Can you terminate an employment contract with an employee if you take advantage of the Temporary Emergency Bridging Fund for Employment (NOW scheme) to obtain a contribution towards your payroll costs? What is permitted and what is not?
Safeguarding jobs
The aim of the NOW, under which applications can be made from 6 April to 31 May 2020, is to safeguard jobs as much as possible. For you as an employer the NOW scheme is therefore subject to the following two conditions:
- you have a best-efforts obligation to keep your wage bill at the same level, as far as possible, and
- for the duration of the NOW scheme you are not permitted to submit any redundancy applications to the UWV on the basis of commercial reasons (so-called ‘reason a’).
Redundancy application already submitted?
As you can see, the second condition concerns redundancy applications submitted to the UWV for commercial reasons (‘reason a’). If you have already submitted redundancy applications on or after 18 April 2020, the UWV will give you 5 working days to withdraw them.
Penalty
If you fail to do so and continue the procedure with the UWV, the calculation of your wage bill will be corrected by the salary of the employee concerned plus 50% (penalty). This correction will be applied for all redundancy applications submitted between 18 March and 31 May 2020 that are not withdrawn within the period set.
When can you terminate an employment relationship?
The NOW scheme refers only to the submission of a redundancy application for commercial reasons. You are permitted to terminate an employment contract – without any consequences for the NOW scheme – for the following reasons and in the following situations:
- dismissal during a probationary period;
- non-extension of a fixed-term employment contract;
- dismissal due to unsatisfactory performance, imputable acts, an impaired working relationship or another reasonable ground for dismissal;
- termination by mutual consent (through conclusion of a settlement agreement).
Please note:
Your wage bill will fall as a result of a redundancy or dismissal. This can affect the amount of the subsidy you ultimately receive. After all, if you do not hire any new employees, there will be fewer people who you need to continue paying, which means the contribution you receive will also drop and you may even have to pay back a certain amount retrospectively.
Best-efforts obligation to keep wage bill at same level
You have a best-efforts obligation to keep your wage bill at the same level, as far as possible. If that is not possible, however, as you are unable to offer employees a permanent contract due to a lack of future prospects, there is no further penalty attached to this. After all, a best-efforts obligation is not the same as an obligation of result.