Breaking news: Emergency Fund Employment Bridge (NOW) published

01 Apr 2020

The final wording of the NOW scheme was published on March 31. This subsidy scheme is part of the package of emergency measures that the government has designed for companies that are confronted with a major drop in turnover as a result of the outbreak of COVID-19. The aim of this NOW-scheme is to enable employers to keep their employees employed as much as possible.

Marieke ten Broeke

Whether and to what extent an employer can claim a subsidy under the NOW is determined on the basis of the expected loss of turnover and the wage bill. After an approved application, the employer receives an advance in three instalments. A final assessment will be made after the subsidy scheme has ended.

This update provides a brief overview of the NOW rules. Successively we will discuss:

1. Determining the loss of turnover

2. Determining the wage bill

3. The amount in subsidy/compensation

4. Other conditions of the NOW

5. Submitting the application

6. Final determination of the subsidy

7. Changes to the NOW

1. Determining the loss of turnover

Employers are entitled to the NOW if there is a loss of turnover of at least 20% over a period of three months. This period of three calendar months must start from March 1, April 1 or May 1, 2020. This provides the employer therefore with various options.

The expected turnover for this period is compared with the turnover for January up to and including December 2019, divided by four (the "reference turnover"). If there is a difference of at least 20%, the employer meets the required expected drop in turnover. An assessment of whether the expected drop in turnover is a direct result of the corona crisis will not take place, but the NOW scheme contains several moral appeals to employers, to use the scheme only for the purpose for which it was created.

The percentage of the expected loss of turnover is therefore:

Expected turnover over a period of three months / (turnover for 2019/4) x 100

If the employer is part of a group of companies, an application must be made for each payroll tax number, but the expected drop in turnover must be determined across the group. In that case, there should therefore be an expected drop in turnover of at least 20% across the entire group, and not just in one specific part of the group. Calculations must be made on the basis of the structure of the group in place on 1 March 2020. If the employer is part of an international group, the expected drop in turnover must be based on the Dutch parts of the group and the foreign parts that pay (employee insurance contributions, ‘SV’) wages in the Netherlands.

2. Determining the wage bill

The amount of the compensation is capped at 90% of the wage bill. The wage bill is the total sum of wages for all employees employed by the employer over which the so-called employee insurance contributions are paid, in Dutch referred to as ‘SV’- wages. For the calculation of the subsidy, the wages are furthermore capped at twice the maximum SV daily wage, being an amount of EUR 9,538 per employee. Payments made by the UWV to the employer, for example a benefit under the Work and Care Act for an employee on maternity leave, must be deducted from the wage bill.

Additional employer costs are also eligible for subsidy. This could include, for example, employer contributions, the contribution to pension and the accrual of holiday allowance. For the sake of simplicity, it was decided to work with a fixed surcharge of 30% on the SV wage bill for all cases.

3. Determining the total sum of the subsidy

The calculation of the subsidy is based on the SV wage bill for January 2020, as listed on the wage tax return to the UWV. If these data are not available, November 2019 will be used. If these data are unavailable as well, it is not possible to apply for compensation.

The total sum of the subsidy depends on the loss of turnover. In case of 100% loss of turnover, the subsidy is 90% of the wage bill. If the turnover loss is 50%, the subsidy is 45% of the wage bill. With a loss of 25%, the subsidy is 22.5%.

The amount of the subsidy is thus calculated as follows:

Percentage expected loss of turnover x SV wage bill January 2020 (minus benefits from UWV) x 3 x 1.3 x 0.9

If the application is approved, the UWV will pay an advance of 80% of the applicable subsidy.

The advance will be paid in three instalments. The UWV aims to pay the first instalment within 2-4 weeks after the application is submitted.

4. The other conditions of the NOW

There are a number of additional obligations for the employer who is entitled to the NOW, such as:

A. The employer must aim at maintaining the level of the wage bill as it was before. The government thus wishes to ensure that the salaries of flexible employees are continued to be paid (for the same number of hours as before).

