Update: Emergency Employment Bridging Fund
16 June 2020 - The government wants to protect jobs and incomes during the coronacrisis. One of the measures taken is the Emergency Employment Bridging Fund (Noodfonds Overbrugging Werkgelegenheid - NOW), an allowance towards wage costs for companies that are currently losing turnover.
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.
Since 6 April 2020, it has been possible to submit an application for the NOW scheme (hereinafter referred to as NOW 1.0). NOW 1.0 provides for an allowance towards wage costs for the months of March, April and May 2020. After NOW 1.0, NOW 2.0 was announced with effect from 20 May 2020 to provide employers with an allowance towards wage costs for the months of June, July, August and September 2020. NOW 2.0 is also open to employers who have not used NOW 1.0. Different conditions apply to NOW 2.0.
DIRECT INSIGHT WITH THE NOW CALCULATION TOOL
Mazars has developed a NOW calculation tool that gives you an insight into the amount of the allowance (NOW 1.0), the advance payment and the monthly instalments.
ANNOUNCED AMENDMENTS AFFECTING NOW 1.0
A number of changes have been published with respect to NOW 1.0:
- An alternative calculation method for the allowance level will be introduced for seasonal adjustment. If the wage bill for the months of March, April and May 2020 is higher than three times the wage bill for January 2020, the wage bill for March, April and May 2020 will be the starting point. The wage bill for April and May is capped at the wage bill for March. This alternative calculation is applied automatically. It will not lead to an addition to the advance payment but will only lead to payment at the end of the allowance period, but not before September 2020.
- The different calculation of the turnover determination for employers that did not yet exist on 1 January 2019 will also apply to situations in which a transfer of enterprise took place before February 2020.
- Payments of the thirteenth month in January 2020 will be filtered out from the wage bill of January 2020 by UWV when calculating the allowance.
The application deadline for NOW 1.0 has been extended until 5 June 2020 at the latest. That is a week longer than the earlier deadline.
NOW 1.0 VERSUS NOW 2.0
- With NOW 1.0, in the event of dismissal for economic reasons, this part of the allowance must be repaid with a 50% increase. With NOW 2.0, the 50% increase is cancelled in the event of dismissal for economic reasons. However, the part of the allowance relating to the wage costs of the employees for whom redundancy has been requested still has to be repaid. For companies that want to lay off 20 employees or more, the trade unions / employee representative body must be involved. If this is not the case, a reduction of 5% of the total wage allowance received applies.
- NOW 2.0 imposes a best-efforts obligation on employers to encourage their employees to apply for development advice or to follow training for job retention.
- NOW 1.0 concerns an allowance for wage costs for the months of March, April and May 2020. NOW 2.0 concerns an allowance for the months of June, July, August and September 2020.
- The decline in turnover under NOW 1.0 is measured over a three-month period starting on 1 March, 1 April or 1 May 2020. NOW 2.0 pertains to a four-month period starting on 1 June, 1 July or 1 August 2020. If an employer already uses NOW 1.0, the four-month period for NOW 2.0 must be aligned with the period chosen for NOW 1.0.
- In principle, January 2020 is the reference month for NOW 1.0 for wage data (unless the exception described above applies). For NOW 2.0, the reference month is March 2020.
- NOW 1.0 is subject to the condition not to pay any dividends or bonuses for 2020 up to and including the General Meeting of Shareholders 2021, or to repurchase own shares, only if the NOW scheme is applied at an operating company level. Under NOW 2.0 these conditions apply to:
- applicants for whom the amount of aid is at or above the amount for which an auditor's report is required.
- applicants opting for application of the NOW scheme at an operating company level.
- In NOW 1.0, the SV wage (wage for social security contributions) is increased by a 30% surcharge for employer charges. In NOW 2.0 this surcharge is 40%.
The NOW 2.0 application procedure will be open from 6 July 2020 until 31 August 2020. The other conditions for NOW 2.0 are the same as those for NOW 1.0, as described below.
OBJECTIVES 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 the same as much as possible and therefore to continue to pay the employees. This means that employees who have an employment contract with the employer are entitled to continued payment of their wages for the full regular working time for as long as the employment contract continues, even if they are unable to work.
