The Coronavirus is currently in its grip on the Netherlands. New developments are reported all day long and government measures follow each other in rapid succession. These are exciting and difficult times for many companies. For example, it was in the news yesterday that many shops remain empty. Although they are currently allowed to remain open, this appears not to be feasible for many stores. This is only different for supermarkets, DIY stores, garden center, drugstores and pharmacists. They appear to be doing good business at the moment.
Reduction of working hours (until March 17th, 2020)
Given the current situation, many companies have recently been forced to apply for a reduction in working hours. Short-time working is a scheme that companies can rely on when they are faced with a temporary loss of working hours due to a disaster. On March 17th, the Ministry of Social Affairs and Employment reported that a total of more than 54,000 applications had been submitted for a permit to shorten working hours. The ministry also reported that in previous years, on average between 100 and 200 companies submitted such an application.
Now that the outbreak of the coronavirus has led to unprecedented demand for the Short-time Working Scheme in recent weeks and the scheme is not tailored to the far-reaching consequences of the corona outbreak for Dutch companies and organizations, the Short-time Working Scheme was closed on March 17th, 2020. withdrawn with immediate effect. Instead of the short-time working scheme, a new compensation scheme will be introduced, the so-called NOW scheme. In this context, the government has indicated that it wants to provide financial assistance to more employers, as well as to accommodate employees more quickly than was possible under the Short-time Working Scheme.
What happens to applications that have already been submitted and/or approved?
As of March 17th, 2020, 6:45 PM, reduced working hours will no longer be granted. Applications already submitted will be considered as an application for the temporary NOW scheme. Additional information may be requested from the employer. Permits already granted remain in force, but will not be extended. If an employer uses the permit for short-time working and wants to extend it after it has expired, the employer will have to use the temporary NOW scheme.
The temporary NOW scheme
An entrepreneur who expects a loss of turnover of at least 20% from March 1, 2020 can apply to the UWV for a compensation for wage costs for a period of three months. The three-month period can be extended once by another 3 months (further conditions may be imposed on the extension). A condition for making use of the scheme is that no dismissal for employees on economic grounds will be requested during the period for which employers receive the compensation.
An auditor’s report will be required for applications exceeding a yet-to-be-determined amount of compensation.
Under the NOW scheme, employers remain obliged to continue paying 100% of their employees’ wages. However, depending on the loss of turnover, employers can receive a compensation for wage costs of up to 90%. The compensation for wage costs applies to both permanent employees and employees with a flexible contract.
Compensation for wage costs depends on loss of turnover
The foregoing shows that the amount of the compensation depends on the loss of turnover. For example, the amount of the compensation is 90% of an employer’s wage bill if 100% of turnover disappears and the compensation is 22.5% of the employer’s wage bill if 25% of turnover disappears.
Advance of 80% of the requested compensation
The UWV will provide an advance of 80% of the requested compensation, so that companies can continue to pay their staff. It will be determined afterwards what the actual decline in turnover was. When finalizing the compensation, an adjustment may be made if there has been a decrease in the wage bill.
NB! Applications for the temporary NOW scheme cannot yet be submitted (March 19th, 2020). The government is currently indicating that they are working hard to change this as quickly as possible and that the exact date from which applications can be submitted will be announced as soon as possible. In addition, the government has indicated that the period for which an employer can receive compensation does not depend on the date on which the application can be submitted. According to the government, loss of turnover from March 1st, 2020 will be eligible for compensation.
