NOW 3 from 1 October 2020

The government has announced that the NOW (in Dutch: Tijdelijke noodmaatregel overbrugging voor werkbehoud) will be extended by nine months from 1 October 2020. In this memo, we explain the main features of this regulation (as far as currently known), which has been given the name NOW 3.

Amendments and similarities NOW 3 compared to NOW 1 and NOW 2

The main amendments to the NOW 3 are:

  • the NOW 3 applies from 1 October 2020 to 1 July 2021, divided over three three-month periods;

  • the minimum loss of turnover will be increased from 20% to 30% in the second period (from January);

  • the subsidy percentages will gradually phase out over nine months (80%, 70%, 60%);

  • employers are given the opportunity to gradually reduce the total wages (10%, 15%, 20%), without this resulting in a reduction of the subsidy;

  • the discount applied in NOW 2 in the event of economic dismissal no longer applies in NOW 3; and

  • the wage to be reimbursed per employee will be reduced in the third period (April, May, June 2021) to a maximum of 1x the daily wage.

 

The following features remain unchanged:

  • the fixed surcharge for employers’ charges remains a surcharge of 40%;

  • the prohibition on the purchase of own shares and the payment of dividends remains;

  • the subsidy is granted, just as in NOW 1 and NOW 2, by paying an advance, after which the last installment is paid after the subsidy has been determined; and

  • the best efforts obligation aimed at training and learning continues to apply to the employer.

 

Please find below a further elaboration on these amendments and similarities.

 

Goal NOW 3

The main purpose of the NOW 3 is twofold. First of all, the primary goal remains the retention of jobs. Secondly, the NOW 3 gives employers and employees the opportunity to prepare for the new economic situation, mainly because not all employment can be maintained. That is why employers are given the freedom under NOW 3 to make adjustments to the total wages and their business operations. The reduction of the total wages must be carried out in consultation with the employee representatives. The employer is free to enforce based on own interpretation, for example through natural attrition, dismissal or a voluntary wage sacrifice. However, the employer cannot unilaterally adjust the employment conditions.

 

Part of the NOW 3 budget is also used for work-to-work-projects and training. In this way, the government wants to prevent that many (former) employees have to depend on social security.

 

Application period NOW 3

The UWV (in Dutch: Uitvoeringsinstituut Werknemersverzekeringen) intends to open the first application period from 16 November 2020. An application can be submitted retroactively for the first period (1 October to 31 December 2020). The second period runs from 1 January 2021 to 31 March 2021. The second application period is open to companies with a minimum 30% loss of turnover. The third period runs from 1 April to 30 June 2021. For each period the employer is free to submit an application or not. An employer who has not been eligible for NOW 1 or NOW 2 may be eligible for NOW 3.

 

Reimbursement percentage and reduction of the total wages

With a drop of turnover of 100%, the compensation for the total wages amounts to:

  • 80% in the first application period (October 2020 to December 2020);

  • 70% in the second application period (January 2021 to March 2021); and

  • 60% in the third application period (April 2021 to June 2021).

 

This phased reduction gives employers and employees the opportunity to jointly consider what is needed to get through the crisis. In addition, support is guaranteed over a longer period, which prevents a major shock on the labor market. This enables employers to monitor the situation over a longer period and to decide which measures are needed to guarantee the continuity of the company, for example lowering the total wages or a reorganization.

 

Under NOW 3, the total wages may be reduced as follows:

  • 10% in the first application period (October 2020 to December 2020);

  • 15% in the second application period (January 2021 to March 2021); and

  • 20% in the third application period (April 2021 to June 2021).

 

The maximum subsidy per employee will be the same in the first two application periods as in NOW 1 and NOW 2, namely a maximum of twice the daily wage (EUR 9,538). In the third application period, this will be  reduced to a maximum of once the daily wage.

 

Conclusion

The government has announced that further information on NOW 3 will follow soon. For questions and / or consultation regarding this memo, we kindly refer you to your relations manager or a PKF Wallast legal counsel.

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