The corona crisis affects your employees and your HR policy. Many people work from home and are dependent on digital tools and facilities. How do you manage a team remotely and ensure that your employees stay healthy, both physical and emotional? Also pension schemes can come under pressure. The 1,5m economy asks for a different way of working and you may even have to rightsize your organization and cut on employee costs because of the corona crisis.
Please pay attention to the following:
What are the consequences of Covid-19 for your business regarding labour law?
What are your obligations as an employer?
How do you keep employees healthy and safe and what can you expect from employees?
What are your obligations with respect to continuing payment of wages during work from home when there for example is no work, when an employee has to take care of a sick family member or during sickness of the employee itself?
Can you ask employees to take furlow for overtime or vacation?
Can you stop or postpone certain payments and what are the possibilities - if necessary - to change or reduce working conditions?
Are you eligible for the NOW scheme or other support measures?
Is the NOW scheme sufficient or will you have to rightsize?
How do you rightsize your organization given the applicable laws and regulations and your duty of care as an employer?
One of the biggest challenges in this time is the deployment of employees and controlling employee costs. Despite government measures organizations are looking at how they will be able to open up again in the new normal while retaining as many employees as possible. Nevertheless it is possible that they will have to cut on employee costs.
Our advice is to do this in a way which ensures that your organization is better positioned after the crisis than it was before. In this transition you can take into account the effect of the crisis on trends that were already known, like technological developments.
We recommend to critically review your business strategy and your HR-strategy and make carefully motivated choices on your journey to the new normal. Steps you can take to intelligently rightsize your organization:
Make sure that the employees with the right competencies fill the relevant positions to ensure that your organization is optimally positioned during and after the crisis. Take into account other strategic goals such as upskilling, male/female ratio and equal pay
In case it is inevitable that you have to let go employees, think about letting employees go from parts where the least added value is delivered or that will be strongly affected in the coming years by (for example) technological disruption.
Map the individual appreciation of all employment conditions to be able to cut on employment conditions which are less valued.
Gain more and better insight in employee data and analyses and link this to financial data so that you can make data driven decisions.
Set up targeted communication and change activities to guide your employees through the turbulent transition.
From a crisis to a new way of working
At one point some of the restrictions set because of the Covicd-19 virus will be reversed. However, we expect that parts of the spatial and physical adjustments will ongoingly change future working methods. The Covid-19 virus can have an unexpected, but highly impactful impact on the future of work and will mark a special place on a list with for example Artificial Intelligence (AI), robotization, cloud computing and Internet of Things.
In order to get the 1,5 society up and running it is important to gain insights into the spatial and labour condition challenges that need to be resolved as quickly as possible. In addition you have to give employees a sense of safety and prepare them for a different way of working. Considering what is necessary to achieve a new way of working that is both effective and satisfactory provides you a foundation for a sustainable future. This will probably enable you to look back on a crisis that has not only led to losses, but also to profits for the future.
To reach this there are two important matters:
This concerns the furnishing of the office and possibilities for working from home:
Map employees’ preferences
Determine how many people are allowed in your building and conference rooms
Determine how you can divide the available space
Think of walking directions and hygiene factors
Explore what is possible to facilitate working from home more structural (secure connections, making available desks and chairs, tax and labour law aspects)
This concerns the perspective from both the employee and employer. It is important to ensure psychological safety from the very beginning. People may find it uncomfortable to reconnect with colleagues they have not seen for a long time.
Be clear about adjustments to the workspace and the logistical organisation of the office
Organize feedback sessions with employees. It helps to categorize employees in groups with a similar home situation as much as possible (with or without a partner/children, commuting time and options, need for physical presence at the office or not)
Think about managing employees on the long term, for example when working from home becomes more structural
How do you ensure that employees who only communicate with each other digitally continue to feel connected to the organization?
How does the crisis influence the assessment of work? Is your assessment methodology still appropriate given the impact on the home situation of for example employees with children and informal carers?
Safeguard the engagement of employees and their wellbeing: healthy and engaged employees provide more productivity and less sick leave.