B. The employer shall not submit a dismissal application for business reasons to the UWV during the subsidy period. If the employer does this nonetheless, this will have consequences for the final determination of the wage bill. In that case the final wage bill will be reduced in the by the wages of the employee(s) concerned, times one and a half. Dismissals of a non-business economic nature are not punished in this way, but they can of course affect the wage bill. The prohibition of redundancies does not apply to applications that were submitted in the period from March 1 to March 17, 2020, since the NOW had not been announced yet at that time. Applications submitted after March 17 last can be withdrawn up to 5 days after publication of the NOW scheme. The scheme was published on 1 April in the Government Gazette. Employers who wish to make use of the NOW can therefore withdraw dismissal applications until ultimately April 6.

C. The employer is obliged to use the subsidy to cover labour costs, not use it for other purposes.

D. The employer is obliged to inform the works council or PVT that subsidies have been granted. If there is no works council or PVT is in place, the employer must inform the employees about the granted subsidies.

E. The employer must keep comprehensive records of all information important for the subsidy. If so requested, the employer must be able to provide access to this administration.

F. The employer must provide an auditor's report when submitting the final statement of the drop in turnover.

5. Submitting the application

The application must be submitted through the UWV website, per payroll tax number (“loonheffinggennummer”). The government and the UWV have indicated that they expect that applications may be submitted from April 14, or, if possible, earlier. The aim is to be able to grant access to the scheme from April 6th.

6. Final determination of the subsidy

The employer must apply for an assessment of the subsidy within 24 weeks after the subsidy period has ended. In principle, this requires an auditor's report. The UWV will determine the final subsidy within 22 weeks of receipt of the application. In the final calculation, a comparison is made between the wage bill for January 2020 (on the basis of which the advance was determined) and the wage bill for March up to and including May 2020. Possible differences are settled; after the final determination subsequent payment or recovery can therefore take place. If the average wage bill over the subsidy period turns out to be higher than the wage bill for January 2020, the subsidy will not be increased on that basis.

7. Amendments to the NOW

Further amendments to the NOW regulation have been published on 6 April. The amendments aim to change or sharpen certain provisions of the NOW. One of these amendments applies to employers with a foreign bank account number. Due to administrative reasons, the UWV is not able to accept requests for the NOW from employers with a foreign bank account number. These employers will therefore be granted a period of four weeks to provide the UWV with a different, Dutch bank account number instead. 

Requests for dismissal

There are two amendments regarding the requests for dismissal due to business-economic reasons. First, the formula for calculating the penalty for filing a request for dismissal due to business-economic reasons during the period an employer receives NOW assistance has been sharpened. The old formula did not work as intended, so it has been altered slightly. 

Another important amendment regarding these requests for dismissal is that employers that choose for whichever reason not to apply for NOW assistance, but instead choose to file a request for dismissal must explain why they made this choice. In short, the employer will have to explain why instead of opting for the NOW scheme to save employee's jobs, the employer has chosen to dismiss employees. This is applicable to all requests for dismissal that are filed on or after 2 April, the day on which the NOW was published. 

The government has mentioned that employers do of course have the freedom to decide what is best for their own company. The UWV will therefore assess these cases with a reluctant approach. Nevertheless, employers will need to have a clear explanation as to why they chose not to apply for the NOW, and instead file a request for the dismissal of one or several employees instead. 

Decision-making period

Finally, the NOW is also amended regarding the decision-making period for the final determination of the subsidy. This period was 22 weeks and is extended to 52 weeks. Employers are obliged to request final determination of the subsidy within 24 weeks following the final day of the three month period that the employer has chosen for the loss of turnover. The UWV had a decision-making period of 22 weeks following this final request. This period has been extended to 52 weeks. 

If an employer has chose to start the three month period for calculating the loss of turnover on 1 May 2020, the three month period will end on 31 July 2020. In that case, the employer must request final determination of the subsidy ultimately on 31 December 2020 from the UWV. The UWV will then have a decision-making period until 31 December 2021 to make the final determination of the subsidy. 

This change means that it can take up to one and a half years for employers to have certainty regarding the actual amount of subsidy that they are entitled to.