Netherlands: Temporary Emergency Bridging Measure to Preserve Employment: the conditions

The coronavirus has the Netherlands and the rest of the world in its grip and is seriously impacting the economy, among other things. Bars and restaurants have closed, shopping streets are empty and businesses are seeing an enormous drop in their sales. The Dutch government has announced several measures to alleviate these economic consequences. One of those measures is the Tijdelijke Noodmaatregel Overbrugging(NOW)(Temporary Emergency Bridging Measure to Preserve Employment). This scheme had been announced earlier, but the conditions for reliance on the scheme were made public on Tuesday, 31 March. We will address the main aspects of the scheme in this blog.

1. What are the conditions and how high is the contribution?
Employers may rely on the NOW in the event of a drop in turnover of at least 20% in a consecutive period of three calendar months between 1 March and 31 May 2020. The other condition is that an employer may not file a redundancy application on economic grounds with the UWV (Employee Insurance Agency) between 18 March and 31 May 2020. The contribution amounts to 90% of the payroll total in the event of a 100% drop in turnover. The actual contribution depends on the exact scope of the drop in turnover.

The application for the contribution first consists of an application for an advance of 80% of the expected contribution. That amount is then paid in three instalments. It is not yet necessary to submit an accountant’s statement when applying for the advance. When the final contribution is applied for, which must be done within 24 weeks after the compensation period, that accountant’s statement must be enclosed, however. An exception applies if the contribution does not exceed a threshold yet to be determined.

2. How is the loss of turnover calculated?
The turnover is determined on the basis of a three-month period. The employer may at its option have the reference period for the turnover comparison commence on 1 March, 1 April or 1 May 2020. The turnover generated in the selected three-month period must then be compared with the average turnover in 2019 (divided by four). An employer must apply for the contribution per withholding tax number.

The turnover is determined at group level. A group of companies may therefore not state the expected drop in turnover per entity. The turnover of the group or of the affiliated legal entities is therefore decisive in determining whether the NOW may be relied on.

3. Is the entire salary taken into account in calculating the compensation?
The contribution amounts to a maximum of 90% of the payroll total for the three-month period from March to May 2020. The payroll total is based on the wage for social insurance purposes from current employment. Additional charges and costs, such as employer’s social security contributions and employee contributions to pension and the accrual of holiday allowance are compensated. To accelerate the application procedure, a 30% surcharge for employer’s social security contributions has been opted for in all cases. No more than twice the maximum daily wage per month per individual employee is classified as wages. Wages in excess of €9538 per month are therefore not eligible for compensation.

4. What are the consequences if I nevertheless dismiss employees on economic grounds?
As described above, one of the conditions for relying on the NOW is that an employer may not file a redundancy application with the UWV between 18 March and 31 May 2020 on economic grounds. If an employer does so nevertheless, the UWV will handle that application in the regular manner. Depending on the outcome of the application, that will, however, have consequences for the amount of the contribution. The salaries of the employees for whom the redundancy application is filed are increased by 50% and are deducted from the payroll total on the basis of which the amount of the contribution is determined.

5. Will the scheme be extended and what conditions will then apply?
The possibility of extending the bridging measure has been kept open. That question will be decided on before 1 June 2020; the extension period will therefore immediately follow the first application period, which ends on 31 May 2020.

6. As from what date may NOW applications be filed?
The government aims to open the service desk for the applications on Monday, 6 April 2020. It will be determined on Friday, 3 April, whether that is feasible. The service desk will in any event be open by Tuesday, 14 April 2020 at the latest. Once the service desk has been opened, applications may be filed via the UWV’s website. That may be done without the use of eHerkenning or any other form of authentication or authorisation. The application must have been filed by 31 May 2020 at the latest. The UWV has announced that it aims to pay the first advances within three or four weeks after an application is filed.

7. Are variations possible for specific sectors or companies?
No. The scheme does not allow for sectoral or company-specific variations. Seasonal influences on the turnover are also not taken into account. The scheme is therefore not a solution for all companies.

If you have any further questions about the Temporary Emergency Bridging Measure to Preserve Employment, please contact one of our employment lawyers at tel. no. 020-664 5111. We will be pleased to help you.