The Temporary Emergency Bridging Measure for Sustained Employment (Noodmaatregel Overbrugging Werkgelegenheid, the “NOW”) has been in force since March 2020 and has been extended multiple times. Effective October 1, 2020, the NOW will be extended again, this time with three periods of three months, until July 1, 2021 (the “NOW 3.0“). In this blogpost we want to inform you of the expected changes in the NOW 3.0 and the finalization of the NOW 1.0.
The aim of the NOW remains to support work and income, but the Dutch government believes it is getting important that companies and employees adapt to the current economic situation. As such, a step-by-step reduction of the amount of NOW subsidy will be introduced. In addition, there will be room for employers to reduce the wage bill without this being reflected in the final amount of subsidy.
The NOW 3.0 will consist of three periods of three months, being October 1 up and including December 31, 2020 (the “Third Period“), January 1 up and including March 31, 2021 (the “Fourth Period“) and April 1 up and including June 30, 2021 (the “Fifth Period“). The reimbursement rates for the NOW support over 9 months will gradually reduce: from 80% in the Third Period, to 70% in the Fourth Period, to 60% in the Fifth Period. The aforementioned percentages will be reimbursed with a turnover loss of 100%. We will highlight the most important changes of the NOW 3.0 compared to the NOW 2.0 below.
Calculation of the turnover loss and wage bill
The total amount of the wage bill of the employer will be calculated by the wage bill from June 2020 for all three periods. If there is no wage bill available for this month, April 2020 will be the reference month. The percentage of turnover loss will remain to be calculated by comparing the expected turnover for 2020 with the turnover of 2019 divided by four. This amount will be compared with the turnover in a period that can be chosen by the employer. If the employer has applied for NOW 2.0 in the past, the turnover period for the Third Period must be consecutive to the period chosen in the NOW 2.0. The same applies to the referral periods for the three periods in the NOW 3.0, these must also be consecutive.
Most important changes:
- the minimum turnover loss will increase from 20% in the Third Period to 30% in the Fourth Period and the Fifth Period;
- the maximum percentage of the wage bill covered by the subsidy will decrease from 80% to in the end 60%;
- the employer has the possibility to gradually decrease the wage bill by 10, 15 and 20% without this being at the expense of the subsidy amount. If the wage bill decreases with more than the aforementioned relevant percentage, the final subsidy will be decreased with the amount above the approved decrease;
- the filing for layoffs of employees on economic grounds will no longer result in a reduction of the subsidy amount. The regular dismissal protection under Dutch law will be maintained;
- in the Fifth Period, the maximum wage to be reimbursed per employee will be reduced to a maximum of 1x the daily wage (being EUR 4,845 per month instead of EUR 9,691); and
- the employer applying for the NOW 3.0, has the obligation to make an effort to support employees who are threatened with dismissal in their transition to a new job. The employer can meet this obligation by contacting the Employee Insurance Agency (in Dutch: UWV) and collecting information regarding the guidance of the employees facing dismissal. If this obligation is not met, this will lead to in a 5% cut of the final subsidy.
The Dutch government is aiming to open the application process for the three periods of NOW 3.0 separately. After the subsidy has been awarded, the employer will receive an advance of 80% of the subsidy amount which will be paid out in three installments. The first application period of NOW 3.0 will start on November 16, 2020 and will be open for a period of four weeks. The application period for the Fourth Period is February 15 until March 14, 2021 and the application period for the Fifth Period is May 17 until June 13, 2021. As previously noted in our blog in respect to a subsidy granted under the NOW 1.0 and NOW 2.0, the employer must request for the final subsidy to be determined. As for the NOW 3.0, the employer has the same obligation and shall have to apply for the determination for all three periods separately. The first request can be made after September 1, 2021. Further information regarding the determination process of the NOW 3.0 will be made available at a later stage.
Final determination NOW and NOW 1.0
Due to the fact that the subsidy is granted as an advance, the employer must request a final determination of the subsidy after October 6, 2020 for NOW 1.0 and November 16, 2020 for NOW 2.0. Should the employer need to obtain the mandatory accountant’s statement, the accountant of a relevant employer will examine whether or not the employer has complied with all requirements of the relevant NOW measure. On September 8, 2020, the NBA (professional organization of accountants) published a protocol which accountant will use for final determination of the subsidy amount under the NOW in joint collaboration with the Dutch Minister of Social Affairs and Employment. According to this protocol, the accountants statement must include a confirmation of an accountant that the dividend prohibition as dictated by the NOW has been complied with. To this end, the accountant will consult with the board of directors and the management of the relevant group, the operating company / intermediate holding company.
Should you have any questions in connection to the NOW 3.0 or the final determination of the NOW or the conditions of the NOW, please contact us.