News Update Employment

1 April 2020

The NOW governmental measure aims to provide rapid financial assistance to employers facing loss of turnover to enable them to continue to pay their employees' wages.

When will NOW applications be accepted?

The application period for subsidies is, in principle, from 14 April to 31 May 2020. The Dutch Employee Insurance Agency (UWV) is aiming for an earlier starting date, namely 6 April 2020. The final date will be made known no later than 3 April.

Employers can receive compensation for loss of turnover as from 1 March 2020. A decision period of 13 weeks after receipt of the completed application applies, however the aim is to pay the first instalment of the advance payment within two to four weeks. The advance payment will be made in three instalments.

A decision on whether the application period for a NOW subsidy will be extended for a period of three months will be made before 1 June 2020.

How does the application work?

Applications may be submitted using the form designed for this purpose, which will be made available at www.uwv.nl.

Under the NOW measure, instead of a decrease in work (as was the case under the Reduction of Working Hours Scheme (WTV)), loss of turnover is the applicable criterion. A company has to indicate what decline in turnover it expects to see for the time being. The expected decline in turnover must be at least 20% over a three-month period.

On the form, the employer is asked to indicate the expected decline in turnover, its withholding tax number and the consecutive three-month period over which the decline in turnover is expected. The account number on which the employer receives payments from the Tax and Customs Administration for tax purposes must also be stated. If the employer has submitted a WTV application, the file number of that application must be stated.

Employers with several withholding tax numbers must submit an application for each withholding tax number if they wish to be eligible for the entire wage bill. For each request, the same decline in turnover for the whole group or company must be reported.

What period applies for determining the loss of turnover?

The decline in turnover of at least 20% must occur over a period of three months, the starting date of which falls on the first day of March, April or May 2020 (the measurement period). Turnover for the measurement period will be compared with turnover for the period from January to December 2019, divided by four. In this way, the turnover of the measurement period is compared to the average turnover over the course of three months in 2019. A measurement period of three months has been chosen to prevent a limited or short-term decrease in turnover from qualifying for a subsidy under the NOW. Although this calculation may be disadvantageous for some companies, e.g., because the peak in sales usually takes place in the current spring months, no adjustment will be made. If an employer did not exist on 1 January 2019, a different turnover provision applies.

Is the loss of sales determined at the level of an individual entity or at the level of a group?

In cases of a composition of legal entities, the decline in turnover at group level applies. This means that if a group as a whole has a loss of turnover of less than 20%, the individual members of that group are not eligible for a subsidy under NOW. It seems that it will then be up to the group to take responsibility for the employees of members with a high loss of turnover.

Does the turnover of foreign companies that are part of the same group also count in determining the loss of turnover?

To determine the decline in turnover in the measurement period, both the Dutch legal entities and foreign legal entities and companies with wages in the Netherlands are taken into account. As long as the employees of the foreign legal entities in the Netherlands receive wages (and therefore have a Dutch wage for social insurance purposes), the decline in turnover of that foreign company will count in the measurement period.

Does the employer have to demonstrate the extent to which the coronavirus crisis contributed to the loss of turnover?

In order to provide clarity and certainty for employers quickly, the application does not ask the employer to demonstrate the extent to which exceptional circumstances, such as the coronavirus, contribute or have already contributed to the decline in turnover of at least 20%.

For which employees can I apply for a NOW subsidy?

The government calls on companies to keep as many people as possible employed.

The NOW subsidy can be applied for in respect of employees who are employed by an employer and who are compulsorily covered by employee insurance schemes.

The scheme also applies to employers who employ employees with flexible contracts and on-call workers. A condition is, however, that they remain employed by the employer during the application period and receive wages from the employer during the period for which the subsidy is granted.

The NOW subsidy encourages employers to continue paying the wages of on-call workers for the same number of hours. If employers have opted to do so, these wages will count towards the wage bill used to determine qualification under NOW and a subsidy will be received in that respect, provided that all the conditions under NOW are met.

Temporary employment agencies may also submit an application to the extent that they retain their temporary workers. Temporary employment agencies are subject to the same conditions as regular employers.

What is the amount of the NOW subsidy?

