Employers can receive a subsidy on the basis of the ‘Temporary emergency measure transitional regulation for preservation of employment (NOW)’. On 31 March, the content of the new regulation was announced. As from today, 6 April 2020, employers can submit an application for a subsidy to the UWV. However, last Friday the NOW was still clarified and amended in several substantive respects. We already discussed the NOW in a previous article. In this article we will discuss the clarifications and amendments.
Regulation as published on 31 March
Under the NOW, employers are eligible for a subsidy covering wage costs for the period from 1 March up to and including 31 May 2020 (the subsidy period). To be eligible, the employer must demonstrate that he has a loss of turnover of at least 20%, and the employer can choose a period of 3 consecutive calendar months between 1 March and 31 July 2020 for the loss of turnover. Depending on the loss of turnover, the subsidy will amount to 90% of the wage costs maximum. The UWV will initially grant an advance payment of 80% of the subsidy. After the end of the subsidy period, the final determination will follow. To calculate the amount of the subsidy, wage costs will in principle be based on the wage bill in the month of January 2020. If the wage costs in the subsidy period are actually lower, the subsidy too will be lowered. If the actual wage costs are higher, the wage costs for the month of January 2020 will be decisive.
The regulation also provides that the subsidy will turn out lower if an application for dismissal is made to the UWV on account of commercial circumstances. According to the original NOW, the wages of the employees for whom permission was asked for dismissal will be deducted by 1.5 from the wage bill of January. However, the increase by 50% was partially, or fully, or more than fully cancelled out, depending on the level of the loss of turnover.
Adaptation and clarification of 3 April
On Friday, 3 April, several clarifications and changes have been published. These relate to the points below:
- It was clarified in the explanation that a lower wage bill in the period from 1 March up to and including 31 May 2020 may have a big effect on the level of the subsidy. For each Euro of wage costs less, the employer will get 90 cents less subsidy, irrespective of the level of the loss of turnover. Lowering the wage bill may therefore have drastic consequences for the amount of the final subsidy. This was probably meant to induce employers to keep the wage costs as equal as possible (and therefore keep employees employed, or call them for the same number of hours).
- Besides, there was a technical error in the NOW with regard to the 50% increase for an application for dismissal at UWV due to commercial reasons until 31 May 2020. This has been adjusted. In brief, as from now 90% of 150% of the wages of the employees for whom permission was asked for dismissal (including the fixed surcharge of 30%) over the period 1 March – 31 May 2020 will be deducted from the subsidy. An application for a dismissal may therefore also lead to a big decrease of the final subsidy.
- Furthermore, it is still possible to submit an application for dismissal with UWV on account of commercial reasons. However, employers will have to make it plausible with applications submitted as of 2 April 2020 that the NOW is not an obvious other solution in their case. However, the UWV will apply a reticent test here.
- The account number of the employer that is linked to the withholding tax number can be a foreign account number. Since it is not possible for practical technical reasons for the UWV to deal with an application for a subsidy in which a foreign bank account number is quoted, it will be arranged that employers who have a foreign account number can quote a Dutch account number within four weeks’ time. The subsidy will then be credited to this Dutch account number.
- Within 24 weeks after the period on which the loss of turnover was calculated, the employer must personally submit a request for the adoption of the final subsidy to the UWV. The term within which the UWV will adopt the final subsidy has been extended from 22 to 52 weeks.
Conclusion
Because of the clarification and amendment described above, a reduction of the wage bill or an application for dismissal for commercial reasons within the period 1 March – 31 May 2020 may have drastic consequences for the amount of the eventual subsidy. It is therefore important that you seek good information about the consequences of the several scenarios.
Feel free to contact our Labour & Employment team if you have any questions.
