COVID-19 – Netherlands job preservation scheme extended

The Dutch measure for job preservation under which employers are reimbursed for labour costs is being extended by another three periods of three months from 1 October (ie until June next year). We have provided a detailed summary below:

The Netherlands Cabinet will extend the Temporary Emergency Relief Measure for the Preservation of Work (the NOW Scheme) by three periods of three months from 1 October 2020.

During the first period, companies with a drop in turnover of at least 20% will be eligible for aid. From January 2021, there must be a fall in turnover of at least 30%.

The aim of the scheme remains to support employment and income, but it will also be important for companies and workers to adapt to the current economic situation. Compensation to companies for continued payment of wages will be phased out in stages. At the same time, there will be room for employers to reduce the wage bill without this being at the expense of the subsidy.

The most important changes

• NOW 3 applies until 1 July 2021 (three periods of three months).

• The minimum loss of turnover to qualify for the scheme will increase from 20% to 30% from the second period onwards.

• The aid over nine months phases out compensation rates: from 80%, to 70% to 60%.

• In return for the reduction in compensation, there is the possibility of gradually reducing the wage bill by 10%, 15% and 20% without this being at the expense of the subsidy.

• The maximum 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.

Safeguarding jobs and employment

The aid is intended to serve two purposes:

• Firstly, it provides a helping hand to companies in need of support to overcome the crisis. In this way, employment will be maintained as much as possible.

• Secondly, it offers companies the opportunity to prepare, together with their employees, for the new economic situation: not all jobs can be maintained.

The Cabinet has therefore decided to gradually reduce the rates of compensation in wage costs, and to provide scope to reduce the wage bill without this being reflected in the level of the subsidy. The NOW is part of a comprehensive support and recovery package in which the government also makes money available for training and job-to-job. Together, this gives employers and employees room to adapt their business operations.

Companies eligible for NOW 3

In the first period, the scheme will apply to all employers with an (expected) loss of turnover of at least 20%, if they also meet the conditions.

From the second period, from January 2021 onwards, this will be increased to 30%.

The exact conditions of NOW 3 are currently being worked out in more detail and will be announced by 1 October 2020, at the latest.

Use NOW 3 after NOW 1 and/or 2

For participation in NOW 3 from 1 October, it does not matter whether or not you have previously participated in NOW schemes.

Duration NOW 3

NOW 3 will run from 1 October 2020 in three periods of three months, until 1 July 2021.

When to apply

The UWV aims to open the next application period on 16 November 2020. An application can be made retroactively for the first period (1 October to 31 December 2020). The second period runs from 1 January 2021 to 31 March 2021 and the third period runs from 1 April 2021 to 30 June 2021. For each period, an employer may decide whether or not to make an application. Even if an employer has not made a claim for the NOW 1 or 2, the employer can still make use of the NOW 3.

Remuneration rate and reduction of the wage bill

The employer may receive an allowance for labour costs, whereby the maximum reimbursement percentage is the percentage of the total wage bill in the event of a loss of turnover of 100%. This reimbursement percentage is gradually reduced per period. This reduction is as follows:

• in the first period, from 1 October 2020 onwards, the maximum reimbursement rate is 80%;
• in the second period 70%; and
• in the third period 60%.

At the same time, the Cabinet wants to give employers with a long-term loss of turnover the scope to reduce part of the wage bill, without reducing the subsidy. The exemption percentage is the percentage of the total wage bill that the employer can reduce without affecting the level of the subsidy for wage costs. The exemption percentage for the wage bill rises from 10% in the first period, 15% in the second period and 20% in the third period.

The (voluntary) reduction of the wage bill can be achieved in various ways. Think of natural staff turnover, by retaining fewer staff or by asking employees to make a voluntary wage sacrifice. The discount applied in the NOW 2 at the time of a business dismissal is abandoned.

Maximum wage to be reimbursed per employee

In the first two periods of three months (October/November/December and January/February/March), the maximum wage to be reimbursed per employee will be equal to the NOW 1 and 2, ie a maximum of 2x the daily wage, which amounts to € 9,538 per month. In the 3rd period (April/May/June) this will be reduced to a maximum of 1x the daily wage. This brings the situation during the last period more in line with the usual social security system.

Our team in the Netherlands would be happy to answer any questions about these extended provisions.

See our Coronavirus (COVID-19) feature for more information generally on the possible legal implications of COVID-19.