Retailers opting for bankruptcy to avoid paying employee costs, unions say

Retailers are opting to declare struggling stores bankrupt so that they can save money on wage costs and other employee rights, trade union FNV told De Telegraaf following the collapse of BCC and Big Bazar. CNV is also seeing a pattern. The number of bankruptcies increased by 9 percent in September compared to the month before, Statistics Netherlands (CBS) reported on Thursday.

“Owners consciously choose bankruptcy, while in fact, we are simply dealing with a reorganization or transfer of a company,” FVN director Linda Vermeulen told the newspaper. In a bankruptcy, employees lose the wages, transition compensation, and other accrued rights they’d be entitled to in a reorganization. “It is deplorable that shop owners charge employees and society for their tinkering.”

If the bankruptcy administrators can organize a restart, employees often keep working for the same store. “But they lose their accrued rights and start again on minimum wage,” Vermeulen said.

CNV is also critical of the bankruptcies in the shopping street. “Of course, I understand that the administrator must first pay the tax authorities, but now the employee is dangling somewhere at the bottom. That really needs to change,” said CNV director Leon van Elsen.

The unions want to strengthen employee’s rights in bankruptcy. FNV wants employees to remain entitled to transition payment in the event of bankruptcy and for the notice period to expire so that employees can immediately switch to a different job.

The SP and PvdA are also concerned about the position of employees when their employer goes bankrupt and have asked parliamentary questions about the matter.

Retail chain Big Bazar denied the accusation that it consciously chose bankruptcy. “We have no indication that this is the case,” bankruptcy administrator Hanneke de Coninck told De Telegraaf. “The legal rights of employees are no different at Big Bazar than in other bankruptcies.” BCC declined to respond

Bankruptcies on the rise

The courts in the Netherlands declared 25 more companies bankrupt in September than in August, corrected for hearing days. That is an increase of 9 percent, CBS reported on Thursday.

The number of bankruptcies has increased for over a year since dropping to a historic low due to the government's coronavirus support measures. In the first three quarters of 2023, 60 percent more businesses went bankrupt than in the same period in 2022.

Not corrected for court hearing days, 278 companies and institutions went bankrupt in September. Specialist business services had the largest number of bankruptcies at 50. That is 26 more than in August. Relative to the number of businesses in a sector, the most bankruptcies happened in the transport and storage sector in September.