Extension of the wage compensation scheme, NOW 2.0
9 juni 2020 | Door: Matthijs van Dorssen
What does NOW 2.0 entail?
If your company has suffered a drop in turnover, you can obtain a contribution towards your payroll costs. This NOW scheme reimburses up to 90% of the payroll costs of companies whose turnover drops by at least 20%. The maximum compensation of 90% applies if a company loses all of its turnover. If the drop in turnover is smaller, the compensation is reduced proportionately. This means that if your company sees its turnover fall by 50%, you can receive compensation for 45% of its payroll costs.
How is the drop in turnover determined?
The drop in turnover is determined over a four-month period, for which the company can choose 1 June, 1 July or 1 August as the starting date. It is not yet known whether this period can also commence on 1 September. If you already used the first NOW (1.0), no choice is available, as the turnover period must fit in with the timeframe chosen for the first scheme period.
Accumulation of coronavirus subsidies
Under NOW 2.0 the level of the wage bill is derived from the wage bill for March. Any subsidies that you receive within the context of the coronavirus crisis are counted as turnover for the purposes of both NOW 1.0 and NOW 2.0. As a result, if you also receive a contribution on the basis of the TOGS scheme or the new TVL scheme receive a lower contribution via the NOW scheme.
The government hopes that the extended NOW scheme 2.0 for June, July, August and September will be open for applications from 6 July. It is now possible to apply for the payroll costs subsidy under NOW 1.0 until 5 June (previously 31 May).
For the NOW 2.0 the fixed mark-up on your payroll costs have been increased from 30% to 40%. With this mark-up the NOW scheme will also cover other staff related costs.
An adjustment has been made to NOW 1.0 with a view to supporting seasonal businesses that increased their workforce between January and March. The wage bill for March will now be taken as the frame of reference instead of the unrepresentative wage bill for January.
If the wage bill from March to May is more than three times the wage bill for January, the wage bill from March to May is taken as the basis for calculating the final subsidy. The wage bills for April and May will then be capped at the level of the wage bill for March, with 15 May as the reference date. This new calculation method will automatically apply to all employers who have a higher average wage bill over the period from March to May compared with January (including capping).
Additional conditions for bonuses
When your company takes advantage of NOW 2.0, it may not distribute any dividends to shareholders, pay any bonuses to its board and/or management or buy back any of its own shares. The condition that no transactions of this nature may be effected in 2020 will apply up to the shareholders’ meeting in 2021, when the financial statements are adopted. ‘Bonuses’ is also understood to cover profit-sharing and other forms of bonus payment. Specification of these conditions need to be made, but probably this ban only applies to companies that are receiving a contribution for which a declaration from an accountant is required.
Declaration from an accountant
You need a declaration from an accountant if you have received an advance payment under NOW 2.0 or NOW 1.0 of € 100,000 or more. To determine this amount, you need to add together the various applications submitted for the payroll tax numbers within your company or group. If you are paid an advance of less than € 100,000, but receive a subsidy of € 125,000 or more when the final subsidy is determined, you also have to submit a declaration from an accountant. You will need to estimate yourself whether the final subsidy determined will come to € 125,000 or more.
If you receive an advance payment exceeding € 20,000, or an amount exceeding € 25,000 when the final subsidy is determined, you must submit a declaration from a third party confirming the drop in turnover. This third party may be a financial services provider, for example.
Redundancy penalty changed
The redundancy penalty is changing under the NOW scheme 2.0. Under NOW 2.0 the redundancy penalty is now 5% on the total amount of the NOW subsidy. This penalty is imposed if 20 employees or more are being made redundant and no agreement has been reached with the trade unions or employee representation body. If the parties are unable to reach an amicable solution, a request for mediation must be submitted to the Labour Foundation. In the absence of an agreement or mediation request, the redundancy penalty will be imposed. This applies to redundancy applications submitted to the Employee Insurance Agency (UWV) between 29 May and 30 September 2020.
One aspect of NOW 1.0 that has been retained under NOW 2.0 is the fact that no payroll subsidy is received for employees who are made redundant for commercial reasons. In this case a 100% correction is applied to the NOW subsidy. The 50% redundancy penalty applied under NOW 1.0 has been abolished under NOW 2.0. The statutory protection in the event of redundancy remains in force, which means the employer is still obliged to make a transition payment.
Further training and/or retraining mandatory
Employers who apply under NOW 2.0 will be subject to a best-efforts obligation to encourage their employees to undertake further training and/or retraining. The aim is to limit the number of compulsory redundancies as a result of the coronavirus crisis as much as possible. To this end, the government is making a € 50 million training package available under the name ‘NL leert door’ (‘The Netherlands keeps learning’). This package, the further details of which are yet to be worked out, will include development advice and online training specifically geared towards career steps that are relevant to the needs of the labour market.
The new NOW 2.0 scheme is a very complex one with a lot of conditions. If you have any questions or need assistance with the application of the NOW scheme, please you Alfa advisor. We are always nearby!