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Coronavirus - Employment law update - the Netherlands

  • Netherlands
  • Coronavirus - Country overview
  • Coronavirus - Workforce issues
  • Employment law

16-10-2020

On 27 February 2020, the first patient was diagnosed with the coronavirus (CoVID-19) in the Netherlands. After a decrease in confirmed cases (and the accompanying relaxation of measures) in the months of May through July, the number of persons positively tested for CoVID-19 has begun to increase again. We have prepared a short Q&A covering potential questions employers may have that are related to CoVID-19 under Dutch law.

Please note that the questions and answers below related to traveling of employees, are based on the situation that there is a choice for employees whether or not to travel. Globally many countries restrict both travel to and within their country. In many cases it may therefore be difficult for employees to travel for business, their holiday or even to return back to the Netherlands after having traveled abroad.

Q&A: Employment questions related to the CoVID-19 under Dutch law

1. What are the general principles an employer should or could apply?

Answer: Pursuant to Dutch law, an employer is responsible for the physical and psychological health and safety of employees in the workplace and in this respect is expected to give instructions and take safety measures.

Below we have set out the general principles which NL employers should and could apply. These principles will be in line with the general principles of other countries and are permitted under Dutch law.

  • Monitor and follow advice and guidance from relevant authorities such as the Dutch National Institute for Public Health and the Environment, RIVM, www.rivm.nl, such as washing your hands with soap regularly, coughing and sneezing into the inside of your elbow and using paper tissues
  • Inform employees and direct them to relevant general websites such as https://www.government.nl/topics/coronavirus-covid-19/frequently-asked-questions-about-coronavirus-and-work
  • Implement a (verbal) policy to have fewer face-to-face meetings and travel less both professionally and privately
  • Assess the risks faced by employees and visitors and implement measures to mitigate those risks, paying particular attention to vulnerable staff (such as those who are 70 years or older; with impaired immunity; on secondment or working away from home)
  • Review the need for flexible working and whether existing contracts and working arrangements permit such flexibility, and if not, consider how this might be achieved
  • Review policies governing business travel, holidays, sickness, caring for dependents and home working to ensure a reasonable and consistent approach, taking account of their risk assessment and government guidance
  • Review relevant insurance policies and guidance issued by their insurers
  • Update contact details for staff and management
  • Devise arrangements for dealing with staff who have to travel abroad; who may be at particular risk of contracting COVID-19; or who report symptoms and may have COVID-19
     

2. Can an employer forbid his employees to travel abroad for business?

Answer: An employer can implement a policy that employees are in principle not allowed to travel abroad for business when not strictly necessary.

 

3. Can an employer oblige employees to travel abroad (to risk areas) for business?

Answer: If an employee refuses to travel to a risk area, taking disciplinary measures may not be reasonable.

If an employee refuses to travel abroad, not qualified as a risk area, an employer might be able to take disciplinary actions. Employers need to be sensitive and take into account reasonableness and fairness. There are many other ways of having a meeting and therefore it should be determined if each meeting can be held through sources such as Skype.

 

4. Can an employer forbid his employees to travel abroad privately (to risk areas)?

Answer: An employer can strongly recommend that employees do not travel, travel less and especially do not travel to risk areas to ensure the health and safety of his/her colleagues.

If an employee does travel privately, an employer cannot take disciplinary measures. If the employee travels privately to a risk area, the employer might be able to take disciplinary actions to protect their personnel, e.g. requesting the employee who returns from a risk area to work from home for the duration of the government advised quarantine period (10 days). This need to be determined on a case by case basis, ensuring decisions are reasonable and fair.

 

5. What if the employee refuses to come to the office?

Answer: If there are no restrictions issued for the Netherlands or a country where the employee has to travel, an employee is in principle obliged to come to the office. However, when considering to require employees to attend work, employers shall take into account that the Dutch government has stated that employees shall work from home unless this is impossible.

Refusal from the employee could potentially lead to disciplinary measures, such as stopping the salary. Decisions on disciplinary measures should be made on a case by case basis. We also refer to the answers to the questions below.

