Payroll 2021 update
In 2021, several changes will take place in the field of laws and regulations relevant to you, your employees, and the payroll administration. We want to inform you about these changes.
We want to start this letter with a subject which is not recently updated, however we do receive a lot of questions in this respect. This is the topic of continued payment of salary in case of illness, additionally we would like to further discuss details with respect to continued payment due to corona., another topic we regularly discuss with you.
This letter contains the following topics:
- Continued payment of salary in case of illness
- Continued payment of salary and corona
- Untaxed travel expense allowance
- Additional maternity leave
- Compensation scheme transition allowance long-term illness
- Adequate pension for payrolled employees
- Written registration of employment contract for an indefinite period
- Dutch Unemployment Benefits Act premium and more than 30% overtime
- 30% scheme for foreign workers
- Expense Allowance Scheme (WKR)
- Job-Related Investment Credit (BIK)
- Expansion of targeted exemption for training costs
- Higher contribution electric cars
- Work Resumption Fund Premiums (Whk)
1. Continued payment of salary in case of illness
An employee is entitled to continued payment of salary in case of illness for a period of two years (unless an employment contract ends sooner). Based on law, an employee is entitled to 70% of the salary during these two years, whereby at least the minimum salary criteria of the first year are met. A higher salary can apply during a period of illness based on the CLA or the employment contract.
The employer is responsible for the reintegration of the employee during the period of illness. The employee must also be committed towards the reintegration.
What often is unknown is that the salary amount during the illness often (also) depends on the stage of the reintegration. The work of an employee during his reintegration can be categorised into four types. A brief description of the actions and the corresponding salary amounts have been set out below.
- If an employee does not perform work during illness, the continued payment of salary depends on what has been arranged in the employment contract or, if applicable, a CLA. If nothing has been arranged in the employment contract or the CLA, the statutory continued payment of salary obligation as set out above applies.
- An employee can also (partially) perform his own work during his reintegration. The employee will be entitled to 100% of his salary for this part.
- A third option concerns the performance of other suitable work during the reintegration. A salary value must be determined for this other work. The salary value corresponds to the labour of the employee. The salary value reflects the extent of the recovery of the employee (compared to a stage of full recovery). The salary value percentage must be determined by the employer. This may be higher than the amount that must be paid during a period of illness based on the employment contract or stipulated by law.
- Fourthly, an employee may work during his reintegration in the form of occupational therapy. Occupational therapy is often a brief form of reintegration, not in the own position or other suitable work, and will often not last for more than 4 weeks. Occupational therapy does not have a salary value. This means that the salary amount depends on what has been arranged in the employment contract, the CLA, or legal provisions.
An example to illustrate the above:
An employee works 40 hours and receives a salary of €2,000. The employee suffers a long-term illness and the employer pays 70% of the entire salary (in the second year and in accordance with the CLA). This salary amounts to 70% x €2,000 = €1,400.
After 52 weeks, the employee starts performing other work for 20 hours in the form of occupational therapy. The employee is 100% ill and performs work without a salary value. After four weeks of occupational therapy, the employee will start working these 20 hours on a remunerated basis. The work is categorised in a lower salary scale than his previous position with a salary of €1,600. The remuneration of this work will be 20/40 x €1,600 = €800.
The determination of the work at salary value is €800 / €2,000 x 100% = 40%. This means that the employee has recovered for 40% in a position with a salary value.
The employee is still ill for the remaining 60% and receives a continued payment of 70% of his salary. The sum of this is 60% x (70 per cent x €2,000) = €840.
Continued payment of salary of original salary €840.
Continued payment of salary for other work €800.
The compound salary of the employee will be €800 = €840 = €1,640, instead of €1,400 (based on the continued payment of salary obligation for ill employees).
If too much salary is – accidentally – paid to the employee during his illness, it is not certain whether the excess salary can be recovered. This depends, among other things, on the agreements between the parties.
- We want to ask you to inform us of the salary to which an employee is entitled during illness in a timely fashion. This can keep changing during the reintegration process. Naturally, we are available to provide you with advice on this matter.
Suspension and cessation of salary during illness
Taking into account the above, it is also important to define the terms suspension of salary and cessation of salary.
If an employee fails to comply with the reintegration obligations, the salary may be suspended in certain circumstances. For example, if an employee refuses to visit the company physician.
