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”). In previous articles we discussed the substance of the NOW 1, the NOW 2 and the NOW 3.
On 27 May 2021 it was announced that the Dutch government intends to extend the NOW up to and including the third quarter of 2021. This means that also after 1 July, companies can still lay claim to wage costs compensation. Below, we will present you with an overview of the main starting points of the NOW 4.
NOW 4
- Like in the previous versions of the NOW, a decline in turnover of 20% is required in order to be eligible for the subsidy.
- The amount of the subsidy will depend on the employer's decline in turnover. In the NOW 4, the maximum subsidy percentage is 85%.
- Within the subsidy period, the wage bill is allowed to drop by 10% without adverse consequences to the subsidy. In principle, the wage bill of February 2021 is taken as the reference wage. For each Euro by which the wage bill has dropped too much compared to the wage in February, the employer will receive 85 cents less subsidy. The percentage of decline in turnover plays no role here.
- In the NOW 4, the maximum wage to be compensated per employee remains at twice the maximum daily wage (€4,858 gross per month).
- In the NOW 4, the fixed surcharge to cover employer's costs like holiday allowance and pension contributions is set at 40%. The wage bill is increased by this percentage for the purpose of calculating the amount of the subsidy.
Overhead Costs Contribution Excepted from Wage Definition
In order to accommodate employers, the government has examined two options to extend the NOW. In the first option, the calculation of the NOW subsidy would be adjusted if the wage bill has decreased by counting in the actual decline in turnover. Eventually, this option was not chosen.
According to the government, excepting the Overhead Costs Contribution (TVL) is a better option to give employers more breathing space. At present, the TVL always counts in as turnover for the NOW, which has consequences for the amount of the NOW subsidy. Starting from the NOW 4, the TVL will be excepted from the definition of wage, which will create a higher entitlement to NOW subsidy. This adjustment will also be implemented for the NOW 3 with retroactive effect.
Conclusion
Employers will soon be able to apply for an advance to the subsidy pursuant to the NOW 4. The advance payment is 80% of the expected subsidy. After the end of the third quarter, the subsidy will be determined definitively on the basis of the definitive decline in turnover and the wage costs actually incurred. Just as in the previous versions of the NOW, the subsidy may therefore turn out lower than the advance payment. Employers will have the possibility to make a repayment arrangement for the amount to be repaid.
If you have any questions, feel free to contact Ruud Schepers or Marieke Opdam.