 

6. Can the employer ask employees whether they have recently visited a risk area and if yes, what can the employer do?

Answer: Yes, employers can ask if employees have recently visited a risk area privately or professionally. If the employee has visited a risk area, the employer can ask the employee to visit the company doctor and send the employee home. Insofar as possible, the employee can continue to work from home.

 

7. Can an employer force an employee to work from home?

Answer: Yes, if this is in response to an identified risk and if working from home is possible and reasonable.

 

8. If an employee is sent home what measures do employers have to take?

Answer: An employer must ensure that the employee is also working in a healthy and safety workplace at home. When this occurs, we recommend to repeat the health and safety rules.

 

9. If the employee is quarantined, does the employer still have to pay the salary?

Answer: In principle yes.

The main rule is that wages are due over the period during which the employee has not performed the contractually agreed work, unless this shall reasonably be for the account of the employee. Being in quarantine is considered to be a cause that is in principle for the account of the employer. It will be exceptional that being in quarantine will be for the account of the employee. If an employee is actually sick, the rules for salary payment during sickness apply.

 

10. If on request of the employer, the employee should stay at home due to a suspicion of being infected, does the employer still have to pay the salary?

Answer: Yes.

Please see our answer to question 9. This also applies if the employee is not able to work from home.

 

11. If childcare services and/or schools are closed, is it allowed from the employee to stay home? If yes, is the employee still entitled to his/her salary?

Answer: Yes.

Please see our answer to question 9. This also applies if the employee is not able to work from home. However, it should be assessed on the basis of reasonableness and fairness whether this applies to each individual employee and whether it can be asked of the employee to bear a part of the risk in this respect.

 

12. Can an employer force the employee to take holidays on (very) short notice?

Answer: No. The employer is not able to determine when an employee has to take holidays.

 

13. Can an employer force the employees to cancel their holidays on short notice?

Answer: In principle an employer cannot force employees to cancel their holidays. Employers can recommend that employees do not travel or at least do not travel to risk areas and if they do travel to risk areas, the employer could consider taking disciplinary action that needs to be determined on a case by case basis and to be reasonable and fair.

 

14. Can employers take the temperature of an employee?

Answer: Pursuant to the GDPR, employers are in principle prohibited from processing employee’s medical data. Therefore, results of temperature checks may not be processed in principle. When employers ensure that the results of temperature checks are not stored/processed and do not end up in an automated system, these temperature checks do not fall within the scope of the GDPR (and the Dutch Data Protection Authority (“DPA”) is therefore not competent). In this case, temperature checks should be performed in the least intrusive manner possible and indiscriminately to ensure compliance with fundamental rights. Alternatively, employees can be instructed to review health questions for themselves and/or self-test their temperature. They are not obliged to share the result of the check and any voluntarily provided information shall not be recorded/processed by the employer. The temperature self-testing and/or health questionnaire instructions should indicate which results would lead to an obligation for the employee to leave the workplace. Temperature tests can also be performed by or under the supervision of the Company doctor. The Company doctor can process the employee’s medical data but cannot share this with the employer as the employer is not allowed to process the employee’s medical data.

 

15. Can employers apply for the statutory reduction of working hours (in Dutch: “werktijdverkorting”)?

Answer: No, as per 17 March 18.45 hours CET this arrangement has been replaced by the so-called NOW-measure, see our response to question 16.

Previously, it was confirmed that the CoVID-19 outbreak qualified as an exceptional circumstance for which employers could apply for a permit at the Dutch Ministry of Social Affairs and Employment for a statutory reduction of working hours.

In case permission was granted, employers were allowed to temporarily decrease their employees working hours. To compensate employees that were affected by this reduction in working hours, employers could apply for temporary unemployment benefits at the Employee Insurance Agency (“UWV”, a Dutch governmental body) within one week after the period of the reduction of working hours had lapsed.

At the beginning of the COVID-19 outbreak in the Netherlands, employers massively applied for this arrangement. Approximately 78.000 employers have filed an application, for which the application system was not designed. On 17 March 2020, the Dutch government therefore decided to cancel this arrangement with immediate effect. As a result, it is no longer possible to apply for a statutory reduction of working hours as of 17 March 2020. Pending applications have been automatically handled as a NOW application.