Suspending the salary is different from actually ending the continued payment of salary. The continued payment of salary obligation will be reinstituted with retroactive effect after a suspension of salary. If the employee visits the company physician, as in our previous example, he will be entitled to salary during the period of the suspension of salary.
A cessation of salary does not apply retroactively. However, cessation of salary can only be applied in a limited number of situations, for example, when the employee refuses to cooperate with measures implemented to promote his reintegration or if the employee does not perform suitable work.
It is important to inform the employee of a suspension or cessation of salary in writing in advance. Without prior notice, a suspension or cessation of the salary is not permitted by law.
We want to ask you to also discuss this topic with us.
RIV check (bill)
The following may change next year.
The company physician plays an important role during the reintegration process. Employers are required to seek the advice of a certified occupational health and safety service or a company physician. The employer and the employee will define the reintegration process based on this advice.
After 104 weeks of illness, the UWV will determine whether the employer and the employee have made sufficient efforts with respect to the reintegration (RIV check) based on the reintegration report. In this opinion rendered by the UWV, an insurance physician can also render his own medical opinion concerning the limitations and deployability of the employee. The opinion of the insurance physician can deviate from the opinion of the company physician. Based on these different medical opinions, the UWV may impose a salary sanction upon the employer. This leads to annoying discussions with the UWV.
For this reason, the bill concerning the RIV check aims to make the opinion of the company physician decisive in the RIV check. In the future, if the bill is adopted, the occupational expert of the UWV will determine whether the employer and the employee have made sufficient reintegration efforts in line with the advice rendered by the company physician. This offers employers a greater level of certainty concerning the question of whether they have made sufficient efforts concerning the reintegration. The insurance physician of the UWV will no longer conduct a medical examination. This proposal is currently still a bill. If the bill is adopted, its intended effective date is September 1, 2021.
2. Continued payment of salary and corona
An employee may be temporarily unable to perform his work due to corona. This may be the case because the employee is ill or has to go into quarantine. What about the continued payment of salary of the employee? Is an employee entitled to salary during his quarantine? The court has rendered an opinion on these questions. We wish to remark that an answer to these types of questions will always depend on the circumstances of the case.
Illness or quarantine
First of all, recent case law emphasises that quarantine is not the same as illness. Quarantine is defined as a precautionary measure imposed by the government which the employee must comply with. This means, for example, that the employer may not deduct any salary for waiting days if an employee is quarantined.
Costs and risk of quarantine
This brings us to the next question: does the employer bear the risk and expense of the corona-related quarantine of an employee who is not ill? This will generally be the case, and the quarantine will be for the risk and account of the employer. There will be no problem if the employee can work from home, and the employer will be required to continue to pay the salary of the employee in a regular manner.
This may be different if the employee cannot work from home. The key question is whether the circumstance in which the employee must go into quarantine as mandated by the government is a circumstance for which the employee bears the risk. The answer to this question greatly depends on the conditions of the case. When answering this question, the fact whether the employee has deliberately taken the risk must be considered (e.g. attending a ‘corona party’).
Travel to an orange/red area
The question of which party must bear the risk for the quarantine also arises if an employee has travelled to an orange/red area. Based on current regulations, the employee will need to go into quarantine when he returns. If an employee deliberately travels to an orange or red area, the continued payment of salary of the employee required to go into quarantine may be stopped during the quarantine period in some circumstances. However, the employee must have been informed in this respect in advance.
Duty to provide information
The employer should inform the employee what the (im)possibilities and consequences related to travel abroad are and of the requirement to comply with measures in force at the destination when travelling abroad. The employee should also be informed of the importance of observing government recommendations when he returns. It is also important to inform the employee about how the employer handles a mandatory home quarantine and the potential continued payment of salary (if working from home is not possible).
The employee will remain entitled to continued payment of salary if a country changes colour during his stay. If an employee can work from home, he will retain the right to continued payment of salary.
3. Untaxed travel expense allowance
Many employees have started to work from home due to the corona crisis. Even though employees no longer, or at least less often, travel to the fixed place of work, the fixed commuting expense allowance may be paid without being subject to taxation until 31 December 2020, under the condition that the allowance was already granted before the corona crisis started. The employer is not required to register whether the employee works from home or at the office for the year 2020.
