On 31 March 2020 the Dutch government provided further insight in the rules of the earlier announced Emergency Fund Bridging Employment, by making public the NOW (Noodmaatregel Overbrugging voor behoud van Werkgelegenheid). On 3 April and 25 May 2020 some amendments to the NOW were published. The NOW provides financial aid to companies suffering at least a 20% turnover loss during a chosen period of three months (March-May, April-June or May-July) in the form of a substantial contribution towards the wage costs during the months March, April and May. Applications for advance payments can be made with the Dutch Employee Insurance Agency (UWV). Companies can make requests under the NOW from 6 April 2020. Applications can be made at the latest on 31 May 2020. The NOW replaces the Reduced Working Time scheme, which was withdrawn in March. Applications under the Reduced Working Time scheme which were submitted prior to the withdrawal will be converted into applications under the NOW.
The following applies to employers filing a request for wage contribution under the NOW.
- Since one of the aims of the NOW is keeping as many people employed as possible, the company should in principle (see below) not, as from 17 March 2020, have made an application to the UWV for dismissals for business economic reasons. Applications which were submitted between 17 March and 2 April must have been withdrawn within 5 working days after publication of the NOW, i.e. by 7 April 2020 at the latest. Applications for dismissals for business economic reasons which were filed or will still be filed from 2 April 2020, must be withdrawn within 5 working days after filing.
- In order to have companies continue paying employees regular wages as much as possible (including on-call employees), the company must 'keep total wage costs as much as possible at the same level' as in January during the months of March through May as in January 2020.
- Wage contribution received from the government must exclusively be used for payment of wages.
- The works council or other personnel representation body or, in case no works council or personnel representation body exists, the employees must be informed about the wage contribution under the NOW.
- The company must make a notification in case of any other circumstances which could lead to the government deciding to grant, amend or withdraw the wage contribution.
Regular dismissals for business economic reasons and the NOW
Under the regular dismissal rules, employers can still initiate dismissal procedures with the UWV for business economic reasons. The regular strict conditions for this procedure continue applying, including the requirement that the reduction in work is expected to last at least 26 weeks. However, when applying for contribution for wage costs under the NOW, the employer commits to not dismiss employees for business economic reasons during the period for which contribution is received. If the employer files a request under the NOW and continues or initiates a dismissal procedure for business economic reasons, a stiff 'penalty' applies. A total amount of three times (contribution is granted over three months) of 150% of the January 2020 wages (including the 30% surcharge, see below) of the employees for whom dismissal was requested, will be deducted from the ultimate wage contribution granted. Further, in the explanatory notes to the amendments of 3 April mention was made of the fact that the employer filing for dismissals for business economic reasons, must 'make it plausible' to the UWV that obtaining wage contribution under the NOW 'was not an obvious other solution for the company'.
Calculation turnover loss
The employer must suffer a turnover loss of at least 20% during the chosen period of three months in order to qualify under the NOW. The estimated turnover during the selected three months period will be compared with 25% of the average turnover of 2019. Depending on the percentage of turnover loss, financial aid in the form of wage contribution amounts to 90% of wage costs during the three-month period chosen. For example, in case of 100% turnover loss, the contribution amounts to 90% of the employer's wage costs. In case of 25% wage costs, the contribution amount to 22.5% of the employer's wage costs. Separate NOW applications will have to be made if an employer uses different wage tax numbers (loonheffingnummers). The eligible wage costs will be determined per wage tax number used by the employer. In case of more wage tax numbers and therefore more applications, the same turnover loss expected for the entire group of companies must be registered.
Calculation wage costs
Under the NOW, the employer may receive contribution towards wage costs which qualify as 'social insurance wages' (sociale verzekeringsloon). This means that employees towards whose wages the employer wishes to receive a contribution must be 'socially insured' under the Dutch system. Non-Dutch entities 'with social insurance wages' in the Netherlands may therefore apply for wage contribution under the NOW. Once it has been established what the percentage of turnover loss is, this percentage is taken over the sum of the wage costs for the months of March, April and May 2020 (the UWV basing its decision on the January 2020 wage costs data in its administration, polisadministratie). Additional charges and costs usually paid by the employer such as social security contribution, pension contribution and accrual of holiday allowance are not included in 'wages' but are covered by a 30% surcharge to the social insurance wages. A cap of twice the maximum daily wages per month per individual employee applies. This means that an employee's wages above EUR 9,538 per month are not eligible for NOW contribution..
