Starting July 6, 2020, business owners who expect at least a 20% loss of sales can apply for wage relief under the NOW 2.0 for the months of June, July August and September. The NOW 2.0 is not just an extension of the first version of the NOW, but includes several changes. This was necessary because the rule was drafted relatively quickly and generically. In order to prevent companies from getting ‘between the lines’ and to remove the threshold for some companies, some aspects have been added to the scheme. Meanwhile, much is already known about the NOW 2.0. You can read more about it in this contribution.
The turnover period
The starting point is and remains: companies that expect at least 20% loss of turnover will receive a compensation of up to 90% of the wage bill, depending on the loss of turnover. Unlike the first version of the NOW, the NOW 2.0 does not apply for three but four months. The turnover period to be compared to 2019 to calculate the turnover loss may start on June 1, July 1 or August 1 in the second rule. For companies that have also used the first NOW, the new measurement period must match the measurement period under the first NOW.
It should be noted that any other subsidies and concessions received by entrepreneurs in the context of the corona outbreak should be included in the calculation of current sales.
The pay period
The reference month for the wage bill under the NOW 2.0 is set to the month of March 2020. Thus, the UWV compares the wage bill for the months of June, July, August and September with four times the wage bill for the month of March. As under the first regulation, a reduction in the wage bill means a disproportionately lower subsidy. For a detailed explanation of this calculation, please refer to the third section from our webpage Coronavirus | Questions & Answers. The flat rate mark-up for employer expenses of 30% from the first NOW scheme, are increased to 40%. This percentage may therefore be added to the wage bill.
Redundancy penalty
Within the first NOW scheme, the total wage bill plus a 50% increase for employees laid off due to economic circumstances had to be deducted from the grant awarded. Within the new NOW scheme, this 50% increase is omitted. Thus, for an employee who has been granted a company economic dismissal, “only” the amount of the wage bill should be deducted from the subsidy. Note that at first glance this seems quite favorable, and compared to the first tranche it is. However, for a 40% turnover loss, therefore, (90% of 40%) 36% of the wage bill will be subsidized, excluding the lump sum surcharge. This means that if an employee is laid off for business reasons, 100% of the total wage bill must be repaid. This therefore amounts to 64% (36% of the wage bill in subsidy minus 100% of the wage bill in repayment) of that particular wage amount in “penalty”.
In the case of economic redundancies for 20 or more employees, an agreement on the redundancy request must be reached with the interested union(s). In contrast to the – already existing before the corona crisis – arrangement, agreement must be reached with the union(s) on the necessity of the number of jobs to be eliminated proposed by the employer. Without agreement, the entire subsidy will be reduced by five percent after the amount of the wage bill for these employees is reduced.
Seasonal
Companies with period-specific revenue peaks, often employ more staff in March than in January. Thus, these companies benefit from using March as the reference month for payroll under NOW 2.0 instead of January.
Training
Employers using the NOW 2.0 will be obliged to encourage their employees to engage in further training and retraining. The government is accommodating employers in this with a new crisis package, namely: ‘The Netherlands is learning by doing’. This package consists of development advice and online training, with a focus on labor market relevant career steps. Qualified career advisors can support people with development advice focused on job market opportunities.
Auditor’s report
Companies that have received an advance payment (80% of the granted grant amount) of € 100,000.00 or more must provide an auditor’s report for the purpose of the final determination of the grant. Companies that have received an advance of less than €100,000.00 will have to estimate for themselves whether the grant will be set at €125,000.00 or more, so they too will need an auditor’s report.
Requests for determination that do not require an auditor’s report will be randomly checked. In addition – if no auditor’s report is required – the request for determination of a subsidy with an advance exceeding €20,000.00 or a determination amount exceeding €25,000.00 will have to be accompanied by a statement from a third party confirming the decrease in turnover. That third party may, for example, be an administrative office, financial service provider, or trade association.
Dividend payments, bonuses and share repurchases
A company using the NOW 2.0 must certify that it will not pay dividends or bonuses to the board or management for 2020 and will repurchase its own shares up to and including the date of the shareholders’ meeting at which the financial statements are adopted in 2021. Bonuses to other staff are, however, permitted.
Conclusion
The Cabinet has tried to trim the generic scheme a little more sharply so that it better reflects the current social situation. These changes will undoubtedly not be the last changes. The Cabinet aims to open the second application period by July 6. Wille Donker will keep an eye on developments for you.
This contribution was written by the Employment Law Practice Group.