The NOW-regulation

19 March 2020

Last Tuesday (March 17, 2020) the Dutch government has taken new temporary emergency measures to reduce the adverse, economic consequences of the spreading Coronavirus for employers and employees, as much as possible.

One of these measures is the Temporary Emergency Bridging Measure to Preserve Employment (in Dutch: Tijdelijke Noodmaatregel Overbrugging voor Werkbehoud (‘NOW-regulation’).

 This NOW-regulation replaces the preceding regulation that provided companies with the possibility to request a short-time working permit. With the introduction of this new regulation the short-time working permit can no longer be requested. In this article we provide you with an explanation of the NOW-regulation, based on the current available information.

The NOW-regulation

Employers that expect a loss in turnover of at least 20% can request the UWV (Dutch Employee Insurance Agency) for a compensation in the wage costs amounting to a maximum of 90% of the wage sum, for a period of three months (this period can be extended with another three months). The employer must continue to pay the salaries of the employees for 100%. This is a pro rata regulation; in case of a loss in turnover of 100%, the compensation will be 90% of the wage sum, in case of a loss in turnover of 50%, the compensation will be 45% of the wage sum. This pro rata rule is based on the Dutch government approach that 10% of the loss in turnover can (still) be considered as an entrepreneurial risk.

Based on this regulation, compensation can also be requested for employees with an on-call employment agreement or a temporary employment agency contract (including a temporary agency clause or a clause that rules out the obligation to continue to pay wages). The UWV can provide companies with an advance payment of a maximum of 80% of the requested compensation. Contrary to the preceding short-time working regulation the NOW-compensation is not linked to the unemployment benefit entitlements of employees.

Currently it is still unclear upon which foundations the loss in turnover can be based. It is not yet clear what the reference period will be, whereby the expected loss in turnover must be compared with. The request must in any event include an estimation of the expected loss in turnover. At a later stage the loss in turnover must be substantiated, for instance with an audit certificate. Afterwards, the definitive compensation can be determined. In that stage it can be determined whether or not the advance payment of the UWV was an over- or underpayment. While determining the definitive compensation, a correction can be made if there has been a decrease in the wage sum.

Please be informed that once the request for compensation has been approved, the employer is obliged not to dismiss any employees based on business reasons during the compensation period.

Retroactive effect

The NOW-regulation relates to loss in turnover as from March 1, 2020. Unfortunately the request for compensation in the wage sum cannot be filed yet. However, shortly companies can request wage compensation with retroactive effect. We expect that the government will announce more detailed regulations within two weeks.

Transition of the preceding short-time working regulation

In case you already submitted a request for short-time working (werktijdverkorting) this request will be handled as it were a request for the new NOW facility. Nevertheless the government might enquire additional information to finalize the application.  

Should you have any questions, please do not hesitate to contact us.