Coronavirus: Position of Employers

25/03 2020

Hereby update nr 5 of our Q&A Coronavirus.

Further questions about the Temporary Emergency Relief Measure for the Preservation of Work (NOW)

Could an employer apply for compensation of wages costs under the NOW for employees with a flexible employment contract?
For on-call workers who have accepted an offer for fixed working hours it is clear that their hours are included for determining the wage costs of an employer that are eligible for compensation. This also applies for the minimum contractual hours of on-call workers with a min-max employment contract.

This is different for on-call workers who have not accepted such offer or on-call workers who are employed for less than 12 months and have not received such offer. In situations where on-call workers cannot work at all, it is not clear which hours must be taken into account for determining the wage costs. As these on-call workers do not work, the actual hours cannot be taken into account.

Imaginable is that for both the pay claim of on-call workers during the period in which compensation under the NOW is received and for the wage costs that are eligible for compensation, the average hours worked in the last three months must be taken into account, in other words the legal presumption of article 7:610b DCC. Or, if this period is not representative, another (longer) period must be taken into account. In the letter to the House of Representatives dated 17 March 2020, it is however also suggested that these on-call workers must apply for unemployment benefits (WW) if they meet the regular conditions in this regard. This would means that they would recieved a double income: continued paymen of wages by the employer and unemployment benefits. This does not seem the government’s intention, so the further elaboration of the NOW will hopefully provide clarity in this regard.

NB: an important question that still remains is what exactly falls under “wage costs” for which compensation can be requested. We are waiting for the government to come up with more information about this and the NOW as a whole. If more information is published, we will of course update you about this.

Is an employer obliged to continue to pay 100% of the salary of its employees to be eligible for compensation under the NOW?
Yes, continuing to pay 100% of the salary is a condition of eligibility for compensation under the NOW. If an employer is eligible for compensation, it will receive compensation of 90% of the wages costs is the drop in turnover is 100%. The level of compensation depends on the drop in turnover.

Could an employer, while he receives compensation of 60% of the wage costs, ask its employees to work 100% of their contract hours?
Yes, we are of the opinion that this will be possible under the NOW. Under the NOW there is no connection between the actual decrease in hours (of individual employees) and the compensation of the wage costs by the UWV. There is a connection between the drop in turnover and the compensation of the wage costs by the UWV. Therefore, it is possible that for certain employees there is no work and other employees can work part or their full contract hours.

Do employees need to apply for unemployment benefits (WW) if an employer receives compensation under the NOW?
No, in case an employer receives compensation under the NOW employees do not need to apply for unemployment benefits (WW). There is no connection between the compensation under the NOW and the employees’ entitlement to unemployment benefits.

Does compensation under the NOW mean that employees are/will be exempted from work?
No, because there is no connection between the actual decrease in hours that employees can work and the compensation under the NOW. This means that an employer must decide and communicate to its employees if and, if so, how many hours they must work in the coming days/weeks.

Could an employer decided to not extend employment agreements for a definite term when it receives compensation under the NOW?
Yes, the NOW does not require an employer to extended current employment agreements for a definite term that terminate by operation of law during the period the employer receives compensation/

Will the NOW apply per 1 March 2020 or can this also be another (later) date?
We expect that it could also be another date, however no earlier date than 1 March 2020. An employer can be eligible for compensation of the wage costs from 1 March 2020, but we expect tat the employer could determine when the three-month’ compensation – taking into account the drop in turnover – should start.

Could an employer be allowed to defer payment of pension premiums?
On 21 March 2020, the Labour Foundation (Stichting voor de Arbeid), Federation of the Dutch Pension Funds (Pensioenfederatie) and the Dutch Association of Insurers (Verbond van Verzekeraars) have made arrangements to accomodate employers that have got financial problems due the COVID-19 outbreak (https://www.stvda.nl/-/media/stvda/downloads/publicaties/2020/coulance-betalen-pensioenpremies.pdf).

The issues differ per sector or employer. Therefore, a tailormade approach will be offered based on the following problem-solving approaches:

  • the pension providers will agree upon payment arrangements with the individual employers with immediate financial problems;
  • the payment term in which the employers must pay their pension premiums will be extended within the limits set by the law for affected sectors and employers;
  • the pension providers will conduct a less strict recovery policy when recovering pension premiums (e.g. by engaging collection agencies and/or the postponement of imposing administrative fines).

