14 Jul Corona special | The NOW 2 scheme
The NOW 2 scheme is published. Applications for the NOW 2 subsidy can be submitted from 6 July until 31 August 2020. We have summarized the points of attention.
1. Loss of revenue:
As under NOW 1, the NOW 2 subsidy can be claimed if there is a loss of revenue of at least 20% over a certain period of time. The employer may choose for which period the NOW 2 is applied for. This will be a period of four months, starting on 1 June, 1 July or 1 August 2020. The reference revenue is the revenue over the year 2019 divided by 3. Employers that also applied for NOW 1 must match the revenue period under NOW 2 to the first selected period.
2. Compensation amount:
The compensation is based on the SV-wages paid in March 2020 (with a maximum of EUR 9,538 per employee per month) plus 40% flat-rate employer’s charges. The formula is: percentage drop in revenue x wage bill x 4 x 1.4 x 0.9.
3. Correction for lower wage bill:
If the wage bill in the compensation period is lower than the reference month March, this will lead – as under NOW 1 – to a more than proportionate reduction in the final compensation (based on a 100% decrease in revenue instead of the actual decrease). A higher wage bill in the compensation period will however not result in higher compensation. Furthermore, NOW 2 doesn’t provide for a separate arrangement for seasonal companies, because the reference month is March 2020 (instead of January) and seasonal influences are therefore less important.
4. Restructuring penalty:
Under NOW 2 the ‘penalty on restructuring’ is reduced from 150% to 100% (x 1.4 x 0.9) of the wages of the employees concerned over a period of three months if the employer applies for a dismissal permit between 1 June and 30 September 2020. Under NOW 2, collective dismissals (20 or more employees) must be subjected to an agreement between the employer and all the trade unions concerned (or, in the absence thereof, other employee representatives). If an employer dismisses 20 or more employees without such agreement, the subsidy is reduced by 5%.
5. Prohibition bonus / dividend payments / treasury shares:
- If a subsidy is granted for which an auditor’s report is required based on the threshold value (advance payment at or above EUR 100,000 and EUR 125,000 final subsidy), the employer is obliged under NOW 2 not to pay any dividend over 2020, not to pay bonuses over 2020 to the management and not to repurchase its own shares until the shareholders’ meeting at which the 2020 financial statements are established (usually spring 2021). This obligation applies only to the applicant entity. The other legal entities of the group, provided that they do not apply themselves and no application is made under the operating company exception, are not bound by these prohibitions.
- The special conditions regarding bonus / dividend / repurchase of own shares under NOW 1 for the operating company exception also apply under NOW 2. In short, the bonus prohibition applies not only to the applicant entity but also to the group head, while the prohibition on dividend payment and repurchase of own shares applies to the entire (international) group.
- The bonus prohibition is limited to bonuses and profit distributions to the board and management. The concepts of board and management are to be explained widely. The registration in the Chamber of Commerce is not decisive in this respect, not even whether the persons involved are authorised with decision-making or signatory rights. Board members, executives or members of management determining the policy of the company are covered by this provision. The internal title is irrelevant. This means that the management may only receive the basic remuneration or the usual pay scheme, due to the ban on bonus payments. This prohibition also includes interim-management. The prohibition however does not apply to other employees working in the company.
6. Training commitment:
Under NOW 2, the employer is obligated to make efforts to encourage employees to undertake further training or retraining.
7. Employee participation:
The works council/employee representation or staff must be informed when the company receives the NOW subsidy.