Newsletter, 2 April 2020

Emergency Bridging Measure for the Preservation of Jobs
The Cabinet has introduced the temporary Emergency Bridging Measure for the Preservation of Jobs (NOW scheme). The NOW scheme replaces the short-time working scheme and is specifically tailored to the far-reaching consequences of the coronavirus. The NOW scheme is a government scheme offering financial help to employers so that they can retain their employees as much as possible. The specific conditions applicable for claiming financial support were published on 31 March 2020. This newsletter will inform whether your company is eligible for financial support and, if so, what you have to do.  

Scheme conditions

In order to claim financial support, employers must make an application for wage costs with the UWV (the Dutch Employee Insurance Agency). The UWV intends to have the scheme operational from 6 April 2020. The window in which applications can be made will run until 31 May 2020. 

Amount of financial support and how it is calculated
The amount of financial support is calculated using the following formula: 

A x B x 3 x 1.3 x 0.9. 

  • A represents the decrease in sales expected by the employer, expressed as a percentage. In order to calculate the decrease in sales, total sales for 2019 divided by four must be compared with sales for the months of March, April and May 2020. If the drop in sales takes place after March 2020, it is possible to base the comparison on a consecutive period of three months starting either from 1 April or 1 May 2020.
  • B represents the total wage bill based on the total wage bill of employees (including on-call workers) who have received wages. The total wage bill for January 2020, as known to the Tax and Customs Administration, is decisive. The wage to be taken into account per employee does not exceed 
    € 9,538 gross per month (twice the taxable wage base). 
  • Financial support is provided for a period of three months: March, April and May 2020. 
  • On top of the total wage bill, the UWV also applies a fixed 30% surcharge in its calculation, to account for other employer expenses, such as holiday pay, pension premiums and insurances. 
  • Financial support for employee wages is capped at 90% of the wage bill and depends on the sales percentage decrease. The percentage of 90% of the total wage bill is a maximum percentage, that is paid out in the event of a 100% drop in sales. For a smaller percentage decrease, financial support is set at a proportionately lower level.

Advance payment
It goes without saying that actual loss of sales can only be calculated retroactively. The UWV will therefore pay 80% of the expected financial support as an advance payment. This advance payment will be paid out in no more than three instalments. The UWV will endeavour to make the first advance payment within 2-4 weeks of submission of the application. Once the period for which financial support was awarded has finished, the employer has up to 24 weeks to apply for a final settlement regarding the financial support. For this purpose, an auditor's statement is required. Once the application has been received, a final settlement will be drawn up within 22 weeks. The final amount of financial support may be lower or higher than the advance payment, meaning that employers will potentially receive an additional payment or have to return some of the financial support received. 

Conditions applicable to the NOW scheme  

In order to be eligible for financial support under the NOW scheme, the following two conditions apply. 

1. Sales loss 
The scheme applies to employers who expect a drop in sales of at least 20%, calculated from 1 March 2020. There is no obligation to prove the extent to which the exceptional circumstances contributed to the loss of sales. 

2. No dismissals
Financial support for wage costs is only awarded if the employer undertakes not to apply to the UWV for dismissal on economic grounds in the period for which financial support is awarded. If nevertheless an application for dismissal of an employee is made, then 150% of  that employee’s wages (multiplied by three months) will be deducted from the financial support paid out. 

If the employer has already made an application to the UWV for dismissal, then the following applies: 

  • If an application for dismissal is made in the period from 18 March 2020 up to and including the date when the NOW scheme takes effect, the employer has five working days after the NOW scheme takes effect to withdraw the application. 
  • If the application for dismissal is made after the NOW scheme comes into effect, the employer may withdraw its application for dismissal five working days after submitting it. 
  • If the application for dismissal was made before 18 March, it does not have to be withdrawn and it is still possible to receive financial support under the NOW scheme. The same applies to applications for dismissal for reasons other than on economic grounds.

Other obligations 
In addition to the above obligations, a number of other obligations apply. Below we list the most important ones. 

3. Keeping wage bills as equal as possible
Employers must use their best endeavours to keep wage bills during the period of financial support as equal as possible to the wage bill for January 2020. This embodies the need for employers to make efforts to preserve employment wherever possible and encourages them, in situations where there is no obligation in law to continue paying wages (on-call workers), to still pay wages on a goodwill basis. There is also a financial incentive. Employers who reduce their actual wage bill during the period in which financial support is received compared to the month of January 2020 will face a proportional reduction of the financial support they receive once final settlement is made.