 

16. Will other government subsidies be made available to compensate employers for payment of wages to employees?

Answer: Yes. The government announced a Temporary Emergency Measure for Job Retention (in Dutch: Tijdelijke noodmaatregel overbrugging voor werkbehoud or “NOW”). The NOW-measure was published on 31 March 2020 after which several amendments and NOW 2.0 and NOW 3.0 were published. For the general framework of the NOW-measure and a comparison of the measure, please refer to the table below.

NOW measure update

NOW amendment - 3 April

On 29 May 2020, the Dutch government announced that the NOW-measure was to be extended once for another period of 4 months (also referred to as “NOW 2.0”), subject to additional conditions. The legal text of the extension of the NOW-measure was published on 22 June 2020. For a summary of the legal framework of NOW 2.0, please refer to our briefing below.

NOW measure update - 25 June

NOW 1.0

NOW 2.0

NOW 3.0

Conditions for eligibility

Employers that expect to suffer a loss of revenue of at least 20% during a consecutive period of 3 months between 1 March and 31 July 2020

Employers that expect to suffer a loss of revenue of at least 20% during a consecutive period of 4 months between 1 June and 30 November 2020

NOW 3.1 (1 October to 31 December 2020):

Employers that expect to suffer a loss of revenue of at least 20% during a consecutive period of 3 months between 1 October 2020 and 28 February 2021

NOW 3.2 (1 January to 31 March 2021):

Employers that expect to suffer a loss of revenue of at least 30% during a consecutive period of 3 months between 1 January and 31 May 2021

NOW 3.3 (1 April to 30 June 2021):

Employers that expect to suffer a loss of revenue of at least 30% during a consecutive period of 3 months between 1 April and 31 August 2021

Period used for the purpose of calculating the loss of revenue (“NOW-calculation period”)

Consecutive period of 3 months starting on either 1 March 2020, 1 April 2020 or 1 May 2020

Consecutive period of 4 months starting on either 1 June 2020, 1 July 2020 or 1 August 2020

Employers which also applied for NOW 1.0 shall ensure that the NOW 2.0 calculation period is directly adjacent to the period used for the NOW 1.0 loss of revenue calculation

Consecutive period of 3 months starting on either:

· NOW 3.1: 1 October 2020, 1 November 2020 or 1 December 2020

· NOW 3.2: 1 January 2021, 1 February 2021 or 1 March 2021

· NOW 3.3: 1 April 2021, 1 May 2021 or 1 June 2021

Employers which also applied for NOW 2.0 shall ensure that the NOW 3.1 calculation period is directly adjacent to the period used for the NOW 2.0 loss of revenue calculation. This also applies if employers apply for NOW 3.2 after having applied for NOW 3.1 and for NOW 3.3 after having applied for NOW 3.2

Calculation loss of revenue

Deducting the expected revenue during the NOW-calculation period from the reference revenue, defined as 25% of the employer’s revenue in 2019, and dividing this amount by the reference revenue

As a general rule, NOW 1.0 concerns the (expected) loss of revenue of the legal entity. However, in case of a group of companies (within the meaning of article 2:24b Dutch Civil Code), the decrease in revenue at group level applies. A group includes foreign group companies to the extent that these pay wages in the Netherlands

An exemption to the above rule may apply to operating companies that suffer a loss of revenue of at least 20%. Key requirements in this context are:

· the operating company shall reach an agreement on maintaining employment with the labour unions or employee representative body and act in accordance with this agreement;

· the loss of revenue at group level shall be less than 20%;

· other entities of the group shall not carry out projects or work which may be to the detriment of the operating company;

· the operating company shall be a legal entity in its own right; and

· no more than 50% of the operating company’s activities consist of intra-group posting of workers

Deducting the expected revenue during the NOW-calculation period from the reference revenue, defined as 1/3rd of the employer’s revenue in 2019, and dividing this amount by the reference revenue

As a general rule, NOW 2.0 concerns the (expected) loss of revenue of the legal entity. However, in case of a group of companies (within the meaning of article 2:24b Dutch Civil Code), the decrease in revenue at group level applies. A group includes foreign group companies to the extent that these pay wages in the Netherlands

An exemption to the above rule may apply to operating companies that suffer a loss of revenue of at least 20%. Key requirements in this context are:

