Newsflash

In our newsletter of 17 March last, we already informed you on headlines of the Tijdelijke Noodmaatregel Overbrugging voor Werkbehoud (NOW). In the meantime the NOW has been specified in more detail. It is expected that further adjustments will take place. The key points are summarized below. Please find the full measure here.

• 20% loss of sales minimum: if you expect a loss of sales as of 1 March 2020 of 20% minimum, compensation for salary costs can be applied for with the UWV (Employee Insurance Administration) for a period of three months.

• 90% salary compensation maximum: it concerns 90% of the salary sum maximum, subject to the level of sales loss. In the event of a sales loss of e.g. 100% the compensation amounts to 90% of the salary sum. In the event of a 50% sales loss for instance, this will be 45% of the total salary sum.

• Salary sum calculation: for the calculation of the salary sum the UWV applies the data of the wage tax return with the Tax Authorities. Starting-point in this is the socialeverzekeringsloon (wage on which social security contributions are based) with a raise of 30% of employer’s charges  (such as the buildup of holiday allowance, pension and employer premiums). Moreover, compensation is capped at a maximum salary of EUR 9,538 a month for each employee.

• The salary sum in the subsidy period is compared with the salary sum of January 2020, if this information is known to the Tax Authorities. If the salary sum of January last is not known, then a comparison is made with the salary sum of November 2019. It is important to (keep) filing wage tax returns with the Tax Authorities in time. Please note: to prevent abuse any changes which have been communicated after 15 March in the wage tax return of January will be disregarded in a NOW application.

• Calculation of sales decrease: for the calculation of the sales decrease the total net sales of 2019 is divided by four, to allow a comparison with the sales in the months of March, April and May 2020. If the sales decrease, however, appears at a later time, employers may also specify a period for sales comparison which commences one or two months later. The Central Government defines net sales as follows: “The yield from the supply of goods and services by the company of the legal entity while deducting any discounts and taxes levied on the sales”. In this, yield is “the revenue that has come about during the performance of the normal activities of a company”. Yield other than from sale (such as subsidies, allowances, gifts, interest revenu) fall within the sales notion of the NOW (https://www.rijksoverheid.nl/onderwerpen/coronavirus-covid-19/veelgestelde-vragen-per-onderwerp/financiele-regelingen/now).

• Sales in group context: employers who are part of a group apply the sales decrease of the group.
  Flex Workers: compensation may also be applied for in respect of flex workers, since this group of employees is also included in the wage tax return and they have also been insured under the WW, ZW or WIA (Act on unemployment, health and supplementary income).

• Dismissal: it is not allowed to submit dismissal permits at the UWV based on reorganisation during the period of the NOW being utilized. However, an employment agreement for a definite term may still end,  dismissal during the trial period is possible, just as a dismissal for other reasons, as well as termination of the employment agreement with mutual consent. Termination of the employment agreement may have an impact on the salary sum and therefore the level of the subsidy.

• Conditions: the conditions for using the NOW are the following:
  • Employees shall continue to receive their regular salary. A drop in the salary sum will therefore have an impact on the level of the eventual subsidy the employer can claim. After all, less persons continue to receive salary or the level of the salary sum has been adjusted downward, and so the compensation for salary costs also decreases.
  • The employer is expected not to apply for permission to terminate an employment agreement for business economic reasons with the UWV, in the period from 18 March to 31 May 2020.
  • The condition does not apply to dismissal applications which have been filed with the UWV in the period from 1 March to 17 March. If dismissal is nevertheless applied for at the UWV and such application has not (or not timely) been withdrawn, then upon deciding the subsidy a correction will be made. When deciding on the subsidy the salary will be determined of the employees whose dismissal has been applied for. This salary will be raised with 50%. The salary plus raise of 50% will be deducted from the total salary sum on which the eventual level of the subsidy will be based. This shows that non-compliance with the condition of not applying for dismissal has an impact on the level of the subsidy.

• Information duty: the employer has a duty to inform the Works Council or employee representation as set out in the Dutch Works Council Act or, in the absence of the aformentioned, employee representative bodies to inform the employees about the subsidy grant.

• (Until) when is application possible: it is intended that companies can address the UWV with an application for the NOW as of 14 April next, but possibly already as of 6 April next. Employers shall state the expected sales decrease in the application. The application period runs up to 31 May 2020. Please note: the NOW plan has replaced the working time reduction plan. As a result it is no longer possible to apply for working time reduction. Applications for working time reduction which have already been filed but not yet decided upon, will be processed in conformity with the new NOW plan. For employers that already apply granted working time reduction, the permit remains in force. If they wish to renew such  existing working time reduction after its termination, the application thereto will fall under the NOW.

• Advance allowance: if the conditions of the NOW plan are met, then the UWV will pay an advance of 80% in three installments. It is expected that the first installment will be made payable within two to four weeks after filing the application.

• Final subsidy and final settlement: employers shall file an application within 24 weeks after expiry of the period for which the NOW has been granted, for a final settlement of the subsidy. This requires in principle an audit report by an accountant. The UWV will draw up a final statement within 22 weeks following this, which may be higher or lower than was originally provided for in the first statement.

• Abuse and improper use: if upon setting the subsidy there is a reasonable suspicion of an offense, the UWV has the option of reporting this to the Public Prosecution Office (OM). The OM can next start a criminal investigation and decide to proceed to criminal prosecution. Based on information of the UWV and/or signs and notices the SZW (Social Affairs and Employment) inspectorate may start an investigation under the auspices of the OM. Furthermore, by means of data analyses checks will be carried out and risk-based checks will be made afterwards, both based on data checks and by means of sample checks.

• Monitoring: since the NOW plan has been set up in a short time its execution/operation will be monitored by the government and where possible adjustments will be made.

We will keep you posted on further developments concerning the NOW. If you have any further questions or need assistance in filing an application for the NOW, then the employment law lawyers of Parker are more than willing to assist you.

This newsletter has been issued for general information purposes only and cannot be considered an advice. No expectations or rights can be derived from this newsletter.