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Workforce Flexibility and Government Incentives in times of Covid-19 - Netherlands

Short-Term Work State Aid

Covid-19 Questionnaire

Are there any regulations in place providing an employer with possibility for flexible workforce planning such as part-time work/temporary leave which are triggered in a situation similar to a pandemic outbreak as Covid-19?

Yes

If YES on question 1, please describe which type of regulation. Please confirm if and to what extent such leave can be supported by state aid and/or other extra-ordinary governmental support.

Please note that on 17 March 2020, the old working time reduction regulations (i.e., Working Time Reduction Scheme) have been withdrawn and new regulations (i.e., Temporary Emergency Measure for Bridging Work Retention, the “NOW”) have been announced.

The NOW in short:

  • Employers who expect a loss of turnover of at least 20% as of 1 March 2020, can apply to the Dutch Public Employment Service (in Dutch: “UWV”) for a subsudy of labor costs for a period of three month.
  • The amount of the subsidy depends on the loss of turnover. With a loss of turnover of 100%, the subsidy is 90% of the wage bill, with a loss of turnover of 50%, the subsidy is 45% of the wage bill, and so on.
  • After the application, the employer will receive an payment in advance of at least 80% of the expected subsidy. The actual loss of turnover is subsequently determined. For large applications, an auditor's report is required (the extent of this has yet to be determined). If the advance payment turns out to be to incorrect a subsequent payment or recovery can take place.
  • The subsidy for labor costs can also be claimed for employees with flexible contracts, such as on-call workers.
  • Under the NOW employees do not consume unemployment benefit rights.

if YES on question 1, please describe which contacts that may need to be initiated with trade unions and/or works councils. Must a special process be followed?

Works council requirements apply. The works council needs to be informed (in advance) about the NOW application. The works council has no right of advice or consent with regard to the application

Are there any governmental programs if a company needs to close totally or partially for a certain time period?

Yes, please be e.g. referred to abovementioned elaborations regarding the NOW.

If state aid and/or other extra-ordinary governmental support is available, please describe the necessary prerequisites to qualify for such state aid.

In short, to be eligible for the subsidy pursuant to the NOW:

  • Employers expect a loss of turnover of at least 20% as of 1 March 2020;
  • Employers are required to continue to pay 100% of the salary to their employees;
  • During the period in which the employer receives the subsidy, he may not dismiss employees for business economical reasons.

Employers applying for a NOW subsidy have to comply with several obligations, including but not limited to, acting in accordance with the purpose of the subsidy scheme and notifying the municipality from which they receive the wage cost subsidy.

If state aid and/or other extra-ordinary governmental support is available, please describe the application procedure for such state aid (e.g. how and when is the application filed with the government etcetera; what shall such application include).

Applications for the NOW can be submitted as of 6 April 2020:
  • The UWV expects to be able to pay the first advance payments within 2-4 weeks after the application submission.
  • The final determination of the amount of the subsidy should be requested within 24 weeks after the end of the three month period. In principle, an auditor statement is required for the final determination of the amount of the subsidy. However, it is expected that this will not apply to small undertakings. Further guidelines in this respect will follow shortly. The final subsidy will be based on the actual turnover loss in the applied three months period in 2020 and the actually paid salary in the months March, April and May 2020.

Please note that the COVID-19 scenario is constantly changing and that this information is current as of 21 April 2020. This publication should not be regarded as offering a complete explanation of the legal matters referred to and is subject to changes in the law and other applicable rules.