{"id":30531,"date":"2020-04-10T14:54:15","date_gmt":"2020-04-10T14:54:15","guid":{"rendered":"https:\/\/thelegalcompany.nl\/?p=30531"},"modified":"2026-09-02T17:36:46","modified_gmt":"2026-09-02T17:36:46","slug":"now-and-dismissal-how-does-it-actually-work","status":"publish","type":"post","link":"https:\/\/thelegalcompany.nl\/en\/now-and-dismissal-how-does-it-actually-work\/","title":{"rendered":"NOW and dismissal, how does it actually work?"},"content":{"rendered":"\n

There is currently a great deal of confusion about the award of the subsidy under the Temporary Emergency Bridging Measure for Sustained Employment (NOW)<\/a><\/span> and topics such as continued wage payment, flexible workers and dismissal options. In our first blog of this two-part series, we discussed continued wage payment for both permanent and flexible employees in relation to the NOW subsidy. In this second blog, we take a closer look at the relationship between dismissal and the NOW subsidy. <\/strong><\/span><\/p>\n

Uncertainty surrounding dismissal and entitlement to NOW subsidy.
<\/span><\/strong>Besides the uncertainties surrounding the obligation to continue paying wages, confusion has also arisen about the NOW’s aim of preserving employment versus economic dismissal. This was mentioned in the outline of the NOW as (1 of 3) absolute conditions for being eligible for the subsidy at all (together with a 20% decline in revenue and paying employees 100% of their wages). Subsequently, in the letter to Parliament from the Ministry of Social Affairs and Employment, issued together with the announcement of the final NOW scheme on 31 March 2020, the following was stated under the heading: <\/span><\/p>\n

Conditions for participation in the scheme.<\/span>
<\/strong> “Given its purpose (preserving jobs), participation in the scheme is subject to two important conditions: the effort obligation to keep the wage bill as level as possible, and the condition not to apply for dismissal on economic grounds during the period for which subsidy is received.”<\/em><\/span><\/p>\n

This sounds clear. An important condition for participation in the NOW scheme thus appears to be that the employer, in the period from 18 March through 31 May 2020<\/u>, does not submit a request to the UWV for permission to terminate an employment contract for economic reasons. Further on in that same letter to Parliament of 31 March 2020, it becomes clear that the Ministry fortunately did not intend this as a hard-and-fast access condition.<\/span><\/p>\n

Accordingly, the final NOW scheme does not contain an express prohibition on carrying out economic dismissal. The relevant article of the NOW scheme concerning the final subsidy determination makes clear what the consequence of economic dismissal in the aforementioned period is.<\/span><\/p>\n

The consequence of economic dismissal is a penalty.<\/strong>
The UWV ‘simply’ accepts the dismissal application in the case of economic dismissal in the period mentioned. So the dismissal application as such is still possible! The ‘punishment’ for the dismissal does not come in the form of a refusal of the NOW subsidy, but in the form of a penalty (=reduction) of the NOW subsidy.<\/span><\/p>\n

When the subsidy is determined, the wage of the employee for whom dismissal was requested is established. This wage is then increased, as usual, by 30% for employer costs. This amount is again increased by a penalty of 50%. Then 90% of that last amount is deducted from the total actual wage bill used to calculate the amount of the subsidy to be determined. This only happens for dismissal applications that the employer has submitted to the UWV after 17 March 2020 on economic grounds! Further on in this article you will find a calculation example.<\/span><\/p>\n

Approval or rejection of the dismissal application not relevant.
<\/strong>It is, incidentally, not relevant whether the UWV ultimately approves or rejects the employer’s dismissal application, for the purposes of applying the sanction! The employer gets the opportunity to withdraw the dismissal application to secure the most optimal amount of subsidy.<\/span><\/p>\n

Dismissals that do not count towards the NOW penalty.
<\/strong>A dismissal due to 2 years of illness, for example, is not sanctioned under the NOW scheme. Nor is a dismissal you have arranged via a settlement agreement penalised. Neither is a dismissal during the probationary period. So only an official economic dismissal application via the UWV counts towards the penalty.<\/span><\/p>\n

