On the 20th of May, the government announced a new support package for entrepreneurs. The Temporary Emergency Bridging Measure (Noodmaatregel Overbrugging voor Werkgelegenheid or NOW) is one of the existing measures that will be extended. The purpose of the NOW remains unchanged: a contribution towards labour costs for companies that are suffering losses, in order to save as many jobs as possible. Read more about the extended NOW 2.0 arrangement on this page (this page was updated on the 25th of June, after the government published the NOW 2.0 arrangement).
If you expect decrease in turnover of at least 20% as a result of the corona crises, you can apply for a contribution towards labour costs with the employee insurance agency UWV from 6 July 2020. Unlike the first NOW period of three months, the government has decided to extend the NOW arrangement for a four-month period, covering the months of June, July, August, and September. The extended NOW arrangement contains the same contribution system, but has several new conditions and provisions compared to the present NOW arrangement related to the income assessable for social security for the months of March, April, and May.
Please note: The Temporary Emergency Bridging Measure (Noodmaatregel Overbrugging voor Werkgelegenheid or NOW) consists of two terms: the current term with a contribution towards the labour costs of March, April, and May, and the new term with a contribution towards the labour costs of June, July, August, and September.
The application term for the NOW period of March, April, and May was until and including the 5th of June. You can apply for the new NOW period of June, July, August, and September from the 6th of July. The deadline for filing your NOW 2.0 application is 31 August 2020.
The NOW in a nutshell:
- The NOW replaces the reduced working time (werktijdverkorting or WTV) arrangement.
- As an employer, you can submit an application for a substantial contribution towards the labour costs, and receive an advance on this contribution from the UWV under the obligation to refrain from laying off employees.
- As an employer, you endeavour to keep wages as equal as possible and to continue paying employees with a permanent or flexible contract.
- The NOW supports employers who are suffering a decrease in turnover of at least 20% over an uninterrupted period of four months.
- As an employer, you have the obligation to use the benefit entirely for paying your due labour costs.
- As an employer, you have the obligation to inform the works council, the employee representation, or, in the absence of one, the employees about the grant of the benefit.
Figures of the NOW 1.0
The government published some figures regarding the use of the first NOW period. A benefit was granted to 138,586 companies, involving an estimated 2.5 million employees. Up to the 12th of June, a total of €6.2 billion was paid in advance. Part of the companies will still receive a second and third instalment, amounting to a total requested benefit of €9.8 billion for a three-month period. The weighted average of the expected turnover decrease, according to the employers' statements, was 67%. 67% of the companies that received the benefit have less than 10 employees, 27% have between 10 and 50 employees, and 6% have at least 50 employees. Most benefits were granted to companies in the retail, hotel and catering, and other commercial services sectors: approximately 25,000 (18% of the total number) each. (Bron: rijksoverheid.nl)
What requirements do you need to meet to qualify for a contribution towards labour costs through the NOW emergency arrangement 2.0?
- If you, as an employer, receive a NOW benefit and apply for a dismissal order, the UWV will reduce the total sum of the benefit by 100% of the wage of the employees for whom a dismissal order was requested. The government wanted to remove the additional dismissal penalty from the extended NOW (the penalty was 50%), but then reconsidered. In case 20 or more employees are dismissed (mass dismissal), the UWV will reduce the NOW by another 5% of the final NOW benefit, in addition to the aforementioned reduction of 100% of the wage of the employees for whom a dismissal order was requested.
- You expect a decrease in turnover of at least 20% from 1 June 2020. The turnover in this measuring period will be compared to one third of the turnover of the period from 1 January 2019 to 31 December 2019.
- The sum of the contribution towards labour costs depends on the decrease in turnover. The government has chosen to take the decrease in turnover as a starting point because a smaller turnover means that there is less money available to pay wages. A decrease in turnover is also a measurable and verifiable criterion.