Group of companies
As stated above, for employers which form part of a group of companies, the turnover loss of all Dutch entities within the group is taken into consideration as well as the turnover loss of all non-Dutch entities 'with social security wages' in the Netherlands. In situations where the turnover loss is mostly suffered in non-Dutch entities, the NOW offers possibilities for a group to successfully file requests for wage contribution under the NOW. As indicated above: attention must be paid to the fact that wage costs are considered per wage tax number and in each of the application, the same turnover loss expected for the entire group of companies must be mentioned. In case an employer is part of a group of companies and suffers 20% loss in turnover, where the group as a whole does not, it may still be eligible for wage contribution if the following conditions are met:
(i) The employer does not pay dividends and/or bonus or buys back shares (inkoop aandelen) in the company this year up to and including the day of the general meeting of shareholders in which the annual accounts over 2020 are adopted. The prohibition of paying bonus applies to members of the board of directors and management, not to regular employees. The obligations with respect to dividend, bonus and share buyback apply to employers being eligible to receive wage contribution of more than EUR 125,000 or an advance payment of at least EUR 100,000.
(ii) An agreement was reached on job retention with the unions involved. If no unions are involved or the employing entity employs less than 20 employees, another type of employee representation, such as a works council, can enter into the job retention agreement.
(iii) In order to prevent 'strategic behaviour' in a group, group companies may not transfer projects or activities to another group entity which are normally performed by the entity applying for wage contribution.
In the event of a positive decision on the application, the UWV will make an advance payment of 80% of the contribution calculated based on the expected turnover loss. The advance payment will be made in three parts, the first part can be expected within two to four weeks after the application was made.
Final determination of the contribution
Within 24 weeks of the end of the period for which the NOW has been awarded, employers must apply for a final determination of the wage contribution accompanied by an auditor's report. The UWV will determine the definitive contribution based on the actual wage costs during the months of March, April and May 2020 within 52 weeks of receipt of the final application. Any wage sum increase after March 2020 is not considered in the wage contribution calculation. The wage sum over March is considered the maximum. The definitive decision of the UWV may result in a reimbursement by the employer because the wage contribution received had to be adjusted downward, or an additional contribution payment to the employer because the turnover loss turned out to be more substantial. The contribution can never be less than zero which means that an employer will not have to reimburse more than it received as advance payment(s).
Acquisition of another company
Special rules apply to employing entities having acquired another company prior to a NOW 1.0 application. As explained above, under the NOW, the wage contribution depends on the percentage of turnover loss of the employer. To calculate the turnover loss, the turnover in the chosen three-month period is compared with the average turnover in the calendar year 2019. If an acquisition took place prior to the NOW, this comparison is not adequate. In this situation the employer can take the period after the acquisition as a reference period for the calculation of the turnover loss. In case the average wage sum in March, April and May 2020 is higher than in January 2020, the final wage contribution will be based on the average wage sum over March, April and May 2020, capped by three times the wage sum over March 2020.
Self-employed persons - TOZO
Self-employed persons are not covered by the NOW. Provided certain conditions are met, self-employed persons whose business is affected, can receive temporary income support during March, April and May under the Temporary Bridging Scheme for Self-Employed Persons (Tijdelijke Overbruggingsregeling Zelfstandige Ondernemers, TOZO). A director/major shareholder (directeur-grootaandeelhouder, DGA) may, under certain circumstances, be eligible to support under the TOZO. Applications can be made at the latest on 31 May 2020. Income support based on the Support Self-Employed Persons Decree (Besluit bijstandverlening zelfstandigen) is temporarily available under more flexible conditions. This means that the viability of the business in question will not be verified and no partner income test or means test applies. Income support can be requested in the form of an additional maintenance payment and/or a working capital loan.
On 15 April, it was announced that the TOZO will be amended to include self-employed persons with a business abroad being eligible for maintenance support and self-employed persons living outside the Netherlands with a business in the Netherlands being eligible for a working capital loan. The scheme is run by municipalities.
Unemployment insurance contribution differentiation - adjustment Balanced Labour Market Act
From 1 January 2020, pursuant to the Balanced Labour Market Act (Wet Arbeidsmarkt in Balans), employers pay lower unemployment insurance premiums for employees on permanent contracts and higher unemployment insurance premiums for fixed-term contract workers and other flexible workers such as those on on-call contracts. For employees on permanent contracts who have worked overtime for more than 30% in a calendar year the employer must retroactively pay the higher unemployment insurance premiums. This rule will temporarily not be enforced because it would have unintended effects in sectors where the coronavirus requires employees to work extra overtime, such as the healthcare sector. In order to qualify for the lower unemployment insurance premiums, the employer must obtain a signed permanent employment contract. It was now decided that employers may take a longer period to organise these signed permanent employment contracts, so instead of until 1 April 2020, they will have until 1 July 2020.