New emergency measures announced

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Date:
17 Mar 2020

During the press conference on Tuesday March 17, the Minister of Social Affairs and Employment announced new emergency measures for companies and self-employed persons who are in financial difficulties due to the corona outbreak.

By:
Marieke ten Broeke

The most important measure for employers is the cancelling of the working time reduction scheme (in Dutch and hereafter: “Wtv”). This scheme is revoked with immediate effect and replaced by the ‘Noodfonds Overbrugging Werkgelegenheid’ (“NOW”), an emergency fund for employers to cover wages. Employers will be compensated by the government for up to 90% of their total wage sum. This compensation is provided as an advance to the employers, so that employers can continue to pay the salaries of the employees.

Duration

The compensation for labour costs under the NOW is in principle granted for three months provided the eligibility criteria are met. This period can be extended once for an additional period of three months.

Conditions

The condition for claiming the NOW are as follows:

  •  an expected loss of turnover of at least 20%. Regardless of the time of the application, loss of turnover from March 1, 2020 is taken into account;
  • during this period of at least three and at most six months no employees are to be made redundant for business economic reasons;
  • employers must continue to pay 100% of their employees’ wages during the period of compensation.
  • As soon as an allowance for wages has been granted to an employer, the UWV will initially provide an advance of 80% of the requested allowance. At a later stage, it will be determined what the actual decline in turnover has been. An audit report is required for applications exceeding a certain, as yet to be determined, amount of compensation.

Contrary to the Wtv, the NOW also applies to flex workers, such as on-call workers. Moreover, temporary employment agencies may also make use of the NOW for the temporary workers they employ.

Unlike the Wtv, a NOW application is not linked to the unemployment benefit of employees. The NOW compensation is therefore not at the expense of unemployment benefits accrued by employees.

Compensation amount

The compensation for labour costs has a maximum of 90%. This maximum will be granted in case of 100% loss of turnover. The percentage of the compensation is directly related to the percentage of the loss of turnover. Below we provide some examples of the ratio between decline in turnover and the awarded compensation percentage. For example:

• if 100% of the turnover is lost, the allowance will amount to 90% of the employer's wage bill;

• if 50% of the turnover is lost, the allowance will amount to 45% of the employer's wage bill;

• if 25% of the turnover is lost, the allowance will amount to 22.5% of the employer's salary.

Working time reduction withdrawn

The possibility to submit applications for short-time working is terminated with immediate effect. Applications for working time reduction that have already been submitted but that have not yet been decided on need not be resubmitted and will be included in the new scheme. An already granted Wtv permit is handled according to the old regulation. An extension of the Wtv permit is not possible, in which case a NOW application can be made. The new scheme will provide insight into the course of action in conjunction with the Wtv with the possibility of using the NOW scheme. If a Wtv permit was initially rejected, a NOW application can now be submitted.

Submitting a NOW application will go through the UWV. The Ministry is working on allowing companies the opportunity to submit applications for the NOW as soon as possible.

Self-employed

For the self-employed, a less stringent application for supplementing income up to the social minimum is provided. The requirements for this application will be loosened; there is no partner income assessment and no assessment of how viable the company is. The money does not have to be refunded. The Ministry of Social Affairs and Employment will also report on the exact details of this adjustment as soon as possible.

Other measures

Finally, various other financial measures have been taken. For example, companies can more easily apply for deferment of tax, after which the Tax and Customs Administration will immediately stop the collection. This applies to income, corporate, wage and turnover taxes (VAT). Tax fines are reduced to nil. An emergency service point will be set up. There, the most severely affected SMEs can immediately be given EUR 4,000, with which they can meet their greatest need. It will also make it easier for companies to obtain bank loans and bank guarantees.

We will keep you informed of the most recent developments via this website and our LinkedIn page.