We all see the negative effect of the consequences on Covid-19 on the wellbeing of people. Next to exposure to the virus itself, working from home is challenging for many people. Especially when the boundary between private and work becomes blurred, employers can make a difference.
How can you ensure the wellbeing of employees and at the same time prepare your organisation for the future? The current crisis offers opportunities to enlarge your attractiveness as an employer and put first the wellbeing of your employees on the long term.
The priority in the first weeks of the outbreak was to offer a good work from home situation, for example with a good office chair, a good screen and infrastructure for digital contact. As we have to work from home for a longer period of time and the consequences on the long term show, it is important to, together with your HR-department, think about structural support to prepare employees for the new reality.
As an employer it is your responsibility to set the conditions that enable your employees to thrive. A mutual goal and/or purpose and an appropriate corporate culture are important building blocks for setting these conditions. Ask yourself questions and communicate about them with your employees: what is our common goal in times of Covid-19 and which values are particularly important to us now?
Virtual work has a great influence on leadership and team dynamics. What is the leadership style required of today's tomorrow's leaders as we work together in other ways? What does a team need to stay remotely connected?
In addition, HR has to think about subjects such as working conditions and terms of employment. It is possible that new initiatives arose which structurally improved the organisation. Rewarding people for this creates energy and engagement.
Taking care of employees is not only is not only desirable from the point of view of being a good employer. It also positively impacts your organisation. Research shows that employees of companies where wellbeing is an important topic:
Covid-19 has a great impact on our mental health. Not taking complaints seriously enlarge the risk of suffering a burn-out. Offer your employees sufficient support and ideas to enable them to take good care of themselves. Support managers with new challenges posed by this crisis and with noticing signals within the team.
Three suggestions you can give your employees
Structure: people need structure and regularity. Make a schedule, work towards a goal and keep challenging yourself.
Connection: stay structurally connected to your team and put chit chat on the agenda consciously, maintain social contacts and give attention to people who are lonely.
Breaks: create moments of relaxation, close your laptop now and then, go outside, away from work.
As an employer you have a statutory duty of care to create a safe and healthy working environment for your employees and you must prevent illness wherever possible. You must inform your employees, for example, about taking hygiene and precautionary measures and what they have to do if they become infected with coronavirus. One precautionary measure is to encourage working from home, or to postpone or cancel a business trip. We recommend that you draw up a coronavirus policy in consultation with your company doctor.
As an employer you have a right to issue instructions to your employees. This means, for example, that you can oblige your employees to follow certain hygiene measures, or that you can ask your employees to work from home, or postpone or cancel their business trips. However, restrictions do apply to this right to issue instructions. For example you are not allowed to force your employees to undergo a medical test. You can advise employees to visit the company doctor or their GP. Something else you are not allowed to do as an employer is demand that an employee cancels his or her holiday to a risk area. However, you can discourage them from going on such a trip and oblige them, when they return, to work from home for fourteen days.
Employees who are ill will receive their wages in accordance with the agreements made in the employment contract or the collective labour agreement (cla). Employees who are not ill, but are unable to come to work due to an obligatory coronavirus quarantine, are entitled to full payment of their wages. Employees cannot be obliged to take holiday. Neither are they allowed to stay home for fear of being infected with coronavirus. In certain circumstances this can be viewed as a refusal to work and you as the employer are then allowed to impose a wage sanction. It may be that an employee will take calamities leave. Calamities leave is intended for short-term emergency situations, for example on the first day that a day care centre is closed due to coronavirus. Employees are then entitled to continued payment of all their wages. In some cases they will be entitled to short-term care leave, for example if they have to look after a sick child. In such cases employees are entitled to seventy percent of their wages, unless a different agreement has been made with the works council or in a cla.
In case you do not qualify for NOW (see separate tab) or when this subsidy offers no or insufficient relief for your organisation, you may consider taking other measures, such as reducing or changing terms of employment (see tab) or smartly rightsizing your organisation(see tab).
