COVID-19 measures from the government: Extended Emergency Fund Bridging Employment NOW 3.0
On 9 October 2020, the Dutch government has published details of the Third Temporary Emergency Bridging Measure to Preserve Employment, the NOW 3.0.
The aim of NOW 3.0 is to enable the employer, together with their employees, to prepare for and adapt to the new economic reality due to the Covid-19 pandemic. Contrary to NOW 1.0 and NOW 2.0, restructurings including termination of employment agreements due to business economic reasons are possible under NOW 3.0.
The NOW has been extended with retroactive effect from 1 October 2020 by three 3-month tranches (the third-, fourth- and fifth tranche). A company may apply for NOW 3.0 every three months (for instance, 1 October 2020, 1 January 2021 and/or 1 April 2021).
A company may apply for the wage subsidy under the NOW 3.0 scheme in case of an expected turnover loss of:
- at least 20% during the third tranche (October – December 2020); and
- at least 30% as per 1 January 2021 for the fourth and fifth tranche (January – June 2021).
The method of calculating the loss of turnover (in Dutch: omzetdaling) remains the same as under NOW 1.0 and NOW 2.0. The wage subsidy will be determined on the basis of the:
- wage sum – for all three tranches, the reference month for the wage sum is June 2020; and
- loss of turnover – turnover over the year 2019, compared to the turnover over the 3-month period chosen by the employer.
The wage subsidy will gradually be reduced (in the event of 100% loss of turnover) to a maximum wage subsidy of:
- 80% in the third tranche (October – December 2020);
- 70% in the fourth tranche (January – March 2021); and
- 60% in the fifth tranche (April – June 2021).
During the third and fourth tranche, the wage cap for employees who earn more than two times the maximum daily wages remain applicable for the NOW wage subsidy. For the fifth tranche, this wage cap changes to a maximum of the daily wages (in Dutch: maximum dagloon), which is currently amounting to EUR 4,845 gross per month.
The company will receive an advance payment of 80% of the wage subsidy to be paid in three instalments. The final determination will be established afterwards on the basis of the company’s actual turnover loss. This may result in a repayment obligation.
Gradual reduction of total wage sum
Under NOW 1.0 and NOW 2.0, the company was obliged to keep the total wage sum as equal as possible. Failing that, the NOW subsidy was significantly reduced. Under the NOW 3.0, the company may gradually reduce the total wage sum each 3-month period by 10%, 15% and 20%, without affecting the NOW wage subsidy.
Condition for NOW 3: offer training to redundant employees, penalty of 5%
The receipt of wage subsidies under NOW 3.0 is subject to the condition that the company makes an effort to assist employees who are forced to leave the company to find a new job. An employer who has filed a request for termination of one or more employment agreements during the wage subsidy period, is obliged to contact the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen or UWV) via the ‘UWV telephone NOW’. Failing that, a penalty of 5% of the total wage subsidy is due. UWV will verify this when determining the wage subsidy.
The expected application dates for NOW 3.0 are:
- Third tranche – 16 November 2020 to 13 December 2020;
- Fourth tranche – 15 February 2021 to 14 March 2021;
- Fifth tranche – 17 May 2021 to 13 June 2021.
After award of the wage subsidy, the applicant will receive an advance payment of 80% of the wage subsidy to be paid in no more than three instalments.
We advise to involve an auditor or accountant in a timely manner to assist with the application of the wage subsidy.
For more information on these articles or any other issues involving labour and employment matters in the Netherlands, please contact Christiaan Oberman (Partner) of Palthe Oberman at firstname.lastname@example.org or visit www.paltheoberman.nl.
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