Emergency Measure for Job Retention (NOW) – update 23 February 2021

This fact sheet is also available in pdf-format.

Please also read our information sheet on the adoption of NOW 1.0: Adoption of NOW 1.0.

 

As part of its efforts to combat the economic impact of the coronavirus crisis, the Government has introduced subsidy schemes designed primarily to enable businesses to retain their staff. These include the Emergency Measure for Job Retention (NOW).

The schemes, which were initially announced and designed to be simple and robust, have since become quite complex. This factsheet outlines the key elements of the schemes, but unfortunately does not have the space to cover all the details and nuances. Please contact the advisers at VWG for further information.

3 calls for applications, 5 funding periods

The scheme has now been opened three times. The grant periods are:

  • NOW-1: the months of March, April and May 2020;
  • NOW-2: the months of June, July, August and September 2020;
  • NOW-3: October, November and December 2020
  • NOW-4: January, February and March 2021
  • NOW-5: April, May and June 2021.

Provided they meet all the conditions, of course, entrepreneurs may choose whether or not to submit an application for each grant period, independently of one another.

The plan is for the scheme to end on 1 July 2021. From that date onwards, business owners will have to stand on their own two feet again and have adapted their businesses to the new economic reality.

Conditions

The conditions for receiving the NOW grant are as follows:

  • the loss of turnover must amount to 20% or more (NOW-5: 30%);
  • the wages of the employees concerned must continue to be paid in full (if this does not happen, the subsidy will be reduced; see below – under NOW-3/4/5, a limited reduction in the total wage bill is permitted);
  • between 17 March and 31 May 2020 (for NOW-2: 1 June 2020 and 30 September 2020), no employees may be made redundant for commercial reasons (for employees who are made redundant nonetheless, the subsidy will be reduced; see below);

In NOW-3/4/5, this condition no longer applies;

  • the grant is to be used exclusively to cover wage costs;
  • the staff representatives are informed about the grant application;
  • auditable records are kept;
  • payroll declarations must be submitted by the prescribed deadlines at the latest;
  • the employer must notify the UWV in writing without delay should any circumstances arise that are relevant to the subsidy;
  • an auditor’s report or a statement from an independent expert must be submitted with the application for the grant to be finalised (where required; see below);
  • if the employer has been granted a wage cost subsidy, the employer must inform the local authority about the NOW subsidy;
  • For up to five years following the award of the grant, the employer shall cooperate with any enquiries aimed at obtaining information relevant to determining the legitimacy of the grant or the development of policy.

Under the NOW-2 scheme, the following conditions have been added:

  • a statement that no dividends or bonuses will be paid out for 2020 and no shares will be repurchased (only for applicants for whom an auditor’s report is required; see below);

This also applies to NOW-3/4/5, and, in the context of the NOW-4/5 tranche, it also applies to payments for 2021;

  • a best-efforts obligation to encourage employees to undertake further training or retraining.

Under NOW-3/4/5, the following penalty is added: a reduction of 5% from the subsidy amount if the employer, who is applying for redundancy on commercial grounds, has not contacted the UWV in connection with the ‘work-to-work’ support scheme.

Grant amount

Under NOW-1 and NOW-2, the grant amount is determined as follows:

loss of turnover × 90% × total wage bill.

 

In NOW-3, the grant for 90% has been reduced to 80%.

For NOW-4, the grant has been increased again to 85%.

For NOW-5, the grant amount is (for the time being) 60%.

 

On the one hand, there is the lower subsidy rate; on the other, there is the option to reduce the total wage bill without this affecting the subsidy. The total wage bill may be reduced by:

  • NOW-3/4: 10%;
  • NOW-5: 20%.

If the total wage bill has fallen by more than the aforementioned percentage, the subsidy will be reduced by the amount corresponding to the excess reduction.

Reference period for the total wage bill

The reference period for the total wage bill is:

  • for NOW-1: the month of January 2020;
  • for NOW-2: the month of March 2020;
  • For NOW-3/4/5: the month of June 2020.