For more information, please contact Nicolien Borggreve.
Although many organisations now focus on keeping everybody healthy, this time is also an important time to critically reflect the terms of employment. While doing this it is important to look at the impact on the so-called people value proposition (PVP). This is a package of unique elements that an employee receives in exchange for his/her competencies, skills and experience.
It is important to realize that not every pillar in the PVP is stimulated by materialistic or financial impulses. The past couple of months made the PVP of sectors like healthcare, government work and education increase. Having meaningful work, inspiring leadership and job and income security inspired a lot of people to (re)join these sectors in the future.
If it is inevitable that you have to cut on terms of employment you can realize this in the following ways:
The best choices differ from organization to organization. The culture and values of the organisation must be preserved or even better adapted to the current zeitgeist. You have to pay attention to the degree of acceptance within your organization (employees, works council, social partners). Clear communication is often underestimated with the revision of terms of employment. It is important to have a clear storyline which is aligned with the communication about your response to Covid-19, your business strategy and the purpose of your organization.
In addition, it is important that you are able to clarify the trade-offs for your organisation and explain why the proposed choices are best for your organisation and employees.
Finally, it helps if you can clearly explain the cost-benefit analysis in the communication and thus the impact on the organisation after the COVID-19 crisis.
When it comes to terms of employment of the entire workforce it is important to involve the main stakeholders in good time. Preferably before you announce the intended decisions.
The NOW scheme was extended for another three months at the end of May 2021.
NOW-4 covers the period July to September 2021. The figures for NOW-4 are equal to the adjusted figures for the second and third period of NOW-3 (January to March 2021 and April to June 2021):
Maximum compensation wage bill: 85%.
Minimum loss of turnover: 20%.
Wage bill exemption: 10%.
Flat-rate surcharge: 40%.
Maximum compensation per employee: twice the maximum daily wage.
For NOW-4 a new reference month for the wage sum has been chosen, the month of February 2021, instead of June 2020.
TVL subsidy no longer counts as turnover for NOW-3 and NOW-4
The Government has chosen to exclude the TVL subsidy from the concept of turnover within NOW 3 and NOW 4. Employers who have applied or are applying for NOW-3 and NOW-4 will therefore no longer need to take account of the TVL subsidy received when determining their NOW subsidy.
The NOW-3 scheme runs from 1 October 2020 to 31 June 2021 and is divided into three periods of three months each. An application for NOW-3 can be made per period.
NOW-3 consists of three three-month periods: 1 October 2020 to 31 December 2020, 1 January 2021 to 31 March 2021, and 1 April to 30 June 2021). For each period separately, the employer can decide to make use of NOW-3.
The minimum loss of turnover to qualify for NOW-3 (all three periods) is twenty percent.
For NOW-3 the maximum compensation of the wage bill is eighty per cent in the first period and 85 per cent in the second and third periods.
Employers are given the option of reducing the total wage bill by ten percent (the 'exemption percentage') without affecting the amount of the subsidy. The possible fine of five percent on the total subsidy due to a larger business economic dismissal no longer applies to NOW-3. For NOW-3, the subsidy will also no longer be reduced by the wages of employees for whom business economic dismissal is requested, when these employees are still in employment during the subsidy period.
Within NOW-3, a maximum of twice the daily wage per employee per month (EUR 9,718 as of January 2021) is reimbursed, as in previous NOW schemes. The employer's obligation to encourage employees to participate in personal development advice or training also applies to NOW-3.
A new effort obligation for work-to-work guidance applies to NOW-3. If the employer applies for business economic dismissal during the subsidy period, then the effort obligation means in concrete terms that the employer must contact the UWV by telephone regarding the possibilities for guidance to new employment for the employees concerned. If the employer does not comply with this effort obligation, this leads to a reduction of 5 percent of the total subsidy.
The prohibition on paying dividends, repurchasing own shares and paying bonuses to the board, management and executive board of the group or parent company and to the management and executive board of the legal person applying for NOW also applies to NOW-3. In the case of an application at group level, the dividend and bonus ban only applies to the entities within the group that apply for NOW-3. In the case of an application at operating company level the ban for dividend payments and repurchasing own shares applies to the whole group. The bonus ban applies to the parent company and the applying operating companies.
