On 17 March 2020 an economic emergency package was announced to avoid a huge loss of jobs as a result of the Corona Crisis. One of these measures concerns a compensation for the wage costs for companies that are now losing turnover. The terms of this so called Temporary Emergency Measure for Work Retention (Tijdelijke noodmaatregel overbrugging voor behoud van werkgelegenheid) (“NOW”) have been published today.
The UWV strives for arranging that companies can submit a NOW-application with effect from April 6 2020. Companies that meet the conditions can expect an advance payment within two to four weeks thereafter.
Many entrepreneurs are struggling as their activities have partly or completely stopped. The cabinet wants to make it possible for them to continue to pay their staff during this period, so that unemployment is prevented and people are retained by the company. That is why Minister Koolmees of Social Affairs and Employment has published the NOW scheme.
With effect from 1 March 2020, companies that have lost at least 20 percent of their turnover during a period of three months can receive a maximum compensation of 90 percent of their wage costs in proportion to the fall in turnover. This will be calculated pro rata: with a loss of turnover of 100 percent, this is 90 percent and with a loss of turnover of 50 percent, this becomes 45 percent of the total wage sum. The condition is that the employer will continue to pay its employees their regular salary and that the employer does not apply for a redundancy for economic reasons during the period in which the subsidy is received.
The initial amount of the subsidy is determined as follows:
A x B x 3 X 1,3 x 0,9
A = the expected percentage of turnover decrease
B = the total wage sum whereby this is upon application based on the wage sum of January 2020.
The final subsidy will be based on the actual wage sum in the 3-month period of loss of turnover.
Two variable elements play a major role in the scheme: turnover and the total wage sum. The higher the loss of turnover, the higher the compensation for the wage sum will be. To determine the amount of the loss of revenue, employers must first divide their total revenue from 2019 by four. This turnover figure will be compared with the (lower) turnover in the period March-April-May 2020. Sometimes a decrease of clients results into a later loss of turnover. That is why employers can also request to take a (slightly) later period into account for the turnover comparison (this means April-May June or May-June-July instead). If a company consists of a number of business units (legal entities) that together form a group of companies, the drop in turnover of the entire group is taken into account.
For the determination of the wage sum, the data from the payroll tax return of the Tax authorities will be used. The UWV uses the so-called social insurance wage sum as a basis for this. An equal surcharge of 30 percent is added to this for coverage of additional employer costs such as the accrual of holiday pay, pension and employer contributions. In addition, the UWV applies a maximum wage figure per employee of EUR 9,538 per month. Any salary above this amount is not compensated.
The wage sum in the subsidy period is compared with the wage sum of January 2020 as known to the tax authorities. If this is missing, the wages sum of November 2019 will be used. To avoid misbehaviour, changes in the January wage return that were submitted after March 15 will not be taken into account. Because of the importance of the wage sum figure in order to get the subsidy, it is important that employers continue to file their wage tax returns with the Tax Authorities on time. If the wage sum in the March-May period is lower than in the reference period the subsidiary will be decreased with 90% of such wage sum decrease.
A subsidy can be received for all employees for which a payroll tax return is submitted and who are insured under the WW, ZW or WIA. This means that the salary of flex workers will also be compensated and that there is no distinction made as regards form of contract. The cabinet is calling on employers, together with employers ‘and employees’ organizations, to continue to pay flex workers, if possible. If the wage bill shrinks because fewer people are continued to be paid, the allowance will be decreased accordingly.
No simultaneous applications for a dismissal for business reasons
In the three-month period from March 18 to May 31, 2020, the employer may not request permission from the UWV to terminate an employment contract for commercial reasons. (Requests that have already been submitted must be withdrawn within 5 days). If applications are filed and not withdrawn, a fine will be applied to the subsidy; this fine is equal to 150% of the wages sum of the employees for whom a dismissal permission has been applied for.
Applications, advance and payment
The UWV strives to execute the NOW scheme with effect from 6 April 2020, but is still in the process of carrying out the final tests to be ready for execution. The office where applications can be filed is expected to open on 6 April. The application period will run until May 31, 2020. Employers must indicate their expected loss of turnover with the application. If the UWV approves the application it will make an advance payment of 80%. This will be done in three terms. The first part of the advance payment will be paid within 2-4 weeks after the submission of the application, although the UWV expects that this can be done quicker for most companies.
Within 24 weeks after the end of the period for which the NOW is granted, the employer must apply for a determination of the subsidy. In principle, an auditor’s report is required for this. The UWV will then make a final determination within 22 weeks thereafter. This may be higher or lower than expected upon making the first application. Companies with urgent cash flow problems can be helped with the other measures of the emergency package.
The cabinet will monitor the precise effects of the measure and – if necessary and if practicable – make adjustments. In addition, given the speed with which this regulation has been developed, it is inevitable that the UWV will have to deal with implementation challenges in the near future.
March 31, 2020