An employer may decide to close the business or face bankruptcy. In both cases, dismissal may be unavoidable for employees. However, this does not mean that you are without rights: rules and compensation also apply in the event of company closure or bankruptcy.
In this article we explain how dismissal works in these situations and what you are entitled to.
Dismissal upon company closure
An employer may close the company, but must follow the dismissal rules.
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Dismissal must be arranged via UWV permission.
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The reflection principle determines which employees are dismissed.
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The employer must conduct a redeployment investigation.
👉 In this case you are entitled to the transition compensation, unless there is bankruptcy (see below).
Dismissal in case of bankruptcy
If the employer goes bankrupt:
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The employment contracts are terminated by the curator.
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The UWV takes over the wage payments via the wage guarantee scheme.
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You are not entitled to a transition payment, because there are no financial resources.
Who can file for bankruptcy of an employer?
Requesting the bankruptcy of an employer can be done by different parties. For example, the employer can file for bankruptcy itself, but this is often done at the initiative of creditors, such as suppliers or theTax authorities, when outstanding invoices remain unpaid. As an employee, you can also file for bankruptcy of your employer if, for example, you have not received a salary for a long time. This does require that there is another creditor who supports your claim (a so-called support claim). It is therefore not possible to file for bankruptcy as the only creditor.Applying for unemployment benefits after bankruptcy
Have you lost your job due to bankruptcy and has the curator officially terminated your employment contract? Then you may be eligible for unemployment benefits via the UWV. Note: Apply for unemployment benefits no later than one week after the end of your notice period. A timely application is important to avoid missing out on part of your benefit. The application process is as follows:- Log in to the UWV website with your DigiD.
- Complete the application form for unemployment benefits.
- Add any necessary documents, such as the letter from the curator.
Should the curator take into account prohibitions on termination (such as illness or pregnancy)?
In the event of bankruptcy, the normal termination prohibitions — such as illness, pregnancy or membership of the works council — do not apply to the curator. This means that the curator may terminate your employment contract, even if you are ill or on maternity leave, for example. Furthermore, no permission from the UWV requires permission for this termination. However, the curator must take into account the applicable maximum notice period, which in the event of bankruptcy is never longer than six weeks.Submitting claims to the trustee: what is and is not possible?
When your employer goes bankrupt, you cannot always count on the full back wages. The UWV pays out wages for a period of up to 13 weeks prior to the bankruptcy, plus certain vacation days and holiday allowance. If you have claims that fall outside this scheme—for example, wage arrears older than 13 weeks, unpaid expenses or other amounts—you can submit these to the trustee of the bankrupt company.Claim priority
Not every claim has the same chance of payment. The curator distinguishes between:- Preferential claims: These are claims that have priority according to the law, such as employee wage claims. These are at the top of the ranking.
- Competing claims: This includes claims for damages and other outstanding amounts. These will only be paid out when the preferential creditors have been paid in full.
UWV wage guarantee scheme
The UWV pays in the event of bankruptcy or suspension of payments:
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Arrears of wages of up to 13 weeks before the bankruptcy.
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Holiday pay and vacation days for the current and previous year.
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Salary for the notice period (maximum 6 weeks).
What if your wage arrears are longer than 13 weeks?
Do you have wage arrears that go back further than the 13 weeks for which the UWV pays out? Then the part that is older is not covered by the wage guarantee scheme. You will usually not receive this part automatically. However, it is wise to always submit these outstanding amounts as a claim to the bankruptcy trustee. Even if the UWV does not reimburse certain amounts or rights, you must report those claims to the curator. Although it is uncertain whether you will receive these amounts in full, submitting a formal claim will maximize your chances.Difference between business closure and bankruptcy
| Situation | Procedure | Transition fee | UWV wage guarantee |
|---|---|---|---|
| Business closure | UWV procedure + reflection | ✅ Yes | ❌ No |
| Bankruptcy | Curator terminates contracts | ❌ No | ✅ Yes |
Practical examples
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Example 1: A retail chain closed voluntarily. The employees were dismissed through UWV and received transition compensation.
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Example 2: A catering company went bankrupt. The curator canceled the contracts. The UWV paid out overdue wages, but there was no transition compensation.
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Example 3: In the event of a factory closure, an employee received additional compensation through the social plan on top of the transition payment.
Checklist for dismissal in the event of closure or bankruptcy
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📑 Check whether there is a closure or bankruptcy.
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⚖️ When closing: ensure correct application of the reflection principle.
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💶 Ask for the transition payment in the event of closure, or wage guarantee in the event of bankruptcy.
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📝 Check whether you are entitled to a social plan.
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📞 Consult an employment law lawyer in the event of a dispute with a trustee or employer.
Common mistakes
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Thinking that bankruptcy automatically means that all rights expire.
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Do not apply for a wage guarantee from UWV.
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In the event of company closure, agree to dismissal without transition payment.
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Do not carry out a legal check of the social plan.
Frequently asked questions (FAQ)
1. Am I entitled to transition compensation in the event of bankruptcy?
No, only in the event of business closure without bankruptcy.
2. What does the UWV pay in the event of bankruptcy?
Overdue wages, holiday pay, vacation days and wages for the notice period.
3. Can my employer simply close and dismiss?
Yes, but dismissal must be done via UWV and in accordance with the rules.
4. What is a social plan?
A scheme in the event of reorganization or closure that contains agreements about compensation and guidance.
5. Can I object to dismissal in the event of bankruptcy?
In practice, almost never, because the company closes down.
Why Arslan Lawyers?
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Specialized in dismissal, bankruptcy and wage disputes
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Guiding employees with UWV and curator procedures
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Check whether you are entitled to a transition payment or wage guarantee
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Negotiate extras via social plan
Conclusion
Dismissal due to company closure or bankruptcy has major consequences, but you do have rights. In the event of closure, you are entitled to a transition payment, and in the event of bankruptcy, you are entitled to a wage guarantee via the UWV. Always have your situation legally assessed to avoid missing out on reimbursements.