 

The total wage bill for the reference month is multiplied by 3 (NOW-1 and NOW-3/4/5) and 4 (NOW-2) (as the subsidy covers 3 or 4 months respectively) and by a surcharge of 30% (in NOW-2 and NOW-3/4/5, this surcharge is increased to 40%). This surcharge is primarily intended to cover employers’ contributions (including pension contributions).

Under NOW-5 (April, May and June 2021), the maximum wage per employee eligible for reimbursement will be reduced from twice the daily wage (€9,691 per month) to once the daily wage (€4,845 per month).

Wage bill

The wage bill is calculated on the basis of the wage used for social security contributions (the ‘SV wage’). Employees who are not covered by social security (such as many directors and major shareholders) are therefore not eligible for the NOW subsidy.

The UWV obtains the total wage bill from the policy records, both for the reference period and for the subsidy period. This information is updated on the basis of the payroll tax returns submitted:

  • for the January 2020 payroll: up to and including 15 March 2020;
  • for the March 2020 payroll: up to and including 15 May 2020;
  • for the June 2020 payroll: up to and including 15 August 2020.

The applicant therefore cannot (any longer) influence the amount of these wage bills.

The wage totals for April and May 2020 (relevant in the context of the seasonal scheme; see below) will be updated up to and including 19 June 2020, on the understanding that these wage totals will be capped at the wage total for March 2020.

When determining the benefit (i.e. not when calculating the advance payment), the UWV will take into account any additional salary payments (such as a 13the (month) from the wage bill. This is done both during the reference period and during the subsidy period.

Seasonal work

Instead of the wage bill for January 2020, the wage bill for March to May 2020 inclusive will be used as the basis if:

  • the total wage bill for March to May 2020;
  • is higher than three times the total wage bill for January 2020.

Under the NOW-1 scheme, this arrangement is designed to assist seasonal businesses for which the January wage bill is not representative. However, the scheme applies to all businesses that meet the above condition (for example, where the workforce has been expanded since January 2020).

This adjusted wage bill is not taken into account when determining the advance payment, but only when determining the grant. Where an additional allowance is payable, this will be paid out only after the end of the grant period.

In addition to the rules governing seasonal work, there are specific rules for determining the total wage bill for start-ups and for companies that have undergone a change in structure (through a merger, demerger or similar).

Loss of turnover

The loss of turnover is calculated by comparing the turnover for the reference period with:

  • NOW-1: 1/4e of the annual turnover in 2019;
  • NOW-2: 1/3e of the annual turnover in 2019;
  • NOW-3/4/5: 1/4e of the annual turnover in 2019.

 

The reference period for the loss of turnover is:

  • in NOW-1: March, April and May 2020, with the option to choose between:
    • April, May and June 2020; or
    • May, June and July 2020.
  • in NOW-2: June, July, August and September 2020, with the option to choose between:
    • July, August, September and October 2020, or;
    • August, September, October and November 2020;

REMEMBER: the reference period for NOW-2 must correspond to that of NOW-1;

  • in NOW-3: October, November and December 2020, with the option to choose between:
    • November, December 2020 and January 2021, or;
    • December 2020 and January and February 2021;

REMEMBER: the reference period for NOW-3 must be consistent with that of NOW-2;

  • in NOW-4: January, February and March 2021, with the option to choose between:
    • February, March and April 2021, or;
    • March, April and May 2021;

REMEMBER: the reference period for NOW-4 must be consistent with that of NOW-3;

  • in NOW-5: April, May and June 2021, with the option to choose between:
    • May, June and July 2021, or;
    • June, July and August 2021;

REMEMBER: the reference period for NOW-5 must be consistent with that of NOW-4.

 

The choice of reference period is finalised when applying for the advance payment of the NOW grant and cannot be revised at a later date.

Regardless of the reference period, the total wage bill is calculated on the basis of the figures set out above under the heading 3 calls for applications, 5 funding periods the periods specified.