· the operating company shall reach an agreement on maintaining employment with the labour unions or employee representative body and act in accordance with this agreement;

· the loss of revenue at group level shall be less than 20%;

· other entities of the group shall not carry out projects or work which may be to the detriment of the operating company;

· the operating company shall be a legal entity in its own right; and

· no more than 50% of the operating company’s activities consist of intra-group posting of workers

Deducting the expected revenue during the NOW-calculation period from the reference revenue, defined as 25% of the employer’s revenue in 2019, and dividing this amount by the reference revenue

As a general rule, NOW 3.0 concerns the (expected) loss of revenue of the legal entity. However, in case of a group of companies (within the meaning of article 2:24b Dutch Civil Code), the decrease in revenue at group level applies. A group includes foreign group companies to the extent that these pay wages in the Netherlands

The NOW 3.0 may also apply to operating companies that suffer a loss of revenue of at least 20% (NOW 3.1) or 30% (NOW 3.2 and/or NOW 3.3). Key requirements in this context are:

· the operating company shall reach an agreement on maintaining employment with the labour unions or employee representative body and act in accordance with this agreement ultimately before the final application for compensation is filed;

· the loss of revenue at group level shall be less than 20% (NOW 3.1) or 30% (NOW 3.2 and/or NOW 3.3);

· other entities of the group shall not carry out projects or work which may be to the detriment of the operating company;

· the operating company shall be a legal entity in its own right; and

· no more than 50% of the operating company’s activities consist of intra-group posting of workers

Application period for advance on compensation

From 6 April 2020 9.00 AM through 31 May 2020

From 6 July 2020 through 31 August 2020

NOW 3.1: From 16 November 2020 through 13 December 2020

NOW 3.2: From 15 February 2021 through 14 March 2021

NOW 3.3: From 17 May 2021 through 13 June 2021

Documents needed for initial application

· the calculation for the expected loss of revenue, expressed as a whole percentage point and rounded up;

· the start date for the calculation of the loss of revenue (1 March, 1 April or 1 May 2020);

· the employer’s wage tax number;

· the Dutch or non-Dutch SEPA bank account number on which the employer receives payments from the Dutch Tax Inspectorate with respect to wage tax; and

· if applicable, the case number of the application for a short-time working benefit which can be found on the confirmation receipt sent by the ministry

· the calculation for the expected loss of revenue, expressed as a whole percentage point and rounded up;

· the start date for the calculation of the loss of revenue (1 June, 1 July, or 1 August 2020);

· the employer’s wage tax number;

· if applicable; the unique number assigned to the employer by the Dutch Chamber of Commerce;

· the Dutch or non-Dutch SEPA bank account number on which the employer receives payments from the Dutch Tax Inspectorate with respect to wage tax;

· a statement that the employer and/or the head of the group of companies will comply with the prohibition to pay bonuses/dividends;

· a statement that the employer will comply with the obligations with respect to collective redundancies; and

· whether the application concerns an employer which has taken over an undertaking

· the calculation for the expected loss of revenue, expressed as a whole percentage point and rounded up;

· the start date for the calculation of the loss of revenue;

· the employer’s wage tax number;

· if applicable; the unique number assigned to the employer by the Dutch Chamber of Commerce;

· the Dutch or non-Dutch SEPA bank account number on which the employer receives payments from the Dutch Tax Inspectorate with respect to wage tax;

· a statement that the employer and/or the head of the group of companies will comply with the prohibition to pay bonuses/dividends in 2020 (NOW 3.1) and/or 2021 (NOW 3.2 and/or NOW 3.3); and

· whether the application concerns an employer which has taken over an undertaking

Formula for calculating advance on compensation

A* x B* x 3 x 1.3 x 0.9 = expected compensation, of which 80% will be paid as advance payment

A* = % expected loss of revenue

B* = total salary owed for January 2020, which will be determined based on the wage tax declaration which was filed ultimately on 15 March 2020

A* x B* x 3 x 1.4 x 0.9 = expected compensation, of which 80% will be paid as advance payment

A* = % expected loss of revenue

B* = total salary owed for March 2020, which will be determined based on the wage tax declaration which was filed ultimately on 15 May 2020