The fixed (lump sum) surcharge for employers' costs, such as holiday pay and pension premiums, remains forty percent for NOW-3.
The application window for the first period of NOW-3 opened on 16 November 2020. Retrospective applications for the first period (1 October to 31 December 2020) could be submitted up to and including 27 December 2020. Applications for the second period can be made from 15 February to 14 March 2021. The application period for the third term is from 17 May to 13 June 2021.
The application desk for the determination of the first period of NOW 3 (subsidy for October until December 2020) is open from 4 October 2021 until 26 June 2022. Applications for the determination of the second and third period of NOW 3 (subsidy for January until March 2021 en April until June 2021) can be submitted from 31 January 2022 until 23 October 2022.
If you, as an employer, are confronted with at least a twenty percent expected loss of turnover you can apply to the Employee Insurance Agency (“UWV”) for a period of three months. The size of the compensation depends on the extent of your turnover decrease.
You need to estimate your possible loss of turnover. To this end, you divide your total turnover in 2019 by four. You compare this turnover with the expected turnover of three months in 2020. You can choose from three periods: March-April-May 2020, April-May-June 2020 or May-June-July 2020. You can use these three periods to calculate the decline in turnover as a percentage.
The loss of turnover must be calculated at group level. There is, however, an exception to this general rule for groups which, as a whole, have a loss of turnover of less than twenty per cent, but where parts of the group (which have their own legal personality and are not a staff company) have a loss of turnover of more than twenty per cent. Under certain conditions, an operating company may apply for NOW on the basis of its own loss of turnover. One of the conditions is that the entire group declares not to pay any dividend or bonuses over 2020. The date of entry into force of this particular possibility was 5 May.
The basis of the NOW is the salary sum from the wage bill of January 2020 with a fixed surcharge of thirty percent for employer's costs (holiday pay, pension contributions and employer's contributions). There is, however, a maximum wage that is compensated, namely 9,538 euros per month per employee.
For the application of the scheme, the UWV looks at the decrease in turnover of the entire group of which your company is part, often the group for which your consolidated annual accounts are drawn up. You may not include the turnover of foreign subsidiaries without Dutch wage for purposes of national insurance contributions, in the calculation of the decrease in turnover.
On the basis of the application the UWV will provide an advance payment of eighty percent of the amount, in no more than three instalments.
When applying, you commit in advance to the obligation not to apply for a dismissal permit based on economic reasons for your employees during the period in which you receive the allowance. If you do apply for such a dismissal permit, a fine (discount on compensation) will be imposed. In addition, you must continue to pay the wages to the employees involved in full. If there has been a decrease in the wage bill when the subsidy is definitively established, an adjustment shall be made.
You can request this wage costs allowance both for employees with an indefinite term contract and employees with a flexible contract (such as employees with a zero-hours contract), but only insofar as they remain employed during the application period. Temporary employment agencies can also apply for the wage costs allowance for their temporary employment workers.
Employees do not use their unemployment benefits (WW) with the scheme because the scheme is separated from this. Employees and employers can decide for themselves whether employees should perform work.
The actual loss in turnover is determined retrospectively and the final compensation is determined on that basis.
An auditor's report is only required as part of the final application, not when applying for an advance payment. The amounts requiring an auditor's report were published on 20 May. In the case of an advance of 100,000 euros and a final grant of 125,000 euros or more, an auditor's report is required. In the case of an advance payment of more than 20,000 euros or a fixed amount of more than 25,000 euros, a declaration from a third party must be submitted confirming the decrease in turnover.
On 29 May, an amendment to the NOW-1 scheme came into force in order to accommodate seasonal businesses in particular. For all employers for whom this is advantageous, the wage bill from March to May will automatically be taken as starting point for the calculation of the subsidy amount, if this wage bill is higher than three times the wage bill for January. This is an allowance for seasonal businesses and other businesses that do not have a representative (too low) wage bill in January. 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, potentially becameeligible for NOW-1.