Select reference period: withdraw

The reference period does not need to be the same as that of the previous period if the applicant has withdrawn their application for the NOW grant for the previous period in good time. ‘In good time’ means:

  • for NOW-1/2/3: before the application for the new grant period was submitted;
  • for NOW-4: before 15 February 2021;
  • For NOW-4: before 1 April 2021.

REMEMBER: Withdrawing the grant application means that the grant is set at zero and all advance payments received for the relevant grant period must be repaid in full.

Turnover

The definition of the term ‘turnover’ is based on the law governing annual accounts: the revenue derived from the supply of goods and services by the company, net of discounts and similar deductions and of tax levied on turnover.

Subsidies received by businesses in the context of the coronavirus crisis (TOGS, TVL, the healthcare continuity grant, the public transport availability allowance and the allowance for ornamental and food horticulture) are counted as turnover. The NOW subsidy itself is not regarded as turnover.

For employers where the standard definition of turnover does not apply (for example, in the non-profit sector), income and expenditure arising from normal activities are treated as turnover for the purposes of the NOW scheme. Examples include benefits, grants, interest income and contributions from a government body, or other income such as donations or reimbursements from health insurers. Where these revenues relate to a longer period, the income must be allocated pro rata for the purposes of the NOW scheme.

Group scheme

Where there is a group of legal entities or subsidiaries (collectively referred to as group) the loss of turnover must be determined for the group as a whole. The same reference period also applies to the group as a whole for the purpose of determining the loss of turnover.

This loss of turnover must then be applied to all applications for parts of the group. The application cannot be made for the group as a whole; a separate application must be submitted for each payroll tax number.

Exception to the group scheme

If the group’s loss of turnover is less than 20% (NOW-5: 30%), the group as a whole is not eligible for the NOW grant. Nor is an individual group company eligible, even if it has a loss of turnover exceeding 20%/30%.

An individual group company may nevertheless apply for the NOW subsidy independently if:

  • the loss of turnover for that company alone amounts to 20% (NOW-1/2/3/4), or 30% (NOW-5), or more;
  • The group states that it will not pay out any dividends or bonuses, nor will it buy back any shares;
  • the operating company enters into an agreement with the employers’ representatives regarding job retention;
  • the group company’s activities do not consist, to an extent of 50% or more, of making staff available within the group.

The following audit safeguards also apply:

  • other group companies must not carry out any assignments or projects that would be to the detriment of the entity applying for the grant;
  • where employees carry out activities at other group entities, the resulting turnover must be allocated to the entity applying for the grant;
  • The 2019 transfer pricing system must also be applied in 2020 (for NOW-3/4/5: the transfer pricing system applied in the most recent annual accounts adopted before 1 October 2020);
  • Changes in finished goods stock are recognised as revenue.

The application for the exemption from the group scheme must be made at the time of applying for the grant.

Advance payment

On the basis of the application, an advance payment of 80% of the expected grant amount will be made.

This advance payment is generally paid out shortly after the application is submitted. The advance payment is paid out:

  • under NOW-1 in (up to) 3 instalments;
  • under the NOW-2 scheme in (up to) two instalments.
  • in NOW-3/4/5: for each individual tranche, in (up to) 3 instalments.

Adoption

Once the grant period has ended, the applicant must submit a request for the grant to be finalised.

The application for a determination may be made:

  • for NOW-1: from 7 October 2020;
  • for NOW-2: from 15 March 2021;
  • for NOW-3: from 4 October 2021;
  • For NOW-4/5: from 31 January 2022.

The deadline for determining the grant is:

  • for NOW-1: on 31 October 2021.
  • for NOW-2: on 5 January 2022;
  • for NOW-3: on 26 June 2022;
  • for NOW-4/5: on 23 October

The subsidy will be definitively determined by the UWV within 52 weeks of receipt of the request for determination.

Late application for approval = no grant!

