9 July 2020

Reorganise and/or apply for NOW?

By Koen Vermeulen

Many businesses are in grave danger because of the corona crisis.

The wage cost subsidy of the NOW scheme is all that is keeping some companies going. But how long can it last without firing staff? Will the second round of wage cost subsidy (NOW 2.0) offer structural relief this summer – or will this summer or autumn be the time for the unfortunate (collective) dismissal of personnel? Here we discuss some of the main points for attention.

Steps in reorganisation and dismissal

In the media and politics, the dismissal fine – the employer’s (partial) repayment of NOW wage cost subsidy – plays a major role in the question of whether a “wave of dismissal” is imminent. However, there is much more to consider when an employer is deciding on a (collective) dismissal.

  • It starts with drawing up a business case in which the reason and need for cost savings – through dismissal – is described.
  • This translates into a mandatory request to the Works Council for advice about the intended reorganisation.
  • If the intention is to fire 20 or more employees, consultation with the union(s) is compulsory based on the Collective Redundancy (Notification) Act.
  • Subsequently, applications for dismissal will be submitted to the UWV (Employee Insurance Agency), taking into account a procedural time of 4 – 6 weeks.
  • After permission from UWV for dismissal, termination will take place after the notice period has expired.
  • Finally, as an employer, you are obliged to pay a transition fee – there is no compensation in the NOW or other scheme for payment of that transition fee.

The dismissal fine

If you apply for wage cost subsidy under the NOW 2.0 scheme, you will receive wage cost subsidies for the months of June, July and August. However, if you also start a UWV dismissal procedure in the summer months, you will have to repay part of the advance payment of that wage subsidy later this year. The degree of loss of turnover determines the amount of the subsidy. The discount on the subsidy, the dismissal fine, is always calculated on 90% of the employees’ salary.

With a smaller loss of turnover, it can therefore be relatively expensive to reorganise during the term of NOW 2.0. Apart from the above costs, which consist of continued payment of wages during the procedure and payment of the transition payment. It may be worthwhile to postpone reorganisation dismissals until shortly after the term of NOW 2.0, in October.

Cost reduction

If the company is in financial difficulties, there are also options other than these employment law options. Think of restructuring debt through an agreement with creditors, or negotiations with financiers and the tax authorities. Consideration may also be given to the partial termination or transfer of business activities.

Reorganisation requires a broader consideration than just looking at employment law. It requires insight into your organisation, the groups of (interchangeable) functions and all financial scenarios.

We can provide you with a unique customised solution

In order to serve companies as efficiently as possible, our employment and company law departments join forces. An employment law expert and an expert in the field of corporate law look at your problem together as a team. This allows us to find a correct and sustainable solution for you. By looking at everything from two sides, we create a unique customised solution for you.

Do you have a question? Do not hesitate to contact us.

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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