NOW 3.1

A* x B* x 3 x 1.4 x 0.8 = expected compensation, of which 80% will be paid as advance payment

A* = % expected loss of revenue

B* = total salary owed for June 2020, which will be determined based on the payroll data pursuant to the UWV’s policy administration (or in the absence of data regarding June 2020, the total salary owed for April 2020)

NOW 3.2

A* x B* x 3 x 1.4 x 0.7 = expected compensation, of which 80% will be paid as advance payment

A* = % expected loss of revenue

B* = total salary owed for June 2020, which will be determined based on the payroll data pursuant to the UWV’s policy administration (or in the absence of data regarding June 2020, the total salary owed for April 2020)

NOW 3.3

A* x B* x 3 x 1.4 x 0.6 = expected compensation, of which 80% will be paid as advance payment

A* = % expected loss of revenue

B* = total salary owed for June 2020, which will be determined based on the payroll data pursuant to the UWV’s policy administration (or in the absence of data regarding June 2020, the total salary owed for April 2020)

Period for which compensation will be received

March, April and May 2020

June, July, August and September 2020

NOW 3.1: October until December 2020

NOW 3.2: January until March 2021

NOW 3.3: April until June 2021

Restrictions on redundancies

Employers shall refrain from filling an application to request a dismissal permit for business-economic reasons from 18 March 2020 up to and including 31 May 2020

If an employer files a request for permission to give notice of termination for business-economic reasons at the UWV and does not withdraw this request within the applicable period, 1.5x the sum of the salary of the employees affected by this will be deducted from the total salary for which compensation will be awarded

Employers shall as general rule refrain from filling an application to request a dismissal permit for business-economic

reasons from 1 June 2020 up to and including 30 September 2020

If an employer files a request for permission to give notice of termination for business-economic reasons during this period, the NOW 2.0 grant will be reduced with the sum of the salaries saved by the employer by making redundancies. No additional penalty applies

In the event that the employer decides to make 20 redundancies or more in the UWV region (and therefore has to notify the UWV and labour unions of a collective redundancy pursuant to the Collective Redundancy (Notification) Act (in Dutch: “Wet Melding Collectief Ontslag” or “WMCO”) it has to

· consult the relevant labour unions in order to try to reach an agreement regarding the collective redundancy or alternatively make a request – jointly with the labour unions – for mediation by the Labour Foundation (“Stichting van de Arbeid”); and

· refrain from filing an application to request a dismissal permit for business-economic reasons until 4 weeks after the notifying the UWV of the collective redundancy

A penalty (“WMCO penalty”) applies in the event that the employer fails to comply with the obligation to (a) reach an agreement with the labour unions regarding the amount of positions which need to be made redundant or alternatively (b) request mediation in that respect by a committee formed by the Labour Foundation. The penalty is 5% of the final compensation after the reduction of the salary of employees for who a dismissal permit was requested and is ‘paid’ by reduction of the penalty amount from the final compensation

The penalties and/or reductions that applied to dismissals due to business-economic reasons and/or the WMCO penalty no longer apply

Employers who suffer a long-term loss of revenue are offered the opportunity to reduce (part of) the total wage sum, without this having an effect on the NOW compensation applied for, by ways of an exemption rate. The exemption rate amounts to:

· 10% as from 1 October 2020 to 31 December 2020 (NOW 3.1);

· 15% as from 1 January 2021 to 31 March 2021 (NOW 3.2);

· 20% as from 1 April 2021 to 30 June 2021 (NOW 3.3)

An obligation for employers to contact the UWV by phone via the UWV Hotline NOW (088 – 898 20 04) applies in case a request for permission to give notice of termination for business-economic reasons is filed for one or more employees during the period for which compensation is requested. The purpose of this obligation is guide employers with respect to the obligation to support redundant employees in finding alternative employment. Should an employer fail to contact the UWV, this may lead to the final compensation being reduced with a penalty of 5%. Further details of this obligation are TBC

Prohibition to pay bonus or dividends

N/A

Companies that expect to receive a compensation for which an auditor’s report is required (see “Auditor’s report required for application final compensation?” below) shall not pay any bonuses to the board of directors, management and leadership, distribute dividends or other profit distributions and/or repurchase shares for 2020. Regular employees remain entitled to their variable compensation through bonuses