On 29 May, an allowance within the NOW-1 came into force for situations of transfer of undertaking. The allowance means that the applicant for NOW - if he has made an acquisition after 1 January 2019, but no later than 1 February 2020 - can use the full calendar months after the date of the transfer up to and including 29 February 2020 for the purposes of the turnover equation, converted to the turnover over three months. This will better reflect the actual turnover (decrease) of undertakings involved in a transfer of undertaking.
When determining the subsidy, the UWV filters out any thirteenth month from the wage bill. This prevents employers from having to repay the NOW subsidy in retrospect only because of the payment of a thirteenth month in January.
The application for determination of NOW-1 will be possible from 7 October 2020 until 31 October 2022.
For the second NOW scheme, the decrease in turnover is determined over a period of four months starting on 1 June, 1 July or 1 August. In this respect, for applicants using the NOW for the second time, the turnover has to be in line with the period chosen in the first subsidy period. For NOW-2, the option of an alternative turnover provision for a change of undertaking remains. In addition, for NOW-2 a mandatory alternative turnover provision has been introduced for the situation where parts or activities have been divested within the group.
The reference month for the wage bill changes from January to March (reference date 15 May) of this year.
The fixed surcharge for additional employer costs will be increased from thirty to forty percent.
For larger applications for dismissal the NOW-2 subsidy can be reduced. The total subsidy amount is reduced by five per cent if the employer makes one or more notifications as referred to in the Collective Redundancy (Notification) Act (WMCO) in the period from 30 May 2020 to 30 September 2020; and the employer applies for dismissal for business economic reasons during the subsidy period for 20 or more employees in a field of activity of the WMCO . The employer can prevent this reduction by reaching an agreement with the trade unions concerned on each WMCO dismissal. In case the employer and the trade unions do not come to an agreement, the five percent reduction can also be avoided if the parties have jointly requested the Labour Foundation (Stichting van de Arbeid) to assess whether the proposed number of redundancies is necessary.
For NOW-2, the correction to the wage bill of 150 percent of the wage of an employee for whom a commercial dismissal has been requested is reduced to one hundred percent.
Companies that apply for NOW-2 are prohibited to: pay dividends; repurchase own shares; and pay out bonuses to the Executive Board, to the board and management of the group or the parent company and to the board and management of the legal entity applying for NOW. This dividend and bonus prohibition only applies to companies that receive a subsidy amount for which an auditor's report is required. If the group as a whole has 20 per cent or more loss of turnover, as a result of which legal entities within the group have to apply for NOW on the basis of the loss of turnover of the entire group, the dividend and bonus prohibition only applies to those entities within the group that apply for NOW. In the case of NOW based on the special possibility for operating companies (if the group as a whole does not have a twenty per cent loss of turnover), the ban on paying dividends and repurchasing own shares applies to the entire group. An additional condition included in the second grant period is a commitment by employers to encourage their employees to undertake further training or retraining. Employers can, for example, encourage employees to do so by making time available and providing resources through an R&D fund.
The application for the determination of the NOW-2 subsidy has to be filed from 15 March until 5 January 2022. Read more about the NOW in our PwC Tax news articles:
Pension funds are suffering badly under the current uncertainty on the financial markets which has been caused by coronavirus. Although most pension funds will not have to cut pension benefits this year due to government intervention, it is likely that certain funds will have to do so in the coming years.
In addition to this, there is also a great deal of uncertainty with regard to certain types of risk cover, such as incapacity for work or death as a consequence of coronavirus. This kind of cover is usually included in an employer's pension commitment. The question is whether employees, or their surviving relatives, will still be entitled to a benefit if such a risk occurs. The Dutch Association of Insurers (“Verbond van Verzekeraars”) have indicated on their website that coronavirus is not included in insurers' general terms and conditions and is therefore not excluded from any payments. If you are in any doubt, we recommend that you contact your insurer.
