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Extension NOW scheme and adjustments first term NOW


We also refer to our article 'Details of the extended NOW scheme' of 25 June 2020.

The last update of this article was on 23 February 2021.

On 20 May 2020, the Dutch government announced the second emergency package with support measures for companies affected by the corona crisis. Part of this package is the extension of the Temporary Emergency Measure Bridging for Retention of Work (the so-called NOW scheme) under new conditions.

At the same time, the Dutch government announced amendments to the current NOW scheme. The application period (for the first period of NOW) will be extended up to and including 5 June 2020 and concessions have been made for seasonal businesses and for involving transfers of company’s business. Also very important, is that the government announced the applicable threshold of the amount of subsidy for which an auditor's report is required.

In this article we will first inform you about the extended NOW scheme and then about the changes in the current NOW scheme.

Amendments to extended scheme (NOW-2)

The extended NOW scheme (the so-called NOW-2) concerns subsidies for wage costs in the period June to September 2020. Applications for this second period are expected to be possible from 6 July 2020. The application period will run until 31 August 2020. The extended NOW scheme is subject to new conditions, which are discussed below.

Decisive periods for loss of turnover and wage bill

The government has extended the second emergency package by an additional calendar month until September 2020. For the NOW, this also means that there must be a loss of turnover of at least 20 percent during four months.

The loss of turnover will be determined over a four-month period starting on 1 June, 1 July or 1 August. For applicants using the NOW for the second time, the turnover period has to be in line with the period chosen in the first subsidy period. The turnover of the chosen four-month period must be compared with one third of the yearly turnover of 2019.

The reference month for the wage bill changes from January to March (reference date 15 May) of the current year.

The Employee Insurance Agency (in Dutch: "UWV") will pay the advance of 80 percent of the NOW-subsidy in two instalments.

Fixed surcharge for employer costs

The fixed surcharge for additional employer costs will be increased from 30 percent to 40 percent.

Penalty for dismissal

The penalty for dismissal is adapted. As announced, the correction to the wage bill as a result of business economical dismissal will be adjusted from 150 percent to 100 percent of the wage of the dismissed employee. This applies to applications for dismissal that are submitted during the period from 1 June to 30 September 2020.

However, in the case of larger dismissal applications under the Collective Redundancy Notification Act (in Dutch “WMCO”; this concerns dismissal for business economic reasons for 20 or more employees) a reduction of 5 percent of the total amount of the final subsidy received (NOW-2) will be imposed, unless an agreement on the dismissal application has been reached between the employer and the trade unions concerned (or, in the absence thereof, another representation of employees), or, if this is not the case, mediation has been requested by these parties from a committee to be set up by the Labour Foundation.

The condition for the extended NOW that applications for dismissal must be submitted to the Employee Insurance Agency (in Dutch: "UWV") no sooner than four weeks after the WMCO notification will still apply. The parties may use this period to reach an agreement.

The above subsidy conditions will apply to WMCO notifications made as from 29 May 2020. 

Restriction on payments of dividend, bonuses and repurchase of own shares

When applying for NOW for the second subsidy period, a company or group must declare that for the year 2020 it will not pay any dividends to shareholders, not pay any bonuses to the board and management, and that it will not repurchase its own shares. Bonuses to other employees are permitted. For directors and other board members, this may mean that they can only receive their basic remuneration. Bonuses include both profit sharing and other bonus payments.

To ensure that the prohibition is verifiable and proportionate, this obligation only applies to companies that receive a subsidy for which an auditor's report is required (see below). 

The obligation does not apply to dividends, bonuses and shares for 2019 to be paid out in 2020, because, as the Dutch government states, decisions had already been taken in this respect.

Commitment for further training or retraining

An additional condition included in NOW-2 is a commitment on behalf of the employers to encourage their employees to undertake further training or retraining. According to the Dutch government, employers can encourage employees to do so by, for example, making available time (that is automatically freed up) and providing funds through an R&D fund. The above obligation relates to another emergency package. The Dutch government will come up with this emergency package that is called in Dutch “NL leert door” at a later stage. The package is still pending and is intended to support people who lose their jobs as a result of the crisis or who will have to make a transition to other promising jobs.

A connection is made with the already existing condition for the employers to inform the works council or an employee representation about the NOW subsidy. The Duch government therefore expects this representation within the organisation to take note of this new obligation to encourage participation in development advice or training, and to address the employer on this matter if necessary.