- The application is valid for a period of four months. If you already applied for a NOW benefit for the months of March, April, and May, you can now file a new application to extend this term, provided that you meet the requirements described above. As for the rest, the second term will follow the same system as the first one: employers who expect a decrease in turnover of at least 20% can file their application with the UWV following the stated turnover period of the NOW 1.0. By doing so, you commit yourself to continuing to pay 100% of the wages of the employees concerned.
- The maximum benefit is 90% of the income assessable for social security over the four-month period covering the months of June, July, August, and September. Wages are calculated based on the income assessable for social security from current employment. Additional expenses and costs, such as employers' contributions and employees' contributions for pensions and holiday allowance build-up, will also be compensated for (a surcharge of 40%, against 30% in the previous period).
- The wage that is taken in to account is up to twice the maximum daily wage per individual employee. Gross wages of more than €9,538 per month are not eligible for the benefit.
- You apply for a benefit for the income assessable for social security over June, July, August, and September because of a decrease of more than 20% of your turnover.
- If you, as an employer, receive a NOW benefit and apply for a dismissal order during the period from the 1st of June until the 30th of September, the UWV will reduce the total sum of the benefit by 100% of the wage of the employees for whom a dismissal order was requested, for a period of three months. The government wanted to remove the additional dismissal penalty from the extended NOW (the penalty was 50%), but then (partially) reconsidered. In case 20 or more employees are dismissed (mass dismissal), the UWV will reduce the NOW by another 5% of the final NOW benefit, in addition to the aforementioned reduction.
Many companies see a 'corona reorganization' as an inevitable measure to avoid bankruptcy, especially now that the minister dropped the dismissal fine/capping from 1 June 2020. But what legal aspects are connected to a corona reorganization? Our article on the website will tell you more about this.
- If you have not used the NOW 1.0 yet, you can have the four-month period start on the 1st of June or, if you expect that the effects of the current situation will not be visible in your turnover until later, on the 1st of July or the 1st of August (note: despite the 4-month extension of the arrangement, you can only choose from three starting dates for the turnover period). You have to choose your measuring period when filing your application; this choice cannot be changed for the final settlement. In all cases, the wage forming the basis for the calculation of the benefit is the income assessable for social security over the months of June, July, August, and September 2020.
- If you have more than one wage tax number, you are required to submit an application for each wage tax number separately. Please indicate the expected decrease in turnover for the entire company or the entire group; so you indicate the same decrease in turnover and the same measuring period in each application.
- It is extremely important to fill in your application as accurately as possible, as no corrections can be made after it has been filed and abuse of the arrangement may lead to fines.
- You are required to apply for determination of the benefit within 24 weeks after the period for which the NOW was granted. To prevent overlap of the application and determination process between the NOW 1.0 and NOW 2.0, a final determination of the NOW 1.0 benefit may be applied for from 7 September 2020. The final determination of the NOW 2.0 benefit may be applied for from the 15th of November, as salary information will be fully available from that date. If you applied for both the NOW 1.0 and NOW 2.0, you may apply for the final determination of both benefits from 15 November 2020. Applications exceeding a certain volume require an accountant's statement or third-party statement. The limits of such accountant's statement are further explained below.
- Do you qualify for the NOW 2.0 arrangement and are you required to submit an accountant's statement? Then you will have to make a statement that you will not pay out any dividend over 2020 to shareholders and that you will not pay out any bonuses to the company's management and directors. Finally, you will not be allowed to acquire shares. These conditions apply until the date of the shareholders' meeting during which the annual accounts of 2020 are confirmed in 2021. This statement must be kept in the company's records. It is allowed to pay out bonuses to other employees.
- If you apply for the NOW arrangement 2.0, you have a best-effort obligation to motivate your employees to take refresher courses and retraining. When you file your application, you are required to make a statement related to this. To support social partners' initiatives, the government reserves fifty million euros for the crisis programme 'NL leert door' (NL keeps learning), which enables employees to follow free online training and development counselling from July 2020 to prepare themselves for the new economic situation. Further information and counselling about the programme 'NL leert door' will be published later.
Note: Employers have a best-effort obligation to promote development counselling and training. We can help and support you and your employees with this. For instance, we could offer your employees a NOW Development Advice. Read more about this in our article.