Short-term possibilities to suspend the payment of contributions depend on the agreed payment terms and on the collection policy of the pension provider concerned. The Labour Foundation (Stichting van de Arbeid), the Pension Federation (Pensioenfederatie) and the Association of Insurers (Verbond van Verzekeraars) have agreed that pension providers will, as far as possible, assist companies who are or have been in acute trouble due to the corona crisis with the payment of pension premiums. The umbrella organisation of pension funds (Pensioenfederatie) has called on its members to be accommodating when entering into payment arrangements for the acute liquidity problems that companies are currently facing. The Dutch Association of Insurers also reported this on 21 March 2020.
Many pension providers have responded to this call for leniency. An employer must coordinate the exact options for deferring payment of pension contributions with the pension provider. Below you will find an overview of the general (statutory) preconditions for premium payment and premium delay.
In the first place, the terms agreed in an administration agreement with pension providers apply. A number of legal preconditions apply. If the premium is due per month, the premium must be paid within two months after the end of each month at the latest. If the premium is determined on a quarterly basis, payment must be made no later than one month after the end of each quarter.
In the event of late payment to a pension fund, the pension fund shall quarterly inform its own bodies and the employer's works council in writing if:
the employer has a premium delay of five percent of the total annual premium to be received by the fund and;
the minimum capital requirements of the fund are not met.
One monthly premium is already more than five percent, so for example a works council will be informed at the end of the payment period and the quarter.
An insurance company or premium pension institution (PPI) informs the participants and the employer if the premium delay makes it necessary to terminate the accrual of pension entitlements by waiving premiums or cancelling pension entitlements without non-contributory value. Insurance companies and PPIs can only do this once they have demonstrably made an effort to collect the delayed premium.
The insurer or PPI can terminate the accrual of pension entitlements at the earliest three months after the notification to the participants and employer, with retrospective effect up to five months before the date on which the participants were notified. The coverage of the occupational disability risk or the risk of death shall remain in full force and effect until three months after the notification to participants and employer.
An employer can combine compensation from the NOW scheme with the deferral of pension contributions. NOW does not include an obligation to continue payment of pension contributions. There is only a best-efforts obligation for the employer to maintain the wage bill as much as possible. On the other hand, the lump-sum surcharge from the NOW is intended for the payment of pension contributions, among other things. In principle, in that case there is no longer any reason for further postponement of payment, unless there is still a liquidity problem or the timelines of payment of the NOW and remittance of pension contributions do not match.
If the employer nevertheless decides to make use of deferred payment of pension contributions, he must withhold the employee part of the pension contribution from wages in the regular manner during this period. The employee part of the premium then will be reserved for the moment of payment. Should the employer go bankrupt in the meantime, the UWV will take over overdue pension contributions that have arisen in a period of one year prior to the end of the employment contract.
In exceptional cases, an employer can also choose to stop all or part of the premium payments to the pension provider or to change the pension scheme unilaterally. However, these are measures that potentially have a major impact on employees and can therefore only be applied in exceptional cases. Any possibilities for a payment reservation or unilaterally changing the pension agreement must be laid down in the administration agreement and pension agreement.
When entering into or amending the pension agreement, an employer may reserve the right to reduce or terminate the premium payment in the event of 'a drastic change in circumstances'. Such a reservation must be laid down in both the administration agreement and the pension agreement.
Financial insolvency of the employer can, under certain conditions, be regarded as a drastic change of circumstances. However, there must then be 'evident force majeure'. Making use of the payment reservation does not imply that the pension agreement as such is changed. Only the employer's contribution to the existing pension scheme will be reduced. Of course, this can have consequences for the pension entitlements of the participants.
The reservation can only relate to the part of the premium that is for the account of the employer and not to the part that is withheld from the employee's income as a contribution.
The reservation for premium payment is not possible if the pension scheme is placed with a mandatory industry-wide pension fund, because in that case there is no pension agreement. If an employer is unable to pay contributions to a mandatory industry-wide pension fund, the employer is obliged to report this in good time to the fund. Failure to do so may result in joint and several liability of the employer's directors.
