international employment law firm alliance L&E Global

The Netherlands: ‘NOW’ Updates – New Amendments announced on Temporary Emergency Measure for Job Preservation during COVID Crisis

On 22 April 2020, the Dutch government informed the House of Representatives by letter about the state of affairs regarding the application of the NOW scheme to groups, seasonal work and the WW premium differentiation.

Application NOW with groups

The NOW scheme aims to provide companies who are faced with a loss of turnover of more than 20% in wage costs, on the basis of which they can continue to pay the salaries of their employees as much as possible during the months of March, April and May. The premise of the NOW scheme is that a larger composition of legal entities, such as a group, is the basis for the drop in turnover of the entire group. The government is relaxing the arrangement on this point.

The government makes it possible for individual operating companies with their own legal personality, which are part of a group, to apply for a subsidy for their wage costs on the basis of the decrease in turnover of the operating company, if the group has less than a 20% decrease in turnover. This derogation does not apply to groups with a turnover drop of at least 20%.

The following conditions apply to the use of the derogation option:

  1. Groups, the operating company of which relies on the relaxed arrangement, must declare that they will not distribute dividends or bonuses or repurchase personal shares for 2020, until and including the date of the shareholders’ meeting in which the annual accounts for 2020 are adopted;
  2. An operating company with 20 or more employees must have an agreement with interested employee associations, or failing that, another employee representation, regarding retention of employment with the operating company. In the case of an operating company with less than 20 employees, agreement of an employee representation is sufficient;
  3. Groups of personnel companies must always assume a decrease in turnover at group level.

With a view to checking the possibility of derogation, the government proposes a number of conditions and guarantees. This will be further defined in the Accountants’ Standards to be elaborated.

Seasonal work

For some sectors or companies, the NOW scheme offers little or no outcome, due to seasonal patterns in turnover or labour costs. According to the cabinet, addressing seasonal work requires customisation and a separate arrangement. According to the cabinet, arriving at a feasible option with a good demarcation is a complex challenge. The cabinet writes in the letter that it is looking hard for a solution and will provide information on its progress as soon as possible.

Unemployment insurance premium differentiation

Since 1 January, employers have paid a low unemployment insurance premium for permanent contracts and a high unemployment insurance premium for flexible contracts. As an extension, employers still have to pay the high unemployment insurance premium retroactively for permanent employees who have worked overtime more than 30% in a calendar year.

According to the government, this provision now leads to unintended effects in sectors where a lot of extra overtime is required as a result of the Coronavirus (COVID-19) pandemic. In order to remove these unintended effects, the government has decided that based on the 30% revision situation, all employers for the calendar year 2020 do not have to revise the low unemployment insurance premium. The revision situation will come back into force on 1 January 2021.

The period for recording in writing and processing in the payroll administration of permanent contracts, for which the low unemployment insurance premium applies, has also been extended from 1 April 2020 to 1 July 2020 due to the COVID-19 crisis.

Application for the NOW

The NOW runs through the UWV (Employee Insurance Agency). Employers can submit an application from 6 April until 31 May 2020. Companies that meet the conditions and complete their application fully and properly shall receive an advance payment of, in total, 80% of the subsidy within 2 to 4 weeks (in three installments).

Next to the NOW, the Dutch government has put several tax relief measures in place for entrepreneurs as well, such as the possibility to obtain an extension of payment of taxes and the repayment of loans.

Active obligation to provide information to employers: point employees to expiry of vacation days

An employer has an active obligation to provide information and care to enable employees to take annual vacation. The employer must proactively and timely inform its employees of any loss of vacation days if these are not taken on time. This remains particularly important throughout the current COVID-19 crisis.

Legal and extra-legal holidays

An employee is entitled to four times the number of hours worked per week per year. With a full-time employment of 40 hours, an employee is therefore entitled to 20 vacation days per year. These are the “legal holidays”. In addition to the statutory vacation days, an employer can grant extra vacation days to an employee. These are called “extra-statutory holidays”. The allocation of non-statutory vacation days is often regulated in the employment contract or in the applicable collective labour agreement.

Expired holidays

The accrued and unused statutory vacation days expire six months after the calendar year in which the employee built up the days, unless the employee can demonstrate that he was unable to take them. This means that statutory holidays accrued in 2019 will in principle expire on 1 July 2020. The statutory holidays will expire after five years.

Active duty to inform the employer

According to the European Court of Justice, the employer has an obligation to give its employees the opportunity to take vacation days every year. The employer is expected to actively point this out to its employees.

The employer must also inform the employees about the possible lapse of accrued, but not yet taken, vacation days. This information obligation only applies with regard to statutory holidays. If the employer does not inform the employee, incomplete or late, or cannot prove that the employee has been clearly informed, the statutory vacation days will not expire. This can therefore ensure that the number of vacation days of an employee increases significantly.

Inform your employees

So inform your employees in writing at least once a year about:

  1. The balance of the employee’s accrued, but not taken, statutory vacation days;
  2. Which expiry date applies to these holidays;
  3. That the holidays will lapse if they are not taken up before this date.

The information can be provided, for example, by sending each employee an individual email in April with the above points. In this way, an employee has until 30 June to take the vacation days. We recommend that you send employees a reminder after this first email at a later time (but before 30 June).


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