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Update: Emergency Employment Bridging Fund
The government is introducing the temporary measure Emergency Employment Bridging Fund (Noodfonds Overbrugging Werkgelegenheid - NOW). On Tuesday, 31 March, the scheme was published and the details became known. The aim is to enable employers to submit applications to UWV as from 6 April. The NOW scheme will replace the short-time working scheme (regeling werktijdverkorting - wtv).
THE MAIN OUTLINES OF THIS SCHEME ARE AS FOLLOWS:
Objective and conditions of the scheme
The NOW measure aims to preserve jobs during the coronacrisis.
In view of its purpose, participation in the scheme is subject to two key conditions:
- the best-efforts obligation to keep the wage bill as equal as possible, and
- the condition not to apply for dismissal due to business economics during the period for which the allowance is received.
The employer may apply to UWV for an allowance if a loss of turnover of at least 20% is expected. The amount of the allowance is related to the amount of the loss in turnover and the amount of the wage bill.
- The scheme also applies to employers who employ employees with a flexible contract. It is important for the amount of the allowance that the flexible workers remain in employment and receive wages from the employer during the period for which the allowance is granted. For that matter, the retention of staff on flexible contracts is not a prerequisite for the application of the scheme.
Loss in turnover
- Applicants must expect at least a 20% loss in turnover.
- The scheme covers declines in turnover for a three-month period starting on 1 March, 1 April or 1 May 2020; employers may choose which measuring period is decisive for the decline in turnover. This must always be a continuous period of three months. Employers must make this choice for the measuring period at the time of application.
- The loss in turnover is determined by comparing the turnover with the 2019 turnover (pro rata basis).
- If an employer did not exist on 1 January 2019, a different turnover calculation applies.
- In the case of a group of companies, the decline in turnover at group level is decisive.
- Upon application, the employer undertakes not to apply for a dismissal for commercial reasons for its employees for the period for which the allowance is paid.
- The application will apply for a period of three months, which can be extended once, by another three months (the extension may be made subject to further conditions).
- The employer will continue to pay the employees' wages and will receive a contribution towards the wage costs. The amount depends on the decline in turnover and will amount to a maximum of 90% of the wage costs. Below are some examples of how the decline in turnover will relate to the amount of the allowance:
- In the event of a 100% drop in turnover, the allowance will amount to 90% of the employer's wage costs.
- In the event of a 50% drop in turnover, the allowance will be 45% of the employer's wage costs.
- In the event of a 25% drop in turnover, the allowance will amount to 22.5% of the employer's wage costs.
The wage bill is based on the social security wage from current employment. This means that the wage costs of employees who do not have social security insurance in the Netherlands cannot be included. Moreover, the salary of, for example, the director-major shareholder (dga) who is not insured for social security, is not included in the wage bill; the same applies to voluntarily insured persons. Therefore, their wages are not eligible for the allowance.
- The wage for social security contributions (SV wage) is increased with a 30% surcharge for employer charges for all cases (to compensate for employer and employee contributions to pension and the accrual of holiday allowance on salary).
- Wages above €9,538 per month (per employee) are not eligible for allowance.
- Groups with Dutch and foreign subsidiaries may not take into account the decline in turnover of the legal entities in the group that do not have Dutch SV wage.
- Foreign employers are also eligible for allowances insofar as they employ employees who have social insurance in the Netherlands.
- An amount of EUR10 billion has been budgeted for the NOW scheme. This amount is based on the estimation that a quarter of the employers will make use of the scheme and that they expect an average decline in turnover of 45%. However, the amount is not capped.
The application procedure
- The application is submitted to UWV via a digital form.
- This is expected to be possible from Monday 6 April (this date will be announced definitively on Friday 3 April).
- On the basis of your application, UWV will provide an advance payment equal to 80% of the expected compensation; this advance payment will be paid after a positive decision on the application; payment will take place in a maximum of three instalments.
- The aim is to make the payment of the first instalment within 2-4 weeks after your application.
- If an employer has more than one wage tax number, it will have to submit more than one application, namely one per wage tax number. However, the employer is required to indicate for each application the decline in turnover that is expected for the entire enterprise (i.e. the same decline in turnover for each application).
- The actual decline in turnover will be determined after the fact.
- Within 24 weeks after the end of the period for which the NOW has been granted, the employer must apply for the determination of the allowance. In principle, an auditor's report is required.
- Applications for allowances below a certain amount – which amount is yet to be determined – will not require an auditor's report.
- When the definitive allowance is determined, there will be a correction if the wage costs have decreased or when the loss in turnover turned out to be lower (which may lead to a repayment obligation). An adjustment may also be made where there has been economic redundancy during the period in which a NOW allowance is received.
Differences between the short-time working scheme and the new emergency NOW scheme
- The short-time working scheme (wtv) was terminated on 17 March (at 7.45 pm). Wtv applications that had not yet been honoured at this time will be regarded as applications for the new NOW scheme; these employers do not have to submit a new application for the NOW scheme. However, additional information may be required for the handling of the application, such as the expected loss in turnover.
- The NOW scheme is not related to the question of whether an employee is entitled to a benefit under the Unemployment Insurance Act, and does not "use up" the employee's rights under that act either.
- Another advantage of the NOW scheme is that an advance payment may be made by UWV.
- The NOW scheme will enable employers to continue paying their employees' wages, both for permanent employees and those working on the basis of a flexible employment contract.
- Short-time working permits that have already been granted will remain in place. Extension thereof (after six weeks) is not possible, but employers will be able to submit an application under the NOW scheme.
Want to know more?
If you require more information, please feel free to contact your Mazars contact person. He or she will be able to assist you in submitting an application or bring you into contact with our experts. We will be happy to help you.
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Your challenges during the coronacrisis
These are special times where we face major challenges. The impact of the coronavirus is significant and the situation is constantly changing. We will inform you about new developments and measures and are of course at your disposal to support you where necessary with your current challenges. Do you have questions? Please contact your trusted Mazars adviser or use the contact form.