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Employment, employee participation & pensions

Reduced working hours and financial compensation

Renate Vink-Dijkstra

16 March 2020 - 2 minutes reading time

Under ‘special circumstances’ such as a fire, a flood or an epidemic, employers in various sectors will be confronted with lower client demand and a subsequently reduced workload. These circumstances are not considered to be a regular business risk. The COVID-19 virus, better known as the coronavirus, qualifies as an epidemic and will result in loss of business. Employers can take measures to reduce the relevant financial impact.

Application

Employers may apply for financial assistance from the Dutch government when their business is reduced by a minimum of 20% for a period of at least 2 weeks with a maximum of 24 weeks. Financial support should be requested through the Ministry of Social Affairs and Employment (Ministerie SZW) by using a digital form. A list of personnel must be attached. If the loss of business due to the coronavirus is expected to last longer than 24 weeks, the permit will be refused.

The permit, if granted, shall apply for 6 weeks and will be extendable three times, in parallel with the maximum allowed of 24 weeks (4 x 6 = 24 weeks).

In the context of such a claim it is important that employers substantiate the direct relationship between the coronavirus and reduction in work/business, due to the strict conditions imposed by the Ministry of Social Affairs and Employment.

Scope of the permit

The permit shall only apply for the period after the application has been submitted to the Ministry of Social Affairs and Employment and not for the period prior to the date on which the application has been received by the Ministry of Social Affairs and Employment.

In addition, the permit can not be applied for in case of on-call employees with a zero-hours contract and temporary workers.

UWV (Employee Insurance Agency)

If the permit is granted, this must be reported immediately to UWV via the form  notification of working time reduction. After the end of the permit period of 6 weeks, the employer may apply for unemployment benefit in the event of a reduction in working hours, if the conditions of the Unemployment Insurance Act have been met.

This unemployment benefit in the event of a reduction in working hours must be applied for within one week after the end of the 6-week permit period.

The above-mentioned conditions do not apply to employees who are already ill. In that case the employer can not apply for an unemployment benefit in the event of a reduction in working hours, due to the legal obligation to pay wages in the case of illness. This legal obligation continues to apply.

UWV compensation

During the permit period, the employer should continue to pay the relevant wage to the personnel as usual. The UWV subsequently reimburses 70% of the wages afterwards for the hours that the personnel did not work during the permit period. This shall only apply to the hours for which a permit has been obtained. As a result, employers ultimately pay less personnel costs, while personnel remain fully employed.

Extension

When the permit expires, and there is still no improvement with regard to the loss of business, extension can be requested, unless the maximum duration of 24 weeks has been reached. The request for extension must be submitted within the period of 6 weeks for which the (previous) permit already has been granted.

Renate Vink-Dijkstra and Guus Wife

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