06-04-2020
Employers can receive a compensation for wage costs on the basis of the ‘Temporary emergency measure transitional regulation for preservation of employment (NOW)’. Due to the current measures in the context of the Coronavirus outbreak, many businesses are facing a major decline in turnover while wage costs remain the same. On 31 March 2020, the content of the new regulation was announced. The purpose of the NOW is to enable employers with a decline in turnover to keep employees employed for the hours they worked before the decline occurred.
Below we discuss the main points of the new scheme. You can also read our Q&A in which we answer frequently asked questions about the NOW.
Decline in turnover of at least 20%
- In order to be eligible for the compensation for wage costs, there must be a decline in turnover of at least 20% over a consecutive period of three months. This consecutive period of three months must be between 1 March 2020 and 31 July 2020. It is up to the employer to make a choice in this respect. The employer does not have to explain the reason for the decline in turnover.
- In order to determine the amount of the turnover loss, the reference turnover is important. This is the turnover for the whole of 2019 divided by four. This amount is compared with the turnover in the three months in which, according to the employer, there is a loss of turnover in 2020.
- When the employer is part of a group of companies, the loss of turnover is determined for the whole group together. Parts of the group of companies established abroad are only taken into account if they pay wages and national insurance contributions in the Netherlands.
Employer receives a subsidy for the wage costs
- Under the NOW, employers are eligible for a subsidy covering wage costs for the period from March through to May 2020.
- Wage costs will in principle be based on the wages paid in the month January 2020. More specifically, the wage costs will be based on the wages for the purposes of wage tax and national insurance contributions from present employment (“SV-loon uit tegenwoordige dienstbetrekking”). The information on these wages should already be known to the UWV (based on the wage declaration submitted by the employer for the month of January 2020). If these data are not known, the wage bill for the month of November 2019 will be used. If no wage data are known for this month either, the application will be rejected.
- There is an upper limit on the wages that are taken into account. A maximum of €9,538 gross per month per employee applies. The wages of employees with flexible employment agreements, such as on-call workers, are also part of the wage costs.
- The wage costs are increased by a fixed surcharge of 30% to cover the employer's costs (SZW contributions, pension contributions).
- In the event of a complete loss of turnover, the subsidy amounts to 90% of the wage costs times 3 times 1.3. In the event of a loss of turnover of less than 100%, the compensation is applied on a pro rata basis. For example: in the event of a 50% loss of turnover, the subsidy amounts to 45% of the wage costs (= 50% of 90%).
The UWV provides an advance payment
- After the employer has submitted an application, an advance payment will be provided. This advance payment amounts to 80% of the subsidy amount on the basis of the employer’s estimate. The advance will be paid in three instalments.
- The definite amount of the subsidy to which the employer is entitled will be determined afterwards. The employer must provide further information for this, including the final turnover figures accompanied by an auditor’s report. In the event the loss of turnover in reality is lower than estimated, part of the subsidy will be reclaimed. If the loss of turnover is higher than estimated, an additional subsidy will be paid.
Special conditions in order to be eligible for the regulation
- After 17 March 2020 (the date on which the regulation was announced), the employer may not ask the UWV for permission to terminate employment agreements for business economic reasons. If the employer does so, 90% of the the wages of the employees concerned will be deducted from the subsidy by a factor of 1.5 in the final subsidy decision.
- No obligation is included to keep employees with flexible agreements employed. However, the regulation does stipulate that the employer must keep the wage costs as equal as possible. A reduction in the wage bill will have a negative effect on the amount of subsidy.
- The Works Council (or other employee representative body) must be informed about the grant of the subsidy.
- The subsidy may be withdrawn or amended to the employer's detriment if the employer is deemed not to have met the objective of the regulation due to his acts or omissions during or after the period for which he received the subsidy. According to the text of the regulation, this purpose is to help employers to pay for wage costs so that they can keep employees employed for the hours they worked prior to this decline.
- The employer is obliged to use the subsidy solely for the payment of wage costs.
To conclude
Applications can be submitted to the UWV via a digital form as from 6 April 2020. The processes have been set up in such a way that a large number of applications can be received at the same time. Applications must be submitted no later than 31 May 2020. A decision will then be taken by the UWV ultimately within 13 weeks of receipt of the application. In practice, the aim is to achieve payment of the advance payment within 2 to 4 weeks after receipt of the complete application.
