On May 19, 2020, the Dutch government published the main rules and conditions regarding the extension of the Emergency Measure Scheme effective as per June 1, 2020 (NOW 2.0, the “Extended Scheme”), The Extended Scheme still needs to be worked out in more detail in legislation, but we already wanted to inform you about the main principles as currently published, which are as follows:
- Employers are eligible for the compensation if they expect to lose at least 20% of their turnover over a three-month period, from June 1, 2020, until October 31, 2020. If under the initial scheme an application has been made and again an application will be made under the Extended Scheme, the loss of turnover should relate to the three 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%
- Loss of turnover is determined at group level: this concerns Dutch legal entities and companies, as well as foreign legal entities and companies with wages in the Netherlands;
- The application relates to the wages paid in June, July and August.
- The fixed (flat-rate) surcharge has been increased from 30 to 40 percent. This implies that the amount of compensation is calculated as follows: A x B x 3 x 1.4 x 0.9.
- A stands for the percentage of the drop in turnover expected by the company/group;
- B is for the wage bill based on the total wage bill of employees for which the employer has paid the wages. 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 under the Extended Scheme 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.
- In case a group has a decrease in turnover of less than 20%, but an individual Dutch company does, this company may apply for subsidy subject to specific terms and conditions, inter alia relating to dividend and bonus payments.
- Employers is (in principle) not allowed to apply for termination due to redundancy with the Labour Office (UWV) during the period they receive compensation. If they do, (i) the wage bill over the relevant period will be decreased with the wages of the employee(s) to be dismissed and (ii) the subsidy will be decreased by the wage bill of these employee(s) x 3 (months) x 1.4 (0.4 is general increase re pension/holiday allowance etc) x 0.9 percentage of subsidy). The fine as set forth in the initial scheme of 50%.is cancelled for applications under the Extended Scheme.
- In case of an application under the Extended Scheme, employers are required to confirm as part of their application that they will consult with unions or other personnel representative body if they want to apply to make more than 20 employees redundant and to reach an agreement with such body. If such agreement appears not be possible, mediation by the (Governmental) Foundation for Employment is required. If no agreement can be reached or no mediation request has been done, the subsidy will be deducted with a penalty of 5%.
- The existing legal provisions regarding collective dismissal also remain in force.
- Furthermore, a company or group that applied the Extended Scheme may not make a profit distribution to shareholders, may not pay bonuses to the board and executives/directors and may not repurchase its own shares over the year 2020, which obligation runs until the shareholders meeting in 2021 in which the yearly accounts for 2020 will be voted for. This requirement under the Extended Scheme only applies for companies and group of companies who receive a subsidy for which a statement of the accountant is required. Such is the case in the event a company/group (i) has applied for subsidy due to a decrease of turnover of 20% or more and (ii) has been awarded for this application a (80%) deposit payment of at least EUR 100.000 or a definitive facility of EUR 125.000 or more.
- Employers who apply for the new 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.
- It is proposed that applications under the Extended Scheme can be made as from July 6, 2020, with retro-active effect until June 1, 2020.
Decrease of less than 20% of the turnover
If the 20% 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:
- A company or group that uses the NOW this year may not make a profit distribution to shareholders, may not pay bonuses to the board and executives/directors and may not repurchase its own shares over the year 2020, which obligation runs until the shareholders meeting in 2021 in which the yearly accounts for 2020 will be voted for. This restriction applies irrespective the amount of subsidy applied for or received.
- A statement of an accountant is required is required to be added to the application confirming that the legal requirements for the application have been met.
- The individual entity claiming scheme relief reaches agreement with the relevant trade union or employee body that jobs will be preserved (the meaning of jobs being 'preserved' is not currently clear), entered into prior to the application;
- Business operations (i.e. projects or contracts) are not transferred to other group entities at the expense of the individual entity claiming scheme relief; and
- The entitlement to the subsidy will be set at zero if the company/group does not meet the requirements for this application or does not act in accordance with its obligations under the Extended Act.
The exact scope of the dividend/bonus restriction set forth in NOW 2.0 regarding “the group” and whether this only relates to the Dutch part of the group or extends to foreign group companies too, again has not been clarified yet and in view of the fact that the Minister explicitly refers to the requirements set by the European Committee for state support, a careful approach is recommended in this stage. We expect that in the forthcoming period, when the Minister will provide for the legislation, this will be clarified.
We will inform you as soon as the announcement of the Minster has been worked out in more detail. More amendments are still possible.
Please also note that the above is a general outline only and we recommend to review and consider the requirements in case of applications under the Extended Scheme, the more since the regulations are also amended from time to time.