Details of the extended NOW scheme

The last update of this article was on 15 March 2021.

The extension of the Temporary Emergency Measure Bridging for Retention of Work or “NOW scheme” has been published. In general, the extended NOW scheme (“NOW-2”) is as previously announced. However, the text of the scheme does provide insight into important details and differences with the previous scheme (“NOW-1”). We will inform you below about the NOW for the second term. Applications can be made from 6 July until 31 August 2020.

Dates and reference periods

The extended NOW scheme concerns a subsidy for wage costs in the period June to September 2020. The application period will run from 6 July until 31 August 2020.

For NOW-2, the loss of turnover must also be at least 20 percent, as it was for NOW-1. The loss of turnover is 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 reference month for the wage bill will be March (reference date 15 May) of this year. If there is no wage bill for March 2020, the wage bill of November 2019 will be used. When the subsidy is finalised, the wage bill (from March) will be compared with the wage bill from 1 June to 30 September 2020. If the average wage bill is lower during the subsidy period, a reduction will be applied to the final NOW subsidy.

The surcharge on the wage bill for employers' costs has increased from 30 percent to 40 percent.

Deadlines for subsidy applications

The employer can apply for the final determination of the NOW-2 subsidy from 15 March 2021. The application desk for the determination of NOW-2 remains open (for all employers) until 5 January 2022.

All employers can apply for the determination of NOW-1 as of 7 October 2020. Contrary to previous announcements, this includes employers who also apply for NOW-2. It is not necessary to apply for the determination of both terms of the NOW-subsidy at the same time.

Determination of loss of turnover: acquisitions and sales

For determining the loss of turnover, the turnover of the chosen four-month period is compared with one third of the annual turnover of 2019. In the case of a group of companies, the loss of turnover must be determined at the level of the group. (Only if there is no 20 percent loss of turnover at group level, a company within the group can apply for NOW-2 on the basis of the loss of turnover at operating company level; in such a case, stricter conditions apply.) For the determination of the group composition, the composition on 1 June 2020 is decisive. For NOW-1 this was the composition of the group on 1 March 2020.

In the previous NOW scheme there was an alternative turnover determination for start-ups and later also for the situation that a group had made an acquisition involving the transfer of business activities (in Dutch: “overgang van onderneming”). These provisions also apply to NOW-2.

Transfer of business activities

In NOW-2, the option of an alternative turnover determination for the transfer of business activities remains. In the event of a transfer of business activities, 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, converted to the turnover of three months, must be compared with the turnover of the chosen three-month period. The end date for the alternative reference period remains 29 February 2020: this date is not extended for NOW-2.

Sale of group components

For NOW-2, a separate turnover determination has been introduced for the situation where parts or activities within the group have been divested.

If an employer has disposed of a component or activity in the period from 2 January 2019 up to and including 1 February 2020, then for the purposes of the turnover comparison the turnover from the first full calendar month from the disposal of the (last disposed of) component or activity up to and including 29 February 2020 must be taken into account, converted into four months.

If there is a disposal/sale as of 2 February 2020, the main rule will apply and the reference turnover should be one third of the turnover for 2019.

Commitments and penalty in case of business economical dismissal

On the application form for NOW-2, companies must agree that, if the Collective Redundancy Notification Act (in Dutch “WMCO”) is applicable, they will consult with the trade unions (or, in the absence thereof, another workers' representation) for a period of (maximum) four weeks about intended dismissals. Applications for dismissal must be submitted to the Employee Insurance Agency (in Dutch "UWV") no sooner than four weeks after the WMCO-notification to the UWV and the trade unions. This applies to WMCO-notifications in the period from 30 May until 30 September 2020.

Penalty for larger business economic dismissals

The NOW-2 subsidy may be reduced in the case of larger applications for business economical dismissal. The total subsidy amount will be reduced by 5 percent if the employer:

makes one or more WMCO-notifications in the period from 30 May 2020 until 30 September 2020; and

submits applications for business economic dismissal during the subsidy period for 20 or more employees in a field of work falling within the scope of the WMCO.

The 5 percent reduction does not require that the applications for business economic dismissal result from the WMCO-notification; the above conditions will be assessed separately.

The 5 percent reduction will not be applied if the employer has reached an agreement with the relevant trade unions (or, in the absence thereof, another employee representative body) on each WMCO-notification regarding the need for the number of jobs to be lost.

If no agreement has been reached, the reduction will also not be applied if the parties have jointly requested a committee of the Labour Foundation (in Dutch: “Stichting van de Arbeid”) to assess whether the proposed number of jobs to be lost is necessary and if the employer has not withdrawn this request to the Labour Foundation.

Assessment of applications for business economic dismissal by the UWV

In the case of an application for business economic dismissal, the Employee Insurance Agency (“UWV”) assesses the need for dismissal in terms of business economics. In connection with this, the employer will have to demonstrate that the NOW subsidy or another aid measure is not an obvious solution in his case. The UWV will, however, exercise restraint in its assessment of the latter point.

