The NOW scheme
The Social Affairs and Employment Minister has publicised the particulars of NOW, the Employment Bridging Emergency Fund scheme, which is aimed at helping out employers whose sales for the months of March to May inclusive have plummeted by 20 percent or more, the underlying philosophy being that sales declines of this magnitude cannot but be attributed to extraordinary circumstances beyond the customary “entrepreneurial risk” sphere. It will not be necessary for the employer to produce evidence in corroboration of the extent to which the extraordinary circumstances have been involved in causing the sales decline.
Substance of NOW scheme
The NOW scheme is a wage cost allowance scheme for use by those employers who have compulsory employee insurance. Although it does not therefore extend to include directors-cum-controlling shareholders (“DGAs” in Dutch), it does cater for those “flex workers” who remain in the service of their employer while collecting a wage. The NOW scheme moreover applies to the wage costs of employees whose wages the employer is under no obligation to continue paying, such as workers with zero hour contracts.
Correlation between level of allowance and magnitude of sales decline
The allowance is capped at 90 percent of the wage bill for the months of March to May 2020 inclusive. The wage bill is based on the (sum total of) social insurance wages under existing employment contracts. The scheme caters for compensation of employer contributions, pension contributions by employees and holiday allowance accrual. A standard 30 percent employer contribution increment applies. As the wage per employee is capped at twice the maximum daily wage per month, this renders wages in excess of 9,538 euros per month ineligible for subsidy. The maximum allowance is paid out where the employer in question has suffered a 100 percent drop in sales. The allowance is fixed on the basis of proportionality to the magnitude of the employer’s sales decline. The latter is calculated on the basis of the annual sales for 2019 divided by four unless the employer in question commenced operations after the first of January 2019, in which case a different sales calculation applies. Employers whose expectations are that the true magnitude of their sales decline will take some time to become apparent have the option of delaying the start of the calculation period by one to two months.
Calculation of NOW allowance
The formula for calculating the NOW allowance is as follows: LOT * AWB * 3 (months) * 1.3 (increment for employer’s charges) * 0.9 (compensatory cap), with LOT and AWB being short for “loss of turnover” (= business’ expected loss of turnover as a percentage) and “aggregate wage bill” (= aggregate wage bill paid out over particular period of time subject to due allowances being made for the aspects set out above), respectively.
How to apply
The employer in its application for a NOW allowance states its expected sales level for the period under review and compares it with 25 percent of its 2019 sales, then takes the resultant sales decline in the application form as a percentage. Where an employer operates multiple withholding tax numbers, it will need to submit a separate application for each withholding tax number in in order to secure the NOW allowance for its entire wage bill, on disclosure all the same of the expected sales decline for its business as a whole.
UWV, the Netherlands Employee Insurance Agency, will see to an advance payment being made in the amount of 80 percent of the allowance as calculated (on condition, it goes without saying, that it should have approved the application). It bases the wage bill particulars on the benefit entitlement data base for the month of January 2020. The application decision period to be adhered to by UWV amounts to 13 weeks. The advance payment is made in three instalments, the first of which is made available within two to four weeks where possible.
The employer has 24 weeks of the date of expiry of the period for which the NOW allowance has been made available to apply for the allowance to be finalised, on submission – mandatorily – of an auditor’s opinion. UWV on receipt of the application in question has a further 22 weeks at most to finalise the NOW allowance, in the context of which it will allow for a possible decline in the wage bill for the months of March to May inclusive compared with the (reference) month of January.
The employer undertakes to make a concerted effort where possible to ensure that its wage bill should remain level. A decline in the wage bill will ultimately affect the level of the allowance. The employer also undertakes throughout the period to which the allowance relates to refrain from applying for permission to let staff go for commercial reasons. We would point out that the latter condition does not apply to applications for dismissal permits having been filed during the period from the first up to and including the 17th of March of the current year.
Effective date of term for application
UWV was to decide on Friday, the third of April 2020 whether the implementation of the scheme would be feasible with effect from the sixth of April. The text of the scheme includes a reference to the effect that the term for application has been fixed at 14 April to 31 May 2020 inclusive or such earlier dates as possible.
The scheme may be extended for a further three months. The relevant decision is to be made before the first of June 2020.
Dutch version: NOW-regeling