In the event that the exception for group operating companies is applied, this prohibition will also apply to the parent company

The above prohibition does not apply if the employer has a statutory duty to pay dividends or is required to do so on the basis of a statement of findings (“Vaststellingsverklaring”) agreed upon with the Dutch Tax Authority

No changes compared to NOW 2.0

With respect to NOW 3.2 and NOW 3.3, the prohibition to pay bonuses to the board of directors, management and leadership, distribute dividends or other profit distributions and/or repurchase shares applies for 2021

Best efforts obligation re training and work-to-work guidance for employees

N/A

Employers are obliged to make strenuous efforts to encourage their employees to take retraining or reskilling courses or seek career development advice, for example by providing them with free time and/or resources through a R&D fund

Employers are not obliged to provide employees with (compensation for) such training. It is expected that the government will issue a crisis response package called “NL continues to learn” (in Dutch: NL leert door) to this end

Continued obligation for employers to encourage employees to take retraining or reskilling courses, seek career development advice and to provide employees work-to-work guidance

Employers receiving NOW 3.0-compensation are obliged to make an effort to guide employees to other work when they terminate employees due to business-economic reasons (e.g. by making time and/or means available for retraining or reskilling courses, career development advice and/or work-to-work guidance). For this purpose, employers can make use of the Social Package “NL continues to learn”

No obligation to use at least 10% of the total wage sum for which NOW compensation is received for this purpose

Additional conditions

Employers are required to:

· keep the wage bill as equal as possible;

· only use the contribution to pay employees’ salaries;

· inform the Works Council, or if there is no Works Council the Employee Representative Body, or in the absence of both the employees about the application for NOW;

· keep proper records of information which could be relevant for determining the final level of compensation and retain these records for 5 years;

· file their wage tax declaration in a timely manner;

· inform the minister in writing of any circumstance which may be of influence to the compensation; and

· if applicable, inform the municipality which has granted a wage costs grant (in Dutch: loonkostensubsidie) that compensation has been granted

Employers are required to:

· keep the wage bill as equal as possible;

· inform the Works Council, or if there is no Works Council the Employee Representative Body, or in the absence of both the employees about the application for NOW;

· keep proper records of information which could be relevant for determining the final level of compensation and retain these records for 5 years;

· file their wage tax declaration in a timely manner;

· inform the minister in writing of any circumstance which may be of influence to the compensation; and

· if applicable, inform the municipality which has granted a wage costs grant (in Dutch: loonkostensubsidie) that compensation has been granted

Employers are required to:

· use the compensation in accordance with the purpose of NOW 3.0, which means that the contribution shall in any case be used to pay employees’ salaries;

· inform the Works Council, or if there is no Works Council the Employee Representative Body, or in the absence of both the employees about the application for NOW;

· keep proper records of information which could be relevant for determining the final level of compensation and retain these records for 5 years;

· file their wage tax declaration in a timely manner;

· inform the minister in writing of any circumstance which may be of influence to the compensation; and

· if applicable, inform the municipality which has granted a wage costs grant (in Dutch: loonkostensubsidie) that compensation has been granted

The obligation to keep the wage bill as equal as possible no longer applies. Employers are allowed to (slightly) reduce the wage bill without this leading to a reduction of the final compensation

Application for final compensation

Applications can be filed as from 7 October 2020 until ultimately 24 weeks thereafter (until 23 March 2021). For the applications for final compensation that require an auditor’s report, the application period is 38 weeks as of 7 October 2020 (until 29 June 2021)

Applications can be filed as of 15 November 2020 (expected at this time) and ultimately 24 weeks thereafter. For the applications for final compensation that require an auditor’s report, the application period is 38 weeks

Applications can be filed as of 1 September 2021 (expected at this time) and ultimately 24 weeks thereafter. For the applications for final compensation that require an auditor’s report, the application period is 38 weeks

Formula for calculating final level of compensation

A x B x 3 x 1.3 x 0.9 = final compensation

A = % actual loss of revenue

B = the total salary as follows from B* in the calculation for the advance payment above, with the exception that