Only if an agreement has been reached with the trade unions about the (number of) dismissals and this is evident from a written statement from the trade unions concerned, the UWV will in principle not assess the economic necessity for dismissal.

Auditor's report

For the application for determination of the NOW-2 subsidy an auditor's report is required if the advance payment of 80 percent of the subsidy amounts to 100,000 euro or more, or if the final amount of the subsidy amounts to 125,000 euro or more. An auditor's report is always required if an operating company applies for NOW on the basis of its own loss of turnover (instead of the loss of turnover at group level). The auditor's report includes the compliance with the subsidy conditions.

Third party expert's declaration

For companies with a subsidy amount below the limit of an auditor's report, a third party expert's declaration is required if the advance payment amounts to 20,000 euro or more and if the final subsidy amounts to 25,000 euro or more. For the third party expert's declaration, the Minister has made a standard form available to confirm the loss of turnover.

Documentation to enclose with the application

At least the following documents must be enclosed with the NOW-2 determination application:

the final loss of turnover and the documentation and information to substantiate this;
a statement indicating whether divisions or activities have been divested in the period from 2 January 2019 to 1 February 2020;
the auditor's report or third party expert's declaration, if required;
a statement that the applicant complies with all (general) conditions for the NOW as well as with the restriction on payments of dividend, bonuses and repurchase of own shares.

The following also applies to the application for determination of the subsidy:

If NOW is applied for on the basis of the operating company's loss of turnover, then the employer must declare that the additional conditions have been met, along with an auditor's report showing this.
If NOW is applied for on the basis of the operating company's loss of turnover, then the employer must have an agreement on job retention with a trade union or other employee representation, as well as a statement from the group head/parent company on the dividend and bonus ban, before the application for the determination of the subsidy.
The employer must state whether the conditions for the 5 percent reduction of the subsidy have been met; and if so, whether the conditions to prevent this reduction have been met, together with the documents showing this.

Commitment for further training or retraining

A new condition for NOW-2, aimed at preventing unemployment, is the employer's obligation to encourage employees to participate in personal development advice or training. Employers must declare when applying for NOW-2 that they will comply with this effort obligation.

The fundamental changes that society and the economy are currently facing, require different business models and a different deployment of people. For employees for whom there is now less work, it makes sense to prepare for a different way of working or for another job.

Employers can fit this into the existing training policies in their company, or discuss it with the works council or employee representatives. In addition, they can point out the importance of training and personal development during individual employee interviews. Employers can also provide resources to their employees through, for example, Training and Development Funds (in Dutch “O&O-fondsen”). The crisis package “NL leert door” also provides resources. The training itself is not part of the NOW-2, the effort obligation is.

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

As announced, NOW-2 is subject to dividend and bonus restrictions regarding 2020.

If companies have a ‘broken’ financial year (meaning that the financial year deviates from running from 1 January to 31 December), the dividend and bonus restrictions apply to the financial year in which the months of June, July, August and September 2020 fall. If these months are part of two different financial years, the restrictions apply to both financial years.

Loss of turnover at group level

If a group of companies as a whole has a loss of turnover of least 20 percent, companies within the group must apply for NOW on the basis of the loss of turnover at group level. In this situation, only the companies that apply for NOW-2 are restricted from:

the payment of dividends to shareholders (also to shareholders within the group);
the payment of bonuses to the Board of Directors; to the board and management of the group head or parent company; and to the board and management of their own company;
the repurchase of own shares.

These restrictions therefore do not apply to companies within the group that do not apply for NOW (if any). These other companies are allowed to pay dividends to their shareholders and pay out bonuses to board and management.

Loss of turnover at level of operating company

Only if the group as a whole has a loss of turnover of less than 20 percent, it is possible for individual operating companies that do have a loss of turnover of at least 20 percent, to apply for NOW on the basis of their own loss of turnover. In this case stricter conditions apply. The dividend and bonus restrictions then also apply to the entire concern/group or the parent company. The companies applying for NOW as well as the group or parent company are restricted from:

the payment of dividends to shareholders;
the payment of bonuses to the Board of Directors; to the board and management of the group head or parent company; and to the board and management of the applying companies;
the repurchase of own shares.

The scope of the dividend restrictions is therefore much broader in this situation than when NOW-2 is applied for on the basis of loss of turnover at group level. The reason for the broader scope is that in this situation the group or the parent company relies on special solidarity from the public authorities, while the group as a whole does not have a loss of turnover of at least 20 percent.

Statement of group head or parent company

In the situation that NOW-2 is based on the individual operating company's loss of turnover, the group head or parent company must declare compliance with the dividend and bonuses restrictions. The employer applying for NOW-2 must be in possession of this declaration from the group head or parent company prior to the application for the final determinination of the subsidy (this is not the initial application).