As a result of the corona crisis, many employers are confronted with a decline in turnover while wage costs remain the same. Since 6 April 2020, employers can apply for a wage cost subsidy based on the Temporary emergency measure transitional regulation for preservation of employment (“NOW”). The purpose of this regulation is to keep employees employed.
Previous blogs were published on our website about the NOW regulation and the changes made to it. In these blogs you can read, among other things, which conditions employers have to meet to be eligible for subsidy moneys under the NOW and how it is determined how much subsidy money an employer will receive.
Many employers have never applied for a subsidy before. We will therefore provide you with a list of the main subsidy-law points of attention in this blog. What do you have to pay attention to as an employer when you apply for a subsidy under the NOW?
First, we will briefly explain the system of the provision of subsidies in the context of the NOW. Then we will list a number of points of attention.
How does the provision of subsidies work?
In order to be eligible for subsidy, you (the employer) have to submit an application. This can be done since 6 April 2020 and ultimately until 31 May 2020. After you have submitted an application, the UWV will assess whether you are eligible for a subsidy. You can apply for a subsidy if you expected a decline in turnover of at least 20% over a consecutive period of three months between 1 March up to and including 31 July 2020. The subsidy covers a maximum of 90% of the wage bill in the period from 1 March up to and including 31 May 2020.
The provision of subsidy has two phases. In response to your application for a subsidy, you will receive a decision for granting of subsidy from the UWV. In this decision, the UWV will inform you whether you will receive subsidy and how much. The subsidy that is granted in this decision is determined (in part) on the basis of the
expected decline in turnover in a consecutive period of three months chosen by you between 1 March 2020 and 31 July 2020. In the decision to grant a subsidy, the advance payment you will receive is also determined. This advance payment amounts to 80% of the subsidy amount that will be granted on the decline in turnover based on your estimate. The advance will be paid in three instalments.
You will have to submit a second application at a later time (see the points of attention below). With this second application, the UWV will request you to determine the subsidy. Then, your will receive a second decision from the UWV, the determination of the subsidy. So only in this decision, the final amount of subsidy is determined. For this purpose, the actual decline in turnover will be considered in the period of three months quoted by you in the application between 1 March 2020 and 31 July 2020.
It is important to be aware of it that the subsidy that will eventually be determined may be lower than the amount previously determined when the subsidy was granted, and that the advance paid out may be higher than the amount of subsidy eventually determined. In that case, the excess part paid will be reclaimed. This is not only the case if the loss of turnover is lower than expected, but also if you have not performed the obligations attached to the subsidy. These obligations include that you keep the wage costs as equal as possible, you may only use the subsidy money to pay the wage costs, and from 18 March 2020 and during the period for which subsidy was granted, you will not submit an application for dismissal for commercial reasons. If your decline of turnover is higher than expected, you will be entitled to a higher subsidy. For the exact conditions of the granting of subsidy, the obligations connected to the subsidy and the way in which the amount of subsidy is determined, we refer to the previous blogs on our website.
We still observe here that the NOW subsidy is intended to accommodate employers in their wage costs who suffer a decline of turnover as a result of extraordinary circumstances, so that they can continue paying the wages of their employees (Article 3 MTO). It appears from the explanation to the NOW that this need not be a corona-related loss of turnover alone. A loss of turnover resulting from a fire in a business, for example, may also be designated as an extraordinary circumstance. However, this does not alter the fact that entrepreneurs who expect a loss of turnover that is not related to extraordinary circumstances must be prepared for it that the regulation was not meant for that purpose. Although it seems as if no demands are set on the reasons given for the application for a subsidy, acting in violation of the objective of the NOW may indeed lead to it that the subsidy will be set at a lower amount or even at nil at some point in the future.
Below, we will list a few points of attention for (applying for) a decision to (1) grant a subsidy and (2) determine a subsidy pursuant to the NOW.
Points of attention for the granting of subsidy and advances
• Applications can be submitted up to and including 31 May 2020 via the form. Late submissions will result in rejection of the application. We therefore recommend you to submit the application (long) before to the end of the term.
• You have to provide the following information with your application (Article 8, paragraph 4 NOW):
-the withholding tax number for which you make the application;
-if you have applied for a reduction of working hours after 31 August 2019: the file number of the application;
-the 3 calendar months between 1 March and 31 July 2020 for which you expect a loss of turnover of at least 20%;
-the expected decline in turnover in that period (in full percentages, rounded up);
-the bank account number on which you receive payments for wages taxes from the Dutch Tax Administration.
