In May, the Dutch government extended until October 1, 2020, the economic relief package related to the coronavirus crises, known as the NOW 2.0 scheme. Under this wage subsidy program, businesses that suffer at least a 20% loss in their revenue over a three-month period receive a subsidy of up to 90% of their wage costs, proportionate to the loss in revenue. The rules for NOW 2.0 have since been announced. The main changes are discussed below.
From July 6, 2020, any employer that anticipates at least a 20% drop in revenue may submit an application for compensation of their wage costs incurred from June to September 2020. NOW 2.0 applies the same compensation system as the one applied in NOW (1.0), with some changes.
Every employer that meets the conditions may submit an application under NOW 2.0, regardless of whether that employer received compensation under NOW 1.0. If it did not, the employer may opt to have the period of loss of revenue in NOW 2.0 commence from June 1, July 1, or August 1, 2020. If the employer already benefits from NOW, the revenue period for the purpose of NOW 2.0 must start directly after the first period.
The reference month applied for the wage costs for NOW 2.0 is March 2020.
Penalty in the event of layoffs
Companies that, despite benefiting from NOW 2.0, intend to lay off more than 20 employees must reach agreement on this issue with the unions or other employee representatives.
If no such agreement is reached, the above-mentioned parties are to jointly submit a request to the Stichting van de Arbeid (Labour Foundation) to assess whether the proposed number of layoffs is necessary. This request cannot have been revoked by the time the application for compensation is submitted. In the absence of such agreement or request, the aggregate amount of the compensation will be reduced by 5% if the employer:
- nevertheless submits a notification under the Wet melding collectief ontslag (Collective Redundancy (Notification) Act) in the period from May 30 to September 30, 2020; and
- asks the Employee Insurance Agency (UWV) for permission to lay off 20 or more people for economic reasons.
This scheme supplements the existing system under which no compensation of wage costs is granted for laid off employees and under which any advances paid on the wage costs relating to those employees will be reclaimed. NOW 2.0 no longer imposes the penalty stipulated in NOW (1.0) of 50% of the wage costs in the event of layoffs for economic reasons.
No payment of bonuses and dividend; no share repurchases
In order to qualify for compensation under NOW 2.0, employers are not permitted to pay a dividend to shareholders or grant directors or members of management or the Board bonuses for the year 2020 until the shareholders meeting in 2021. The term director, member of the board or management should be interpreted broadly. It refers to the person who is (temporarily or otherwise) responsible for management, and not just a person who has the power to sign or is listed as a director in the commercial register of the Chamber of Commerce. A director in any event includes any director under a company’s articles of association. Furthermore, no shares may be repurchased in the period concerned.
These restrictions apply to companies that receive an advance of at least EUR 100,000 under NOW 2.0, or where compensation is set at EUR 125,000 or more. A company may, however, grant bonuses to ordinary employees within the context of their regular pay packages.
Best efforts obligation
Employers that benefit from NOW 2.0 have a best efforts obligation to encourage employees to retrain or participate in additional training to adapt to the altered economic situation. Employers are to submit a statement to this end with their application under NOW 2.0.
*Fleur van Lieshout (fvl@clintlegal.com / +31 20 820 0330) is an Associate with Clint / Littler in Amsterdam.