This temporary facilitation will expire as of 1 January 2021. Employers will need to start registering the travel behaviour of their employees. An employer may no longer grant an untaxed travel expense allowance for days on which the employee works from home as of 1 January 2021. Only the travel days on which the employee actually travels will qualify for an untaxed allowance up to an amount of €0.19 per kilometre.
- Due to the corona crisis, the travel behaviour of employees has changed in many situations. The employer may no longer categorise remote workdays as travel days as of 1 January 2021. This is why it is important to already identify the travel behaviour of your employees and, where necessary, to make new agreements with your employees in case the employment conditions need to be amended.
4. Additional maternity leave
The additional maternity leave for partners has taken effect on 1 July 2020. Partners can currently use at least 1 week and up to 5 weeks of additional maternity leave. The partner will have the right to receive 70% of the daily salary during this period (up to 70% of the maximum daily salary). These benefits will be paid by the UWV. The additional maternity leave is subject to the following conditions:
- the employee must first use the regular maternity leave equivalent to the number of working hours per week, during which the employer will continue to pay the full salary; and
- the additional maternity leave must be used within six months of the birth.
Additional maternity leave application
The additional maternity leave can only be requested through the employer. In consultation, the leave can be distributed over a period of more than five weeks, but the leave can only be used in the form of full weeks. It is also possible to use fewer than 5 weeks of additional maternity leave. Only one application can be filed.
Using additional maternity leave does not affect the accrual of holiday bonus and the statutory leave. However, it may affect the accrual of the extrastatutory leave. This depends on what has been arranged in the employment contract or the CLA.
We can provide you with a brief checklist and/or a template letter for the employee to confirm the additional maternity leave application.
5. Compensation scheme transition allowance long-term illness
In order to prevent dormant employment relationships, compensation can be requested for the remuneration transition allowance to an employee whose employment relationship ended while ill as off 1 April 2020.
Several conditions apply with respect to this compensation scheme. The compensation amount may not exceed the amount actually paid by the employer, and the amount may not exceed the amount due by the employer immediately after the two years of illness of the employee. The maximum compensation amount granted by the UWV will be € 84,000 in 2021. This is also the maximum amount of the transition allowance.
The employer can file the application with the UWV. A so called E3-herkenning (certificate) is required to apply for the compensation. You can use this certificate to access the UWV employer portal. The application must be filed within 6 months of the payment of the complete transition allowance.
The application requires at least the following documents:
- the employment contract (or, if not available, a payslip which lists the starting date of the employment relationship);
- proof of the termination of the employment contract (for example, the termination agreement);
- the calculation of the transition allowance amount and the payslips; and
- proof that the entire transition allowance has been paid (bank statement).
You can contact us if you have any questions about the transition allowance compensation scheme application. We can also file the application for you, for example, if you do not have an E3 certificate yet.
6. Adequate pension for payrolling employees
Since the introduction of the Dutch Balanced Labour Market Act (WAB), payrolling employees are entitled to the same employment conditions as they would have been entitled to if they had a direct employment contract with the client as of 1 January 2020. The legislator believes that payrolling should not lead to worse (primary and secondary) employment conditions for payrolling employees.
As of 1 January 2021, payrolling employees will be entitled to an adequate pension plan. Based on this obligation, payrolling employees are entitled to the same pension plan as employees working for the client in a similar or equivalent position. If the client does not have any employees in a similar or equivalent position, the payrolling employee will be entitled to the same pension plan as employees working in similar or equivalent positions in the same industry in which the client operates. There will not be any obligation to arrange an adequate pension plan if no pension plan exists in both situations.
In practice, this means that the payroll employer has two options:
- joining an existing pension plan of the client; or, if this is not possible,
- arranging an adequate pension plan itself.
If the payroll employer arranges a pension plan itself, this must be an adequate basic pension plan. This basic pension plan must, inter alia, provide an old-age and survivor's pension, the plan may not have a threshold period or waiting period, and the employer premium must be based on the average employer premium in the Netherlands (14.5% in 2021).
Practical consequences as of 1 January 2021
The mandatory pension plan for payrolling employees at Stipp will expire. Payrolling employees will no longer accrue any pension rights at Stipp, as the payroll employer will need to arrange an adequate pension plan itself. This is possible by joining the fund of the client or the sector in which the client operates, either on a voluntary or mandatory basis. If this is not possible, the payroll employer must arrange an adequate pension plan itself as of 1 January 2021.