When is the penalty\/correction applied to the NOW subsidy?
<\/strong>The correction is only applied to dismissal applications submitted in the period from <\/span>
18 March through 31 May 2020<\/u>. If the dismissal application was submitted between 31 March and 31 May, it must be withdrawn within 5 days, otherwise the penalty is due. If the dismissal application was submitted between 18 and 31 March 2020, then the employer should have withdrawn it before 6 April 2020.<\/span><\/p>\n

If the dismissal application was submitted to the UWV in the period from 1 March through 17 March, then no correction is applied. The reason for this is that, although the NOW subsidy indeed also covers March 2020, it was not yet knowable to the employer during this period that this condition would be attached to the NOW.<\/span><\/p>\n

It is the employer’s ultimate responsibility to withdraw its dismissal application, but the UWV will make an effort to point out these consequences to the employer who has submitted, or submits after this scheme takes effect, a dismissal application on economic grounds. In practice, we have indeed noticed that, as authorised representative, we have already been called by the UWV to alert us to this, or to indicate that the application was in fact submitted in a period to which no sanction applies.<\/span><\/p>\n

Calculation example of the NOW dismissal sanction.
<\/strong>Technical company A is missing 30% of revenue in the reference period due to a substantial drop-off in service-installation assignments for specialised computer-controlled factory machines, and as a result one job among the service technicians has to be eliminated. Jan qualifies for dismissal under the dismissal rules, since redeployment is not an option. Jan earned \u20ac3,000 gross wages in January 2020.<\/span><\/p>\n

The total wage bill in January 2020 was, according to the wage tax return, \u20ac60,000 gross. Company A wants to make use of the NOW scheme, but also wants to dismiss Jan via the UWV because it expects the drop-off in assignments to be structural. In this situation, company A can do a number of things. Making optimal use of the NOW scheme, not dismissing Jan, and waiting to see what happens is the first option. Making use of the NOW scheme and dismissing Jan at the same time is the second option. A third option could be to do this sequentially.<\/span><\/p>\n

Option 1<\/strong>: In that case, company A would receive subsidy amounting to: 0.3 x \u20ac60,000 x 3 x 1.3 x 0.9 = \u20ac63,180. That is therefore \u20ac21,060 per month.<\/span><\/p>\n

Option 2<\/strong>: The total wage bill would then be reduced by 150% of Jan’s gross wage from January 2020. The formula would then be as follows: 0.3 x (\u20ac60,000 \u2013 (0.9 x (\u20ac3,000 x 1.3 x 150%)) x 3 x 1.3 x 0.9 = \u20ac57,635.95. So \u20ac19,211.98 per month.<\/span>
N.B. <\/strong>Most likely, the actual wage bill, and thus the final subsidy determination, will not be affected, because the length of the UWV dismissal procedure plus notice period means the date of termination of employment will probably fall after 1 June 2020.<\/span><\/p>\n

Option 3: You use both dismissal and the NOW subsidy.<\/strong>
Dismissal and reorganisation produce a structural reduction in your wage costs. These are solutions with effects for both the short and the long term. If it is expected that the loss of revenue will be more structural (i.e. also after corona) and\/or that you need to organise your business and jobs more efficiently or differently to have a future-proof and effective operation, a reorganisation is usually the best measure.<\/span><\/p>\n

Extra test by the UWV because of the NOW scheme.
<\/strong>The UWV announced on 3 April 2020, in this connection, that if a dismissal application on economic grounds is nevertheless submitted, the employer must demonstrate that the dismissal is necessary and that making use of the NOW scheme is not an appropriate solution for the employer. So, for example, you will have to demonstrate that the decline in revenue will persist for a longer period and that the workforce really does need to be cut to reduce costs. The temporary contribution towards wage costs under the NOW is thus not sufficient to weather the crisis. The UWV will, however, test this cautiously. <\/span><\/p>\n