Failure to submit the application for the grant to be determined, or failure to do so on time, will result in the UWV setting the grant at zero. The full advance payment received must then be repaid.

Calculation when determining the grant

When the grant is determined, a number of amounts are deducted from the grant amount specified in the application. The method used to calculate this reduction varies for each individual grant period.

This calculation may result in the final grant being set at a negative amount. In that case, in addition to the advance payment, the negative amount must also be paid when the final statement is settled.

Efficiency margin: €500

If the UWV concludes that the final grant amount is lower than the advance payment, this amount will be reclaimed. Amounts up to €500 will not be reclaimed. However, the UWV will not pay out any additional grant amounts up to €500 either.

If an amount is due, this amount must within 6 weeks be paid. For business owners for whom this is a problem, the UWV will offer a payment plan involving payment in 12 monthly instalments. If this is not feasible either, an individual payment plan can be agreed with the UWV.

Discounts

The actual loss of turnover and the actual wage bill are the determining factors when the final amount of the NOW grant is determined.

However, the starting point for the final determination is the calculation of the advance payment. Deductions are made from the result of this calculation in respect of:

  • benefits paid by the UWV in respect of the reporting period, in so far as these are included in the wage bill;
  • 150% of the total wage bill for employees who have been made redundant on commercial grounds;
    • Under NOW-2, this reduction is lowered to 100%, supplemented by a 5% reduction in the subsidy if 20 or more employees are made redundant (with the option to avoid this reduction).
    • In NOW-3/4/5, this discount is no longer applied.
  • holiday pay paid out
  • if the holiday allowance is paid at the same time as the salary, a factor of 0.926 is applied;
  • the fact that the actual wage bill is less than three times the wage bill for January (or March) 2020.

In practice, these reductions may lead to results that are not immediately apparent. It is therefore important to monitor the impact of the company’s financial developments on the (expected) amount of the NOW grant.

Request

Applications for the NOW grant are submitted to the UWV.

  • The application for NOW-4 can be done from 15 February 2021 to 14 March 2021.
  • The application for NOW-5 can be done from 17 May 2021 to 13 June 2021.

Applications for NOW-1/2/3 can no longer be submitted.

The following details must be provided with the application:

  • the payroll tax number;
  • the expected percentage loss of turnover;
  • the reference period (see above);
  • the account number into which the employer pays the payroll taxes.

There is no need to submit the total wage bill. The UWV obtains this information from its policy records.

Auditor's report

When applying for the grant to be determined, an auditor’s report must be submitted if:

  • the advance payment of the grant amounts to €100,000 or more, or;
  • the final bill amounts to €125,000 or more.

These thresholds do not, of course, apply per payroll tax number, but to all payroll tax numbers for which a business owner has applied for a NOW subsidy. And, in the case of a group of companies, they apply to the group as a whole.

A group company that has made use of the exemption from the group scheme (see above) must submit an auditor’s report, regardless of the amount of the NOW subsidy to be received.

Statement by a third-party expert

When applying for the grant to be determined, a statement from an independent expert must be submitted if:

  • there is no obligation to submit an auditor’s report, and;
  • the advance payment is €20,000 or more, or;
  • the final bill amounts to €25,000 or more.

Third-party experts are:

  • accountants and accountancy firms;
  • tax experts or tax consultancy firms;
  • trade associations and accountants.

Employers who no longer meet the conditions of the scheme must repay their entire advance. They are not required to submit an auditor’s report or a statement from a third-party expert (see below) with their application for the grant to be finalised. This is the case, for example, where it transpires that no loss of turnover has been suffered.

Even business owners who voluntarily choose not to claim the NOW subsidy do not need to submit a declaration.

For business owners who voluntarily waive part of the NOW subsidy, the obligations regarding the declarations remain in full force.

 

 

 

The purpose of this note is to outline a scheme. For the sake of readability, matters have therefore been simplified. VWG is therefore not liable for the consequences of actions taken or not taken as a result of this memorandum.

 

Table of contents