The NOW 2 regulation
On 20 May 2020, the Dutch government announced that it would extend the NOW regulation (in Dutch: Tijdelijke noodmaatregel overbrugging voor behoud van werkgelegendheid (hereinafter: NOW 1)). The final NOW 2 regulation (hereinafter: NOW 2) was published on 25 June in the Government Gazette. This extends the NOW by four months. The main goal of NOW 2 remains to support employers with the preservation of employment. Employers who expect at least a 20% decrease in revenue can submit an application to the UWV (in Dutch: Uitvoeringsinstituut Werknemersverzekeringen). The application period under NOW 2 runs from 6 July to 31 August 2020. Below we will further elaborate on the NOW 2.
Subsidy period, reference month wage sum and revenue period
Under NOW 2, the subsidy period changes from three to four months. The reference month for the wage sum changes from January to March 2020. The subsidy is granted over the wage sum in the period from 1 June 2020 up to and including 30 September 2020. The turnover decrease for NOW 2 is determined over a continuous four-month period from 1 June 2020 to 30 November 2020 and therefore can either start on 1 June, 1 July or 1 August 2020. For employers who have already submitted an application under NOW 1, the revenue period must follow on the revenue period as chosen under NOW 1. Based on the application, just like under NOW 1, the UWV provides an advance of the subsidy (80% of the amount) to the employer. It is subsequently determined what the actual decrease in revenue has been and whether there has been a decrease in the wage sum (in accordance with NOW 1). The determined subsidy amounts to a maximum of 90% of the wage sum.
Determination revenue decrease in case of transfer of business
An employer who has recently taken over another company may experience a problem with determining the revenue decrease. The NOW 2 provides in this situation as follows: if there is a transfer of business after 1 January 2019 and before 29 February 2020, the employer can choose to calculate the reference revenue by taking the realized revenue in the period from the first entire calendar month from the date of the transfer up to and including 29 February 2020 as the basis for the reference revenue, converted to four months. The acquisition must be at least one calendar month before 29 February 2020. When applying for the NOW, the employer must explicitly opt for this alternative calculation method.
The government increased the standard surcharge in the NOW 2 from 30% to 40%. Standard employers' costs are covered with this surcharge.
For NOW 2, the government has decided to exclude the ‘dismissal fine’ from NOW 1 for the dismissal of employees for business economical reasons. Therefore, the subsidy for dismissal for business economical reasons under NOW 2 will no longer be corrected by 150%, but by 100% of the amount of the wages of the dismissed employees. This applies to dismissal applications that are submitted in the period between 1 June up to and including 30 September 2020. The current regulations regarding protection against dismissal in the event of business dismissal (e.g. preventive assessment UWV, transition allowance) and the obligations under the WMCO (in Dutch: Wet Melding Collectief Ontslag) continue to apply.
In the case of dismissal applications in the context of the WMCO (dismissal for business reasons for 20 or more employees), a discount of 5% of the final NOW subsidy will also be imposed, unless (i) an agreement is reached between the employer and the unions (or, in the absence of which another employee representative body) on the application for dismissal, or (ii) these parties have requested for mediation by the Labor Foundation (in Dutch: Stichting van de Arbeid).
Dividend distribution and bonus payment and purchase of own shares
The NOW 2 prohibits the legal entity that receives subsidy to pay dividends or bonuses or to purchase its’ own shares over 2020. This general prohibition applies up to and including the date of the (shareholders) meeting in which the annual accounts are adopted in 2021. This prohibition does not apply to natural persons, legal persons or groups who have received an advance of less than EUR 100,000 and of which the total determined subsidy amounts to less than EUR 125,000.
This prohibition applies to bonuses that are paid to the board of directors and the management. The definition of board of directors or management is to be interpreted broadly. DGA’s / directors therefore receive only their basic compensation on their usual wages. It does not extend to the other personnel working in the company who may receive variable pay through bonuses.
After the introduction of article 6a NOW 1, the prohibition on distributions and purchase of own shares also applied if the decrease in revenue was determined at the individual operating company level, instead of on the basis of the entire group. In that case, the prohibition also applies to the group or parent company. The prohibition under the NOW 2 on distributions and purchase of own shares applies in all cases, but only to the requesting legal entity and not to any other legal entities in the group, unless they themselves also have applied for NOW 2 and / or the special regulation has been used - which also applies under NOW 2 - to determine the decrease in revenue at individual operating company level.
Under NOW 2, an effort obligation of means is included for employers to encourage their employees to take additional training or retraining. The works council, staff representation or employees have the obligation to encourage the employers to enable training for the employees. In addition, employers must indicate with the NOW 2 application that they comply with the best efforts obligation.
The government also introduces the program NL continues to educate (in Dutch: NL leert door). The aim of this program is to support people who are likely to lose or have already lost their job as a result of the crisis and will therefore have to make the transition to other promising work. The intended period of entry into force is July 2020 with a term until the end of 2020.
Inform works council
Just as under NOW 1, if the employer makes a subsidy application under NOW 2, he/she must inform the works council (if present) or staff representatives about the subsidy application. In the absence of these bodies, the employer informs the employees.
The employer applies for the determination of the subsidy within 24 weeks after 15 November 2020. If the revenue period ends after 15 November 2020, the employer requests the determination of the subsidy within 24 weeks after the end of the revenue period. The aforementioned period of 24 weeks is 38 weeks, if the employer is required to submit an accountant’s report with the request for determination.
An employer who has applied for both NOW 1 and NOW 2 does not have to simultaneously apply for determination. Every applicant can apply for a determination of NOW 1 from 7 October 2020 onwards. Applicants are free to submit the determination applications for NOW 1 and NOW 2 simultaneously after 15 November 2020.
An accountant’s report is mandatory for companies that have received an advance of EUR 100,000 (or more) and for companies that have received a final determined subsidy of EUR 125,000 or more. For companies that have received an advance of less than EUR 100,000 is their own responsibility to
estimate whether the final subsidy will be determined at EUR 125,000 or more. The accountant’s report must be submitted with the application for the determination of the subsidy. The government provides an online tool, to help making a reasonable estimate whether an accountant’s report is required. The threshold of the accountant’s report is based on the subsidy amount that is paid to the group, the legal person or natural person, and not per individual payroll tax number.
Third party statement
With the request for determination of a subsidy with an advance above EUR 20,000 or a final determined subsidy above EUR 25,000, a statement from a third party confirming the revenue decrease will have to be submitted. This third party may, for example, be an administrative office, financial service provider of or branch organization.
Adjustment NOW 1
The government has also retroactively adjusted NOW 1 on the following points:
for seasonal work under NOW 1, the calculation of the subsidy is adjusted. The adjustment is an additional compensation for employers who, due to a seasonal pattern (or for other reasons), had too low unrepresentative wages in January 2020 compared to the subsidy period (March-May 2020). This adjustment is automatically made when the subsidy is determined;
any paid thirteenth month will be filtered out of the total wage sum by the UWV, when the subsidy is determined; and
benefits paid by the UWV via the employer are not filtered out of the wage sum because this turned out to be impossible to implement.
For more information, please contact your relationship manager or one of the PKF legal advisors.