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The ins and outs of the amended NOW-scheme

Nieuws 08 mei 2020

On 17 March 2020, the government announced an emergency package of measures to ensure that people keep their jobs and income. One of those measures is an allowance for labour costs. This measure applies to employers expecting a turnover loss of at least 20% during a consecutive period of three months from 1 March 2020. See our previous blog. The compensation of wages will amount to a maximum of 90% of the wage sum, in proportion to the turnover loss.

Minister Koolmees of the Social Affairs and Employment department has published the further conditions of this Temporary Emergency Bridging Measure for Sustained Employment ("NOW") on 31 March 2020. On 3 April 2020, an amendment thereto was published. The digital counters of the Employee Insurance Agency ("UWV") have been open from 6 April 2020 onwards. See our previous blog. A second amendment was made on 1 May 2020: individual operating companies of a group can also apply for a compensation of wages based on 20% or more turnover loss of the individual operating company itself (instead of on group level), but only if the total group on average has less than a 20% turnover loss. See our previous blog. The NOW-scheme, the explanatory note, the amendments thereto and the relevant letters to Parliament are written in easily legible language. We advise anyone considering to make use of the scheme to study the concerned documents.

The full scheme including explanatory note can be found here.
The first amendments thereto can be found here
The second amendments thereto here.
The consolidated version of the scheme can be found here.The Parliamentary letter attached to the NOW-scheme of 31 March 2020 can be found here.
The Parliamentary letter attached to the amendment of 3 April 2020 can be found here.
The Parliamentary letter attached to the amendment of 1 May 2020 can be found here.

If you have any questions regarding the scheme, please contact us. We are glad to help you, free of any obligation. Below, we will already discuss the most important questions surrounding the NOW-scheme. We hope that this will already help you to get started.

How is the amount of allowance for labour costs calculated?

  • Two variables play a significant role in the scheme: the turnover loss and the wage sum. The higher the turnover loss, the higher the compensation for the wage sum of the employer.
  • The monthly wage sum is based upon the wage sum of the first return period (the reference period) of 2020 (January). A return period of four weeks will be increased with 8,33% to a period of one month. The wage sum of the reference period is called the reference wage sum.
  • The monthly subsidy will amount to a maximum of 90% of the reference wage sum, depending on the turnover loss. 90% is a maximum percentage, which will be subsidized in the event of a 100% turnover loss. If the turnover loss is lower, the subsidy will be established proportionally lower. At a 50% turnover loss, the subsidy will amount to 45% (=50% of 90%) of the wage sum and at a turnover loss of 20%, the subsidy will be 18% (= 20% of 90%), etc.
  • If there is no wage sum information available for January 2020, the UWV will take the wage data of November 2019 as a starting point. If there is no information available for this period either, the subsidy will be denied.
  • The subsidy is an allowance for the labour costs during the period of March through May 2020. This wage sum period (the subsidy period) is applicable to all applications. The allowance for labour costs continues to relate to labour costs between March and May 2020, regardless of the period within the three-month period in which the turnover is established (the measurement period, see below).

How to calculate the turnover loss?
The turnover loss is established by comparing the reference turnover with the turnover during the measurement period. The following starting points are applicable:

  • the reference turnover is the net turnover from 2019, divided by four. This is a given, except for businesses that did not yet exist on 1 January 2019. In that case, the average monthly turnover until 29 February 2020 is calculated and multiplied by three;
  • the period over which the turnover loss is calculated (the measurement period) can be selected by the employer himself. Employers can opt for the measurement period to start on 1 March, 1 April or 1 May 2020. The period must always be a consecutive period of three months. The measurement period selection must be made at the application;
  • there must be an average turnover loss: the NOW subsidy will be denied if there is a turnover loss of 20% in only one month, while a normal turnover is generated in the surrounding months. After all, the average percentage of turnover loss over three months, will only be 6,7% in that case. In the event that turnover declines by 60% in one month, the average over three months is 20%, which gives a right to the subsidy;
  • in the event of a larger assembly of legal entities or private persons, such as a concern or group, the turnover loss of the entire group will be the basis for the subsidy. The employers within that group must therefore select the same percentage of expected turnover loss and the same measurement period for the turnover loss;
  • the second amendment has made an exception to the previous premise: individual operating companies that are part of a group can apply for support through the NOW measure based on the 20% or more turnover loss of the individual operating company itself (instead of on group level), but only if the total group on average does not suffer turnover loss of more than 20%. Key requirements have been drawn up for this extension:

                - the business group may not pay out bonuses 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;
                  - the option only applies to new applications;
                  - additional audits are required

  • concerns with Dutch and foreign subsidiaries cannot take into account the turnover loss of legal entities within the group that do not have a Dutch salary for social insurance purposes ("SV salary");
  • the definition of turnover ties in with the turnover definition as defined in accounting law. The core is that the definition of turnover ties in with the activity level of the company as closely as possible.

 What is the definition of 'wage sum'?