An employer may include a unilateral amendment clause in the pension agreement with his employees. This clause means that the employer can change the pension agreement without the consent of the employee. For this the employer will need such a vital interest that the employee's interest, which would be harmed by the amendment, must deviate according to standards of reasonableness and fairness. Whether the employer has such an important interest will depend on the specific situation in which the employer finds itself. This may include important economic or organisational circumstances.
For more information, please contact Bastiaan Starink.
The coronacrisis has a major impact on the international mobility of workers. People are not able to travel or be close to their family and carry out their work from there. You can read about the possible consequences of this and the areas of focus below.
Currently many employees are working from home as much as possible. If the normal working place of these employees lies in another country, working from home can have an impact on their tax position. For example, a resident taxpayer of France usually works 100% in the Netherlands for a Dutch employer. During the corona crisis he is working from home in France. The employment income connected with the French workdays is now exclusively taxable in France instead of in the Netherlands.
There are also situations where the individual will temporarily not actively exercise his employment during the corona crisis, but is still receiving employment income from his employer and/or temporary unemployment benefits. The personal tax consequences for the employee and the potential withholding obligations for the employer should be reviewed on a case-by-case basis, taking into account the applicable bilateral tax treaty and relevant case law.
The Netherlands has made different arrangements with Belgium and Germany for this exceptional period. On the basis of the agreements with Belgium and Germany, employees who, as a result of the coronation measures, work from home in their country of residence will be able to opt for taxation of their earned income in the 'country of usual employment' (the country where they would otherwise have worked and would normally have been taxable) or for taxation in their country of residence (the country where they actually work during the corona measures).
For the social security position of international mobility employees, the Dutch social security authorities have confirmed that the social security position does not change from a Dutch perspective (for the time being) if the corona measures require international workers in the EU, EEA and Switzerland to work in another country than normal. This applies to all situations of persons living and working in the EU, EEA and Switzerland. The social security authorities of several other countries have published similar policies (no change in social security position due to temporary working from home). The EC has also recently published guidelines confirming this approach.
Employees who were not covered by the Dutch social security system during their work outside the EU, EEA and Switzerland may, however, need to be compulsorily insured in the Netherlands by returning to the Netherlands. These situations must be considered separately.
Similar or different tax and social security consequences may ensue in other jurisdictions, which means that careful assessments will need to be carried out for different employee populations such as commuters, local workers and expats.
For more information, please contact Niek Schipper.
Following agreements made at EU level, the Netherlands has been enforcing stricter conditions for entry from 19 March 2020. These restrictions were initially in force for 30 days but have been extended. As a result all non-essential travel to the Netherlands from outside the EU has been suspended, with travellers being refused entry at the border. However the travel restriction does not apply to the following categories of persons:
Persons travelling from Australia, New Zealand, Rwanda, Singapore, South-Korea, Thailand, China (mainland China, Hong Kong, Macau) and Israel;
EU and Schengen country citizens and members of their families, and residents of these countries;
Nationals and residents of Andorra, Iceland, Liechtenstein, Monaco, Norway, San Marino, Vatican City and their family members;
British citizens with a valid EU residence permit issued under the EU-UK Withdrawal Agreement or proof of eligibility for a Dutch residence permit under the EU-UK Withdrawal Agreement;
Third-country nationals who are in a long-distance relationship with a Dutch, EEA or Swiss national residing in the Netherlands;
Third-country nationals holding a residence card or a residence permit in accordance with Directive 2003/109/EC (long-term residence Directive);
Third-country nationals who derive their right of residence from other European Directives or from the national law of a Member State;
Holders of a long-stay visa, including persons with a temporary residence permit (MVV);
Highly Skilled Migrants and their family members (under certain conditions);
Business travellers (under certain conditions);
Persons working in the transport sector;
Persons working in the energy sector, including offshore workers;
Persons working in the cultural and creative sectors.