The amount of the NOW subsidy is, depending on the decline in turnover, a maximum of 90% of the wage bill (the wages of all employees) for the period from 1 March 2020 to 31 May 2020.

Only in the event of a 100% decline in turnover will 90% of the total wage bill be paid out. If the decline in turnover is lower, the subsidy will be set at a proportionately lower level. In the event of a 50% decline in turnover, the subsidy amounts to 45% (i.e. 50% of 90%) of the wage bill and in the event of a 20% drop in turnover, the subsidy amounts to 18% (i.e. 20% of 90%), etc.

How is the NOW subsidy calculated?

The advance payment is calculated by multiplying the percentage of the expected decline in turnover by the wage bill for January 2020 x 3 x 1.3 x 0.9.

For example, an employer has:

• a 2019 turnover of EUR 2,000,000
• a wage bill in January 2020 of EUR 200,000 x 3 x 1.3 = EUR 780,000

Let’s say that turnover is expected to decrease by:

• 10%: subsidy = EUR 0
• 50%: subsidy = 50% x 90% x EUR 780,000 = EUR 351,000 (advance payment: x 0.8 = EUR 280,800)
• 100%: subsidy: = 100% x 90% x EUR 780,000= EUR 702,000 (advance payment; x 0.8 = EUR 561,600)

The final subsidy is calculated by multiplying the percentage of the actual decline in turnover by the wage bill from 1 March 2020 to 31 May 2020 x 1.3 x 0.9.

For example, an employer has:

• a 2019 turnover of EUR 2,000,000
• a wage bill as of 1 March 2020 - 31 May 2020 of EUR 600,000 x 1.3 = EUR 780,000

Let’s say that turnover has actually decreased by:

• 5%: subsidy = EUR 0
• 60%: subsidy = 60% x 90% x EUR 780,000 = EUR 421,200 (advance payment was EUR 280,800)
• 90%: subsidy = 90% x 90% x EUR 780,000 = EUR 631,800 (advance payment was EUR 561,600)

What falls under wage?

The term 'wage' means the wage for social insurance purposes in so far as it relates to wages from current employment. This means that employers can only receive a subsidy for wages of employees who are covered by social insurance in the Netherlands. The wage for social insurance purposes is the gross wage plus fixed components of the wage. Holiday allowance, shift allowance, end-of-year bonus, and thirteenth month's salary are included.
Additional charges and costs such as employer contributions and employee contributions to pension and the accrual of holiday allowance will also be compensated.

A maximum of twice the maximum daily wage per month per individual employee is taken into account as salary. Wages above EUR 9,538 per month are not eligible.

The UWV pays out an advance of at least 80% of the expected allowance. Subsequent settlement will take place on the basis of the actual turnover. In principle, an audit opinion is required for audit purposes. An exception is made, for example, for small amounts of subsidy or companies with a very small wage bill. For the time being it is not clear what this lower limit will be. The government is endeavouring to clarify this within four weeks of the scheme's publication.

What are the employer's obligations during the period that the NOW subsidy is received?

The scheme sets out a number of obligations for employers receiving the NOW subsidy. The most important of these are that the employer:

• must endeavour to keep the wage bill as equal as possible (in contrast to WTV, main-taining employment is the starting point here);
• may not apply for dismissal for commercial reasons during the period of NOW subsidy (If dismissal is applied for anyway and this application has not been withdrawn (or has not been withdrawn on time), a correction will be made when the subsidy is determined. 150% of the salary of the employee concerned will be deducted from the total wage bill on which the final subsidy will be based);
• is obliged to use the subsidy exclusively for the payment of wage costs;
• must inform the works council, employee representative body or, in the absence thereof, the employees about the subsidy provision;
• must notify the Minister immediately and in writing of any other circumstances that may be relevant to a decision to amend, revoke or determine the subsidy; and
• must submit a final statement of the decline in turnover at the end of the period for which the subsidy is granted.

Are probationary period dismissals and non-renewal of fixed-term contracts covered by the prohibition on applying for dismissal for commercial reasons during the period in which NOW subsidy is received?

Employers are free not to renew fixed-term employment contracts and to terminate probationary contracts. These are forms of termination other than dismissal for commercial reasons. Of course, it is also always possible to agree a settlement agreement with the employee to terminate the employment contract, whether or not for a fixed term.