By now it is clear that the economic consequences of the coronavirus will stay with us longer. The government's second support package is not enough to offset those consequences. Without additional support policy, the expectation is that unemployment in 2021 will rise to 6.5%. On Friday 28 August, the cabinet therefore announced an extensive third support and recovery package. Not only are the support measures such as NOW, Tozo and TVL extended, but there is also attention for investments in retraining and upskilling, guidance for job-to-job transitions, the fight against youth unemployment and debt counseling.
NOW extension: three time periods
The cabinet extends the temporary Emergency Bridging Measure for Work Retention (NOW) as of 1 October with three periods of three months. The turnover loss that must be at least present in order to be eligible for the NOW remains at 20% in the first period. From the second period, the NOW is accessible to companies that suffer 30% or more revenue loss.
Reduction in reimbursement percentage
From the 90% reimbursement rate in the first period, 10% is allocated to training and to from-work-to-work trajectories. The reimbursement percentage that goes directly to companies will therefore be 80%. The cabinet and the social partners want, with this agreement, to prevent as much as possible that people rely on social security when it proves necessary for a company to lay people off. Finding another job is, after all, the easiest if there is still a job.
The reimbursement percentage is gradually reduced per period: in the second period (which starts in January 2021) the reimbursement percentage is 70%, and in the third period (April 2021) 60%.
The dismissal penalty expires.
The penalty for economically motivated dismissal (which had already been reduced in NOW 2.0) expires. Companies are allowed to partially reduce their payroll without this leading to a reduction in the subsidy. The exemption percentage for the wage bill increases from 10% in the first period to 15% in the second period to 20% in the third period. The employer can, in consultation with the employees' representatives, determine whether and how he wants to reduce the payroll. As examples, the cabinet cites natural attrition, dismissal or a voluntary wage sacrifice.
The maximum reimbursable wage per employee remains in the first two time periods at most twice the daily wage, which amounts to € 9,538 per month. In the third period this is reduced to a maximum of one daily wage.
The obligation aimed at training and the prohibition on paying out dividends and bonus payments remain.
In the third NOW (consisting of three periods) companies remain obliged to stimulate retraining or upskilling. The ban on bonuses and dividends also remains in place. The fixed (lump-sum) surcharge for the employers' costs, such as vacation pay and pension premiums, remains 40%.
Just like in NOW 1 and 2, an employer receives after the application an advance of 80% of the subsidy amount and the remaining 20% upon the determination.
Applications from 16 November
The UWV strives for the next application period per 16 November 2020 to be opened, in which an application can be submitted for the first time period (October 1 to December 31). The second period runs from January 1, 2021 to and including March 31, 2021, and the third period runs from April 1, 2021 to and including June 30, 2021. The employer may choose for each period whether he wants to submit an application. Final determination of the subsidy takes place after the end of the three time periods.
Tozo: vermogenstoets en ondersteunen nieuwe toekomst
The allowance for self-employed entrepreneurs (the Tozo) is also extended by nine months to July 1, 2021. The TOZO is for self-employed entrepreneurs, including freelancers. It provides for an additional living allowance if income due to the coronavirus crisis falls below the social minimum and/or a loan for working capital to address liquidity problems.
As of 1 October 2020, an asset test will become part of the conditions. Attention is being paid to available funds. Entrepreneurs with more than €46,520 in directly available funds (such as cash, bank and savings balances, and shares, bonds and options, etc.) are no longer eligible for Tozo 3. Other assets, including those from one's own home, protected pension, business premises, machines, business equipment and inventories, are not taken into account.
As of January 1, 2021, the government will begin providing support to entrepreneurs who are orienting themselves toward a new future, whether as self-employed entrepreneurs or as employees in paid employment. Municipalities will, together with self-employed entrepreneurs, inventory whether and what support is needed. This can, for example, involve coaching, further training or retraining, and reorientation.
SME fixed costs allowance (TVL)
The fixed-cost subsidy for SMEs will also be extended by nine months, with the maximum subsidy amount increased to €90,000 per three months.
For the tranche through December 31, the TVL is extended under the current terms, meaning that companies with a revenue loss of more than 30% are eligible. From January 1, the conditions for the TVL will be tightened by raising this revenue decline threshold to 40%. For the period from April 1 to and including June 30, the threshold is set at 45%. The other conditions for the TVL remain unchanged: the percentage of fixed costs that the TVL reimburses remains 50%.
Measures aimed at investments
The recovery and support package is broader than the previous two emergency packages, and also focuses on investments to accelerate the economy's recovery. The package of measures aimed at investments has been shaped along four lines: the acceleration of public investments; the triggering and spurring of private investments; the strengthening of the solvency position of Dutch companies; and the stimulation of innovation.
recovery package
Because it cannot be prevented that people are laid off and that companies go bankrupt, the cabinet is setting aside a further approximately €1.4 billion for proper guidance from unemployment to work, retraining and development, the fight against poverty and problematic debts, tackling youth unemployment, and protecting vulnerable groups in the labor market.
Would you like to discuss?
Do you still have questions about the third support and recovery package, or do you have other questions that are (indirectly) related to the coronavirus crisis? Please feel free to contact our LEAN Corona Desk and our labor-law/restructuring specialists.
We can be reached at the number 085 – 303 64 29 or send an email toarbeidsrecht@LEANlawyers.nl.
