Extension of Emergency Covid-19 support
Category: Financial law
Last week, the cabinet announced that the emergency financial measures introduced as a result of the Corona crisis are to be extended. Part of the emergency package is the Temporary Emergency Measure Bridging Work (NOW). The NOW scheme provides an allowance for employers’ wage costs for the months of March, April and May 2020, proportionate to their loss of turnover (also read my previous blog).
Depending on employers’ loss of turnover, the subsidy amounts to a maximum of 90% of employers’ wage costs. The NOW scheme will be extended for an additional period of 3 months for the months of June, July and August. The conditions for granting the NOW scheme have been modified in a few ways. In addition, some conditions from the NOW 1.0 scheme have been adjusted.
NOW 1.0 subsidy at a glance
An employer who suffers a loss of turnover of at least 20% is eligible for a wage subsidy. The NOW subsidy can amount to a maximum of 90% of wage costs, depending on the loss of turnover. For example, for a loss of turnover of 50%, the subsidy in wage costs is 45%. The loss of turnover is calculated on the basis of the company turnover measured over a self-selectable continuous period of three months between March and July 2020, compared to the total turnover achieved in 2019 divided by 4.
In the case of a group of companies (a ‘group’), the loss of turnover is determined at a group level. If a group as a whole has a loss of turnover of less than 20%, no compensation is paid to the individual parts of the group. Under certain conditions, however, individual companies operating in a group that independently have a minimum loss of turnover of 20%, but do not achieve this at a group level, may also qualify for a subsidy.
For the calculation of the wage total, the wage of all employees with a social insurance wage (SV wage) is taken into account up to a maximum amount of € 9,538 gross per month. The salary of any employee who exceeds this amount does not qualify for the subsidy. The total wage and salary bill of the employer is increased by a surcharge of 30% for employer contributions, pensions, etc.
On the basis of the employer’s application, an advance payment of 80% of the expected NOW benefit will first be made. The final compensation is then determined afterwards and, if necessary, corrected in accordance with the actual loss of turnover. When determining the advance, January 2020 is the reference month for the wage and salary bill. For complaints and appeal against the (amount of) NOW support granted please read here.
NOW 2.0 wage support summarized
The NOW scheme will be extended for an additional period of three months (June, July and August 2020). The scheme follows the NOW 1.0 scheme and remains essentially the same, although there are a number of changes or additions to be made. The starting point remains an entry requirement of a loss of turnover of at least 20%.
- The decrease in turnover shall be observed over a three-month period starting on 1 June, 1 July or 1 August, with the new turnover period corresponding to the selected period under NOW 1.0 if requested.
- The reference month for the wage costs is to be changed to March 2020.
- he application for NOW 2.0 does not require a previous application for NOW. The NOW 2.0 scheme is open to both employers who have previously applied for NOW subsidies and employers who have not yet done so.
- The lump-sum surcharge on wages (to compensate employers’ costs, etc.) will be increased from 30% to 40%.
- The so-called dismissal penalty, amounting to 150% of the salary of an employee who was dismissed for business economic reasons in the period of the NOW scheme, has been cancelled. In the event of dismissal for economic reasons, only 100% of the salary of the employee(s) concerned still has to be repaid. Employers must state on the application form for the NOW scheme that they will consult with the trade unions in the event of a collective redundancy (20 employees or more).
- For companies that receive a subsidy amount for which an auditor’s report will be required, a condition to qualify for the NOW 2.0 scheme is that no bonus or dividend payments, or share buybacks, will be made throughout 2020. The conditions for non-payment of bonuses only apply to the payment to management and the board and does not apply to other staff.
- As an additional condition in the NOW 2.0 scheme, a best-efforts obligation for employers will be included to encourage their employees to undergo further training or re-training.
- The NOW 2.0 scheme can be applied for from 6 July 2020 until 31 August 2020.
- Changes/additions to NOW 1.0
- As an allowance for seasonal businesses (which have no or considerably lower wage costs in January, as a result of which they were insufficiently compensated in their wage costs in the NOW 1.0 scheme for March, April and May), the reference month is adjusted to March 2020 (instead of January) if the wage costs in the months of March, April and May is higher than in January to March 2020. This additional allowance will only be paid in arrears when the subsidy is finally determined and does not affect the advance payment.
- As a result of the above, an employer who did not have a wage and salary bill in January 2020 and/or November 2019, but who did have a wage and salary bill in March to May 2020, will still be eligible for a NOW subsidy.
- Companies that have recently taken over another company, resulting in there being a non-representative turnover or wage bill, may be subject to the same alternative turnover calculation as start-ups.
- Any thirteenth month paid out in January 2020 will be taken out of the wage and salary bill. As a result, situations will be avoided where, as a result of the payment of a thirteenth month and therefore a higher wage bill in January 2020, the NOW subsidy has to be repaid at the time of final determination.
- It has also been determined that an auditor’s report will have to be submitted for companies that have received an advance payment of € 100,000 or more, or where a subsidy of €125,000 or more will be awarded upon the final determination.
- The application period for the NOW 1.0 has been extended until 5 June 2020.
- The final determination of the NOW subsidy has been postponed to 7 September 2020. It will then be possible to apply for both NOW 1.0 and 2.0.
Subsidy for other costs during Covid-19 crisis in the making
In addition to the extension and supplementation of the NOW scheme, there will also be a scheme to meet the fixed costs of SMEs for the SMEs that are the hardest hit, including hotels, restaurants, recreational facilities, gyms, etc. (sectors that are eligible for TOGS) in fixed costs other than wage costs. Depending on the size of the company, the amount of the fixed costs, and the degree of loss of turnover, these companies can receive an allowance for their fixed costs up to a maximum of € 20,000 for three months.