4. Auditable records 
Employers claiming under the NOW scheme must keep verifiable records so that all data relevant to calculating financial support can be verified. It must be possible to inspect the accounts for up to five years from the date when the amount of the financial support was set.  

5. Right of co-determination 
Under the NOW scheme, employers are obliged to inform the works council or employee representation about the financial support. The employee representation body must be kept informed of the employer's best endeavours to ensure continued payment of wages and preserve jobs. 

6. Acting in line with the intention of the scheme 
The action taken by employers must be in line with the intention of the scheme. In concrete terms, this means, among other things, that the financial support may only be used for paying wage costs. Employers who receive wage subsidies from a municipality must inform the municipality that it is receiving financial support under the NOW scheme. This allows the municipality to set the wage subsidy at a lower level, thereby avoiding double financing the wage costs for this target group.

Practical questions 

1. “I've obtained a permit for short-time working (WTV). Can I convert that to the NOW scheme? On the basis of the NOW scheme, our business can receive a higher amount of financial support”

If you have already obtained a short-time working permit, it will in principle continue. If you want an extension after the short-time working permit expires, you must apply under the NOW scheme. Employers who are already making use of a short-time working permit can also make a claim under the NOW scheme. The most recent statutory unemployment benefits paid out will then be accounted for when calculating the wage bill (the B factor in the formula).

2. "Our business only started to experience a drop in sales after March 2020. Are we still eligible?"

Yes, you may be. If the decline in sales is not reflected until later in the year, it is also possible to base the comparison of sales on a three-month period starting either from April 2020 or May 2020. 

3. “Our company is made up of several entities. Do we calculate the decline in sales suffered by the various entities or the entire group?”

If a company consists of several entities, then the decrease in sales is calculated based on the sales of the whole group. However, the application for financial support must be made per entity (per payroll tax number).

4. “Our company has its registered office outside the Netherlands, but our employees work in the Netherlands. Are we eligible for financial support under the NOW scheme?”

Yes, employers who have a registered office outside the Netherlands are also eligible for financial support under the NOW scheme if their employees have social insurance in the Netherlands. 

If one of the entities has its registered office outside the Netherlands, but does not have any employees who have social insurance in the Netherlands, the sales of that foreign entity are excluded when calculating total lost sales.

5. “Can I allow fixed-term contracts to expire without losing the right to financial support under the NOW scheme? What’s the situation with dismissal during the probation period?”

In response to the first question, yes. One of the conditions for financial support under the NOW scheme is that the employer undertakes not to apply to the UWV for dismissal permits on economic grounds during the period in which financial support is awarded. The scheme does not preclude the non-renewal of fixed-term contracts, no longer calling on-call workers and the termination of employment contracts during the probationary period. However, these actions will have an impact on the amount of the wage bill during the period of financial support, and therefore will impact the final amount of the financial support.

6. “Does the director and major shareholder (DMS) fall under the NOW scheme?”

Directors and major shareholders are usually not covered under employee insurance. The salary of a DMS is therefore not included when calculating the amount of financial support. The salary of a DMS is only included in the wage bill eligible for financial support if the DMS is compulsory (and not voluntarily) covered under employee insurance.

Making an application under the NOW scheme

If your business meets the conditions for claiming financial support under the NOW scheme, you can submit an application to the UWV. To submit an application, all you need is the payroll tax number; the eHerkenning (digital authentication service) is not required, nor any other form of authentication. 

For any queries about the NOW scheme or if you need help with the application, please contact us. We will be happy to help you.

Yours sincerely,

Ester Kalis, Matthijs Bos, Eugenie Ágoston, Maartje van Asten, Anantha Vos, Marjon Schlimbach, Romy Schneider, Laura Rozema and Merel Janssen.

Van der Steenhoven advocaten N.V.
Herengracht 582, (1017 CJ) Amsterdam
Tel +31 (0)20 607 79 79, mail

The contents of this newsletter have been put together with the utmost care. Van der Steenhoven advocaten N.V. accepts no responsibility with regard to decisions taken on the basis of this newsletter, unless it has been consulted beforehand in specific cases.


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