Should you have any questions about the best-effort obligation to promote development counselling and training, please contact B. (Bengt) Verhoeven, HRM Advisor at HLB Van Daal in Valkenburg.
Application, advance, and explanation for NOW 2.0 benefit
Do you want to use the NOW measure? The benefit application is open for both employers who already filed an application during the first term (NOW 1.0) and employers applying for the NOW for the first time. Applications can be filed from the 6th of July to the 31st of August. At that moment, you will have to go through the following steps, in addition to submitting details such as the company name and wage tax number:
- You apply for a benefit for the income assessable for social security over June, July, August, and September because of a decrease of more than 20% of your turnover.
- If you are applying for a NOW for the first time, you may choose to have the four-month measuring period start on the 1st of June, or one or two months later (on the 1st of July or the 1st of August) if you expect that the effects of the current situation will not show in the turnover figures until later. You will have to choose the measuring period when filing the application; the measuring period cannot be changed for the final settlement. Again, the wage on which the benefit calculation is based is the income assessable for social security of the months of June, July, August, and September 2020. In case this is the second time you apply for the NOW, the turnover period must start directly after the end of the period you chose for the first term.
- If you have more than one wage tax number, you are required to file an application for each wage tax number separately. In each application, you state the expected decrease in turnover for the entire company or group; in other words, you state the same turnover decrease and the same measuring period for each application. Subsidiaries whose turnover decreases by more than twenty percent due to the corona crisis, but belong to a group that does not meet those conditions, are allowed to apply for the NOW. However, they will have to comply with additional conditions. For example, such groups have to make job saving arrangements with trade unions or the works council/employee representation.
- It is extremely important to fill in your application for this four-month period as accurately as possible, as no corrections can be made after it has been filed and abuse of the arrangement may lead to fines.
- You need to request a final determination of the benefit within 24 weeks after the period for which the NOW was granted. To avoid overlap of the application and determination process between the NOW 1.0 and NOW 2.0 arrangements, a final determination of the NOW 1.0 benefit may be requested from 7 September 2020. The final determination of the NOW 2.0 may be applied for from the 15th of November, as salary information will be fully available from that date. Applications for a contribution exceeding a certain amount require an accountant's statement. The limitations of this accountant's statement are explained in another section of this article. Besides, in case an accountant's statement is required, the 24-week application term will be extended to 38 weeks.
Note that, contrary to the NOW 1.0, where the advance was paid out in 3 monthly instalments, the advance of the NOW 2.0 is paid out in 2 instalments. The UWV endeavours to pay the first instalment, being the benefit for the first two months, within 2-4 weeks after receiving the application. The second instalment, the benefit for the remaining two months, will be paid out approximately two months after the first one.
As the NOW takes a big bite out of public funds, transparency in the way these funds are spent is very important. For this reason, an employer who applies for the NOW must agree to the possible disclosure of information of their benefit file. By the way, the possibility that such information is disclosed has nothing to do with the NOW, but results from the general obligation under the Dutch Government Information Act (Wet openbaarheid van bestuur). However, as a rule, the government will only share the data that are most relevant for the transparency of the way they spend public funds, but do not contain sensitive company information. This way, it will be clear which companies use the NOW and for what amount, but any harmful effects on these companies resulting from the disclosure of their information will be avoided insofar as possible.
The NOW in figures
The amount of the contribution towards labour costs depends in the decrease in turnover, with a maximum of 90% of the wage. If the turnover decrease is smaller, the benefit will be reduced accordingly.
- If the turnover drops by 100%, the contribution will be 90% of an employer's total wages.
- If the turnover drops by 50%, the contribution will be 45% of an employer's total wages.
- If the turnover drops by 25%, the contribution will be 22.5% of an employer's total wages.
The average pay of the month of March 2020 (reference date 15 May 2020) will be used for the calculation of the advance. In case of four-week pay, the third full four-week period of 2020 will count (to reach a monthly pay, the average pay of that time frame will then be increased by 8.33%). The starting point is the social security wage from present employment. Additional employer's costs (social security contributions, pension costs, and holiday allowances) are also compensated for. For the sake of practicability, the UWV has chosen a fixed rise of 40% for employer's costs (this was 30% in the first NOW) instead of determining the exact amount of the employer's costs.
