The reduction of working hours scheme is replaced by new regulation NOW
Worldwide the number of Corona patients is increasing. In all affected countries measures are being taken to prevent the further spread of the virus as far as possible. The foregoing affects many employers in the Netherlands, resulting in employers temporarily having no or less work for their employees.
On 17 March 2020 the Dutch government announced that – effective immediately – no more applications for a reduction of working hours can be submitted. There will be a new temporary regulation, Tijdelijke Noodmaatregel Overbrugging voor Werkbehoud (NOW), that will replace the reduction of working hours scheme.
The details of NOW are still unclear, but the main elements have been published (see below). The Dutch Minister of Social Affairs and Employment announced that the elaboration of this measure will take some time (the expectation is no later than 1 April 2020). It is also not yet possible to apply for NOW (the necessary infrastructure is not yet in place).
Main elements of NOW
Businesses expecting a loss of turnover of at least 20% with effect per 1 March 2020 can apply to the Employee Insurance Agency (UWV) for a wage allowance (the Wage Subsidy), that compensates wage costs (up to a maximum of 90% of the wage costs, the actual percentage depending on the loss of turnover) for a period of three months with the possibility to prolong for another three months (the Subsidy Period).
The Wage Subsidy is related to the expected loss of turnover. The following examples have been provided:
- loss of turnover 100% → Wage Subsidy: 90% of the wage costs;
- loss of turnover 50% → Wage Subsidy: 45% of the wage costs;
- loss of turnover 25% → Wage Subsidy: 22.5% of the wage costs.
At this stage it is not yet clear whether the Wage Subsidy will be limited to the maximum daily wage which the UWV always applies when providing social security benefits to (former) employees, such as unemployment benefits and long-term illness benefits. The maximum daily wage currently amounts EUR 219.28 per day or EUR 4,769.34 per month.
If a business already applied for the reduction of working hours scheme, this application will automatically be regarded as an application for the Wage Subsidy. These businesses will be asked to provide additional information.
The UWV will provide an advance payment of 80% of the requested Wage Subsidy which enables businesses to continue the salary payments to their employees, subject to the declaration that no employees will be dismissed for economic reasons during the Subsidy Period.
The Wage Subsidy can also be requested with regard to temporary employees, provided that they will also remain employed during the Subsidy Period. Temporary employment agencies can also apply for the Wage Subsidy. For larger requests, an auditor’s report will be necessary.
Request Dutch tax authorities
The Dutch tax authorities made the following request to employers: “submit your wage tax return on time. You don’t have to pay yet in case you apply for a postponement of payment”. The Dutch tax authorities request employers to send in their wage tax returns timely. Especially now, during the Corona crisis, as the UWV needs the data from the wage tax returns in order to make payments under NOW.
Klaas WiersmaPartner Attorney at law
Klaas Wiersma, attorney at law, is the chairman of the Employment & Benefits practice group in the Netherlands. He has over 20 years’ all-round experience in employment law, with a particular focus on the employment aspects of, mostly international, M&A-deals, co-determination procedures, restructurings and collective dismissals, and cross-border employment.T: +31 20 578 59 60 E: email@example.com
Maureen te PoelCounsel Attorney at law
Maureen te Poel, attorney at law, is a member of the Employment & Benefits practice group. She has over 21 years of experience as a lawyer, of which 8 years in the M&A department. The last 13 years she has been focusing on all-round employment law, with a particular focus on the employment aspects of M&A-deals and restructurings, co-determination procedures, remuneration structures and sector-specific regulations on remuneration.T: +31 20 578 54 64 E: firstname.lastname@example.org