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How to gain access to temporary allowance for wage costs (NOW regulation)?

Gain access to temporary allowance for wage costs

Companies are eligible for a temporary allowance to cover wage costs in the periods March to May (NOW 1.0) and/or June to September 2020 (NOW 2.0) if their turnover is expected to decrease by at least 20% compared to 2019 due to COVID-19. This allowance is aimed to enable employers to retain their employees in these extraordinary times. Our paper explains how you can estimate your allowance, how your allowance finally will be determined and what the differences are between NOW 1 and 2. Below we shortly describe the main characteristics of NOW 2.0. More details about NOW 2.0 and information about the NOW 1.0 can be read in our one pager which can be downloaded from this website (see PDF-file).

Ewald van Hamersveld

Partner

KPMG Nederland

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To apply for the allowance, employers are expected to calculate the percentage of turnover loss. This percentage should be calculated based on the comparison of the total turnover of four consecutive months starting from the first of June, July or August 2020, and a reference period being 1/3th of the full year turnover in 2019. Companies who applied for NOW 1.0 are required to choose subsequent months of turnover loss as starting point when applying for NOW 2.0. In case of a new company, launched after 1 January 2019, and before 1 May 2020, the 2019 turnover is replaced by the turnover since set up and adjusted to reflect a four months period.  

The allowance intends to compensate the wage bills of June, July, August and September (irrespective whether the turnover loss period being different, and noting that the expected monthly wage bill is based on March). To this end, the expected monthly wage bill is multiplied by four. The allowance compensates also for social security premiums and holiday pay, for which a fixed percentage of 40% is assumed. The maximum allowance will be based on 90% of the above mentioned estimate and the UWV will pay 80% of the allowance as an advance payment.

The final allowances is reduced if the total actual wage costs in the allowance periods are lower than the expected wage costs. The reduction equals the difference between expected and actual wage costs times x 90%. Also if an employee’s contract is terminated for business economic reasons the allowance will be reduced by its salary. Additionally, companies who terminate 20 or more employee contracts for business economic reasons will face a 5% cut on their total allowance unless agreement has been reached on the termination with the trade union(s). Under NOW 2 employers are obliged to encourage employees to retrain themselves; the government covers the costs incurred;

Companies who receive NOW 2.0 allowance are not allowed to pay dividends and bonuses or repurchase shares in 2020 and in 2021 (until the general meeting of shareholders takes place) if the amount of allowance requires an audit report (see below). This restriction is always applicable (irrespective of the allowance amount) if allowance is requested at operational level instead of at concern or holding level;

The final settlement is against the advance payment, which can result in either a reclamation or additional payment. Requests for the final decision regarding the allowance should be accompanied with an auditor’s report if the advance payment exceeds €100,000 or the final allowance is expected to exceed €125,000. Without an auditor’s report, the request should be submitted within 24 weeks after the turnover loss period; with an auditor’s report, the request period is 38 weeks. The UWV decides upon the final allowance within 52 weeks after the request for final decision has been submitted.

Please also view our PDF on the NOW 1.0 and 2.0 for explanatory graphics, formulas and try our NOW-calculator.

More Information

For more information please contact Ewald Van Hamersveld, Lourens van der Zijl and Ada Sneekes.

© 2021 KPMG N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.


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