Updated on 04-06-2020
Since 6 April 2020 employers can receive a 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 contents of the NOW, some important adjustments of the regulation, the widening of the NOW for groups of companies and a third adjustment making the NOW accessible to more companies.
The government has announced that the NOW Regulation will be extended for the months of June, July, August and September 2020. A compensation can be applied for at the UWV as from 6 July 2020 until 31 Augustus 2020. The main objective remains the preservation of employment and the protection of jobs. In addition, it has been communicated that the NOW Regulation 2.0 should also provide room for companies to make adjustments in the coming period.
The NOW Regulation 2.0 uses the same system of compensation, but the new regulation also contains changes. In concrete terms, the following adjustments have been announced:
- Seasonal patters of company will be taken into account (after all). The reference month for the wage sum will be March 2020 (with 15 May 2020 as the reference date). This may offer an outcome to seasonal businesses that have scaled up between January and March 2020. In order to accommodate seasonal businesses and their employees even more, it was decided to adjust the first subsidy period of the NOW. This adjustment is an additional compensation for employers who had a too low, non-representative wage sum in January 2020 due to a seasonal pattern or other reasons compared to the subsidy period from March to May 2020. This adjustment will be applied automatically in the subsidy granting process to applicants who are advantaged by it.
- The fixed surcharge to cover employers’ costs (SZW premiums, pension premium, holiday allowance) will be increased from 30% to 40%.
- A company that is entitled to the NOW Regulation 2.0 may not distribute profits to shareholders for 2020 (up to and including the meeting of shareholders at which the annual accounts will be adopted in 2021), pay out bonuses to the board and management, or purchase own shares. To ensure that this obligation is proportional and can be checked, it will be arranged that the obligation will apply only to companies receiving an amount of subsidy that requires an auditor’s report.
- The reduction of the subsidy (the so-called “dismissal penalty”) that is in place if the employer has applied for permission to terminate the employment agreement for commercial reasons, will continue to exist but will be reduced from 150% to 100%. Additional conditions apply to contemplated dismissals of 20 or more employees, whereby the employer must make a notification as referred to in the Collective Redundancy (Notification) Act (“WMCO”). The employer must reach an agreement on the collective dismissal with the trade unions concerned (or, in the absence of which another employee representative body).If parties fail to reach an agreement, a request for mediation must be submitted to a committee to be set up at the Labour Foundation (in Dutch: “Stichting van de Arbeid” (“STAR”). In the absence of an agreement or request for mediation, a reduction of 5% of the final subsidy shall be imposed.
- Employers will be obliged to encourage their employees to undertake further training and retraining on the basis of the crisis programme “NL continues to be educated” (in Dutch: crisisprogramma “NL leert door”). The government is allocating € 50 million for this. This programme is expected to start in July 2020. Employees can then follow on-line training and development advice free of charge in order to adapt to the new economic situation. The employer must make a statement about this when applying for the NOW Regulation 2.0.
At the press conference, a Compensation fixed expenses SME (in Dutch: “Tegemoetkoming Vaste Lasten MKB”) was also announced for small and medium enterprises (“SMEs”) in specific sectors, as mentioned in the Compensation of Damage Caused by Covid-19 Regulation (in Dutch: “Tegemoetkoming Schade Covid-19-regeling (the “TOGS Regulation”)”). This compensation is in addition to the NOW Regulation 2.0. The compensation concerns a tax-free compensation for the payment of fixed tangible costs. Depending on the size of the company, the amount of the fixed costs and the degree of loss of turnover (at least 30%), companies can receive a compensation up to a maximum of € 50,000 for the next four months (June through to September 2020).
The text of the NOW Regulation 2.0 is expected to be published in June 2020.
Do you have any questions about the NOW and/or specifically about the above changes? Please feel free to contact the Employment Law team.
