NOW 2.0: emergency scheme extended by three months

New rules as of 1 June 2020

The Dutch Temporary Emergency Bridging Measure to Preserve Employment (Tijdelijke Noodmaatregel Overbrugging voor Werkbehoud, “NOW”) will be extended by three months. NOW has so far provided short-term financial aid to many employers, which contributed to 1.9 million employees retaining their jobs. An extension to NOW allows for the addition of further conditions in the second phase.

Expiry of first phase on 31 May 2020

Given that the first subsidy phase will expire on 31 May 2020, the government has decided to extend NOW by three months. As of 6 July 2020, an employer who expects to suffer a loss in turnover of at least 20% may apply for compensation of wage costs for June, July and August 2020. The extended NOW scheme applies the same compensation system, but also contains several changes.

Scheme available for all employers

Every employer that meets the requirements may file an application for compensation of wage costs, irrespective of whether it has participated in the current NOW scheme. If an employer applies for the NOW scheme for the first time, the period in which its turnover declines may begin on 1 June, 1 July or 1 August 2020. If an employer relies on the NOW scheme for a second time, the turnover period must follow on immediately after the previous period.

During the NOW scheme’s second subsidy phase, the subsidy to be granted will be based on the employer’s wage bill for March 2020 and compared to its wage bills for June, July and August 2020. Accordingly, payment of a bonus or 13th month allowance or similar in March 2020 will not affect the subsidy amount. This prevents employers from having to repay the entire NOW subsidy due to a decreasing wage bill solely because they paid out bonuses.

March 2020 is the starting point

In addition, the current NOW scheme also takes March 2020 as the starting point if an employer’s wage bill in the months March-May is higher than in the period January-March. This is important for seasonal companies. What is more, a company that uses the NOW scheme is not allowed to make profit distributions to shareholders, pay out bonuses to the board and management or buy back its own shares.

Fixed supplement increased to 40%

The fixed supplement will be raised from 30 to 40 percent, meaning that the compensation will now also cover other costs aside from holiday allowances and employer’s contributions. NOW 2.0 retains the correction to the subsidy in the event of dismissal, but the ‘dismissal penalty’ is now off the table: the subsidy will no longer be lowered further in the event of economic dismissals, but only linearly in line with the employer’s decreasing wage bill. The obligation to consult with the unions in the event of collective dismissal (Dutch Collective Redundancy (Notification) Act, WMCO) and the statutory dismissal protection remain in force, such as the preventive review by the Employee Insurance Agency (UWV), or the rules on transition payments.

Training of employees

Employers that apply for NOW are obliged to encourage their employees to take up extra training or retraining. The works council, among others, may monitor compliance with this obligation: employers that use the NOW scheme must inform their works council about that. The government is setting aside EUR 50 million to support initiatives by social partners.

Wouter Engelsman (we@clintlegal.com / +31 20 820 0330)