NOW 2.0 | Details of extended wage subsidy scheme reveal important differences from NOW 1.0
Published on 29th Jun 2020
The final text of the Temporary Emergency Bridging Measure to Preserve Employment 2.0 (the NOW 2.0) was published by the Dutch government on 22 June 2020.
It is expected that as from 6 July 2020 a company will be able to apply for the NOW 2.0 wage subsidy for a continuous period of four months. The company may choose a starting date on which the four month period loss of turnover commences. The period may start from 1 June 2020 and end up to and including 30 November 2020. However, that starting date must be on the first day of a month (or example, 1 June, 1 July or 1 August 2020). If a company wants to apply for NOW 2.0 it makes no difference whether or not this company applied for NOW for March, April and May. If the company has applied for the NOW 1.0, the period of turnover loss must be continuous.
The NOW 2.0 applies the same system of wage subsidy as under the NOW 1.0, but also contains changes. The most important changes are as follows:
The fixed surcharge to the total wage sum will be increased from 30% to 40%.
The reference month for the total wage sum will be March 2020. March will also be taken as the starting point if the wage bill in the months of March-May is higher than for January-March.
A company or group of companies that jointly receive a wage subsidy advance payment of EUR 100,000 or more, or whose wage subsidy is established at EUR 125,000 or more, must declare that no dividend or bonuses will be paid over 2020 to board members, members of management board or members of the day-to-day management. Those categories of people will also not be allowed to (re)purchase the company's shares.
The 'bonus ban' does not apply to staff other than the categories listed above. This prohibition only applies to the legal entity applying for the NOW 2.0 wage subsidy. Other legal group entities may still pay bonuses, provided that they do not also apply for the NOW 2.0 themselves and no application is made at the level of an operating company. Moreover, the bonus ban only applies to bonuses and dividends for the year 2020 and not for the years 2019 or 2021.
Termination of employment
If the company files a termination request with UWV due to economic reasons, there will be an adjustment to the wage subsidy. The company will have to pay back 100% of the wage subsidy received for the employee(s) concerned for the period of three months, even if the termination date will be after the wage subsidy period. This does not apply to a termination of the employment agreement by mutual consent.
Unlike under NOW 1.0, companies will not incur an additional 'penalty' upon carrying out redundancies whilst receiving wage subsidy. Companies do, however, have to state in the NOW 2.0 application that they will consult with trade unions if they wish to apply for redundancy due to economic reasons for more than 20 employees. If, during the period from 30 May 2020 to 30 September 2020, the company notifies UWV of its intention to proceed with collective redundancies and submits redundancy applications to UWV for 20 or more employees within one working area during the wage subsidy period, the total wage subsidy amount will be reduced by 5%.
However, even then, the reduction will not apply:
- if agreement is reached with the trade unions or, if there is no such union, another personnel representative (such as the works council) on the necessity of the collective redundancy, or
- if no agreement can be reached but the company and union/representative jointly submit an application to the Labour Foundation (which is yet to be set up) in order to assess whether the proposed number of redundancies is necessary;
Companies applying for the NOW will be obliged to make efforts to encourage employees to participate in development advice or training.
An auditor's report is required for:
- companies that have received an advance payment of (80% of the wage subsidy amount granted) of EUR 100,000 or more;
- an established wage subsidy of EUR 125,000; or
- companies that are part of a group, but apply for the NOW 2.0 at the level of an operating company. Companies should assess themselves whether this is the case.
If no auditor's report is required, the company must provide a report by a different third party if it is applying for a wage subsidy with an advance payment above EUR 20,000 or an established wage subsidy above EUR 25,000. That third party could be, for example, an administrative office, a financial service provider or a branch organization, and must confirm the loss of turnover.
Determination of wage subsidy
Within 24 weeks from 15 November 2020 (or – if applicable - 24 weeks after the turnover period ended, the company must apply to have the wage subsidy determined. If an auditor's report has been submitted as mentioned above, the period is extended to 38 weeks. For the wage subsidy determination, the company is required to submit various information, including the final loss of turnover and an auditor's report or third party's report. It is advisable to involve an auditor / accountant in a timely manner to assist with this.
The wage subsidy advance may be (partially) claimed back if it has been paid wrongly or for an amount that is too high, or if:
- the obligations under the NOW 2.0 have not been met;
- no auditor's report has been submitted while the company was obliged to do so; or
- the obligation to not pay dividends and bonuses has not been met.
Furthermore, the wage subsidy grant may be withdrawn or amended to the employer's detriment, if the company is deemed not to have complied with the purpose of the NOW 2.0.
The company is obliged to inform the works council, employee representative body, or in the absence thereof, the employees about the wage subsidy grant. From the end of June 2020 data relating to the applicants for NOW 1.0 will be published on the UWV website.
The company must keep the data relevant to the determination of the wage subsidy for a period of five years from the date of determination and, of so requested, shall cooperate in inspecting the administration.
For more information, including in relation to other measures taken by the Dutch government, see:
- Second Temporary Emergency Bridging Measure to Preserve Employment (legislative text in Dutch)
- https://www.rijksoverheid.nl/onderwerpen/coronavirus-financiele-regelingen/overzicht-financiele-regelingen/now/now-hoe-werkt-het (in Dutch)