Under the NOW scheme, employers can receive compensation for their wage costs. This compensation depends on the extent to which their turnover has fallen as a result of the coronavirus crisis.
In the case of groups of companies, the decline in turnover at group level is the decisive factor. This “group scheme” is due to be amended slightly in the near future. This is evident from a Chamber letter from Minister Koolmees of Social Affairs and Employment.
For details of the final amendments to the group scheme, see our article Terms and conditions of the amended NOW group scheme announced
The NOW scheme
As part of the efforts to combat the economic impact of the coronavirus crisis, the NOW scheme compensates employers for their wage costs (the acronym NOW stands for: Temporary Emergency Measure to Safeguard Employment).
We describe the NOW scheme in our articles The NOW scheme opens on 6 April 2020, NOWloket is about to open; think before you act and Be aware of the reduction under the NOW scheme.
Why the group scheme?
The rationale behind the group scheme is that those parts of a group which are not experiencing a fall in turnover, or are experiencing a lesser fall, should help bear the burden of those parts of the group that are affected by the coronavirus crisis, or are affected to a greater extent.
This idea does not always seem to go down well with corporate groups, with the result that the group does not make use of the NOW scheme. Instead, the group’s subsidiaries facing significant falls in turnover are considering making staff redundant.
Minor adjustment
The main rule of the group scheme remains unchanged. Only where the group as a whole has experienced a fall in turnover of less than 20% will it be possible for a group company to apply for the NOW scheme on the basis of the fall in turnover of that group company alone.
For groups of companies with a fall in turnover of 20% or more, the NOW scheme will therefore not be adjusted.
The amendment to the group scheme will be published in the course of next week. Applications may be submitted to the UWV once it comes into force.
Conditions
The conditions for applying the NOW scheme on the basis of a decline in turnover at just one group company are:
- the group must declare that it will not pay any dividends or bonuses for 2020, nor will it buy back any of its own shares, up to and including the general meeting at which the 2020 financial statements are adopted;
- the operating company must have an agreement with the trade union(s) regarding job security;
- There is no staff limited company within the group.
In addition to these conditions, a number of conditions and safeguards have been established to prevent strategic behaviour within the group:
- the other operating companies must not carry out any assignments or projects that would be to the detriment of the entity applying for the grant;
- if employees of the operating company carry out activities at another entity during the subsidy period, the operating company’s loss of turnover is reduced by the (theoretical) turnover arising from those activities;
- The transfer pricing system used in the 2019 financial statements will also be applied for 2020;
- Changes in finished goods stock are allocated to turnover.