Updated on 22-02-2021
Since April 2020, employers can receive a subsidy in the form of compensation for wage costs on the basis of the “Temporary emergency measure transitional regulation for preservation of employment” (“NOW”). We have discussed the substance of the NOW 1 and the NOW 2 in previous articles. The NOW was prolonged again on 1 October 2020 (NOW 3).
Because contamination figures were low last autumn, it was planned to reduce the levels of the NOW 3.0 subsidies. Unfortunately, these figures started growing again soon afterwards, and the Netherlands is currently in a strict lockdown. As a result, the legislator has decided to reverse the cutbacks in part. Below, we will present you with an overview of the NOW 3.0 as it applies since the most recent change.
NOW 3
- The NOW 3 has been divided into 3 tranches of 3 months each. These tranches (3, 4 and 5) dovetail with tranche 1 (NOW 1) and 2 (NOW 2). The NOW 3 started on 1 October 2020.
- The NOW 1 and 2 required employers to have a decline in turnover of 20% in order to be eligible for the subsidy. In the 3rd, 4th and 5th tranche of the NOW, this threshold remains at 20%. Originally, this threshold would be increased to 30% starting from the 4th tranche. The amount of the subsidy depends on the decline in turnover. Under the NOW 1 and 2, the subsidy amounted to a maximum of 90% of the wage costs. This maximum is 80% in the 3rd tranche and 85% in the 4th and 5th tranche. This means that the cutback by which the subsidy in the 4th tranche would be reduced to 70%, and in the 5th tranche to 60%, has been cancelled.
- Since 1 October 2020, the employer can allow the wage bill to go down by 10% during the subsidy period without any adverse effects on the subsidy. In principle, the reference month for determining the wage bill will be June 2020. For each Euro by which the wage bill has declined too much compared to the wages paid in June, employers will receive 80 eurocents (in the 3rd tranche), or 85 eurocents (in the 4th and 5th tranche) less subsidy.
- The general cutback on the subsidy that was applied in the NOW 1 and 2 if the employer requested the UWV's permission to terminate employment agreements on commercial grounds has lapsed in the NOW 3.
- With regard to employees whose employment agreement is terminated, or whose employment agreement the employer intends to terminate or not to continue, a best efforts obligation is introduced in the NOW 3 for employers to help guiding these employees towards a different job.
- If an employer requests permission to terminate the employment agreement for commercial reasons, he is obliged under the NOW 3 to contact the UWV’s telephone line NOW. Employers who do not do this will see their subsidies decreased by 5%.
- In the NOW 3, the maximum wages to be compensated per employee remain at twice the maximum daily wage (€4,858 gross per month).
Other Conditions
Just as under the current NOW, employers receive an advance to the subsidy of 80%. The (fixed) surcharge to cover employer's costs like holiday allowance and pension contributions has been set at 40% in the NOW 3. The special conditions for employers that we know already from the NOW 2, like the ban on paying dividends and bonuses and the best efforts obligation aimed at training do still apply.
Conclusion
The abandoning of the reduction timetable of the NOW 3 allows employers to count on generous wage costs compensation also in the first and second quarters of 2021. Regarding the period after that, it is not yet known whether the NOW will be continued.
More clarity about this is expected to follow this spring.
If you have any questions, you are welcome to contact Eylard van Fenema and/or Marieke Opdam.