– 1.5 x the salary of employees for whom a dismissal permit was requested will be deducted from the total salary (unless the application for the dismissal permit is withdrawn ultimately on 6 April 2020 or 5 days after the application was filed)

– 13th month payments made in January will be deducted from the total salary costs

– the holiday allowance will be deducted from the total salary costs if the employer reserves the employees’ holiday allowance on a monthly basis throughout the year

– individual salaries will be capped at EUR 9,538 gross per month

– for companies operating in a sector that is dependent on seasons the wage sum of March, April and May 2020 shall be taken into account, provided that the wage sum in the period March until May 2020 is higher than 3x the wage sum of January 2020. The wages of April and May are capped at the wage sum for March 2020 (based on the employer’s wage tax declaration filed on 15 May 2020)

In the event that the salary costs for 1 March – 31 May 2020 (defined as C) are less than 3 times the salary defined as B, the compensation shall be reduced by applying the following formula:

(B x 3 – C) x 1.3 x 0.9

The actual wage costs (C) will be based on the employer’s wage tax declaration as filed by the employer to the Tax Inspectorate ultimately on 19 July 2020

A x B x 3 x 1.4 x 0.9 = final compensation

A = % actual loss of revenue

B = total salary paid for the third wage reporting period of 2020, based on the wage tax declaration which was filed ultimately on 15 May 2020, with the exception that

- the holiday allowance will be deducted from the total salary costs if the employer reserves the employees’ holiday allowance on a monthly basis throughout the year;

- if the employer does not reserve the employees’ holiday allowance on a monthly basis, the total salary shall be multiplied by 0,926;

- salary paid pursuant to the (collective) employment agreement which is in addition to the usual salary and holiday allowance and is not dependent on the company and/or the employee’s performance (e.g. 13th month payments), will be deducted from the total salary;

- individual salaries will be capped at EUR 9,538 gross per month

 

In the event that the salary costs for 1 June – 30 September 2020 (defined as C) are less than 4 times the salary defined as B, the compensation shall be reduced by applying the following formula:

(B x 4 – C) x 1.4 x 0.9

The actual wage costs (C) will be based on the employer’s wage tax declaration as filed by the employer to the Tax Inspectorate ultimately on 16 November 2020

NOW 3.1

A x B x 3 x 1.4 x 0.8 = final compensation

A = % actual loss of revenue

B = the total salary as follows from B* in the calculation for the advance payment above, with the exception that

- the holiday allowance will be deducted from the total salary costs if the employer reserves the employees’ holiday allowance on a monthly basis throughout the year;

- if the employer does not reserve the employees’ holiday allowance on a monthly basis, the total salary shall be multiplied by 0,926;

- salary paid pursuant to the (collective) employment agreement which is in addition to the usual salary and holiday allowance and is not dependent on the company and/or the employee’s performance (e.g. 13th month payments), will be deducted from the total salary;

- individual salaries will be capped at EUR 9,691 gross per month

In the event that the salary costs for 1 October – 31 December 2020 (defined as C) have been reduced with more than allowed pursuant to the exemption rate (i.e. more than 10%), the compensation shall be reduced with the wage costs reduced in excess of the exemption rate. The following formula shall be applied:

((0,9B x 3) – C) x 1,4 x 0,8

NOW 3.2

A x B x 3 x 1.4 x 0.7 = final compensation

A = % actual loss of revenue

B = the total salary as follows from B* in the calculation for the advance payment above, with the exception that

- the holiday allowance will be deducted from the total salary costs if the employer reserves the employees’ holiday allowance on a monthly basis throughout the year;

- if the employer does not reserve the employees’ holiday allowance on a monthly basis, the total salary shall be multiplied by 0,926;

- salary paid pursuant to the (collective) employment agreement which is in addition to the usual salary and holiday allowance and is not dependent on the company and/or the employee’s performance (e.g. 13th month payments), will be deducted from the total salary;

- individual salaries will be capped at EUR 9,691 gross per month (expected, indexed as of 1 January 2021)

In the event that the salary costs for 1 January – 31 March 2021 (defined as C) have been reduced with more than allowed pursuant to the exemption rate (i.e. more than 15%), the compensation shall be reduced with the wage costs reduced in excess of the exemption rate. The following formula shall be applied:

