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Acquisition of a Netherlands Antilles Business – automatic “take over” of employment contracts and obligations towards employees?

In the Netherlands Antilles the purchase and acquisition of the business activities of a company (the “Target Company”) is not subject to specific statutory regulations. The answer to the above captioned question depends on the method of acquiring the business. There is a difference between the acquisition through an asset transfer and an acquisition through a share transfer In case of a share transfer, the Target Company will remain employer in relation to the employees. As such the acquisition of the shares in the Target Company, does in principle not affect the legal relationship between the Target Company and its employees.

Although the ownership of the shares of the Target Company has changed, the Target Company as such remains the same, thus the parties to the employment contract do not change. In case of an asset transfer all or part of the activities of the Target Company will be assumed by the company which acquires the relevant assets (the Purchaser”).The Purchaser decides whether or not it wishes to acquire the employment force of the Target Company. In the affirmative case the Purchaser, the Target Company and the employee(s) will have to negotiate the take over of the rights and obligations arising from the employment contracts

The following observations should also be made with respect to an asset transfer.

The Purchaser of the assets of the Target Company is not obliged to take over the employment contracts of the employees of the Target Company. If the Purchaser of the Target Company does not take over the employment contracts, the Purchaser will not be liable for any arrears in salary payments, nor can the Purchaser be held liable by the social security bank of the Netherlands Antilles or by the Netherlands Antilles tax authorities if the Target Company has not complied or does not comply with its obligations with respect to, for example, social insurance contributions or tax.

This is different in the Netherlands. Pursuant to applicable Dutch legislation, the Purchaser of the business, though the acquisition of the assets of the Target Company, in principle also assumes and “takes over” the employees of such business.

However, if no arrangement has been made in relation to the employees of the Target Company and the Purchaser continues to make use of their services after the asset acquisition, their employment contract with the Target Company will be considered as “taken over” by the Purchaser. In which event the Purchaser can also be held liable for any arrears in payment regarding the salary payments, social security contributions or wages tax. It is therefore advisable to structure things well with respect to the employees of the Target Company before any asset acquisition.

In case the Purchaser decides to “take over” and contract one or more of the employees of the Target Company, the Purchaser should offer the concerning employees of the Target company a new employment contract. The Purchaser is not obliged to offer the employees the same employment conditions they had with the Target Company. The employees, on the other hand are not obliged to accept the offer of the Purchaser. If the employee agrees, his or her old employment contract with the Target Company has to be terminated properly and the Purchaser and the concerning employees should enter into a “new” employment contract.

Curaçao, 05 July 2007
VanEps Kunneman VanDoorne
www.ekvandoorne.com