Wage costs subsidy in the Netherlands, NOW 1.0 & NOW 2.0
Key support measure in the Netherlands Wage costs subsidy in the Netherlands, NOW 1.0 & 2.0
What is NOW? Because of the emergency situation due to the coronavirus, you may have less work for your employees or no work at all. The NOW-scheme allows you to apply for a substantial compensation of wage costs. The NOW temporarily replaces the unemployment benefit during short-time working (werktijdverkorting, WTV). Are you an employer? You may be eligible for compensation of wage costs. This allows you to continue payment of wages to your employees on a permanent or flexibel contract.
The official portal from the Dutch UWV (Employee Insurance Agency), where applications can be submitted, was opened on April 6, 2020: https://www.uwv.nl/werkgevers/formulieren/formulier-aanvraag-tegemoetkoming.aspx
Please find the official information about the NOW measures below:
in English
in Dutch
How does it work?
An employer who expects a loss of turnover (at least 20%) can apply for a substantial compensation for his employees’ wages for a period of three months (March, April, May 2020; NOW 1.0, maximum 90% of wages, depending on the percentage of lost turnover). The Employment Insurance Agency (UWV) will pay an advance of 80% of the requested compensation, in instalments. This allows companies to continue to pay their staff.
By the end of May 2020, the NOW scheme was extended, initially by another 3-month period but in the end 4 months (NOW 2.0), allowing employers to apply for NOW-support for the period of June, July, August and September 2020 as from 6 July 2020.
Some conditions to be eligible for the NOW 1.0:
You continue payment of 100% of the wages and you do not proceed with termination of employment due to redundancy. If you decide to apply for termination of employment at a later stage, the payroll total of the redundant employees plus an additional 50% penalty will be deducted from the subsidy amount granted under the NOW 1.0 scheme. For NOW 2.0, this correction on the subsidy will also apply (100% instead of 50%) if you apply for termination of employment due to redundancy; also, a 5% penalty will be charged on the total sum of the NOW subsidy granted if you apply for redundancy termination of 20 or more employees, unless an agreement has been reached between the employer and the unions or personal representatives regarding the application for termination of employment. In our opinion, it would be very unfavourable for an employer to start up a redundancy application with UWV during the NOW support period. The single fact of the application (i.e. without clarity on actual termination of employment), already results in a significant reduction of the subsidy amount granted (both for NOW 1.0 and NOW 2.0). Alternatively, you could conclude a termination agreement with an employee, in which case it is best to set the end date after the expiration date of the NOW support period.
If you have employees with social insurance in the Netherlands but do not have a branch in the Netherlands, click here for more information about the application procedure.
Additionally, the following applies to NOW 2.0:
- During this year, you will not pay out any dividends or profit sharing to shareholders, you will not pay out any bonuses to management and executives, and you do not buy any treasure shares. It appears that this condition does not apply to companies that ultimately receive a final subsidy amount of less than € 125,000. It also seems that this does not apply to decisions that were already taken in the year 2019 with payment in 2020.
- You commit to consultation with the unions if you aim to request termination of employment due to redundancy for more than 20 employees. Legal protections relating to termination of employment will remain unchanged.
- You are required to make a best effort in respect of encouraging your employees to complete training. Further details will be posted in the near future.
- If a company has submitted a NOW 1.0 application and is submitting a NOW 2.0 application, the 4 month reference period to determine the loss of turnover will directly connect to the period selected in NOW 1.0.
- The NOW 2.0 application is separate from the NOW 1.0 application. You’ll need to submit a new application. You can submit as from 6 July 2020, until 31 August 2020.
How to determine the loss of turnover and the amount of wage costs to be compensated?
- Turnover: Take ¼ of the annual turnover for 2019 and compare it with the turnover for a three month period in 2020, where you may decide the starting moment yourself (March 1, April 1 or May 1). In case the turnover in 2020 is at least 20% lower than 1/4 of the total turnover in 2019, you can apply for NOW support. For more information about this topic, click here.
- Wage compensation: There is a cap on the wage per employee of € 9.538 per month. Salary above this amount is not compensated. To determine the total amount of wages, the authorities will use data from the payroll tax return. The basis will be the social security wage. For all companies, an equal addition will apply in order to cover employer’s costs such as holiday allowance, pension and employer’s contributions. For NOW 1.0, this was 30%. For NOW 2.0, this will be 40%.
- Reference month: To determine the payroll total for NOW 2.0, the month of March is used as the reference month, reference date is 15 May (for NOW 1.0 this is January, with some exceptions).
- Application terms: Between 6 April and 5 June 2020, you can submit your NOW 1.0 application. NOW 2.0 applications can be submitted between 6 July and 31 August 2020.
Final settlement retrospective inspection; auditor statement
- The actual loss of turnover will be determined retrospectively in a final settlement bill. If the loss is higher than estimated, extra payments may be received. Conversely, if the loss is lower, the excess amount may be claimed back.
- If the advance received is in excess of € 100.000 or if the eventual subsidy will exceed € 250.000, an auditor statement will be required. In order to estimate if the eventual subsidy will exceed this limit, an online calculation tool will be provided.
- The employer is required to have an auditable financial accounting system in order to allow for retrospective audits for advances under € 100.000, resp. subsidies below € 125.000 to check if the grant amount was justified.
- The employer is also required to report from which date the company is no longer eligible for the subsidy.
- If the advance payment is in excess of € 20.000 or if the eventual subsidy will exceed € 25.000, an auditor statement will not be required. However, the employer is still required to show a third party approval statement (administrative agent, financial service provider or sector board).
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