2 September 2020

NOW 3.0 and dismissal for business economic reasons (redundancy)

By Koen Vermeulen

The corona crisis is still gripping many business owners. Turnover remains under pressure, while costs continue - such as wage costs.

The Dutch Cabinet has therefore announced a third support package to compensate employers for continuing wage costs. Business owners are expected to be able to apply to the Employee Insurance Agency (UWV) for wage cost subsidy based on this NOW 3.0 from 16 November 2020. This scheme will be different from the NOW 2.0 support package.

What does NOW 3.0 mean for business owners and the possibilities for (simultaneous) dismissal for business economic reasons?

Term of NOW 3.0

NOW 3.0 has a term of six months, from October 1, 2020 to July 1, 2021, consisting of three three-month periods. The business owner can decide for each period whether an application for a subsidy will be made, and it is irrelevant whether they have previously received a subsidy based on NOW 1.0 and / or NOW 2.0.

Fall in turnover

The business owner must determine the expected fall in turnover every three months. If the reduction in turnover is at least 20% in the period October to December 2020, the employer is entitled to a wage cost subsidy. From January 2021, that right will only exist with a loss of turnover of at least 30%. We assume that the turnover for 2019 will continue to be the reference period for determining the minimum turnover decrease of 20 or 30%.

In the period October to December 2020 (i.e. the first period of NOW 3.0) an employer will be reimbursed 80% of the wage costs; that will be reduced to 70% and 60% respectively in the second and third periods of NOW 3.0.

In the letter of 28 August 2020, the Cabinet explicitly stated that the employer may reduce the total wage bill by a maximum percentage without the lower wage bill leading to a lower setting of the NOW subsidy afterwards (as was the case in NOW 1.0 and NOW 2.0).

Please note that a reduction in salary may not be a unilateral decision by the employer; this requires consultation with employees (representatives), but it does offer opportunities for entrepreneurs.

Maximum salary per employee

In the period from October 2020 to March 2021, the employer will still receive a NOW subsidy calculated on a maximum salary per employee of € 9,538 gross. In the period April – June 2021, this will be reduced to € 4,769 gross per month. In the latter period, they will therefore only receive a NOW subsidy with at least 30% loss of turnover and the maximum subsidy is therefore 60% of € 4,769 per employee.

No dividends or bonuses.

It is still a condition that the company does not pay dividends and bonuses.

No dismissal fine in NOW 3.0

Finally, a major difference with NOW 2.0 is that the employer who is eligible for NOW 3.0 subsidy can dismiss employees through the Employee Insurance Agency due to business economic reasons (redundancy), without this leading to a so-called “dismissal fine”. So if the wage bill on which the NOW subsidy was calculated falls due to economic dismissal, the UWV will no longer apply a discount on the subsidy afterwards.

The intention is that business owners can submit their application for NOW 3.0 subsidy to the UWV from 16 November 2020. The definitive content of the arrangement and conditions for NOW 3.0 will follow at a later date.

It is therefore not completely clear at this time, at the beginning of September 2020, how the scheme will turn out. But the starting point now is that dismissal will in principle no longer have negative financial consequences for the amount of the NOW subsidy.

Our experts are ready to assist you

If you have a question about NOW 3.0, reorganisation or a related topic, please contact us. Our employment law team is ready to help.

Koen Vermeulen

Koen Vermeulen

Lawyer / associate partner

Koen Vermeulen is your sparring partner for all questions on employment law, employee participation and pensions.

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