Employers can receive a compensation for wage costs on the basis of the ‘Temporary emergency measure transitional regulation for preservation of employment (NOW)’. As from 6 April, employers who have a loss of turnover of at least 20% can submit an application for a subsidy to the UWV. In previous articles we discussed the NOW and important adaptations thereto.
On 1 May the NOW was once again adapted and widened for employers that are part of a group of companies. We will explain the changes below.
Individual operating companies of a group of companies can now apply for a subsidy for their wage costs on the basis of the decline in turnover of (only) the operating company.
This widening of the NOW is subject to a number of strict conditions:
- The operating company must have its own legal personality. Parts of legal entities, such as an autonomous economic entity, a branch office or a business unit, are not eligible for a compensation for wage costs.
- The operating company must not be a personnel company; personnel companies must always assume a decline in turnover at the level of the group of companies. The reason for this is that at that level the turnover (decline) and the deployment of personnel come together. A personnel company is deemed to exist if more than half of the activities consist of making personnel available within the group of companies.
- Operating companies must have concluded an agreement with the interested trade unions (and in the absence of such an agreement, another employee representative body) on the preservation of employment. In the case of small companies (with less than 20 employees), an agreement must have been concluded with an employee representative body.
- Groups of companies whose operating companies make use of the NOW regime must declare that they will not pay any dividends or bonuses for 2020 or purchase own shares. In the case of bonuses, this prohibition is limited to the bonuses of the board and management of the head of the group and the operating company concerned. Bonuses include both profit-sharing and other bonuses. The prohibition will apply up to and including the date of the meeting at which the annual accounts are adopted in 2021. Dividend payments are furthermore permitted if there is an obligation to do so on the basis of a settlement statement with the Tax Authorities or a tax-law obligation.
- The decline in turnover of the group must be less than 20% in the chosen reference period. Groups that have a decline in turnover of at least 20% could already benefit from the regime.
- If several of the group's operating companies apply for subsidies separately, they must maintain the same turnover period.
- To conclude, additional conditions have been set and control guarantees have been included that should limit ‘strategic behaviour’ (such as moving personnel, turnover, stocks around, etc.). For example, the other legal entities within the group are not allowed to carry out assignments which may be to the detriment of the legal entity within the group for which the subsidy is granted. These conditions will be elaborated in more detail in the auditor's standards to be drawn up.
As from 5 May, employers who qualify for the NOW adaptation can submit an application for this to the UWV.
Do you have any questions about the NOW and/or specifically about the above change? Please feel free to contact the Employment Law team.
