On 15 November 2021 the District Court of Limburg issued the first NOW judgement in which it ruled that the UWV (government agency handling the NOW subsidy), when determining the NOW subsidy, must deviate from the rules for determining the reference wage bill. In its judgement the Court ruled that incidental wage components may be filtered out of the reference wage bill, provided they are specifically and sufficiently substantiated. This judgement may well be relevant to determining the final amount of the NOW-1 subsidy.

History

The NOW 1 reference wage bill is the wage for January 2020. From the moment the scheme came into force there has been much criticism of the representativeness of this month, as many employers pay out special allowances such as bonuses in this month. The scheme states that only extra period salaries (such as a thirteenth month) may be automatically filtered out of the reference wage bill. Because three times the reference wage bill for January 2020 is therefore higher than the wage bill for the months March to May 2020, when determining the NOW subsidy a reduction is applied to the subsidy to be received, which may even result in having to repay the received NOW subsidy in full.

Minister Koolmees of Ministry of Social Affairs has acknowledged that special allowances such as bonus payments should actually be removed the reference wage bill, but that the UWV is unable to do so. The minister indicated that employers should have the option to lodge an objection to the decision on the final NOW amount, provided the employer can demonstrate in detail which amounts should be filtered out of the wage bill. This court case most probably relates to a decision already made before the Minister issued the above statement.

UWV’s defence before the Court

The UWV reasoned that since the employer had not included the overtime and leave hours in the correct wage table, it is not possible to adjust the reference wage bill. The UWV states that this is not possible because in these cases the special wage components cannot be automatically filtered out of the reference wage bill. According to the UWV, manual adjustment is not an option as this would produce too much work and jeopardise the basic principles of the scheme.

Ruling of the Court

The Court did not concur with the UWV's position. The Court indicated that, since it concerned the determination of the amount of the NOW subsidy, the importance of a quick and simple assessment was less relevant than in the case of a subsidy where an advance must be issued quickly. Thus, the Court held that there is more time for due care and accuracy with respect to the application to determine the amount of the subsidy.

Since the employer can demonstrate by means of objectively verifiable data from the payroll records that the wage bill in the reference month is not representative, the Court ruled that the UWV must remove these wage components from the reference wage bill and review the subsidy amount using these data.

Takeaway

It is likely that the reduction of the subsidy, due to a decreasing wage bill compared to the reference wage bill, was frequently applied in the final determination of the subsidy of applicants. If this applies to you, it is important to have any party entitled to a subsidy check your NOW decisions carefully. If it transpires that this is relevant to a party entitled to a subsidy, it is important to act quickly considering the 6-week objection period. 

Would you like more information?

Would you like more information about the above ruling? Please contact your trusted RSM-advisor or send an email to: [email protected].