10 March 2020

Coronavirus and working time reduction

Coronavirus and working time reduction

The outbreak of the COVID-19 (Coronavirus) already has consequences in a lot of companies. Also for employers in the Netherlands. Certain extraordinary events as the Coronavirus may result in businesses having insufficient work for their employees. One of the possible measures that could be taken in this regard is to request for temporary working time reduction. In that regard employees may be entitled to unemployment benefits due to a reduction in the number of working hours available.

Working time reduction in the Netherlands – requirements

In order for your business to do so, employers must show that, due to the outbreak of Coronavirus:

i) for at least 2 (two) calendar weeks,
ii) at least 20% of the working capacity available cannot be (or is not expected to be) utilised.

In order to receive the benefits, employers must apply for a permit for a working time reduction at the Ministry of Social Affairs and Employment (SZW). After having received the permit, the employer must then immediately inform the UWV (Uitvoeringsinstituut Werknemersverzekeringen).
The permit may not be granted if the workforce of the company is not appropriately tailored to the needs of the business. The benefits will not apply to any period prior to the date of receiving the application for the permit. Additionally, the benefits are not applicable to on-call or temporary employees.

Period of working time reduction

The granted permit is valid for a initial maximum of 6 (six) weeks. Employers may apply for certain employees, or certain groups of employees. If there is still no improvement after this time, a request for an extension can be made for another 6 (six) weeks’ period, the permit can be extended maximum three times six weeks (18 weeks). So working time reduction can applied for a maximum period of 24 weeks.

Unemployment benefit – compensation

During the period the permit is granted the employer has to continue to pay wages, as per usual, throughout this period to the employees. If the employees meet the requirements of the Unemployment Insurance Act (a loss of at least five hours per week of the concluded working time and the employees should have worked at least 26 weeks in the last period of 36 weeks), the employer will receive the temporary unemployment benefit as a compensation for the hours the employees did not work during the period of working time reduction. The compensation will be subject to 70% of the salary of the employee subject to the maximum daily wage.

Continuation coronavirus

If it turns out that after the total period of maximum 24 weeks of working time reduction, there is still an increase of working hours, termination of employment agreements could be considered based on business economic circumstances.

In case it turns out to be inevitable to apply temporary working time reduction, please feel free to contact us. Our lawyers are happy to assist you to obtain the permit if necessary and to further advise.