- If you are a payroll employer, you must arrange an adequate pension plan as of 1 January 2021.
7. Written registration of employment contract for an indefinite period
As of 1 January 2020, the Dutch Unemployment Benefits Act premium has been differentiated based on the type of employment contract: for a definite or for an indefinite period. The Dutch Unemployment Benefits Act premium will lead to a lower contribution for employers for contracts for an indefinite period compared to contracts for a definite period. The low premium applies to employment contracts for an indefinite period, unless this is an on-call contract. The difference is significant. In 2021, the low premium will be 2.7%, compared to the high premium of 7.7%.
In order to be able to apply the low Dutch Unemployment Benefits Act premium, the employment contract for an indefinite period must have been set out in writing.
This written registration must have been signed by both the employer and the employee.
- The employment contract for an indefinite period of employees hired on or after 1 January 2020 must immediately be captured in writing. Please note: the tacit renewal and conversion of an employment contract for a definite period into an employment contract for an indefinite period has adverse consequences for the Dutch Unemployment Benefits Act premium!
8. Dutch Unemployment Benefits Act premium and more than 30% overtime
As already set out above, the low Dutch Unemployment Benefits Act premium –generally – applies to employment contracts for an indefinite period set out in writing. The low Dutch Unemployment Benefits Act premium must be revised in certain circumstances. For example, in the situation in which the employee performs more than 30% overtime.
The low Dutch Unemployment Benefits Act premium must be revised in case of more than 30% overtime in a given calendar year. The high Dutch Unemployment Benefits At premium will apply retroactively.
This can have very adverse consequences because of the corona crisis. We expect this impact in the healthcare sector, for example, where employees are asked to work a great deal of overtime. For this reason, the cabinet has decided to make an exception to this rule for all employers for 2020. The low Dutch Unemployment Benefits Act premium will not be revised if an employee has worked more than 30% overtime in 2020.
The cabinet has decided to renew this measure in 2021. Because of the corona crisis, there will still be a great deal of overtime in many sectors in 2021. For this reason, the Dutch Unemployment Benefits At premium will also not be corrected in case of more than 30% overtime in 2021.
9. 30% scheme for foreign workers
The 30% scheme applies to foreign workers who temporarily work in the Netherlands at a Dutch withholding company. If these employees meet the conditions of the scheme, they will not need to pay taxes on up to 30% of their salary.
The duration of the 30% scheme has been decreased from 8 years to a maximum of 5 years as of 1 January 2019. There is currently a transition scheme for expats who would lose their right to the 30% scheme in 2019 or 2020 as a result of the amendment.
End of transition scheme
The transition scheme for the cases making use of the scheme before 1 January 2019 will last until 1 January 2021. As of 1 January 2021, the Dutch Tax and Customs Administration will also look at the period during which the 30% scheme was used for these employees:
- Are the employees using the scheme for less than 5 years on 1 January 2021? In this case, the scheme will last until the 5-year period has expired.
- Are the employees using the scheme for more than 5 years on 1 January 2021? In this case, the scheme will expire on 1 January 2021.
- If you employ foreign workers using the 30% scheme, you can check whether these employees have been using the 30% scheme for more than 5 years on 1 January 2021.
10. Work related cost Scheme (WKR)
Since 1 January 2015, the application of the Work related cost Scheme (WKR) is mandatory for employers who want to reimburse certain costs to their employees without being subject to additional taxation. Allowances or gifts to partners, temporary workers, freelancers, and the other groups are not covered by the WKR.
The WKR will grant the employer a tax free budget. This means that the employer may annually calculate on a yearly basis the total WKR budget based on a percentage of the total salary processed in payroll. This budget may be use for allowances and gifts.
The following things will change concerning the WKR in 2021:
The WKR space for the total salary of the employees up to € 400,000 will be reversed to 1.7% in 2021 (this percentage was temporarily 3% in 2020 because of the corona measures).
The percentage of the free space above an amount of € 400,000 of the total salary of the employees will be reduced from 1.2% to 1.18% in 2021.
The WKR budget percentages may be adjusted again in relation to the corona measures in 2021. At this moment it is unclear if this will be adjusted again similar to 2020.
In addition, a specific exemption for training of employees will be expanded in 2021 by an exemption for training costs for salary that is qualified as previous labour. More information about this can be found in section 12.
