Cross-border restructuring: The crucial role of employees, works councils and trade unions
10-11-2025
Cross-border restructurings (mergers, demergers and conversions) are extensive procedures that not only require intensive coordination with foreign counsels but also raise many questions about the possibilities and interpretation of Dutch law.
In this fifth blog in our series on cross-border restructuring, we turn our attention to another area of law, which is employment law. In this blog, we discuss the role of employees, works councils, and trade unions.
How is employee participation organised in cross-border mergers?
Employees have the right to be involved in key company decisions that affect their work, working conditions, or employment terms. Through the works council or another form of employee representation, employees can provide input and advice on matters such as reorganisations, mergers, or internal changes. This ensures that their interests are considered in the decision-making process.
The general rule is that the national employee participation rules of the Member State in which the company will be established after the cross-border merger apply. For an inbound merger, this means that Dutch employee participation rules generally apply. Employee participation can be divided into three phases, as described in our second blog. If one of the exceptions applies, a Special Negotiating Body (hereinafter defined) must be established.
The participation rules are not limited to cross-border mergers; they also apply to cross-border divisions and conversions.
It is therefore important to take the applicable national employee participation rules into account from the very start. In an inbound merger, compliance with the Dutch Works Councils Act (hereinafter: "WCA") is required, whereas in outbound mergers European rules may apply. Early involvement of the works council or another employee representative body can help ensure a smooth process and prevent legal complications.
What happens during the preparatory phase of a cross-border merger?
Already in the preparatory phase, the works council and trade unions must be involved in the restructuring. No later than six weeks before the general meeting or the management board decides on the merger, the works council—or, in the absence of a works council, the employees—must be informed about the intended merger and the merger proposal. The works council then has up to five working days before the merger decision to submit its comments.
The merger proposal must include, among other things, the timeline for the merger and the likely consequences of the merger. In addition (where applicable), information must be provided on the corporate participation procedure. For the works council (or employees), the explanatory notes (where relevant) must also include employee-related elements.
The works council may then provide comments on the merger proposal and, where applicable, the explanatory notes.
In addition, the obligations arising from the WCA must be observed. In a cross-border merger, the works council will generally have the right to issue advice under Article 25 WCA. The advice must be requested at such a moment that it can have a material influence on the final decision.
Furthermore, under the SER Merger Code (“SER-Fusiegedragsregels”), the merger must be notified to the relevant trade unions. Comments from the trade unions or the works council must be included in the explanatory notes, which are made available to shareholders and the notary.
It is therefore essential to comply with all information and consultation obligations during this preparatory phase. A detailed merger proposal must be drawn up and shared in a timely manner with the works council and trade unions to prevent delays or legal disputes later in the process.
What happens during the decision-making phase of a cross-border merger?
In the decision-making phase, the works council usually no longer plays an active role unless it decides to appeal to the Enterprise Court under Article 26 WCA against a decision that conflicts with its advice. Nevertheless, the advice and comments of the works council and trade unions may still influence the final merger decision, depending on the circumstances and the process.
Although the works council is less actively involved at this stage, it remains important to carefully consider its earlier advice during decision-making. Companies should also be mindful of potential legal action if a negative advice is disregarded.
What happens during the implementation phase of a cross-border merger?
In the implementation phase of an outbound merger, the notary must verify—before issuing the pre-merger certificate—that all formal requirements have been met (as also described in our second blog). This review includes consideration of the works council’s advice and the comments provided by the works council and/or trade unions. For inbound mergers, this assessment also relies on the certificate issued in the Member State of departure.
It is crucial to ensure that all required documents, including the advice and comments of the works council and trade unions, are complete and available to the notary in time. This prevents delays and ensures full compliance with legal requirements.
What are the exceptions to national participation rules in cross-border mergers?
If the applicable national law does not contain specific rules for employee participation in an outbound merger, it is possible that the participation rights of one of the merging entities could be circumvented. To prevent this employee participation must be arranged in accordance with the European employee participation framework, and a Special Negotiating Body (hereinafter: SNB) must be established, if one of the following exceptions apply:
Exception 1: If the merging company employs at least 4/5 of the national threshold for employee participation, the European framework applies. This means that a Dutch company with 80 or more employees undertaking an outbound merger is required to establish an SNB.
Exception 2: If the employee participation framework after the outbound merger does not ensure the same level of participation, an SNB must also be established. This exception will almost always apply to Dutch companies with a full statutory two-tier board status (“Structuurvennootschap”), as Dutch works councils have recommendation rights for the appointment of all supervisory or non-executive directors.
Exception 3: The European framework applies if the national employee participation rules of the company’s new registered office do not guarantee equal participation rights for employees of establishments located in other Member States. This situation occurs frequently, since employee participation rules usually apply only to establishments located in the Member State concerned.
It is therefore recommend assessing in advance whether any of these exceptions apply. If it does, an SNB must be established in time to comply with the European employee participation rules. This helps avoid legal complications and ensures that employee participation is properly regulated.
What is the role of the Special Negotiating Body (SNB)?
If one of the above exceptions applies, an SNB—comprising employee representatives—must be established to negotiate with the management of the merging companies. The purpose of these negotiations is to reach an agreement governing employee participation after the merger. The SNB may decide not to enter into negotiations or to terminate them early, in which case the national law of the acquiring company applies.
If the establishment of an SNB is required, it is important to be well prepared for these negotiations.
Conclusion
Cross-border restructurings raise complex legal and employee participation issues in which the role of employees, works councils, and trade unions is essential. It is crucial to involve these parties early in all phases of the process and to comply with the statutory obligations, such as the works council’s advisory rights and the notification requirements under the SER Merger Code. A careful and legally sound process that respects both national and European participation rules is key to a successful restructuring.
By seeking timely legal advice and complying meticulously with all obligations, legal risks can be minimised, and a positive contribution can be made to the successful completion of your cross-border merger.
This blog was written by Marjolijn van Deventer, Stijn van Lummel, and Pauline van Hecke. If you have any questions regarding this or any of our previous blogs on cross-border restructuring, please feel free to contact Marjolijn van Deventer or Pauline van Hecke.
