Update NOW scheme 2.0, as publiced on the government’s website (inhouse translation of 2 June 2020)
Below you will an update of the NOW scheme which wil apply effective 1 June 2020, click on the link for our first newsletter regarding this topic. Please note that formal legislation has yet to be published. We will keep you posted of any future developments.
Extra conditions for NOW 2.0
- The wage costs reference month will be March 2020.
- Until 5 June 2020 it was possible to request subsidy on the basis of the NOW 1.0 scheme whereby the wage costs reference month is still January 2020.
- If you dismiss employees on economic grounds you have to pay back 100% of the compensation you received per employee.
- If you want to dismiss 20 employees or more on economic grounds, you must have reached an agreement with the unions or other staff representation. In the absence of such an agreement, a reduction of 5% of the final NOW subsidy will be imposed, or if you cannot reach an agreement, you must have made an application for mediation through a (to be founded) Labour Foundation committee.
- The 30% surcharge for the accrual of among others holiday allowance, pension contributions and other employer’s contributions will be increased to 40%.
- You are obliged to stimulate your employees to take retraining or reskilling courses. You will have to include a statement with your application.
- You are not allowed to pay out bonuses or dividend and you may not buy (back) your own shares.
Key conditions for business group subsidiaries
Business groups, who pay wages to employees in the Netherlands who are insured under the social insurances is covered by the wage bill for which a subsidy can be received, can also apply for support through the NOW measure for operating companies that suffer turnover loss of more than 20%. This applies even in case other business units do not suffer turnover losses or even make a profit. Key requirements have been drawn up for this extension:
- the business group may not pay out bonusses or dividend over 2020 nor may it buy its own shares
- the operating companies for which NOW is claimed must make arrangements on maintaining employment with trade unions or employee representation
- the applying operating company must be a legal entity in its own right
- an intra-group secondment operating company (personeels-bv) within the group cannot apply
NOW 2.0: what will change with the NOW scheme applicable from 1 June?
The NOW will be extended for a period of 3 months, whereby you can apply for an allowance for the wage costs for the period June, July, August and September 2020.
Employers who are faced with at least 20% expected loss of turnover can request the UWV for an allowance for this period amounting to a maximum of 90% of the wage bill, related to the loss of turnover. The decrease in turnover will be determined over a three-month period starting on 1 June, 1 July, 1 August or 1 September 2020 and will be in accordance with the system of the first period.
There are a number of differences. We briefly describe them here. These new conditions of the NOW are still being worked out in more detail. We aim to open up the second application period on 6 July 2020.
NOW 2.0 has some adjustments to the current NOW. What are the changed conditions?
The reference month for the wage bill for the second period is set at March 2020 (reference date 15 May);
- the obligation not to apply for dismissal will be maintained, but the subsidy reduction will be reduced from 150% to 100%;
- if you want to dismiss 20 employees or more on economic grounds, you must have reached an agreement with the unions or other staff representation. In the absence of such an agreement, a reduction of 5% of the final NOW subsidy will be imposed;
- employers are obliged in NOW 2.0 to make an effort to encourage their employees to apply for development advice or to follow training to maintain their jobs;
- for 2020 and up to and including the 2021 shareholders’ meeting, no dividend or bonus may be paid and no own shares may be repurchased if there is an aid amount at or above the amount for which an auditor’s report is required. For operating companies that have received a NOW grant as part of a group, this threshold does not apply; they must always comply with it;
- the surcharge on labour costs is increased from 30% to 40%.
Does NOW 2.0 take into account the typical wage sum characteristics of seasonal work or the fact that as an employer you have a higher average wage sum in the subsidy period than during the reference period?
With the extension of the NOW, companies with a seasonal pattern are accommodated, because in the reference month the wage bill has been chosen for March instead of January. The adjustment offers a solution for seasonal companies that had an increase in personnel between January and March of this year.
For companies with a seasonal pattern, a solution has also been sought for the first period. For this purpose, if the wage bill from March until and including May is higher than the wage bill of three times January, the wage bill of March will be taken as the starting point. This increases the subsidy amount for the employer. This new calculation method automatically applies to all employers with a higher average wage bill in the period March to May than in the month of January.
I paid an extra period salary in March (such as a thirteenth month). This means that my wage and salary bill for March is higher. What is the effect of this on the amount of the subsidy?
In the NOW’s second subsidy period, the subsidy is based on the wage bill for March and compared with the wage bill for June, July and August. The UWV will apply and compare the wage bill for the different months as accurately as possible when making the advance payment and determining the subsidy. For example, extra period salaries, such as a thirteenth month, and the payment of holiday allowance will be taken out of the wage bill. The payment of an extra period salary therefore has no effect on the amount of the subsidy. This prevents employers from having to repay the full NOW subsidy simply because of the payment of an extra period’s salary, due to a falling wage bill.
How does the best efforts obligation to stimulate development advice and/or training work?
For the second period of the NOW, employers have an obligation to use their best efforts to encourage their employees to apply for development advice or to follow training to maintain their jobs. At the moment that the work has been greatly reduced or is in danger of disappearing, there may be room for orientation to another career and/or training towards other work. Employers can encourage their employees by, for example, making time or resources available, e.g. from R&D funds.
To support this, the government is making € 50 million available for a crisis package ‘NL leert door’ (“NL continues to learn”). This will enable people who have lost or are at risk of losing their jobs as a result of the crisis to refocus on job opportunities and, if necessary, to follow (online) training courses for this purpose. This crisis package runs from July to December 2020. Further information and education will follow. There are already various possibilities for training and development. For example ‘Lifelong development, also during corona’ on the website of the Social and Economic Council (SER).
How is it ensured that employers encourage employees to receive development advice and/or training?
Employers who use NOW are obliged to inform their Works Council of the fact that they are participating in NOW. If employers do not pay attention to career development and training on their own initiative, the Works Council or employee representatives can keep their finger on the pulse and call the employer to account [for this].
Who can participate in NOW 2.0?
Every employer that meets the conditions (including an expected loss of turnover of at least 20%) can apply for an allowance for labour costs, whether or not you participated in the first NOW. If you make your first application, you can start the period for a turnover reduction on 1 June, 1 July or 1 August. If you apply for the NOW for the second time, the turnover period must be in line with the period chosen in the first period.
When can I apply for NOW 2.0?
We aim to open the second application period as of 6 July 2020, whereby an allowance for labour costs for the period June, July and August can be applied for.
What will change with regard to dismissal?
The obligation for employers not to apply for dismissal will remain, but the subsidy reduction will be reduced from 150% to 100%. This means that the subsidy will be reduced by 100% of the wage bill(s) of the employee(s) for whom a request for dismissal has been made.