- We want to ask you to close your WKR administration in 2020 to ensure that the administration is included correctly in the payroll taxes of 2021.
- If the WKR budget is exceeded, please inform your payroll contact within PKF Wallast.
- At PKF Wallast, we have developed an WKR Tool to enable us to advise/facilitate you even better with respect to the WKR Scheme.
11. Job-Related Investment Credit (BIK)
The cabinet wants to encourage companies to keep investing during the corona crisis. After all, investments lead to more jobs, or retention of jobs, and enable companies to innovate and adapt. A new (temporary) fiscal provision will be introduced for this purpose: the Job-Related Investment Credit (BIK). This provision concerns a payment discount for the payroll taxes related to investments in new company resources. A budget of 4 billion euros has been set aside to finance the provision.
As stated, the BIK is a discount that the company receives that can be deducted on the payroll taxes. The amount of the discount is linked to the amount of the investment(s) and can be deducted from the payroll taxes return. As a result, the implementation of the BIK is the same for all companies (with sufficient employees). This means that the benefit is not only realised at companies making a profit during the crisis. As indicated, the scheme will apply for two years: 2021 and 2022.
The BIK can be used if the investment obligation is entered into on or after 1 October 2020. The BIK only applies to investments in new company resources. This applies subject to the condition that the investment has been paid in full between 1 January 2021 and 31 December 2022 and that the resources have been commissioned within six months of the full payment. The amount of the BIK will be determined as follows:
- Companies will receive a discount of 3% of the investment amount for investments up to €5 million per calendar year
- Companies will receive a discount of 2.44% of the investment amount for investments above €5 million
- A lower threshold of €1,500 per company resource and €20,000 per application applies for all applications
The percentages set out above are expected to change once the bill has been adopted. A significant part of the BIK is expected to end up at Small and Medium Enterprises.
The BIK and already existing incentive measures may be applied simultaneously.
The administration and processing of the BIK will predominantly take place in the form of a collaboration between the Netherlands Enterprise Agency (RVO) and the Dutch Tax and Customs Administration. An application to qualify for the investment credit can be filed as of 1 September 2021. The application for the BIK declaration will have a (maximum) turnaround time of 12 weeks. The investment credit can be settled with the payroll taxes based on the issued BIK declaration. This process will thus become part of your payroll administration.
- We want to ask you to inform PKF Wallast as soon as you would like to apply for the BIK.
- Once the BIK statement has been issued, we also want to ask you to inform our payroll administration department.
12. Expansion of specific exemption for training costs
Currently, only training costs of employees currently employed by the employer are exempt from payroll taxes. Naturally, this only applies if the corresponding conditions are met.
Because of the current corona crisis, the cabinet also wants to exempt training costs from payroll taxes insofar as these concern ‘previous labour’. ‘Previous labour’ exists in relation to employees whose employment relationship has ended.
In this case, the employer can include the training costs in the final settlement at the end of the employment relationship. The Dutch Tax and Customs Administration will subsequently check whether the training course has been completed in order to improve the position of the employee on the labour market with the goal of generating income.
Subject to certain conditions, the exemption can also apply to individual training budgets or education budgets, as agreed in specific industries and CLAs.
13. Higher fiscal contribution electric cars and contribution for car with solar panels
The fiscal contribution for electric cars is 8% until 31 December 2020. As the cabinet announced previously, the fiscal contribution for electric cars will increase.
In 2021, a fiscal contribution percentage of 14% on the first €40,000 of the catalogue value of the electric car registered in 2021 will apply as of that year. A fiscal contribution of 22% will apply to the remaining amount above €40,000.
A fiscal contribution percentage of 18% will apply to the first €40,000 as of 2022.
Only cars that fully use solar cells or hydrogen will not be covered by the already concluded scheme. In other words, the fiscal contribution for cars full using solar cells or hydrogen will not increase further.
As of 2023, there will no longer be a difference between the fiscal contribution for electric cars and cars using fossil fuels.
14. Work Resumption Fund (Whk)
An employer will pay Whk premiums if this employer is insured for incapacity risks with the UWV. The Whk is part of the employee insurance premiums. The corresponding premium depends on the size of your company.
In order to properly prepare the salary administration for processing in 2021, we need correct data in relation to the Whk premiums.
- We want to ask you to send the statements with the premium percentages for the year 2021 to your salary administration contact in December.