Calculate the amount of the NOW in your situation
For a direct estimate of the amount of the (provisional) NOW benefit, calculate it with our easy-to-use module (Excel). This calculation module gives you an estimate of the advance and the monthly instalments. If you have any questions about this, please contact us, without obligations, using the contact details at the bottom of this page. We will gladly help you.
What about flexworkers, people on a zero-hours contract, and temporary workers?
- The NOW also applies to employees whose wages you are not obliged to continue paying, such as flexworkers and employees with an on-call/zero-hours contract. You have to continue paying their wages.
- Temporary employment agencies, as well as payroll companies, can also apply for a contribution towards the labour costs for temporary employees in their service. The same conditions that apply to other employers also apply to Payroll employers.
- Hired workers (such as payroll and temporary workers) do not count for the total wages of the company where they work.
- Employers, work agencies, and payroll employers have a so-called best-effort obligation to keep flexworkers, on-call workers and temporary workers employed during the months of March, April, and May for the NOW 1.0 and June, July, August, and September for the NOW 2.0, and, as such, to keep the total wages level and qualify for the benefit.
- The total income assessable for social security of January 2020 is the starting point for the determination of the labour costs forming the basis of the NOW 1.0 benefit, and the income assessable for social security of March 2020 is the starting point for the NOW 2.0 benefit. One option is to continue paying on-call workers' wages in the months of March, April, and May for the NOW 1.0 based on the number of hours worked in January 2020. For the NOW 2.0, in the months of June, July, August, and September 2020, that will be hours worked/paid in March 2020.
- This may lead to a legal presumption claim under article 7:610b of the Dutch Civil Code. In other words, the employee could demand that you continue paying this wage in the future, or claim that the income assessable for social security of January 2020 or March 2020, respectively, is not a representative figure.
The above depends on the specific situation of each company. You may have an obligation under the collective agreement to pay on-call workers a certain minimum of hours. This obligation may affect the above. If you have any questions about continued payment of wages to on-call workers, please contact us using the contact details at the bottom of this page.
If you pay less wages, the income assessable for social security over the months of March, April, and May or June, July, August, and September, respectively will drop compared to the month January or March, respectively, and the benefit will be reduced because the labour costs are lower. In some situations, this may lead to a reclamation.
Calculation example (in case of a 100% turnover decrease): The income assessable for social security (including a factor of 4) on which the advance is based is € 200,000. The expected sum of the benefit is € 200,000 x 90% = € 180,000. 80%, so € 144.000, will be paid out in advance.
If the labour costs have dropped to € 110,000 over the months of June, July, August, and September because the employer did not continue paying the wages of employees with flexible working hours, this will be taken into account for the final determination of the benefit. The decrease of the labour costs, multiplied by 90%, will be deducted from the benefit. The final benefit amount is, therefore, € 180,000 – (€ 90,000 x 90%) = € 99,000. That means a reclamation of € 45,000 (€ 144,000 -/- € 99,000).
If the labour costs have not dropped over the months of June, July, august, and September but remained steady at € 200,000, the starting point for the final determination of the benefit is 90% of the original labour costs, i.e. 90% of € 200,000 = € 180,000. The final benefit is higher than the paid-out advance and a post-payment of € 36,000 will follow.
Higher labour costs in the months of June, July, August, and September compared to March do not lead to a higher benefit. If, for example, the labour costs increase because you hire new employees after March 2020, this will not lead to a higher contribution.
Group provision of the NOW
Subsidiaries that suffer a turnover decrease of more than 20% due to the corona crisis but belong to a group that does not meet that requirement, can still apply for the NOW. In several groups, business has stopped completely or partially in some of the subsidiaries as a result of the corona crisis, while other subsidiaries of the group are still trading. In that case, the group as a whole does not meet the 20% turnover decrease criterion.
