Intra-group redeployment

Over recent months, numerous multinational corporations have unveiled plans for large-scale reorganisations. Compared to last year, also in the Netherlands, a significantly higher number of employers have notified the Employee Insurance Agency, the UWV, of their plans for intended collective redundancies. ¹

Both the preparation and execution of a reorganisation are subject to extensive rules and regulations. Failure to comply with these obligations can have significant legal consequences, such as the UWV not giving permission to terminate the employment agreement, financial claims or reinstatement of the employees involved. A key employer obligation that often proves critical for successful redundancy is the redeployment obligation (herplaatsingsplicht).

Especially in redundancy cases, compliance with the redeployment obligation is crucial as non-compliance can lead to the employee remaining employed or entitlement to additional severance (billijke vergoeding). Most pitfalls may be circumvented by obtaining timely legal advice.

In this contribution, we shed some light on the redeployment obligation, focusing on employers who are part of a large, internationally operating group. After providing a brief description of the redeployment obligation under Dutch law, we discuss the topic of intra-group redeployment, emphasizing a recent interesting case concerning a hiring freeze handled by the Arnhem-Leeuwarden Court of Appeal (ECLI:NL:GHARL:2024:6). We conclude this contribution with some practical takeaways for intra-group redeployment.

The redeployment obligation under Dutch law

In short, the redeployment obligation entails that the employer who intends to dismiss an employee must, barring exceptions², actively verify whether the impacted employee might not be redeployed within the company and/or its group companies into another suitable position (befitting their education, experience and skills) within a reasonable timeframe with or without training.

The redeployment obligation goes beyond merely checking existing vacancies or vacancies that might arise shortly. Also roles that are currently being performed by so-called 'flexible workers' such as, for example, self-employed workers or temporary workers should be checked to assess whether the impacted employee might be suitable to perform such role instead.

In practice, compliance with the redeployment obligation requires an active approach of the employer that is tailored to the individual employee. Generally, such approach also entails that an employer schedules a personal meeting with the impacted employee to investigate possibilities and get a better feel of the employee's unique skills, ambitions and wishes. Case law shows that employers are expected to think in solutions and to take concrete measures to remove obstacles. Depending on the employee (and the size and financial situation of the employer), this can mean offering a concrete training possibility and/or providing guidance throughout the job application process.

Intra-group redeployment

As there are numerous pitfalls where it comes to redeployment, the topic can be quite challenging for Dutch employers. This applies even more where these employers are part of a larger, internationally operating group.

Often, within an international group, the separate entities conduct local personnel policy according to their own needs and wishes. Consequently, a Dutch employer within the group will - most often - not have effective control over the hiring decisions of the other group entities. Rather than an obligation to enforce redeployment elsewhere in the group, based on Dutch case law (ECLI:NL:HR:2019:64), employers who are part of a larger concern have an obligation to make reasonable efforts (inspanningsverplichting) towards intra-group redeployment.

Recent case law: does a (global) hiring freeze stand in the way of the redeployment obligation?

In a recent case on intra-group redeployment handled by the Arnhem-Leeuwarden Court of Appeal, the Court concluded that the employer, a multinational conglomerate with more than a hundred locations across Asia, North- and South-America and Europe, had made insufficient efforts towards redeployment of an employee whose role had become redundant in a reorganisation. The Court reproached the employer for merely referring the employee to vacancies on the intranet and omitting to hold an actual redeployment meeting with the employee. As a consequence thereof the employer had to pay an additional severance amount of roughly EUR 109,000 (billijke vergoeding) to the employee.

An interesting point of defence raised by the employer was that intra-group redeployment of the employee had not been an option, due to a global hiring freeze. In practice, this is not an uncommon argument. However, the value of such argument can differ significantly from case to case:

• Defining the term 'hiring freeze'

To start, what is covered by the term 'hiring freeze' may differ from employer to employer. In this case, the employer had merely imposed a hiring freeze for non-critical hiring. This leaves room for discussion on whether or not roles that might be suitable for the impacted employee may be classified as critical or not.

• Vacancies are only one part of the redeployment puzzle

Assuming a hiring freeze is absolute and applied consequently throughout the concern, then a hiring freeze can be a relevant factor that might hinder the possibilities of successful redeployment. However, even then, a hiring freeze is only one part of the redeployment puzzle. Jobs that might be relevant for redeployment are not limited to existing (or expected) vacancies. As discussed, employers are also obligated to assess whether there are roles that might be suitable for the impacted employee that are currently being performed by so-called 'flexible workers', for example: on-call workers, fixed-term employees whose contract will terminate within the reasonable period for redeployment and/or, under circumstances, workers who perform their work on the basis of another contract than an employment agreement (such as: self-employed workers). A hiring freeze does not stand in the way of this assessment of roles fulfilled by flexible workers.

Practical takeaways for intra-group redeployment

As shown by recent case law, the scope of the redeployment obligation must not be underestimated.

• Effective redeployment requires an active and tailored approach towards each individual employee whose position is made redundant, transcends national borders, and goes beyond merely checking for vacancies.

• Redeployment is complex, and misconceptions about hiring freezes represent just one of many potential pitfalls.

Over the years, the lawyers in the Employment, Incentives & Pensions Team in our Amsterdam Office have gained extensive experience with redeployment. Feel free to reach out to us if you have any questions about a specific case or wish to discuss a tailored approach for your reorganisation.

¹ Impacting 20 or more employees. Please see the link to the UWV’s publication on this topic here: Meer faillissementen en reorganisaties, maar krappe arbeidsmarkt overheerst | UWV.
² Such as dismissal due to a serious imputable act.