Currently the possibilities to offer a tailor-made approach are limited by the statutory rules regarding payment terms and recovery efforts. The Dutch Pensions Funds, the Dutch Association of Insurers. DNB and the Ministry of Social Affairs and Employment are will discuss this topic.

If employers have immediate problems with paying pension premiums and want to be eligible for a payment arrangement, they should contact their pension provider. Employers that participate in a mandatory industry-wide pension fund are required by law to timely inform the pension provider about their inability to pay. If this duty to inform is not adhered to by employers, this may lead to the board members of the employers being jointly and severally liable towards the pension fund.

What does the NOW mean for the pension accrual and payment of pension premiums?
Currently it is not clear yet what the NOW means for the accrual of pension of employees. One of the conditions to be eligible for compensation under the NOW, is that employers must continue to pay 100% of the salary. Taking this condition into account, it seems obvious that the pension accrual is being continued. It is currently unknown whether the UWV will also compensate 90% of the pension premiums to the employers. Therefore, we should await publication of the NOW. The minister of Social Affairs and Employment has indicated that he strives to publish the NOW within two weeks from 17 March 2020.

Other questions

COVID-19 and privacy at the work place

Can an employer ask an employee to check upon his or her health?
Yes, under the current special circumstances of the COVID-19 crisis this is allowed.

Usually an employer is not allowed to ask about an employee’s health or administer a test to check upon his or her health. It is prescribed by law that asking about and administrating the reason for reporting sick is also not allowed.

The Dutch Data Protection Authority (Autoriteit Persoonsgegevens) is of the opinion that an employer under the current extraordinary circumstances may require cooperation from its employees. This means that an employer may ask about possible (COVID-19) related symptoms and also send its employees home if they have symptoms of a cold or the flue or if it has doubts in this regard. An employer may also require from its employees to closely monitor their health. Especially if the employees are not working from home. If required, employers may ask employees to check upon themselves during working hours. E.g. by measuring their temperature.

Holiday and leave

If a scheduled holiday is cancelled; is an employee allowed to withdraw his or her holidays?
The position of employers in our view should be that requested and approved holidays cannot be unilaterally withdrawn. As the approved holiday requests are “arrangements” made between parties: parties have legally agreed upon these arrangements and could there not unilaterally withdraw these. Under the current circumstances employers have strong arguments to reject a request to withdraw approved holiday requests. By consenting to the withdrawal of all approved holiday requests, employers could (hopefully in the near future) be confronted with major planning issues, which is an undesirable situation.

Employers could inform employees that when things are back to normal, they will enter into discussions with the employees to review the holiday planning. Employees could of course make arrangements with employers about withdrawing approved holiday requests.

Can an employee withdraw unpaid parental leave or another type of (unpaid) leave due to the COVID-19 crisis?
Regarding sabbatical leave, the answer is the same as for regular holiday requests: there are arrangements made between parties that given the current circumstances should in principle remain in place and cannot be unilaterally withdrawn.

In case of unpaid parental leave the employee is permitted by law to submit a written request to the employer to interrupt the parental leave or to terminate the leave due to ‘unforeseen circumstances’. The employer must respond to the request within four weeks. Examples of unforeseen circumstances that are given are a decrease in household income, incapacity for work, etc. The employer may only reject the request if adhering to the request leads to severe (financial) problems for the employer. In our view, COVID-19 qualifies as such unforeseen circumstances and would an employee in principle be entitled to withdraw the leave. If the employer via the NOW is compensated for the (higher) wages costs the employee, it will be difficult to argue that the withdrawal of the parental leave leads to (financial) problems for the employer. That would of course mean that the employee should work the hours for which the employee was granted leave.

For completeness sake, we refer to long term care leave: this type of leave can end due to expiry of the time for which the leave granted or if before for expiry of the time for which the leave is granted the person for whose care the leave has been granted does no longer require care. In this case, an employer could ask a critical question to the employee to which extent this is indeed the case.

Please do not hesitate to contact us if you have any further questions.