employment

News Update Employment

Conditions for NOW 3.0 published with correction for groups
01 October 2020
1 October 2020

On 28 August 2020, the Dutch government announced that the Temporary Emergency Bridging Measure for Sustained Employment (NOW) will be extended with effect from 1 October 2020 (NOW 3.0). In the meantime, the changes to the scheme and the exact conditions for receiving this subsidy for wage costs have also been published.

The NOW 3.0 scheme is largely the same as NOW 1.0 and NOW 2.0. In order to protect jobs during the coronavirus crisis, employers can receive a subsidy for part of their wage costs, depending on their loss of turnover.

NOW 3.0 has three tranches each lasting three months and will end on 1 July 2021. NOW 3.0 builds on the earlier tranches of NOW 1.0 and 2.0, which is it why it refers to the third, fourth and fifth tranches.

NOW 3.0 gives employers room to restructure the company by offering the possibility of slightly reducing the wage bill without this having any direct consequences for the amount of the subsidy.

The percentage that the employer can receive as a subsidy for wage costs will be gradually reduced per tranche. In the third tranche - starting 1 October 2020 - the maximum subsidy will remain at 80% and the wage bill can be reduced by 10%.

The subsidy will be reduced as from the fourth tranche (1 January 2021). In the fourth tranche, the maximum subsidy will be 70% and the wage bill can be reduced by 15%. In the fifth tranche (1 April 2021), the maximum subsidy will be 60% and the wage bill can be reduced by 20%.

In the third tranche, companies with a decline in turnover of at least 20% will be eligible for support. From 1 January 2021, only companies that suffer 30% or more loss of turnover will qualify for NOW.

The maximum wage contribution per employee in the third and fourth tranches will be equal to NOW 1.0 and 2.0, i.e. a maximum of 2 x the maximum daily wage (currently EUR 9,691 per month). In the fifth tranche this will be reduced to a maximum of 1 x the maximum daily wage (EUR 4,845).

The reductions to the wage subsidy in the event of redundancy for economic reasons that applied under NOW 1.0 and 2.0 [Include link to news update 23 June 2020], will lapse under NOW 3.0. This will be replaced by a reduction of 5% linked to a best efforts obligation for employers to provide work-to-work guidance to employees who are made redundant. A 5% reduction to the subsidy may be imposed on employers who apply to make an employee redundant for economic reasons without contacting the UWV benefits agency in the context of work-to-work guidance.

The prohibition on dividend distributions and bonus payments and the fixed surcharge of 40% for employers' costs, such as holiday pay and pension contributions, will remain unchanged. As under NOW 1.0 and 2.0, employers will receive an advance of 80% of the subsidy after the application, and the remaining 20% when the final amount has been determined.

Applications for the third tranche will be opened on 16 November 2020 with possible retroactive effect from 1 October 2020.

Employers can decide whether to apply for each tranche. Employers who have not applied for NOW 1.0 or 2.0 can make use of NOW 3.0.

Correction for groups

Accountants have pointed out that a number of companies applied under NOW 1.0 and NOW 2.0 without realising that they are part of a group within the meaning of the NOW regulations and therefore that the turnover of other group companies (sometimes unknown to them) must be taken into account. Some examples are Dutch subsidiaries and operating companies which are linked via an international structure (but otherwise have nothing to do with each other), or do not have consolidated financial statements. Because these companies must report their decline in turnover at group level, this could mean that if the group experienced a decline in turnover of less than 20% they are not eligible for the NOW subsidy after all. In order to accommodate these companies, Minister Koolmees has changed what has been called the operating company exception in NOW 1.0 and NOW 2.0.

The NOW 1.0 condition that an application for determining the amount of the subsidy at operating company level can only be made if the NOW application was made on or after 5 May will lapse.

In addition, these companies are expected to comply with the conditions that apply for determining the amount of the subsidy at the level of the operating company when that determination is to be made, instead of when the application is first submitted, meaning that they have:
  • submitted a declaration from the group head or parent company that no dividends or bonuses will be paid over 2020 within the group as a whole; and
  • reached an agreement with the trade union or other worker representation on job retention.

The condition that the group of which they are part has a loss of turnover of less than 20% remains applicable.

For more information click here.
Written by:

Key Contact

Amsterdam
Advocaat | Managing Partner
+31 20 605 61 86
+31 6 5373 9632
Rixt de Vries

Key Contact

Amsterdam
Advocaat | Partner
+31 20 605 69 00
+31 6 2248 0662