of the works council (OR) will be strengthened. The trustee must consult the OR about restart decisions, and the supervisory judge must hear the OR and give prior approval for the transfer.

Criticism from practice

While the objective of the bill is viewed positively, the proposal has faced substantial criticism. Insolvency practitioners, trustees, and employers fear that the new law will complicate or delay restarts. The obligation to take over all employees could significantly increase costs and risks for buyers. This may in fact lead to fewer restarts and reduced job preservation – the opposite of the law’s intended effect.

Concerns have also been raised about the practical feasibility of the proposed rules. Within a short timeframe, the trustee, the works council, and the supervisory judge must assess compliance with numerous procedural and substantive requirements. This is at odds with the urgency and speed often required in practice.

What does this mean for employers?

Employers considering a restart should, if the law enters into force, take personnel obligations into account at an early stage. Transparency towards employees, involvement of the works council, and close coordination with the trustee and supervisory judge will become crucial. Small businesses retain some flexibility, but only if choices are carefully substantiated.

The WOVOF marks a significant shift in Dutch labour and insolvency law. Employers are well advised to prepare in good time for the implications of this legislation.

WOVOF on the horizon: Increased protection for employees, greater pressure on employers