An increasing number of employers in the Netherlands are applying to the Ministry of Social Affairs and Employment for permits to reduce their working hours (Werktijdverkorting, or WTV) arising from the coronavirus (COVID-19) and the resulting government measures. With such a permit, employers can then apply to the Employee Insurance Agency (UWV) for a temporary payment for their employees under the Unemployment Benefits Act (Werkloosheidwet, or WW).
There appears to be a lot of uncertainty about WTV, primarily regarding the duty to continue paying wages. The following provides an explanation:
Conditions for reduction in working hours
A WTV permit may be issued if the employer reduces working hours by at least 20% for 2 to 24 weeks because of some extraordinary circumstance that is not part of its normal commercial risk. The government has now classified coronavirus as being such an extraordinary circumstance.
A permit will not be issued:
- for the period before the date the ministry receives the WTV application. This means that WTV does not have retroactive effect.
- to the extent that the number of staff members working for the employer's business is not in line with reasonable requirements (i.e., where the employer has too many employees on the payroll).
- if the reduction in work is associated with a strike.
The ministry issues a WTV permit for a maximum of six weeks. If there is still not enough work after this time, the ministry can extend the permit up to three times, each for a maximum of six weeks.
An employer cannot apply for a WTV permit for agency workers, on-call staff with zero-hours contracts or employees who became ill before the WTV permit period started. For this last category, there remains an obligation to continue paying wages based on illness. Self-employed individuals without employees are also excluded from WTV. However, they may be able to rely on the Assistance for the Self-employed Decree (Besluit bijstandverlening zelfstandigen).
Obligation to continue paying wages
Various (government) websites, such as rijksoverheid.nl, state that employees generally will not notice WTV, as their pay will remain the same. This means that employers using the WTV have to continue paying full wages and be (partially) compensated retroactively for any working hours when the employee did not work, by way of the WW payments awarded to their employees.
WW payments are much lower than an employee's normal wages. The employer therefore pays part of the wage costs for hours when no work is done. If wages are equal to the maximum daily wage, this represents a difference of 25-30%. If wages are more, the difference is even bigger.
In addition, many employers do not know that the statutory right to continued payment of wages when there is insufficient work was amended on 1 January 2020. The Regulation on Unworkable Weather (Regeling onwerkbaar weer) also entered into force on that date.
Regulation on unworkable weather and lapse of obligation to continue paying wages
The title of this regulation is misleading, as it also deals with other extraordinary circumstances, apart from natural extraordinary circumstances such as frost or torrential rain. Under this Regulation, the employer's obligation to continue paying wages ends if it has obtained a WTV permit.
If the employer obtains a WTV permit, it therefore does not have to continue paying wages to the employees who are covered by that permit. Those employees will then have to rely fully on WW payments for the period during which their working hours are reduced.
The Regulation on unworkable weather makes no exception for employees who have not built up sufficient WW rights. This means that they have no right to wages during the WTV period. In addition, employees paid high salaries are not compensated for the difference in income resulting from the lower WW payment.
Employers can avail themselves of the possibility offered by the new Regulation on unworkable weather to avoid an obligation to continue paying wages during the WTV period. The question now is whether many employers will take advantage of this opportunity during the coronavirus crisis.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.