Adjustments to current scheme (NOW-1)

The current NOW scheme (NOW-1) concerns the subsidy for wage costs in the period March to May 2020. 

Auditor's report

The NOW requires an auditor's report for companies that have received an advance payment (80% of the subsidy amount) of 100,000 euros or more. An auditor's report will also be required if the subsidy is finally set at 125,000 euros or more. Companies that have received an advance payment of less than 100,000 euros must estimate for themselves whether the subsidy will be set at 125,000 euros or more. This means that they also will need an auditor's report. An online tool will be made available to support companies in this process.

The amounts mentioned above are based on the amount of subsidy granted to the group or, if there is no group, the legal or natural person, and not on the amount of subsidy granted per payroll tax number.

Companies that have applied for NOW on the basis of the loss of turnover at operating company level will always have to provide an auditor's report. 

If the application for determination of the subsidy does not include an auditor's report that meets the requirements while an employer is obliged to do so, an employer will be given 14 weeks to still file a (correct) auditor's report. If he does not meet these requirements, the subsidy will be set at nil.

Finally, if an auditor's report is not required, the application for determination of the subsidy with an advance payment of more than 20,000 euros or a final subsidy amount of more than 25,000 euros will have to be accompanied by a statement from a third party confirming the loss of turnover.

Extension of NOW to specific situations
Seasonal companies and employers with no or a lower wage bill in January

An adjustment is made to the current NOW scheme as additional compensation for employers who, due to a seasonal pattern or other reasons, had a too low, non-representative wage bill in January compared to the March to May subsidy period. 

The adjustment works as follows: if the wage bill from March to May is higher than the wage bill of January multiplied three times, the wage bill from March to May is taken as the starting point for calculating the level of the subsidy when it is determined. The wage and salary bill for April and May is then capped at the wage and salary bill for March (reference date 15 May). The adjustment is automatically applied to applicants for whom this is beneficial when determining the subsidy. The adjustment also works in favour of applicants other than seasonal companies with a higher wage bill in March to May than in January.

The adjustment in the NOW scheme only leads to additional compensation when the subsidy is determined. The advance payment will not be adjusted. 

The adjustment also means that applicants with a zero wage bill in January 2020 or no wage bill in January 2020 or in November 2019, who do have a wage bill in March through May 2020, may still be eligible for the NOW. For this reason, among others, the NOW-1 application period is extended up to and including 5 June 2020.

Transfer of company’s business 

For companies that have taken over another company prior to the application of NOW, it will be possible to determine the loss of turnover in line with the different turnover determination that applies to start-ups. After all, in the event of a takeover, the companies actually work in a new business composition.  

In the event of a transfer of undertaking, the turnover of all full calendar months in 2019 from the first month after the date of the transfer up to and including 29 February 2020 can be taken into account for the turnover comparison. The turnover of this period, converts to three months, must be compared with the turnover of the chosen three-month period. As is the case for start-ups, for companies that have made an acquisition and wish to make use of the alternative turnover comparison, the acquisition must have taken place at least one calendar month before 29 February 2020. 

It will also be possible to apply the determination of the wage bill for seasonal companies (see above) in the case of a company that has taken over another company and where the wage bill in the period March to May 2020 is higher than three times the wage bill for January.

Extension of application period until 5 June 

Due to the above extensions, the application period for the NOW-1 scheme is extended up to and including 5 June 2020.

Thirteenth month will be filtered out of wage bill

Any thirteenth month is filtered out of the wage bill for the determination of the NOW subsidy. When determining the subsidy, the UWV will take the extra period wages, such as a thirteenth month, out of the wage bill. This will prevent employers from having to repay the NOW subsidy only because of the payment of a thirteenth month in January.

Application deadlines for determination of NOW

It will not be possible to apply for the determination of NOW before 7 October 2020. This postponement is to avoid duplication of the application and determination process. The application desk for the determination of NOW-1 remains open until 31 October 2021.

Disclosure of data by the UWV

From the end of June, the UWV will publish on its website information on applicants for NOW and the advances and subsidies granted. An earlier amendment to the NOW provided that employers agree to the publication of this information when applying for NOW.

Contact us

Nicolien Borggreve

Nicolien Borggreve

Partner, PwC Netherlands

Tel: +31 (0)62 081 66 41

Daniël Sternfeld

Daniël Sternfeld

Partner, PwC Netherlands

Tel: +31 (0)61 089 28 89

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