On June 22, the Dutch government published the extension of the Temporary Emergency Measure effective June 1, 2020 (the “Extended Scheme”). We hereby inform you about the main principles of the Extended Scheme, which are the following:
- Employers are eligible for the compensation if they expect to lose at least 20% of their turnover over a four-month period, starting June 1, July 1 or August 1, 2020. If an application has been made under the initial scheme and an application will again be made under the Extended Scheme, the loss of turnover must relate to the four-month period immediately following the period referred to in the first application under the initial scheme.
- The compensation is dependent on the loss of turnover:
100% loss of turnover: 90%
50% loss of turnover: 45%
25% loss of turnover: 22.5%
- The fixed (flat-rate) surcharge has been increased from 30% to 40%. The application relates to the wages paid from June until the end of September. This implies that the amount of compensation is calculated as follows: A x B x 4 x 1.4 x 0.9, A being the percentage of the drop in turnover expected by the company and B being the wage bill based on the total wage bill of employees whose wages the employer has paid. These wages are maximized and may not exceed €9,538 per month per employee (maximum of twice the maximum daily social security wages).
- The reference month for the wage bill is March 2020, even if the wage bill in the months of March-May is higher than in January-March. This is important for companies with seasonal workers.
- Loss of turnover is determined at a group level: this concerns Dutch legal entities and companies, as well as foreign legal entities and companies with wages in the Netherlands.
- If a group has a decrease in turnover of less than 20%, but an individual Dutch company has a decrease in turnover of 20%, that company may apply for subsidy subject to additional specific terms and conditions relating to e.g. dividend and bonus payments, as set forth below*.
- Employers may apply for dismissal with the Dutch Labour Office due to redundancy of employees during the period in which they receive compensation. If they do, (i) the wage bill over the relevant period is decreased with the wages of the employee(s) who left due to this dismissal; and (ii) the subsidy is decreased by the wage bill over a three-month period of the employee(s) to be dismissed (x 1.4 x 0.9). The (extra) fine of 50% set forth in the initial scheme is cancelled for applications under the Extended Scheme.
- If an application is made under the Extended Scheme, employers are required to confirm as part of their application that they will consult with unions if they want to make 20 or more employees redundant. If such agreement appears to be impossible, mediation by the (Governmental) Foundation for Employment is required. If no agreement can be reached or no mediation request is made, the subsidy will be reduced by 5%.
- The existing legal provisions regarding collective dismissal also remain in force.
- Furthermore, a legal entity that applies for the NOW 2.0 this year may not make profit distributions to shareholders, may not pay bonuses to the board and executives/directors and other policy makers of that entity and the group and may not repurchase its own shares over the year 2020, which obligation continues until the shareholders’ meeting in 2021 at which the 2020 financial statement are adopted. This restriction under the Extended Scheme applies to companies and groups of companies that receive in total a (80%) deposit payment of at least EUR 100,000 or a definitive facility of EUR 125,000 or more, in which case also a statement of the accountant must be enclosed with the request for final assessment of the subsidy. Specific rules apply to companies with a split financial year. It is still being debated in Parliament whether this restriction should also be extended to dividends and bonuses over 2021.
- Employers who apply for the Extended Scheme are obliged to encourage their employees to take additional training and retraining. Employers will be required to make a statement about this when applying for NOW 2.0.
- Applications under the Extended Scheme may be made from July 6, 2020 until August 31, 2020, with retroactive effect until June 1, 2020.
- The entitlement to the subsidy is set at zero if the company/group does not meet the requirements for this application or does not fulfil its obligations under the Extended Act.
* Decrease of less than 20% of the turnover (Article 7 of the Extended Scheme)
If the 20% or more decreased revenue requirement is not met at the Netherlands group level, but is met by an individual legal entity in the Netherlands group, the individual entity may still be eligible to claim scheme relief on that basis if, among other things, the following additional (and stricter) requirements are met, which also already applied under NOW 1.0:
- The company, the group and the parent company may not make profit distributions to shareholders, may not pay bonuses to the board and executives/directors and legal entities in the group, and may not repurchase its own shares over the year 2020, which obligation continues until the shareholders’ meeting in 2021 at which the 2020 financial statement are adopted. This restriction applies irrespective of the amount of subsidy applied for or received and applies not only to the applying entity in view of the assumed group solidarity. The ultimate holding company, the group holding company and parent company will have to provide a statement that the group will comply with this restriction. A statement of an accountant must already be added to the application confirming that the legal requirements for the application have been and will be met. The scope of the term “group” in the Scheme is not clearly defined and should, according to the explanation of the Scheme, be reviewed also on the basis of accounting principles;
- The individual entity claiming scheme relief reaches an agreement with the relevant trade union or employee body about work retention, entered into prior to the application; and
- Business operations (i.e. projects or contracts) are not transferred to other group entities at the expense of the individual entity claiming scheme relief.
Please note that the above is a general outline only and does not constitute specific advice. We recommend carefully reviewing and considering the requirements in case of applications under the Extended Scheme for a specific company or group, particularly because the regulations are not only worked out in more detail than set out above, but are also amended from time to time. In addition, in light of the accounting aspects, we strongly recommend involving your accountant in good time.
Please feel free to reach out to us if you have any questions. We will keep you updated in the event of new developments and will invite you to participate in a client webinar shortly.