Extended NOW 3.0 scheme continues support for employers during Covid-19 pandemic
Published on 16th Oct 2020
The updated wage subsidy scheme contains new details and differences to NOW 2.0 and 1.0
The Dutch government has published (9 October 2020) details of the Third Temporary Emergency Bridging Measure to Preserve Employment (the NOW 3.0) which is no longer fully focused on maintaining employment.
The scheme update follows the publication of the previous NOW 2.0 in June, which made way for companies to apply for wage subsidies for a continuous period of four months. The aim of the new NOW 3.0 is to enable the employer, together with their employees, to prepare for and adapt to the new economic reality due to the Covid-19 pandemic. Crucially, restructuring an organisation, including termination of employment agreements due to business economic reasons, is possible under NOW 3.0.
The NOW has been extended with retroactive effect from 1 October 2020 by three 3-month tranches (the third-, fourth- and fifth tranche). A company may apply for NOW 3.0 every three months (for instance, 1 October 2020, 1 January 2021 and/or 1 April 2021).
A company may apply for the wage subsidy under the NOW 3.0 scheme in case of an expected turnover loss of:
- at least 20% during the third tranche (October – December 2020); and
- at least 30% as per 1 January 2021 for the fourth and fifth tranche (January – June 2021).
The method of calculating the loss of turnover (omzetdaling) remains the same as under NOW 1.0 and NOW 2.0. The wage subsidy will be determined on the basis of the:
- wage sum – for all three tranches, the reference month for the wage sum is June 2020; and
- loss of turnover – turnover over the year 2019, compared to the turnover over the 3-month period chosen by the employer.
The wage subsidy will gradually be reduced (in the event of 100% loss of turnover) to a maximum wage subsidy of:
- 80% in the third tranche (October – December 2020);
- 70% in the fourth tranche (January – March 2021); and
- 60% in the fifth tranche (April – June 2021).
During the third and fourth tranche, the wage cap for employees who earn more than two times the maximum daily wages remain applicable for the NOW wage subsidy. For the fifth tranche, this wage cap changes to a maximum of the daily wages (maximum dagloon), which is currently amounting to €4,845 gross per month.
The company will receive an advance payment of 80% of the wage subsidy to be paid in three instalments. The final determination will be established afterwards on the basis of the company's actual turnover loss. This may result in a repayment obligation.
Under NOW 1.0 and NOW 2.0, the company was obliged to keep the total wage sum as equal as possible. In order to compensate the gradual reduction of the maximum wage subsidy, under the NOW 3.0, the company may gradually reduce the total wage sum each 3-month period by 10%, 15% and 20%, without affecting the NOW wage subsidy.
The permitted reduction of 10%, 15% and 20%, concerns a reduction compared to the total wage sum in the reference month (June 2020). If the reduction exceeds 10%, the following formula applies (for the third tranche, for instance, 1 October 2020 until 31 December 2020): ((0.9B x 3) – C) x 1,4 x 0,8.
In the formula, B refers to the total wage sum, C refers to the wage sum over the period of 1 October 2020 until 31 December 2020; and 1.4 refers to the fixed 40% surcharge to the wage sum to cover for holiday allowance, pension premiums etc.
Training and termination
Companies applying for the NOW will be obliged to make efforts to encourage employees, who (are expected to) lose their jobs, to participate in development advice or training.
The termination of employment agreements due to business economic reasons will no longer lead to a reduction in the wage subsidy under the NOW 3.0, unless this would affect the total wage sum with more than the permitted reduction.
Under NOW 3.0, the company receives a wage subsidy for the wage costs it has shouldered during the wage subsidy period as long as an employee is actually employed during that period (also during the notice period in case of termination due to business economic reasons).
The receipt of wage subsidies under NOW 3.0 is subject to the condition that the company makes an effort to guide employees who are forced to leave the company to a new job. In this respect, an employer who has filed a request for termination of one or more employment agreements, due to business economic reasons during the wage subsidy period, is obliged to contact the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen or UWV) via the 'UWV telephone NOW'. If not, a penalty of 5% of the total wage subsidy is due. UWV will check this when determining the wage subsidy.