Netherlands: Corona Crisis and the Workplace – Employment Law aspects of the NOW
On March 31, 2020, the temporary bridging emergency measure for job preservation (hereinafter: the NOW) was published by the Dutch government.
The NOW aims to prevent unemployment as much as possible as a result of the Corona crisis. The NOW provides for a subsidy for wages of three months. In principle, wage costs for the months of March to May 2020 are compensated. If it is expected that the turnover will decrease with a delay, the compensation can also be started on 1 April or 1 May. The start date must be stated with the application and can no longer be adjusted.
The NOW may be extended for another three months. Applications can be submitted to the UWV (Employee Insurance Body) from 6 April. After receiving the complete application, the UWV strives to pay an advance of 80% of the subsidy within two to four weeks. Payment will be made in three installments. The UWV must determine the final subsidy within 13 weeks of the application.
When is there a right to subsidy?
Employers who expect to experience a turnover drop of at least 20% for three consecutive months (between 1 March and 31 July 2020) are eligible for a subsidy.
What is the amount of the subsidy?
The amount of the subsidy depends on the drop in turnover. The subsidy is based on the wages bill in January 2020 and amounts to a maximum of 90%. It is also important that (i) per employee a maximum of EUR 9,538 gross salary is eligible for subsidy (being twice the maximum daily wage) and (ii) the wage bill is adjusted by a factor of 1.3 in order to also take into account the various employer costs (such as contributions for pension, holiday allowance and employee insurance).
How is the drop in turnover calculated?
In short, the decrease in turnover is calculated by making a comparison between the expected turnover in the three consecutive months chosen in 2020 and the so-called “reference turnover”. The reference turnover is the turnover for 2019 divided by four. The decrease in turnover is determined by dividing the difference between the reference turnover and the turnover in the three consecutive months chosen by the reference turnover. The result of this calculation is expressed in whole percentages (rounded up).
It is also important that the decrease in turnover is based on the decrease in turnover of the legal entity, unless that legal entity is part of a group. In that case, the decline in turnover of the entire group is assumed.
What are the main labor law obligations?
The NOW introduces the following employment law obligations for employers:
- The employer is obliged to keep the wage bill the same as much as possible. Employees are entitled to full continued payment of wages if they have a fixed work volume. There is not always an obligation to continue to pay wages for employees with a flexible workforce (oncall workers). This is the case, for example, if they cannot successfully invoke the presumption of employment. However, the NOW also provides for compensation for the wages of employers when they pay more wages to such employees than they are legally obliged to do.
- In the period from March 18 to May 31, 2020, the employer does not submit a request to the UWV for a dismissal permit for business reasons. If that does happen, the subsidy will be reduced. In that case, the wages of the employee (s) for whom the application is submitted will be increased by 50%, which will subsequently be deducted from the wages.
- The employer is obliged to inform the works council, staff meeting or (in the absence thereof) the employees about the subsidy. The legislator mentions that this also offers an opportunity to consult with employees to consider what other measures are needed to bridge this difficult period. This could include, for example, suspending payment of holiday pay and taking, for example, holidays and ADV / ATV days.
- The employer is obliged to use the subsidy exclusively for the payment of labor costs.
Palthe Oberman attorneys are available to assist you with these and other workplace issues. For more information, visit paltheoberman.nl.
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