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Publication details of Temporary Emergency Measure Bridging for Work Retention regulation (“NOW”)31-03-2020

Today, 31 March 2020, the Dutch government has published the details of the Temporary Emergency Measure Bridging for Work Retention regulation (“NOW”). The NOW aims at making it possible for employers to retain their employees as much as possible in the event of a loss of turnover of at least 20% as a result of the Corona crisis. To this end, a compensation in wage costs is provided of a maximum of 90% of the wage bill, related to the percentage of the decrease in turnover. Below the most important questions and answers are summed up.

When does the NOW apply?

The NOW applies if there is a turnover decrease of at least 20% over a three-month period between March 1, 2020 and July 31, 2020 due to extraordinary circumstances, which cannot reasonably be considered normal entrepreneurial risk.

What is the amount of the compensation?

In principle, the wage subsidy is based on the wages bill of January 2020 and amounts to a maximum of 90% per month. The wage subsidy is a contribution towards the labor costs from March to May 2020.

The 90% percentage is paid with a 100% decrease in turnover. If the drop in turnover is lower, the compensation will be proportionately lower. For example, if the turnover falls by 50%, the compensation amounts to 45% (= 50% of 90%) of the wage bill.

The compensation is capped per employee at a maximum of twice the maximum daily wages per month per individual employee, which is a maximum of € 9,538 per month per employee.

Which wage bill is assumed?

When determining the advance on the subsidy, the wage bill of the January 2020 wage tax return is taken into account.

If it subsequently appears that the wage bill for the months for which the subsidy has been applied for is lower than the wage bill for January 2020, the subsidy will be reduced by 90% of the amount by which the wage bill has decreased.

A flat-rate surcharge of 30% is calculated to correct the wage bill for the various costs that the employer has, such as pension contributions (the employer part and the employee part), employee insurance premiums and (in many cases) a reservation for the payment of holiday allowance.

How is the drop in turnover calculated?

The decrease in turnover is calculated on the basis of the turnover for 2019. The reference period is the turnover for 1 January to 31 December 2019, divided by 4. That turnover is compared with the turnover for the period between 1 March and 31 May 2020.

For entrepreneurs who experience a fall in turnover that manifests later, the drop in turnover can also be measured from a later moment. But it must always be related to a consecutive three-month period between 1 March and 31 July 2020. The wage costs subsidy will always relate to the wages bill between 1 March and 31 May 2020, regardless of the three-month period for which turnover is determined.

Example of subsidy amount

 

Calculation example for a 100% decrease in turnover:

The wage bill on which the advance is based is € 200,000. The expected subsidy grant is € 200,000 x 90% = € 180,000. As an advance, 80% is paid out, € 144,000.

If the wage bill has decreased to € 110,000 over the months of March-April-May, because the employer has not paid the wages of employees with a flexible work volume, this will be taken into account in the final determination of the wage subsidy.

The decrease in the wage bill, times 90%, is deducted from the subsidy amount. The final grant amount will therefore be € 180,000 - € 90,000 x 90% = € 99,000.

That means a recovery of € 45,000.

If the wage bill for the months of March-April-May did not decrease but remained at € 200,000, the subsidy will ultimately be based on 90% of the original wage bill, i.e. 90% of € 200,000 = € 180,000. The definitive subsidy that will be granted is therefore higher and a supplementary payment of € 36,000 will follow.

Which conditions apply?

Best efforts obligation to continue paying wages

The employer has an obligation to make every effort to keep the wage bill the same as much as possible. Employees are entitled to continued payment of wages for the full fixed amount of work as long as the employment contract continues, even if they are unable to work. For employees with a flexible workforce (on-call workers) the obligation to continue wages does not always apply. If employers continue to pay the wages of employees with a flexible workforce, the NOW contribution will apply.

No applications for dismissal for business reasons

The employer is required not to apply for a dismissal from UWV for his employees in the period from 18 March to 31 May 2020 for business reasons. If a dismissal application has already been made after March 18, the employer will receive 5 working days after the NOW comes into effect to withdraw the application. If the employer does not or does not do this on time, a decision will be made on the application, but this will have consequences for the amount of the subsidy. The wages of employees for whom dismissal has been applied for will be increased by 50% and that amount, including the increase, will be deducted from the total wage bill on which the subsidy is based.

Inform Works Council / employees

The employer must inform the Works Council, the staff representation body or, in the absence thereof, the employees about the granting of the wage subsidy.

Use of subsidy for labor costs

The employer is obliged to act in accordance with the purpose of the subsidy regulation, which means that the subsidy must be fully used to pay the wage costs.

Wage cost subsidy municipality

If an employer receives wage subsidy from the municipality, he must report the NOW grant to the municipality.

What about large companies / multiple payroll tax numbers?

If an employer has several payroll tax numbers, he will have to submit several applications if he wants to apply for a subsidy for the entire wage bill. The wage bill will be determined per payroll tax number. The drop in turnover is reported on the basis of the expected drop in turnover within the entire company. The employer must enter the same drop in turnover and the same reference period for each application.

For a group, the drop in turnover of the entire group is the basis of the subsidy.

When and how can NOW be applied for and when will the subsidy be transferred?

The aim is to start the application procedure on Monday, April 6, 2020. In any case, applications can be made between April 14 and May 31, 2020. Applications can be submitted using the form designed for that purpose, which is made available on www.uwv.nl. UWV will decide no later than 13 weeks after receipt of the complete application.

In practice, the aim is to transfer the advance payment within two to four weeks after receipt of the complete application. The advance is paid in three installments. If a positive decision has been taken on the application, an advance of 80% will be provided, based on the information supplied with the application.

After the period of decline in turnover, the final subsidy must be requested within 24 weeks, also via a form from UWV. It will be determined how large the actual drop in turnover has been and whether the employer has complied with the obligations of the NOW regulation. An audit report must be enclosed with this application, in which the definitive decrease in turnover must be reported. The final subsidy is then determined which may result in a recovery or supplementary payment.

Will the NOW regulation be extended after May 31, 2020?

The option to extend the NOW regulation by three months will be kept open and a decision will be taken before 1 June 2020. However, further conditions can be added to the current regulation.

The NOW regulation is published on Publication NOW

If you have any additional questions about the NOW or the consequences of the corona virus, please do not hesitate to contact us. This can be done by telephone on 030 220 3111 or by e-mail via info@vanbladeladvocaten.nl

You are invited to join a free webinar about the NOW on Friday, April 3, 2020 from 4 PM to 5 PM. You can register via this Webinar NOW 3 April 2020

For frequently asked employment law questions about the Corona virus please see our other blogs.

Hanneke Klinckhamers

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