The key points of the NOW!
On Tuesday morning March 31, 2020 secretary Koolmees announced the “new working time reduction”: the Temporary Emergency Bridging Measure for Sustained Employment, abbreviated as NOW, during a press conference. Below you’ll find the key points you need to know about the NOW!
It appears that the application for the NOW can be submitted from Monday April 6, 2020 onwards. The UWV will determine on Friday April 3 whether April 6 is indeed feasible. The scheme will be opened no later than April 14, 2020.
What is the amount of the compensation?
The amount of the compensation is the result of the following formula:
A x B x 3 x 1,3 x 0,9.
A = turnover loss
A is the percentage (must be at least 20%) of the turnover loss expected by the employer in three consecutive calendar months. The employer can choose to start measuring on March 1, April 1 or May 1, 2020.
PLEASE PAY ATTENTION to which period of three months turnover loss to choose in the application, because the measurement period cannot be adjusted during the final settlement! Furthermore, when estimating the expected turnover (loss), you must use the same method as in the 2019 financial statements. If you are not sure which method was used, please ask your accountant or send us your annual report / annual accounts or income tax return for 2019 so that we can help you along.
The expected turnover loss during the period you have chosen, must be compared to a quarter of your turnover in 2019.
When you subtract the expected turnover in the three relevant months in 2020 from a quarter of your sales in 2019, and then divide this by the quarter of your sales in 2019, you round the percentage off to whole percentage points and you have calculated “A”.
B = wages
You apply for the compensation based on the wage bill of January 2020. In other words, as far as the application is concerned, B is the wage bill of January 2020. The advance of 80% of the requested compensation will also be based on this wage bill, payment of which is expected within 2 – 4 weeks after the application.
During the final grant and / or subsequent calculation of the compensation by the UWV, the final wage bill for March 1 to May 31, 2020 will be taken into account, since the compensation relates to this period.
PAY NOTE that you continue to pay the wages for March, April and May 2020 in full to be able to claim full compensation. The compensation will only be provided regarding the wages per employee up to € 9.538 gross per month.
If the wage bills over March 1 – May 31, 2020 are lower than the wage bill in January 2020 on which the advance is based, you will have to repay the excess received. The processing time for the definite grant of the compensation is 13 weeks after the application.
If the wage bills over March 1 – May 31, 2020 are higher than the wage bill in January 2020, for example because employees have started working as of February or March 1, 2020, it looks like you will not receive an additional amount on top of the then already provided advance. However, this does not seem to be in line with NOW’s goal of supporting employers in sustaining employment of the employees as much as possible. In case this will be corrected, we will let you know!
The “B” will eventually be based on the wage bill over one month.
3 = duration of compensation
Since the compensation will be granted for a three-month period, multiply by a factor of 3. These are the three months March, April and May 2020 for which NOW is initially intended. However, the option to extend the scheme by 3 months is expressly mentioned. This will be decided before June 1, 2020, so that a possible second tranche might follow the first application period that ends on May 31, 2020.
1,3 = raise of wage costs
The wage bill is increased by 30% in connection with additional costs such as pension premium and accrual of holiday pay.
0,9 = turnover loss compensation
The formula ends with the 90% of the turnover loss that is compensated.
Who is the applicant of the compensation?
The compensation will be granted for each payroll tax number. This means that every employer must apply for the compensation himself, even if that employer is part of a group. Within a group the turnover loss in the entire group has to be taken into account and group employers will have to coordinate the applications with regard to the percentage of expected turnover loss.
Other obligations regarding the compensation
As we already knew, the employer may not submit a dismissal application at the UWV based on business economic reasons during the NOW scheme. If the employer does so nevertheless, the wage sum calculation will be corrected by the wage sum of the employee plus an increase of 50% (fine). This correction will be applied to all applications for dismissal that are submitted in the period from March 18 to May 31, 2020 and that were not withdrawn within 5 days after the application.
“No dismissal application for business economic reasons” does not include the conclusion of a termination agreement or dismissal during the probationary period. As a result of these redundancies, the wage bill will decrease howver and thus have consequences for the amount of the final compensation that employer can claim. After all, fewer people will continue to be paid, so the compensation for wages will also decrease.
In addition to “no dismissal application for business economic reasons”, a new condition has been announced for participation in the NOW scheme, i.e. the obligation to make an effort to keep the wage bill as equal as possible. Despite this obligation, layoffs can also be realized through a settlement agreement and probationary dismissal, but a decrease in the wage bill does have consequences for the amount of the final compensation.
Other important obligations are:
- the employer may only use the compensation for payment of labor costs;
- inform the works council, staff representation, or in the absence thereof, employees about the compensation being granted;
- submit a final statement of the turnover loss after the end of the compensation period, accompanied by an auditor’s report.
What documents do you need?
We estimate that applying for the NOW will take the necessary preparation time. Although the application cannot be made yet, you now have the opportunity to collect all the necessary information. In any case, you will need the following documents for the application:
- Your calculation of the expected turnover loss over March to July 2020, so that you can choose the “best” period of 3 consecutive months from these 5 months.
- Your turnover data for 2019: in the form of your annual report / annual accounts or income tax return.
- Payroll tax for January 2020.
- The account details associated with your payroll tax number, since this number must also be provided with the NOW application.
Valegis Advocaten can assist you in applying for the wages compensation under the NOW. Do you have any questions about this blog? Or do you have other Corona crisis-related questions? Please do not hesitate to contact the Corona Crisis Advisory Team of Valegis Advocaten.
We strive for completeness in our reporting but cannot guarantee this because developments follow each other at a rapid pace. The Dutch government regularly comes up with additions to or improvements of (new) regulations. As a result, our reports may be outdated at the time you read them. That is why we mention the date and time of posting with each message.