On May 14, 2024, the draft legislative proposal on employee retention during crises (in Dutch abbreviated as: Wpc) was published. The Wpc can be seen as the successor to the Reduction in Working Hours scheme (in Dutch abbreviated as: WTV) and the Temporary emergency bridging measure for sustained employment (in Dutch abbreviated as: NOW). The aim of this proposal is to support companies and their employees in retaining jobs during crises such as wars, pandemics, or floods that are beyond entrepreneurial risk. The proposal allows employers to reassign employees to different roles or pay reduced wages. Read this blog for a detailed explanation of these instruments and the conditions under which employers can use them according to the proposal.
Current legislation
Currently the WTV is in force. This scheme is intended as a temporary solution for periods in which companies have less work due to extraordinary circumstances, enhancing this without it being categorized as a normal entrepreneurial risk. Under this scheme, employers can apply for work time reduction at the Ministry of Social Affairs and Employment if activity decreases due to circumstances that reasonably do not fall within the normal entrepreneurial risk. If the application is approved, employers are allowed to reduce the working hours of their employees and, together with the employee, apply for an unemployment benefit (in Dutch abbreviated as: WW) for the hours not worked from the Employee Insurance Agency (in Dutch abbreviated as: UWV).
During the COVID-19 crisis, the NOW was temporarily introduced. Under this scheme, employers could apply for subsidies to be able to pay their employees’ wages during the COVID-19 crisis.
When can employer use the instruments provided in this bill
An employer is entitled to use the instruments of the proposal if:
- The employer has been affected by a crisis for at least two months and this can be assumed to be plausible, and
- The employer cannot use at least 20% of its employment capacity as a result of this crisis.
Instruments
In accordance with this proposal, if the aforementioned conditions are met, two instruments can be utilized: 1) redeployment or 2) reduced wage payment. Additionally, a combination of these two may also be possible. These instruments can be applied to the hours during which the employee is unable to work due to the crisis.
In the case of redeployment, the employer can temporarily modify the employee’s usual duties by requiring them to work in a different role. This allows the employee to continue working as much as possible, with the employer being obligated to maintain 100% of the wage.
Furthermore, the employer has the option of reduced wage payment. This entails the employer choosing to pay 10% less wage for the hours that cannot be worked due to the crisis. A reduced wage payment is only applicable when work cannot be performed. If the employer selects this option, they can apply for wage subsidy from the UWV. The underlying principle is that the employer will receive 65% of the wage costs for the hours not worked. The wage subsidy is granted to the employer to enable them to continue paying their staff during times of crisis.
Initially, the employer is entitled to utilize the instruments outlined in the proposal for a period of two months. This can be extended twice, for a maximum period of 6 months.
Conditions
The proposal specifies three conditions that employers must meet when using the instruments.
1) The employer must use the instruments for an equal percentage per group of interchangeable functions
2) No dismissal for business economic reasons during or up to four months after the end of the crisis period. If the employer does so, this will lead to a measure involving a reduction in the wage subsidy.
3) The employer must inform the employee(s) in a timely manner
Status of the proposal
The proposal is currently under internet consultation. Until the law comes into force, employers can continue to utilize the WTV. Employers who are already utilizing the WTV on the day the law comes into force are covered by transitional provisions. These provisions allow employers to continue using the WTV for the duration specified under this law.