COVID-19 - Dutch Government introduces measures to protect economy

On Tuesday 17 March 2020, due to the situation surrounding the COVID-19 pandemic, the Dutch government decided to take exceptional economic measures with the aim of maintaining jobs and income.The emergency package will provide support for at least the next three months but will be extendable ensuring that employers are able to continue to pay their employees.

In this insight we will cover the withdrawal and replacement of the short-time working scheme and the measures concerning the WW premium differentiation. In addition to these, other measures will also be taken in relation to (i) wage costs and income of self-employed persons and (ii) liquidity, amongst others by easing tax deferrals, reducing tax fines and expanding the Guarantee Scheme for Entrepreneur Financing.

i) Withdrawal and replacement of the short-time working scheme (Wvt-scheme)

Due to the outbreak of COVID-19, an unprecedentedly large appeal has been made to the WVT-scheme in the last few weeks, to such an extent that it is unable to cope and has been withdrawn with immediate effect. Therefore, the Wvt-scheme is now replaced by a new Temporary Emergency Bridging Measure for Work Retention (Tijdelijke noodmaatregel overbrugging voor werkbehoud) (EBM).

The EBM applies temporarily and retroactively from 1 March 2020. The applications already submitted under the WVT-scheme will be treated as submitted under the EBM, although additional information will be requested from the applicants.

ii) EBM

The EBM applies to companies of all sizes, making it possible to provide financial support to more employers and faster than under the temporarily revoked WVT-scheme. The EBM is - in contrast to the WVT-scheme - not linked to the Unemployment Benefits Act and therefore, employees do not surrender their WW rights. Regarding the application, the conditions and the provisional implementation, the following is important.

Application

Employers who expect a loss of turnover, from 1 March 2020, of at least 20% can apply to the UWV for an allowance for wage costs amounting to a maximum of 90% of the wage sum (depending on the loss of turnover) for a period of three months.

The allowance amount granted to cover labour costs will depend on the loss of turnover. Below are a few examples on the relationship between reduced turnover and the allowance calculation:

• if 100% of the turnover is lost, the allowance amounts to 90% of an employer's wage sum;

• if 50% of the turnover is lost, the compensation amounts to 45% of the wage sum of an employer;

• if 25% of the turnover is lost, the compensation amounts to 22.5% of the wage sum of an employer.

The three-month period can be extended once for another three-month period. The EBM may stipulate (in advance) that this extension will be subject to further conditions.

Conditions

The employer may not apply for dismissal on business economic grounds during the grant period, for the employees for whom the allowance is received.

The employer must continue to pay 100% of the salary to the employees concerned.

The allowance also covers the wage costs of employees with flexible contracts (i.e. on-call employees), provided they remain employed during the grant period.

Provisional implementation

Once applied, the UWV will provide an advance payment of at least 80%.

The actual loss of turnover will be determined afterwards. For large applications, an auditor's report will be required. If the advance payment has been too large or too limited, subsequent payment or recovery may be considered.

The date from which applications can be submitted to the UWV is as yet unknown. As soon as this is known, we will, of course, inform you in more detail about this.

iii) WW-premium differentiation

Since 1 January 2020, (as a result of the Labour Market Balancing Act coming into force) employers pay a low WW premium for employees who are employed for an indefinite period and a high WW premium for employees with a flexible contract.

A high WW premium must also be paid for employees who are employed for an indefinite period of time and who have worked more than 30% overtime in one calendar year. This provision can now lead to unintended effects in sectors affected by the coronavirus and may require large increases in employee overtime. As a result, this regulation will be amended and will apply to the whole of calendar year 2020.

In addition, employers were previously given until 1 April 2020 to draw up a permanent employment contract in writing, in order to meet the conditions for the low WW premium, but this period will be extended until 1 July 2020.

Depending on developments, the Dutch government will be taking any necessary and appropriate follow-up measures. We will of course keep you informed of these measures as they come to light. More information provided by Simmons & Simmons about COVID-19 can be found on our website here.

Please let us know if a call would be useful - we are very happy to do this on a relationship basis.