Employers have been given a new way of retaining employees who would otherwise have to be laid off due to the financial crisis. On 1 April 2009 a decree introducing a partial unemployment benefits (WW benefits) scheme entered into effect. This replaces the scheme under the special regulation for the reduction of working hours (bijzondere regeling voor werktijdverkorting), under which employers who could demonstrate a drop in turnover could, subject to certain conditions, apply for a collective reduction of employees' working hours and which terminated on 21 March 2009. The businesses that can benefit from the new scheme are those that are sufficiently healthy to survive the current crisis despite a temporary drop in revenue and/or orders. The scheme will run until 1 January 2010.
The partial WW benefits scheme
Under the scheme, an employer can reduce an employee's number of working hours by up to 50% for a certain period of time. During this period, the employee will receive WW benefits for the hours that he/she no longer works.
The WW benefits granted pursuant to the scheme will be deducted from the WW rights thus far accumulated by the relevant employee, and he/she will not accumulate new rights in respect of the hours not worked. However, the employee is not required to register as a job seeker or apply for other jobs during this period. He/she will be considered as being employed by the employer in respect of both the hours worked and the hours not worked.
An employer can initially apply to reduce an employee's working hours for a period of up to 13 consecutive calendar weeks. This period can then be extended twice, each time for up to 26 consecutive calendar weeks. Therefore, the maximum total period is 65 weeks.
Conditions to be met by the employer
In order for the UWV (the Employee Insurance Administration Agency, which administers the unemployment benefits system in the Netherlands) to approve the granting of partial WW benefits pursuant to the scheme, the following conditions must be met:
- The reduction of working hours must have been approved by a body representing the employees of the employer. In addition, there must be an agreement between that body and the employer that the employer will continue to pay the salary of the relevant employee(s) if and to the extent that the latter is/are not entitled to WW benefits in respect of hours not worked as a result of a reduction of working hours pursuant to the scheme.
- There must be an agreement between the representative body and the employer that, during the period in which the reduction of working hours applies, the employer will: (a) provide the employee(s) with training/education opportunities in order to maintain or improve the employability of the employee(s) with the employer himself/itself or with another employer; and (b) make it possible for the employee(s) to perform work for another employer during the period in question.
- The reduction of working hours must commence prior to 1 January 2010. The period during which the reduction applies may not overlap with a reduction of working hours pursuant to the aforementioned special regulation for the collective reduction of working hours.
- The employer must undertake to pay compensation to the UWV (a) if the employee's working hours are reduced by more than 50% during the relevant period, or (b) if the employee, within the 13 weeks thereafter becomes or stays unemployed. The compensation payable is equal to half of the total WW benefits payable to the employee in question in respect of the period of reduced working hours.
When assessing an application for the granting of WW benefits under the scheme, the UWV will check whether the above conditions have been satisfied. In the event of an application for an extension, the UWV will primarily check how the training/education and secondment requirements have been met.
End of period of reduced working hours
After the period of reduced working hours pursuant to the scheme has ended, the employer must reinstate the employee's original number of working hours and retain him/her in service for a period equal to at least one-third of the period of reduced working hours, subject to a minimum of 13 weeks. Failure to comply with this condition will result in the employer having to pay back to the UWV half of the WW benefits received by the employee. The employer will not be required to pay compensation if the employee himself/herself has terminated the employment contract by notice, if the contract is rescinded at the employee's request or if the contract is terminated by the employer for urgent cause pursuant to Article 7:678 of the Dutch Civil Code.
Monitoring of scheme
The use of the scheme by employers will be closely monitored. If it appears that there is extensive abuse of the scheme, it can be terminated with immediate effect. In addition, a budgetary ceiling of EUR 375 million applies. If the total amount of WW benefits approved as payable pursuant to the scheme becomes such as to create a risk that this ceiling will be exceeded, no new applications for the granting or extension of benefits will be considered. Where an approval has already been granted, however, benefits will continue to be paid.
Partial WW (Retention of Skilled Manpower) Decree (Besluit deeltijd WW tot behoud van vakkrachten), with explanatory memorandum.