Compensation for employers suffering from a decrease in revenue due to the corona pandemic

Today, the Dutch government has announced a set of new measures aimed at mitigating the impact of the coronavirus pandemic on the Dutch economy.

As part of these new measures, the rules with regard to working time reduction are revoked and replaced by a new emergency measure. Over 78.000 businesses requested permission to reduce the working time of their employees under the Working Time Reduction Decree over the past days, whereas in a normal year the number of applications amounts to approximately 200. The Ministry of Social Affairs and Work does not have the capacity to process these applications within an acceptable time-frame. Moreover, the government finds that the financial support that was being offered to businesses under the Working Time Reduction Decree will be insufficient to protect Dutch businesses from bankruptcy and employees from losing their jobs. Effective immediately, applications under the Working Time Reduction Decree can no longer be filed.

Instead, the government has announced a temporary emergency measure, under which compensation of salary costs will be offered to businesses who are suffering from a decrease in revenue. The details of this new regulation are expected to be announced over the following days. Please find below a general overview of what is expected based on announcements that have been made by the government so far.

Employers expecting a drop in revenue of at least 20% as of 1 March 2020 can apply for compensation of salary costs for a period of three months. The amount of the compensation will depend on the decrease in revenue and will be up to 90% of the total salary sum of the employer’s business. The following examples have been published:

• in case of a decrease in revenue of 100%, the compensation will be 90% of the total salary sum;
• in case of a decrease in revenue of 50%, the compensation will be 45% of the total salary sum; and
• in case of a decrease in revenue of 25%, the compensation will be 22.5% of the total salary sum.

The request for this compensation must be filed with the Employment Insurance Agency (UWV). UWV will provide advance payments of 80% of the expected compensation. For requests above a certain level, an auditor’s report will need to be presented.

The actual drop in revenue will need to be demonstrated afterwards. When the final amount of the compensation is calculated, any decrease in the salary sum of the employer will be taken into account. This may mean that the employer will need to repay part of the compensation.

After the initial three months, an extension of another three months can be requested, but conditions may apply.

The aim of this measure is to enable businesses to continue to pay their employees’ salaries, thus preventing mass dismissals. To safeguard this purpose, an important condition for eligibility will be that during the period in which compensation is paid, the employer does not terminate employees for business reasons.

The temporary emergency measure will be made accessible as soon as possible. Further details are expected to be published over the following days.

We will post further updates when more information is published and will be at your disposal in case you have any questions about this temporary emergency measure or if you require other support in these challenging times.