The Lower House has asked minister Koolmees to look into the possibilities for relaxing this rule of the NOW. The minister then adjusted the NOW arrangement, but connected additional conditions to it:
- These groups have to make agreements with the trade unions or, in their absence, the works council or employee representation about saving jobs.
- These groups must refrain from buying own shares, distributing dividend to shareholders, and paying bonuses to the management and directors.
- If you apply for this arrangement, you will have to sign a statement that you will not pay out dividend over 2020. Additionally, you are not allowed to pay bonuses or to buy own shares. You will also have to consult with the trade union about saving jobs and reach an agreement with them. If you have less than 20 employees in your service, this consultation with the trade union is not required. In that case, you will have to consult with the employees' representation.
In case you use this group arrangement, an accountant's statement will be required. In this statement, the accountant tests the requirements mentioned above, among other things. Note that this extension does not change the main rule of the NOW. Even in this situation, the NOW is still based on the company's turnover decrease compared to the turnover in 2019. Furthermore, the starting point is still the average pay of the month of March 2020.
Surcharge employers' charges
With the extension of the current NOW, the government also meets a motion of the Lower House requesting a further contribution towards affected companies' overheads. To maintain as many jobs as possible in the near future, the government intends to contribute more towards employers' charges. For this reason, the fixed surcharge has been increased from 30% to 40% in the new NOW 2.0.
As a contribution towards the labour costs for employees in your service, you can receive a benefit under the NOW. The first requirement is that it concerns income assessable for social security. This means that you can only qualify for a benefit insofar as the employees whose wages it concerns are socially insured in the Netherlands. This also means that legal entities or natural persons domiciled abroad who employ persons who are socially insured in the Netherlands, can also apply for the NOW.
Are you a director and majority shareholder and not liable to pay employees' insurance?
Then, unfortunately, you do not qualify for the application of the Temporary Emergency Bridging Measure (Noodmaatregel Overbrugging voor Werkgelegenheid or NOW). Read more about the alternatives >
Execution: abuse will be punished
Good administrative records are important for the NOW. At the same time, you will have to follow the rules strictly from the start. If requested, employers who use this measure must grant access to their administration until five years after determination of the benefit. If it becomes clear that you no longer meet the requirements for a grant of the benefit, you must report this immediately. If there is a reasonable suspicion of a criminal offence during the determination of the benefit, the UWV may report this. The Public Prosecutor may then start a criminal investigation and proceed to prosecution.
As already provided in the NOW, it is mandatory in some cases to submit an accountant's statement during the final determination of the NOW benefit. By now, two limits have been set to determine what companies have to submit an accountant's statement.
A mandatory accountant's statement has to be submitted for the NOW by companies that received an advance (80% of the granted benefit) of €100,00.00 or more.
To prevent that an applicant receives a small advance but receives a final benefit that (vastly) exceeds €125,000 without having to submit an accountant's statement, an accountant's statement is also required in case of a final benefit of €125,000 or more. This means that companies that received an advance of less than €100,000 will have to estimate for themselves if the final benefit will be determined at €125,000 or more, as they will also need an accountant's statement in that case.
Given the above, this means that companies that received an advance of less than €100,000 and a final NOW benefit of less than € 125,000 are not required to present an accountant's statement. However, random checks will be carried out among these companies as well. The NOW arrangement, therefore, requires in all cases that the employer keeps such a verifiable administration of the turnover and labour costs that it can be verified afterwards whether a benefit was granted correctly.
Furthermore, if no accountant's statement is required, a third-party statement confirming the turnover decrease will be required in case of a request to determine a benefit with an advance exceeding €20,000 or a final sum exceeding €25,000. We can draw up such statement. The Tax Authority will also require a so-called third-party statement in case of a moratorium under extraordinary circumstances.
Would you like us to file your NOW application for you?
We will gladly do so. Please fill in the Application Form and Statement of approval of the Temporary Emergency Bridging Measure for Sustained Employment and send it to NOW@hlb-van-daal.nl, and we will process your application as soon as possible.