18 March 2020
1. UPDATE – Dutch Government Introduces a Crisis Fund for Companies
1.1 On March 16th, 2020 we published a blog on the working time reduction facility and other legal measures against the covid-19 impact on corporations. Yesterday evening the Minister of Economics, the Minister of Finance and the Minister of Social Affairs & Employment held a press conference in which they announced that the Dutch government will provide for additional support packages in the amount of 10 to 20 billion euros for the coming three months. The support packages are meant to minimize the number of bankruptcies and prevent employees losing their jobs.
1.2 To date roughly 78,000 companies have applied for the reduced working time facility this year. As of March 17th, 2020, it is no longer possible to apply for this facility and new applications will not be processed, including applications that are unrelated to the covid-19.
1.3 Yesterday Dutch government introduced the “Noodfonds Overbrugging Werkgelegenheid” (the “Crisis Fund”). The Crisis Fund is of temporary nature and will have immediate effect. The Crisis Fund is for a period of three months. Under certain (still to be determined) conditions the Crisis Fund can be extended for another three months.
1.4 The Crisis Fund replaces the reduced working time facility. Pending applications will be transferred to the Crisis Fund. If the working time facility permit has already been issued, this remains in force for the duration of the permit. It is no longer possible to extend the permit.
1.5 All new applications for compensation under the Crisis Fund will have to be filed at UWV. Applications can be filed once the regulation of the Crisis Fund has come into effect.
1.6 Unlike the working time reduction facility the Crisis Fund measures are not related to working time reduction and the level of unemployment social benefits. In our last Memorandum on the Covid-19 outbreak we explained that under the reduced working time facility government paid a compensation equal to 75% of the gross maximum daily wage in the first two months and 70% thereafter calculated over the wages of the reduced working hours. The Crisis Fund will compensate for a maximum amount of 90% of the wage bill (loonsom, that’s the entire wage sum on the employer’s payroll), depending on the percentage of decrease in the company’s revenues.
1.7 The government provided the following calculation examples:
– 100% revenue loss; compensation of 90% of the wage bill;
– 50% revenue loss; compensation of 45% of the wage bill;
- 25% revenue loss; compensation of 22,5% of the wage bill;
1.8 Based on the Crisis Fund application, UWV will provide an advance-payment of 80% of the expected compensation. For applications above a certain compensation amount (maximum amount still to be set by the government), an auditor’s report will be required.
1.9 The actual revenue loss will be determined retro-actively. A correction will be applied if the wage bill appears to have decreased during the Crisis Fund period. Any excess amount pursuant to the UWV 80% advance payment will need to be paid back. How the correction will be implemented has not been communicated yet.
1.10 Contrary to the reduced working hours facility the Crisis Fund will not only apply to employees who are on the employer’s payroll with a fixed number of hours per week but also to on-call workers with flexible hours.
1.11 Companies applying for compensation under the Crisis Fund must meet/agree to the following conditions:
i they must demonstrate that they expect their business operations to decline by at least 20% since 1 March 2020;
ii they are not allowed to dismiss any employee for business reasons during the Crisis Fund period;
iii they must continue paying the employees’ contractual salary.
1.12 The condition that an employer must pay the full contractual salary to be eligible for the Crisis Fund compensation seems to cater to the concerns that we raised in our previous Memorandum of March 16th, 2020. We discussed the Unworkable Weather Regulation which regulation implied that as from the moment that the request for the reduction in working time facility is granted by means of issuance of the permit, the employer has no obligation to continue paying the salary over the hours for which the permit was granted. In our view this is contrary to good employership and the nature of Dutch employment law. Now that the Crisis Fund is not related to working time reduction nor unemployment benefits the employee remains entitled to his contractual salary while the employer is compensated by means of the Crisis Fund.
1.13 Employers who do not wish or are not eligible to use the Crisis Fund, but still want to reduce labor costs can opt for (i) a reduction of salary with prior consent of each employee, (i) partial dismissals (see our Memorandum 3 of March 16th, 2020) or (iii) a full fledged reduction in force.
1.14 The legislator is now drafting the regulation for this new Crisis Fund. Once published we will inform you further with the exact details. Companies who comply with the conditions as outlined under paragraph 1.9 will be eligible for the Crisis Fund.
1.15 Apart from the Crisis Fund, companies who are currently impacted the most by the coronavirus such as companies in the catering, cultural and travel industry can obtain an immediate fund of 4,000 euros from a still to be established crisis office. The government will distribute the list with industries that may apply for the immediate fund.
2. Vital Sectors
2.1 The National Institute for Public Health and the Environment (Rijksinsituut voor Volksgezondheid en Milieu (“RIVM”)) is providing advice and information on covid-19. The RIVM published information on covid-19 in English which you can find via the following link: https://www.government.nl/topics/coronavirus-covid-19
2.2 In general the rule (still) applies that the employer is responsible for ensuring a safe and healthy working environment. The general advice from the RIVM at the time of writing this memorandum is that employees should work from home as much as possible up to and including April 6th, 2020.
2.3 Last Sunday, March 15th, 2020, the Dutch government mandated the closure of all schools and daycare facilities. The government also designated a number of sectors as “vital sectors” to prevent social and economic disruption. This means that corporations and institutions in these sectors must remain operational (see the list below under point 2.6). The vital sectors/professions list is not exhaustive. In this regard it is important to underline that persons with an indispensable facilitating or support function (e.g. cleaning, security, IT) to the vital sectors/professions are considered to be vital too.
2.4 People who work in the designated vital sectors or have an indispensable facilitating or support function are allowed to bring their children to school and daycare enabling them to continue fulfilling their work with no additional costs. This applies to employees and self-contractors. However, schools and day care facilities are only for emergency cases. The people working in designated vital sectors are therefore requested to first try to arrange for child care themselves. The exception to take the child(ren) to school or day care regardless shutdown applies only if both or one parent has a vital profession, or a facilitating or supporting function in view hereof. If a child has covid-19 symptoms, they are not allowed to go to school or day care.
2.5 Generally parents are expected to take care of the necessary arrangements for their children during the school closure. Parents who cannot arrange for the care of their children can apply for calamity leave. During the calamity leave the salary payment continues. This is a temporary leave in order for the employee to make the necessary arrangements for child care.
2.6 List of Vital Sectors / Professions
2.7 List of vital procedures
The lists can be found via the following link: https://www.rijksoverheid.nl/onderwerpen/coronavirus-covid-9/cruciale-beroepsgroepen
This blog is drafted on the basis of the available information on 18 March 2020. We are monitoring the development on a daily basis. Please do not hesitate to contact us if you have any queries or wish to discuss your company specific circumstances.
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