Netherlands: Restricted scheme for part-time unemployment benefits introduced from 20 July 2009

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Background

This scheme allows employers to make employees redundant on a ‘part-time’ basis for a limited period.  The benefit for an employer is twofold, in that there is an immediate reduction in salary expenses but the experienced and trained workforce is retained.  For the employee, the downside of being made redundant on a ‘part-time’ basis is mitigated by him being allowed to claim a “part-time unemployment benefit.”  In order to be able to qualify for the restricted scheme, an employer must be able to demonstrate that the turnover of his business has been severely impacted by the credit crisis.

The initial scheme for part-time unemployment benefits (in Dutch: “Deeltijd WW”) was recently withdrawn because the EUR 375 million limit had been reached.  However, from 20 July 2009, companies may now use a more restricted version of the initial scheme for part-time unemployment benefits (“scheme”).  The Dutch government wants to raise awareness and ensure that companies consider more carefully the manner in which they use the scheme so that more companies will be able to participate.

Changes introduced

The following changes have been made:

• After the first period of 13 weeks, the maximum number of extensions permitted is now 4 x 13 weeks rather than 2 x 26 weeks, with the aim of ensuring companies are more conscious of their additional use of this scheme and to ensure that it is easier for the Dutch unemployment benefits agency, the UWV, to monitor such use;
• The employer must use the scheme for at least 26 weeks, and the number of working hours per employee must be decreased by at least 20%;
• The scheme cannot be used for employees whose employment agreements will terminate during the period that the working hours are decreased;
• In principle, the total duration of use of the scheme may not exceed 65 weeks.  However, if the scheme is used in respect of 30% - 60% of employees, the total duration is 12 months, and if the scheme is used in respect of more than 60% of the employees, the total duration is 9 months;
• If fraud is discovered, participation in the scheme will be terminated for all the employees of the participating employer.  Fraud will be assumed if the employer permits an employee who has an entitlement to part-time unemployment benefits to work during hours that have actually been decreased pursuant to the scheme.  In that case, the employer will have to indemnify the UWV and pay an amount equal to all the unemployment benefits that have been given for all the employees during the period of the decreased working hours;
• The employer must indicate what training courses will be taken by the employee.

Other conditions, such as the agreements which have to be concluded with the unions, remain the same as under the initial scheme.  The budget for the scheme has been increased from EUR 375 million to EUR 950 million.

For further information, please contact Klaas Wiersma (klaas.wiersma@loyensloeff.com) on +31 20 578 57 85.

This article was produced by, and re-produced with kind permission of, our correspondent firm in The Netherlands, Loyens & Loeff N.V. www.loyensloeff.com

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