News Update Employment

25 May 2020

On 2 April 2020, the Temporary Emergency Bridging Measure for Sustained Employment ("NOW 1.0") came into force. On 8 April and 23 April, we informed you about a number of changes that were made after NOW 1.0 came into force.

It was announced on 20 May 2020 that the scheme will be extended for another three months. The purpose of the second tranche ("NOW 2.0") is still preserving jobs, but the conditions under which the scheme can be accessed have been tightened. In a letter to the House of Representatives, Minister Koolmees not only announced the extension of the NOW scheme, but also a number of changes to NOW 1.0 that, among other things, broaden the scope of the scheme.

How does NOW 2.0 work?

Loss of turnover and compensation
Employers who expect a loss of turnover of at least 20% for a period of at least three months can apply to the Employee Insurance Agency ("UWV") for an allowance to cover wage costs for the period of June, July and August.

The allowance is capped at a maximum of 90% of the wage bill relative to the loss of turnover during a period of three months starting on 1 June, 1 July or 1 August.

For employers who are applying to receive the NOW subsidy for the second time, the turnover period must directly follow the previous chosen period.

The UWV will again provide employers with an advance payment of the allowance based on the request. The actual loss of turnover and whether there was a reduction in the wage bill for the months of June, July and August will be determined in retrospect. Subsidies received by entrepreneurs in the context of the coronavirus crisis count as turnover.

Increase in fixed surcharge and change in wage bill reference month
The fixed surcharge will be increased from 30% to 40%. This allows costs other than wage costs to be paid from the subsidy. The reference month for the wage bill has changed from January to March (reference date 15 May) of this year.

Seasonal companies
For companies with seasonal work scaled up between January and March, it may be that March is established as the reference month. If the wage bill in March was higher than in January, this adjustment will result in a higher subsidy for the second period.

In addition, an adjustment has been made to the first NOW subsidy period by applying a new calculation method which benefits all employers with an average wage bill that was higher in the period March to May than it was in January.

This new calculation method works as follows: when determining the amount of the subsidy, the starting point is automatically the wage bill from March to May if the wage bill from March to May is three times higher than the January wage bill. The wage bills for April and May are then capped at the March wage bill (reference date 15 May). This increases the total amount of subsidy for the employer when the subsidy is determined. The advance remains unchanged.

Tightened conditions NOW 2.0

Reduced correction for redundancy on economic grounds
Employers requesting NOW subsidies remain obliged not to apply for redundancy on economic grounds. Under NOW 2.0, employers who fail to comply with this obligation will receive a correction of 100% instead of 150% when determining the subsidy. This means that 100% of the wage of the employee concerned will be deducted from the total wage bill on which the final subsidy is based.

In addition, an employer who wishes to request redundancy for more than 20 employees must consult with the trade unions. What is new is that employers must state on their NOW 2.0 request form that they will comply with the obligations of the Collective Redundancy (Notification) Act (Wet Melding Collectief Ontslag) (including a month's waiting period) if this act applies.

Prohibition on dividend and bonus payments and purchase of own shares Companies or groups relying on NOW 2.0 must declare that they will not pay any dividends or bonuses for 2020 or purchase their own shares up to and including the shareholders' meeting at which the financial statements are adopted in 2021.

The prohibition on paying bonuses only applies to the board. It does not extend to other personnel employed by the company who may be paid variable bonuses.

The condition not to pay out bonuses and dividends is already in effect under NOW 1.0 for groups of companies with less than 20% loss of turnover, whereby one of the operating companies that does meet this loss of turnover criterion wishes to rely on the NOW scheme.

Compulsory training and retraining
Employers will be obliged to encourage their employees to undergo further training or retraining. The government also sees a role here for works councils and employee representations to encourage participation in development advice or training and, if necessary, to hold employers to account for this. The government will draw up its own crisis package 'Learning Netherlands' (Nederland leert door) and will make a budget available for this.

Entry into force of NOW 2.0
The aim is to implement NOW 2.0 as of 6 July 2020. Employers who only request a subsidy under NOW 1.0 can request the final determination of the first subsidy period (March, April, May 2020) as of 7 September.

Other changes to NOW 1.0

In addition to the aforementioned new calculation method, the Minister will correct a number of other issues in NOW 1.0.

Company takeovers
In the case of a transfer of undertaking in the period from 2019 to 1 February 2020, the company will be deemed to have started up no later than 1 February 2020, otherwise there would be no relevant reference month for the turnover. This legal fiction is already used in the current NOW scheme for start-ups.

Thirteenth month
The representativeness of January 2020 as a reference month was distorted for employers who paid thirteenth month pay that month. As a result, the obligation to keep the wage bill for the months of March to May at the same level as in January has a negative impact. The UWV will therefore take the extra period components, such as a thirteenth month, out of the wage bill when determining the subsidy. This will avoid employers from having to repay the NOW subsidy when the subsidy is finally determined simply because of the payment of a thirteenth month in January.

Auditor's report
When requesting the final determination of the NOW subsidy, an auditor's report is required for companies that have received an advance payment (80% of the subsidy amount granted) of EUR 100,000 or more. In order to avoid the entrepreneur receiving a low advance, but - following determination - receiving a subsidy that is higher or even much higher than EUR 125,000 without having to submit an auditor's report, this report is also required for an established subsidy of EUR 125,000 or more.

Companies and institutions that have received an advance of less than EUR 100,000 will have to estimate for themselves whether the subsidy will be determined at EUR 125,000 or more, which means that they too will require an auditor's report.

Requests for determination not requiring an auditor's report will be randomly audited.

In addition, if no auditor's report is required, a third party's report confirming the decrease in turnover will have to be submitted with the request to determine a subsidy with an advance above EUR 20,000 or a fixed amount above EUR 25,000. This could be the case, for example, for an administrative office, a financial service provider or a branch organisation.

Request period extended
The request period for NOW 1.0 will be extended from 31 May to 5 June 2020. The above changes will apply retroactively from the date of dispatch of the letter to the House of Representatives of 20 May 2020. Employers can therefore make use of these new options in the current scheme from now until 5 June.

Source: Kamerbrieven Noodpakket banen en economie 2.0 + Derde wijziging NOW, 20 May 2020