- The condition not to apply for dismissal due to economic circumstances during the period for which the allowance is received.
DECLINE IN TURNOVER
- Turnover refers to the net turnover as defined in Section 377(6) of Book 2 of the Dutch Civil Code adjusted for the change in ongoing projects recognised in the profit and loss account and determined on the basis of principles and detailed applications as applied by the employer in the last annual accounts that were adopted before 1 March 2020.
- Applicants expect at least a 20% loss in turnover.
- In the case of a group of companies, the decline in turnover at group level is decisive. For groups with Dutch and foreign subsidiaries, the decline in turnover of the Dutch companies within the group as well as the foreign parts with Dutch SV wage are taken into account.
- Under certain conditions it is possible, for the determination of the decline in turnover, not to align with the decline in turnover at group level but with the decline in turnover at operating company level. However, if the entire group has a decline in turnover of 20% or more, this extension cannot be used. In order to benefit from this extension, the operating company must have legal personality.
- In the case of an operating company with more than 20 employees, an additional condition applies, namely that an agreement has been concluded with the trade union or employee representative body on work retention at the operating company. If the operating company has fewer than 20 employees, the consent of an employee representative body will be required. If it concerns a private personnel company with limited liability (personeels-bv) within the group, this company cannot make use of the proposed extension.
- If an employer did not yet exist on 1 January 2019 and therefore cannot measure the turnover for the whole of 2019, a different turnover calculation applies. For these companies, for the reference period, the entire calendar months from the time the business has commenced in 2019 up to and including February 2020 will be taken into account, converted to 3 months. UWV compares the resulting amount with the measurement period chosen for 2020.
- The decline in turnover is determined by comparing the turnover with the 2019 turnover on a pro rata basis.
- The employer will continue to pay the employees' wages and will receive an allowance towards the wage costs. The amount depends on the loss in turnover and will amount to a maximum of 90% of the wage costs.
- The wage bill is based on the SV 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. That salary is not eligible for allowance.
- The 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 the salary). In NOW 2.0 this surcharge is 40%.
- There is a maximum wage per employee of EUR9,538 per month. Salary above this amount will not be compensated.
- Foreign employers are also eligible for allowances insofar as they employ employees who have social insurance in the Netherlands. Employers without a Dutch bank account can fill in a non-Dutch SEPA bank account number; the application is not made via the digital form but via a paper application.
- 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.
THE APPLICATION PROCEDURE
- The application is submitted to UWV via a digital form.
- On the basis of your application, UWV will provide an advance payment equal to 80% of the expected allowance; this advance payment will be paid after a positive decision on the application; payment will take place in no more than three instalments.
- UWV aims to pay 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 (sub 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 decrease in turnover is determined in retrospect.
- Within 24 weeks after the end of the period for which the NOW scheme has been granted, the employer must apply for the determination of the allowance. In principle, an auditor's report is required if the advance payment exceeds EUR100,000.
- If no auditor's report is required, a random check will be carried out to determine whether the allowance is justified. The employer must keep verifiable records for this purpose.
- Applicants participating only in NOW 1.0 will be able to apply for the final determination from 7 October 2020. If you also participate in NOW 2.0, this will happen at a time to be determined at a later date.
- For companies that have received an advance of EUR100,000 or more, the requirement of an auditor's report at the time of the final determination will apply. If the advance was less than EUR100,000 but the final allowance will be set at EUR125,000 or more, an auditor's report will also be required.
- If the NOW allowance remains below these limits but the advance payment exceeds EUR20,000 or the final allowance exceeds EUR25,000, a declaration from a third party is required. This third party must confirm the decline in turnover. This could be, for example, an administrative office, a financial service provider or a branch organisation.
- 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 was received.
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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.
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NOW scheme 3.0: changes as of 1 October 2020
15 September 2020 – On 28 August 2020, the Ministry of Economic Affairs announced that it would extend the NOW scheme for three periods of three months from 1 October 2020. This decision is part of the announced aid and recorvery package. It is expected that it will be possible to apply for NOW 3.0 from 16 November 2020. We would like to inform you about the changes that this scheme entails.