Explanation and conditions
The Dutch government wants to achieve that as many people as possible remain employed by ensuring that companies can continue to pay their wage costs, while turnover has demonstrably decreased. The new Temporary Emergency Bridging Measure for Sustained Employment (Noodmaatregel Overbrugging Werkgelegenheid “NOW”), which was announced in detail on March 31, 2020, is intended to cover the wage costs of companies during the corona crisis.
The amount of the subsidy is calculated on the basis of the wage bill and the turnover loss. The turnover loss must be at least 20% to qualify for the subsidy. The maximum subsidy paid is 90% of the total wage bill, with a loss of turnover of 100%. The subsidy is granted for the wages bill for the months of March, April and May 2020, with an possibility of extension. Additional conditions may be attached to this extension.
Amount of subsidy
The amount of subsidy is calculated by the percentage of the turnover loss. For example:
- If the turnover loss is 100%, the compensation will amount to 90% of wages.
- If the turnover loss is 50%, the compensation will amount to 45% of wages.
- If the turnover loss is 25%, the compensation will amount to 22.5% of wages.
How is the NOW subsidy calculated?
The amount of the advantage payment of the subsidy is calculated by the following formula:
A x B x 3 x 1.3 x 0.9
A = percentage of the expected turnover loss; and
B = wage bill for January 2020
In the calculation of the final subsidy, the actual turnover loss and the wage bill for the months March, April and May 2020 will be used in the calculation.
Employers must determine the percentage of expected turnover loss themselves. To do this, the turnover from 2019 must be divided by 4. In this way, the average turnover for a quarter is determined (the “Reference Turnover“). The expected turnover loss should be determined by choosing a period of 3 consecutive months in the period March through July 2020 (the “Period Turnover“). It is possible that the turnover loss is not immediately noticeable. Therefore, the employer also has the option of using the expected turnover in the months of April, May and June or May, June and July.
The turnover loss is then determined calculating the difference between the Reference Turnover and the Period Turnover and dividing it by the Reference Turnover. The result of this calculation is expressed in whole percentages and rounded up.
This loss of turnover does not need to be caused by the coronavirus outbreak. You may also use the NOW if your company experiences turnover loss due to other exceptional circumstances.
If the employer is part of a group, the turnover of the entire group must be included in the calculation. The group concept of art. 2:24b Dutch Civil Code is decisive here. Foreign legal entities can also be taken into account, insofar as they pay wages to employees (for social insurance purposes) in the Netherlands.
The Dutch government intends to ensure that the subsidy can still be claimed within groups where personnel costs and loss of turnover do not coincide in the same entity. However, this also means that entities with loss of turnover that fall in a group in which profitable activities are carried out, are not eligible for the subsidy. In those cases, the group is asked to take responsibility for the entity affected by a drop in turnover.
For the wage bill calculation, the wages of all employees are considered. In addition to the amount of monthly wages, there is a supplement of 30% to cover employer costs, such as pension contributions and holiday allowance. The subsidy is limited to an amount of EUR 9,538 per employee. Salary above that limit is not eligible for the subsidy. For the determination of the subsidy in advance, the wage bill of the month January 2020 is considered. If no data is available for this month, the month November 2019 is considered. If no data is available for this month either, no subsidy can be requested.
A correction will be made upon final determination. At that time, the final wage bill for the months March, April and May 2020 will be considered. Even if another period has been used in determining the turnover loss, these months will be used in the final determination of the wage bill. If the wage bill is lower, for example because employees have been fired or removed or on-call workers have not been paid, the subsidy is adjusted downwards.
No distinction is made in the type of employee when calculating the total wage bill. Both employees that are regular employees and employees with a flex or on-call contract are included in this calculation. The purpose of the subsidy is that the employer is able to continue to pay all of his employees.
Dismissal for commercial reasons prohibited
If the employer is granted the NOW subsidy, it is prohibited to fire employees for commercial reasons during this period. If by the determination of the final subsidy, it appears that the employer has filed a dismissal application, the subsidy will be cut. 150% of the salary of the employee concerned, will be deducted from the total wage bill on which the final subsidy is based. Please note that this concerns employees for whom the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen “UWV”) has received a dismissal application. It is not important whether the UWV approves or rejects the dismissal application. If the employer has already made a dismissal application, the employer will have 5 days to withdraw this application.
Advance and determination
Since the NOW is an emergency measure and the Dutch government wants to assist employers as quickly as possible, it is not possible to make a clear calculation of the amount of the subsidy to which the employer is entitled in advance of the payment. Therefore, it was decided to work with an advance payment of the expected subsidy and a subsequent determination.
After approval of the application, an advance payment of 80% of the expected subsidy will be made in 3 installments. Settlement will take place afterwards on the basis of the actual turnover. Final calculations that exceed a certain amount, will require an auditor’s report. The height of this amount is yet to be established.
Practical information NOW
Applications and allocation of the subsidy will be made by the UWV. The UWV website contains the form that must be completed for the application. Payments and checks afterwards will also take place via this agency.
The application period for the subsidy runs from April 6 to May 31, 2020. After the application, the UWV has a decision period of 13 weeks. However, the aim is to have the first installment of the advance paid within 2 to 4 weeks. Within 24 weeks after the compensation period, the employer needs to apply for the determination of the final subsidy. UWV will then issue a final statement within 22 weeks.
Before June 1, 2020, it will be decided if the NOW subsidy will be extended. This possible extension will most likely be for a subsequent period of 3 months.
NOW is a new emergency measure and it will replace the old short-time working scheme (werktijdverkorting “wtv”). Companies that had submitted an application for wtv before the NOW came into force and for which no decision had yet been taken by the UWV, are deemed to have now submitted an application for the NOW.
If you have any further questions, please do not hesitate to contact us.