((0,85B x 3) – C) x 1,4 x 0,7

NOW 3.3

A x B x 3 x 1.4 x 0.6 = final compensation

A = % actual loss of revenue

B = the total salary as follows from B* in the calculation for the advance payment above, with the exception that

- the holiday allowance will be deducted from the total salary costs if the employer reserves the employees’ holiday allowance on a monthly basis throughout the year;

- if the employer does not reserve the employees’ holiday allowance on a monthly basis, the total salary shall be multiplied by 0,926;

- salary paid pursuant to the (collective) employment agreement which is in addition to the usual salary and holiday allowance and is not dependent on the company and/or the employee’s performance (e.g. 13th month payments), will be deducted from the total salary;

- individual salaries will be capped at EUR 4,845 per month (expected, indexed as of 1 January 2021)

 

In the event that the salary costs for 1 April – 30 June 2021 (defined as C) have been reduced with more than allowed pursuant to the exemption rate (i.e. more than 20%), the compensation shall be reduced with the wage costs reduced in excess of the exemption rate. The following formula shall be applied:

((0,8B x 3) – C) x 1,4 x 0,6

Disclosure

As of the end of June 2020, the UWV will publish information on which companies have applied for the NOW 1.0, including the advance payments made and amounts of final compensation awarded on its website

No changes compared to NOW 1.0

No changes compared to NOW 1.0 and NOW 2.0

Auditor’s report required for application final compensation?

An auditor’s report shall have to be included in the application for final compensation from companies that (i) receive an advance payment of EUR 100,000 or more or (ii) expect to receive a final compensation of more than EUR 125,000. The intensity of the audit depends on the amount of the subsidy (EUR 375,000 or more) and whether or not a company has a mandatory audit of their annual accounts. Of these companies more accountability is expected and if they lack in this respect, the NOW-compensation shall be repaid. The competent authority together with the Royal Netherlands Institute of Chartered Accountants (Koninklijke Nederlandse Beroepsorganisatie van Accountants, “NBA”) has drawn up an accountant’s protocol (in Dutch) with requirements for the audit

Additionally, a report from a third-party expert (such as an administration office, tax consultant bookkeeper or accountant) will be required for companies that:

(i) receive an advance payment (80% of the amount of expected final compensation) of EUR 20,000 or more; or

(ii) expect to receive a final compensation amounting to EUR 25,000 or more

No changes compared to NOW 1.0

However, for groups of companies that apply for NOW 2.0 to compensate the loss of revenue for operating group companies, an auditor’s report is mandatory irrespective of the amount of compensation received

No changes compared to NOW 1.0 and NOW 2.0

It was announced on 28 August 2020 that the NOW-measure was to be extended again as of 1 October 2020 for three 3-month periods until 1 July 2021 (also referred to as “NOW 3.0”). The legal text of the NOW 3.0-measure was published on 9 October 2020. Please find our briefing with the key details of NOW 3.0 and a comparison of all three NOW schemes below.

Further details on emergency measure NOW 3.0 

17. Are government measures being taken to support independent contractors (‘zzp’ers’)?

Answer: Yes. The Dutch government has also introduced a few temporary arrangements to support independent contractors that are currently experiencing financial difficulties as a result of the COVID-19 outbreak.

Independent contractors can apply for income support for a period of max. 3 months at their municipality to supplement their income up to the social minimum to be acquired for no consideration (up to approx. EUR 1,500,- net per month).

Additionally, independent contractors can request their municipalities for a working capital loan up to a maximum of EUR 10,157 that can be used to solve liquidity problems. This loan shall be repaid by the independent contractor in due time. However, it is possible to include a postponement of the repayment obligation if a working capital loan is granted. In addition, a lower interest rate applies.

Further details on the procedure how to apply for the income support and/or the working capital loan are decided by the municipality in which the self-employed person lives.

 

18. Is the government taking other measures to mitigate the economic impact of COVID-19?

Answer: Yes. The government has announced an Emergency Package for jobs and the economy, which includes several tax-related measures and several measures to facilitate the granting of loans. Click for more information.