NOW subsidy and dismissal for business economic reasons
More clarity has recently been provided about the conditions for participation in the NOW scheme. The Ministry of Social Affairs and Employment has indicated that, given the purpose of the scheme (job retention), two important conditions are attached:
- Participating companies have an obligation to use best endeavors to keep the wage bill the same as much as possible;
- Participating companies do not submit a dismissal application during the period for which a subsidy is received due to business economic reasons.
No absolute prohibition of dismissal application due to business economic circumstances.
The prohibition not to apply for a dismissal application due to business economic circumstances is not an absolute prohibition. It is therefore still possible to submit a dismissal application to the UWV due to business economic circumstances. The employer must be able to demonstrate that:
- the dismissal is necessary, and
- using the NOW scheme is not an appropriate solution for the employer.
For example, an employer will have to demonstrate that the decline in sales will continue over a longer period of time and that must be cut in the workforce in order to reduce costs. The temporary compensation for employment costs under the NOW scheme is not sufficient to deal with the crisis. However, the UWV will be cautious to test whether this is the case.
Please note: a dismissal application due to business economic circumstances does have a consequence (see below).
What consequence is attached to the non-compliance with the condition not to apply for dismissal due to business economic circumstances?
The consequence of an application for commercial dismissal during the aforementioned period is the implementation of a correction when the subsidy will be determined. (fine).
- The wages for January 2020 of the employees for which dismissal is applied for business economic reasons, will be increased by 50% to indicate that the employer has violated his commitment not to make such dismissal applications.
- This amount then will be multiplied by 3 (after all, the subsidy covers three months), and
- Increased with the regular surcharge for employers' costs of 30%, and
- Increased with factor 0.9 for the percentage of the grant,
- The whole will be deducted from the subsidy.
Assignment or rejecting of the dismissal application?
For the application of the correction it’s not relevant whether the UWV ultimately assigns or rejects the employer's application for dismissal. The UWV gives the employer the opportunity to withdraw the dismissal application in order to ensure the most optimal level of the subsidy.
In which situation will the correction be applied to the subsidy?
The correction will (for now) only be applied to applications for dismissal for business reasons in the period from March 18 to May 31, 2020.
- Applications for redundancies filed from March 18 to March 31, 2020: these should have been withdrawn before April 6, 2020, otherwise correction will be applied.
- Applications for dismissal filed between March 31 and May 31, 2020: must been withdraw within 5 days, otherwise the correction will be applied.
No correction will be made for dismissal applications which are submitted between March 1 and March 17, 2020.
What about other dismissal options?
The correction only applies to dismissal applications for business economic reasons. Applications for dismissal due to long-term disability , probationary termination, termination by mutual consent are examples that are not sanctioned under the NOW scheme.
Hire an expert if you are considering dismissal due to economic circumstances during the NOW period.
In some circumstances, dismissal due to business economic circumstances can still be desirable. Due to the complexity of the regulations, it is advisable to contact an expert in Dutch employment law. An expert is able to assess how the situation will turn out if you as an employer wish to apply for a dismissal application due to business economic circumstances during the NOW period. Careful consideration is important in such a situation.
Dutch Legal Experts is happy to assist you. Please contact Dutch Legal Experts for more information and possibilities.
April 16, 2020