  • For the calculation of advance funding, the reference wage sum is applied (see above).
  • The SV salary from current employment, without holiday allowance, is taken as a starting point.
  • The salaries of all employees that were in the employment of the applicant in January 2020 will be taken into account, including the wage sum of sick employees.
  • For all companies, the SV salary will be increased with a fixed supplement of 30% for employers' costs, such as the accrual of holiday allowance, pensions and employers' premiums.
  • The salary per employee is maximized at EUR 9,538 gross per month (+ 30% supplement).

 What are the obligations for employers?

  • The employer is under the obligation to use best endeavours to keep the wage sum as equally levelled as possible, so to keep paying the employees. A decline of the wage sum will therefore have consequences for the amount of the eventual subsidy. After all if less people continue to be paid or the amount of the wage sum is adjusted to a lower amount, the allowance for wage costs will also decrease.
  • During the period from 18 March up to and including 31 May 2020, the employer is not allowed to request permission to dismiss employees on economic grounds to the UWV. This prohibition of dismissal is not as absolute as was first thought; for example, dismissals during trial periods, contracts for a fixed period that end by operation of law (and that are not extended) and dismissals by mutual consent are permitted. Withdrawal of applications already submitted to the UWV is possible.
  • When the dismissal prohibition is violated, the salary of the dismissed employees during the reference period will be increased by 50% and subsequently multiplied by 3 x 1,3 x 0,9. This increased salary will then be deducted from the subsidy. There is a clear element of penalty in this substantial decrease of the subsidy. This condition does not apply to dismissal applications submitted to the UWV during the period of 1 March up to and including 17 March 2020.
  • If dismissal applications for economic grounds are submitted to the UWV, the UWV will consider the NOW-scheme in the execution of its dismissal activities. An employer will have to demonstrate why that dismissal cannot be prevented by appealing to the NOW-scheme.
  • The employer is obligated to use the compensation for the payment of wage costs exclusively.
  • The employer is obligated to inform the works council, the employee representation or, lacking those, the employees, about the subsidy grant.
  • The employer is obligated to conduct an administration so verifiable that all information required for the establishment of the subsidy can be traced and checked and, if so requested, the employer will allow perusal of this administration until five years after the date of establishment of the subsidy.
  • The employer will submit his wage tax return at the prescribed moments.
  • The employer will immediately inform the UWV in writing if other circumstances occur, which may be important for any decision to amend, withdraw or establish the subsidy.
  • The employer is to submit an audit report after the period for which the subsidy is granted.

Where and when to submit the application?

  • The application must be submitted digitally to the UWV through the intended form.
  • Only one request for a subsidy can be submitted per withholding tax number. Therefore, if a company is part of a concern, an application must be submitted for each withholding tax number.
  • The subsidy application can be submitted as from 6 April 2020.
  • As a result of the second amendment, it has also been arranged that by submitting the subsidy application, the applicant agrees to the possible publication of information he has provided to the UWV upon application and data from his subsidy file.

What to mention in the application?

The subsidy application should at least mention the following:

  • if the employer has applied for unemployment benefit during short-time working (wtv) after 31 August 2019; the file number of the application;
  • the expected turnover loss, expressed in whole percentages, rounded upwards;
  • the consecutive period of three calendar months within the period of 1 March through 31 July 2020 for which the employer is expecting a turnover loss;
  • the withholding tax number;
  • the Dutch or foreign bank account number into which the employer is receiving payments regarding withholding taxes from the tax authorities. In the second amendment, the condition that an employer with a foreign bank account number must supplement the application with a Dutch bank account number within four weeks is adapted: employers with a non-Dutch SEPA bank account number no longer have to provide a Dutch bank account number.

When will a decision be made?

  • The UWV will decide ultimately within 13 weeks after receipt of the full application for subsidy. In actual practice, the aim is to realize payment of the advance within 2 to 4 weeks after receipt of the full application.

 What will be the amount of the advance?

  • The amount of the advance will be 80% of the expected compensation.
  • The advance will be paid in no more than three terms.

 When and how will the definite subsidy be determined?

  • The employer will request to determine the subsidy within 24 weeks after the period in which the turnover loss has occurred (the measurement period), through the intended form.
  • The definitive compensation will be determined within 52 weeks after receipt of this application.
  • In establishing the definitive subsidy, the wage sum of January 2020 will be compared to the wage sum of March 2020 through May 2020.
  • The settlement may entail a reclamation or subsequent payment. If, for example, the wage sum has declined, the subsidy will also turn out lower. Furthermore, it is also possible, of course, that the turnover loss is different than was expected. And – as already discussed – the subsidy can be cut back if the employer files an application for dismissal on financial grounds with the UWV.

 Is an extension possible after the first period?

  • The government is explicitly keeping the possibility open to extend the emergency measure by three months. A decision will be made in that respect before 1 June 2020, so that this second tranche will tie in with the first application period, which ends on 31 May 2020.
  • In the event of an extension, further conditions may be added to the scheme for the second tranche.

 Is the possibility of appeal and objection open?

  • Objection and appeal are possible against the decision to grant the subsidy. In this case, the Central Board of Appeal will be the authority to decide on the appeal.

For more information or advice on this subject, please contact one of our lawyers of the Employment department.

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