A full list of exempted groups can be found on the website of the Dutch government.
NOTE: Some travellers are being requested to show negative Covid-19 tests before travelling. In addition, the Dutch government has implemented flight bans from regions with a high infection rate. We advise to review the current measures in place before travelling to the Netherlands.
The guidance also states that the individuals should travel directly to the Netherlands from their country of residence (i.e. not to transit). However it is possible for travellers to transit at Amsterdam Schiphol Airport for up to 48 hours if they have a booked onward journey to a non-EU country and do not leave the transit area of the airport. In addition, the Dutch government now requires travellers from at-risk locations to self-isolate for ten days after arrival in the Netherlands. This also applies to travellers who do not display any symptoms or have tested negative for the virus. Whether self-isolation is required after arrival can be reviewed on the website of the Dutch government www.nederlandwereldwijd.nl/landen (in Dutch) and searching the country from where an individual is travelling (note: this can also be an EU country). The travel advice for that country will specify when self-isolation is required when travelling from that country to the Netherlands.
Since the start of the pandemic, Dutch Embassies and Consulates have followed local guidance in respect of the closure of their offices. As a result the processing of entry visa applications or other consular services can be suspended at any time. This means that while the Dutch Immigration and Naturalisation Service (IND) in the Netherlands is still accepting and processing applications, applicants who require an entry visa (MVV) may not be able to apply for their entry visas after the IND has issued a positive advice on their application. Applicants who are entry visa exempted will be subject to the travel restrictions and will also generally not be able to enter the Netherlands if not covered by the list of exemptions above.
Due to measures taken by the Dutch authorities, the processing time for new or pending applications can be increased. The IND and UWV are processing submitted applications in the same way as before, which means the IND is accepting online and hard-copy applications and UWV still only accepts hard-copy applications.
Following initial closures, IND desks, town halls and Expatcenters have gradually reopened their offices, allowing for foreign nationals to complete their immigration process. However additional measures may apply, such as keeping a distance of 1.5 metres from others, wearing a face mask and limited capacity at the desks.
We advise employers to make sure they are in close contact with their mobile workforce. In order to ensure compliance in a time where rules are changing fast, it is important to be aware of how any changes will affect their employees and their family members. PwC is also working closely with its clients in order to support them and their employees at this critical time.
For more information, please contact Yvette van Gemerden.
As an employer you have made agreements with your employees about the terms of employment. When providing the terms of employment, you take tax consequences into account. Due to the special circumstances, you may be confronted with other tax consequences.
The government has taken a number of measures to accommodate employers in this regard. You may continue to pay the fixed travel allowance until 1 April 2021, even if the employee does not travel. The approval for the continued payment of other fixed expense allowances expired on 1 January 2021.Coulance is also given on the administrative side. For example, you do not have to immediately identify a new employee, nor do you have to take into account the high unemployment premium (WW), if your employees work more than thirty percent of the agreed working hours.
To give you the opportunity to make a gesture towards your employees, in 2020 and 2021 the tax-free budget of the work-related costs scheme is increased from 1.7 to three per cent for the first 400,000 euros of the wage bill. For employers with a G-account, financial scope is created by an expanded unblocking option.
In addition, we receive many questions about renouncing gross wages, for example to donate to charity. In some situations, the employer adds to the employee's donation. Currently there is no special scheme for this and the regular rules of payroll taxes apply.
The government has announced that it is investigating a new scheme that will make it possible to reimburse (additional) homeworking expenses untaxed. As it is expected that employees will work more often from home after the corona crisis, the government is committed to working out a structural scheme for working from home. We expect that the development of this scheme will take some time. Employers will therefore, for the time being, have to make use of the work-related costs scheme to facilitate working from home (untaxed). If you make use of the existing possibilities within the work-related costs scheme, including the specific exemptions for health and safety provisions and for necessary ICT resources, you must meet all the conditions for this. When drawing up the policy on facilitating working from home, it is important to take account of the tax framework from the outset.
Director, PwC Netherlands
Tel: +31 (0)65 388 45 79