News Update Employment

24 June 2020

In our News Update on 25 May we informed you about some changes to the Temporary Emergency Bridging Measure for Sustained Employment (Tijdelijke Noodmaatregel Overbrugging voor Werkbehoud, NOW) 1.0 ("NOW 1.0") and the extension of the NOW scheme ("NOW 2.0").

The text of the scheme is now available and we are able to give you more information about the conditions for applying for a subsidy under NOW 2.0.

How does NOW 2.0 work?

Entry into force
NOW 2.0 will enter into force on 26 June 2020 and applications can be submitted to the Employee Insurance Agency ("UWV") from 6 July 2020 until 31 August 2020.

Turnover loss and compensation
Employers who expect a turnover loss of at least 20% for a period of at least four months can apply for the NOW subsidy for wage costs for the period June, July, August and September 2020.

If the employer is part of a group, turnover loss is calculated based on the group. Companies that form a parent company/subsidiary are treated in the same way as a group for the purpose of calculating the turnover loss. The explanatory memorandum to NOW 2.0 shows that it is based on a very broad group concept. For example, if a parent company has several subsidiaries, the turnover loss of all these legal entities should be determined jointly. It is not yet clear how this will work out in practice. The Royal Netherlands Institute of Chartered Accountants (NBA) is discussing this issue with the Ministry.

An online calculation tool will be made available for calculating the amount of the expected turnover loss.

The maximum subsidy is 90% of the wage bill relative to the turnover loss in a period of three months starting on 1 June, 1 July or 1 August 2020. Employers using NOW for the second time should align the turnover period with the period chosen for the NOW 1.0 application.

Based on the application, the UWV will again provide the employer with an advance on the subsidy. The actual turnover loss and whether there was a fall in the wage bill over the chosen period is retrospectively determined.

Increase in fixed surcharge and change in wage bill reference month
The fixed surcharge will be increased from 30% to 40%. This means the subsidy can also be used to pay costs other than wage costs. The reference month for the wage bill will change from January 2020 to March 2020.

Reduced correction for redundancy on economic grounds
Employers applying for NOW subsidies and submitting applications for redundancies to the UWV before October 2020 still have to repay the subsidy for the employee(s) concerned, but the additional 50% penalty that applied under NOW 1.0 will lapse. There is no penalty for redundancy through settlement agreements under NOW 2.0.
However, an extra guarantee is included in the event of a collective redundancy. For employers who notify the UWV of their intention to make 20 or more employees within one working area collectively redundant in the period from 30 May 2020 to 30 September 2020, which is also during the subsidy period, the total subsidy amount will be reduced by 5%. This reduction can only be avoided by (i) reaching agreement with the trade unions or, failing that, another employee representative body (such as the works council) on the necessity of the collective redundancies or (ii) if no agreement can be reached, by jointly applying to a committee that will be set up by the Labour Foundation to assess whether the proposed number of redundancies is necessary.

Prohibition on dividend and bonus payments and buying own shares
Employers or business groups that jointly receive a subsidy advance of EUR 100,000 or more, or whose subsidy is set at EUR 125,000 or more, must declare that no dividends or bonuses will be paid over 2020, and that they will not buy their own shares. It follows from the explanatory memorandum to NOW 2.0 that this prohibition only applies to the legal entity applying for the subsidy. The other legal entities of the business group may still do so, if they do not apply for a subsidy themselves and no application is made at the operating company level.

If there is an application at the operating company level - because there is less than 20% turnover loss at the group level, but 20% or more turnover loss at the operating company level - then the employer must submit a declaration from the group head or parent company that no dividends or bonuses will be paid out over 2020 within the entire group.

The prohibition on bonus payments only applies to board members, executives or members of management who determine policy. It does include other staff. This prohibition only relates to bonuses and dividends for the year 2020 and not for the year 2019.

Compulsory training and retraining
Employers must encourage their employees to undergo further training or retraining. The government also sees a role here for works councils and employee representative bodies 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.

Disclosure of NOW applications

Since the NOW scheme is a subsidy, it is covered by the Government Information (Public Access) Act (Wet Openbaarheid van Bestuur or Wob). As a result, the names of the recipients of subsidies or advance payments and the amount they have received may be made public. At the request of Minister Koolmees, the details of the successful NOW 1.0 applicants will be published on the UWV website at the end of June 2020.

Read more information here. (Only in Dutch)