Bring in expertise for a combination of economic measures.
<\/strong>It is best to have an expert calculate how this works out if you deploy these measures simultaneously, or how to do this sequentially in the most optimal way. A UWV dismissal procedure can be a time-consuming and costly process, but with the right guidance it can be considerably shortened. This is done by already submitting Part A (which is regarded as an application within the NOW) and negotiating with the employee for an amicable termination via a settlement agreement. Usually, the notional notice period is respected in doing so, so the end date will, in most cases, only result in the employment ending after 31 May 2020. The wage of the surplus employee will therefore most likely have to continue to be paid at 100% during the subsidy period of March through May 2020, but no longer after that due to the dismissal. The effect of the wage sanction from the dismissal on the amount of the NOW subsidy can be offset against that. Ultimately, because of the formula, the sanction does not have such a large effect after all, as can be seen in the preceding calculation examples under options 1 and 2.<\/span><\/p>\n

The worst-case scenario, incidentally, is that the amicable route fails and the UWV rejects the dismissal application. In that case, you will have both a NOW sanction and a lower subsidy, legal costs, and continued wage payment even after May 2020 as well. The application being rejected will not readily happen if you have been assisted by an experienced dismissal and reorganisation specialist with the NOW application, the UWV application and the amicable route. It is important to weigh your options carefully here, time things well, calculate everything properly and bring in an employment law and dismissal specialist.<\/span><\/p>\n

Extension of the NOW under different conditions.<\/strong>
The Minister of Social Affairs and Employment, Wouter Koolmees, recently announced that the NOW scheme will be extended. An interesting addition to this is that the 150% ‘penalty’ for dismissing employees will no longer feature in the extended NOW scheme. The exact conditions will most likely be presented by 1 June at the latest. The cabinet has also already indicated that there will be a ban on dividend payments, bonuses and share buybacks. Finally, with the extension of the NOW, Koolmees also wants to stimulate retraining of employees in sectors where the virus is likely to eliminate a lot of jobs, also in the longer term. Think of hospitality, the events industry and the travel sector.<\/span><\/p>\n

Need a NOW and employment law expert?
<\/strong>The Legal Company sincerely hopes that, through this sharing of knowledge, you now have a better understanding of how this NOW scheme works and how it impacts labour relations and regular employment law. For more NOW information or NOW advice and support, Click Here<\/a><\/span><\/span><\/p>\n

Click here<\/strong><\/a> for our other blog about how continued wage payment and the NOW work.<\/span><\/p>\n

Of course, you can also always email info@thelegalcompany.nl<\/a> <\/span>or call 020-3450152<\/span>.<\/span><\/p>\n

A word of thanks in these difficult times.
<\/strong>As an organisation, we put a lot of time and effort into researching, writing up and sharing our knowledge in these blogs. The Legal Company hopes that, through this sharing of knowledge, we can at least contribute to solving the shared problem that we are currently experiencing as people, households and entrepreneurs in the Netherlands. This is driven by a deep gratitude for those who keep vital business processes running and for the essential-service workers who keep this country going.<\/span><\/p>\n

Disclaimer.
<\/strong>Since this is an emergency measure of the government, some parts have not yet been worked out or are still unclear. It may therefore be the case that the information we share is not yet 100% complete.<\/span><\/p>\n

Nothing changes as often as laws and regulations. We would like to point out that our blogs may no longer be in line with current laws and regulations and may therefore be outdated. If you have questions or a problem relating to this blog, or if you require legal assistance, please contact us.<\/em><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":2,"featured_media":19967,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"page_builder":"","footnotes":"","_et_pb_custom_css":""},"categories":[27,29,32],"tags":[139,63],"class_list":["post-30531","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-arbeidsrecht","category-contractenrecht","category-ondernemingsrecht","tag-now","tag-ontslag"],"acf":[],"_et_pb_custom_css":"","yoast_head":"\nNOW and dismissal, how does it actually work? - The Legal Company<\/title>\n<meta name=\"description\" content=\"Lees hier meer over de verwarring van de subsidie onder de NOW en onderwerpen als loondoorbetaling, flexwerkers en ontslagmogelijkheden.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/thelegalcompany.nl\/en\/now-and-dismissal-how-does-it-actually-work\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"NOW and dismissal, how does it actually work? 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