• The term within which your application must be decided on is 13 weeks. This term will start running when a full application has been submitted. This is the case when you have provided all the information necessary. The UWV strives for it to take a decision and pay the advance within 2 to 4 weeks after receipt of the complete application.
• If the UWV considers your application to be incomplete, you will get the opportunity to supplement it within 4 weeks. Since the time limit for decisions only starts running once the application is complete, this may cause the granting decision to arrive later. It is therefore recommended that you make sure that the application is submitted completely from the start. It is also wise to contact the UWV after submitting your application and to inquire whether it is complete. Are you notified that your application needs supplementing? Then do so as soon as possible, in order to prevent any (further) delays.
• The UWV may refuse to grant a subsidy if there is a ground for refusal as provided by Article 5 NOW. This is the case, among other things, if the decline in turnover of 20% is not or insufficiently plausible. However, it is not clear how the UWV will handle this ground for refusal. The information that must be submitted in the scope of the application is mentioned in Article 8 paragraph 4 NOW. No furnishing of evidence of the expected decline in turnover is mentioned there. The form, which must be uploaded along with a bank statement as the website of the UWV mentions, also leaves no room for a furnishing of evidence in this regard. We do not expect that the UWV will use this ground for refusal strictly, but we will have to wait and see how the UWV will deal with this.
• Besides the grounds mentioned in Article 5 NOW, the subsidy may also be refused on a ground mentioned in Section 4:35 of the General Administrative Law Act. Under this section, the subsidy may be refused if the applicant has provided incorrect or incomplete information that would have led to an incorrect decision. Besides, the subsidy may be refused if the applicant has been declared bankrupt or has been granted a suspension of payment of debts, or if the arrangement of debt rescheduling of natural persons has been found applicable to him. This may already happen if only a request to this effect has been submitted to the court (Section 4:35 (2) General Administrative Law Act).
• In the context of the granting of subsidies, decisions are taken that are relevant to the eventual granting of a subsidy. Therefore, the correctness of the granting decision is an important point of attention. If there are errors in the decision to grant a subsidy, you must object to the decision within six weeks. If you fail to do this in time, the correctness of the granting decision will be assumed to be established, even if it has serious flaws.
• Appeals may be brought before the court and the court of appeal against the decision on the objection. It is not clear (yet) which court of appeal (the Administrative Law Division of the Council or the Central Appeals Tribunal) will be the competent court.
Points of attention for the granting of subsidy
• Within 24 weeks after the end of the period for which the decline in turnover was calculated, you as the employer must apply for the decision determining the subsidy. Again, you have to do this via a form on the website of the UWV. It is important that you do this on time. The explanation with the NOW mentions that if no application to determine the subsidy is made within 24 weeks, the granting of the subsidy will be withdrawn. The result is that the advance was paid unduly and can be reclaimed in full. It is therefore very important to submit an application for the determination of the subsidy on time.
• In your application, you have to provide the information listed in Article 14 paragraph 2 NOW, including the final (information about the) decline in turnover with documentary evidence thereof. It is therefore important to keep good records, from which the decline in turnover can be derived. Besides, an auditor's report and a statement that the subsidy obligations have been fulfilled must be submitted (see Article 14 NOW).
• The UWV has to decide on your application within 52 weeks. The determination decision is also open to (subsequently) objection, appeal and appeal to a higher court. You should also keep a close eye on the terms for this.
• It is important to look carefully at the obligations attached to the subsidy (Article 13 NOW). Failure to meet these obligations (in full) may lead to a lower determination of subsidy.
• Article 16 NOW contains a provision to prevent abuse. The determination of the subsidy may be withdrawn or amended if it appears at any time that the employer has acted contrary to the objective of the NOW regulation by his acts or omissions during or after the period for which he received the subsidy. It appears from Article 3 NOW that the objective of the regulation is that employers are accommodated in paying their wage costs “so that they can keep employees employed for the hours they worked prior to this decline.” So, even acts or omissions contrary to this objection of the regulation after the end of the subsidy period may still have consequences for the determination of the subsidy.
Conclusion
If you have questions with regard to this article, please contact Jutta Wijmans or Jan van der Grinten.
