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Cross border legal mergers: equal participation rights for employees

Cross border legal mergers: equal participation rights for employees
Written by
Stephanie ter Brake

On 20 June 2013, the Court of Justice of the European Union (CJEU) ruled that national legislation regarding employee participation after a cross border legal merger, only applies when it contains the highest level of employee participation rules as well as equal participation rights for employees across the various Member States working for the same company (C-635/11). The CJEU based its judgement on Article 16(2)(b) of Directive 2005/56/EG, which Article The Netherlands failed to implement in its national legislation. The reason for not implementing this Article was that Dutch participation rules for employees are based on the principle of territory. Hence, they don’t apply to employees working at foreign business locations.

To satisfy the demands of the CJEU and comply with the Directive, the Dutch legislator has decided to introduce an amendment in the national laws governing cross border legal mergers as per 1 July 2015 (Article 2:333k of the Dutch Civil Code). The new rules mainly provide for equal participation rights between employees of business locations in other Members States and employees working for the same company in The Netherlands, in case a Dutch company is created by means of a cross border legal merger. As a consequence, the negotiation process for the structuring of the employee participation will be even more sophisticated than before.

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