Draft Bill for Employee Retention in Crisis (Wpc)

From NOW/Wtv to a structural scheme

The WPC is intended for employers temporarily facing reduced work capacity due to a crisis. It is designed as a successor to the temporary COVID-19 scheme (NOW) and the Short-Time Work scheme (Wtv). The Wtv allowed companies to reduce working hours temporarily during acute downturns but proved to be insufficient during the COVID-19 crisis. The NOW scheme was created under pressure and provided a temporary safety net for employers and employees. Based on the lessons of the pandemic and input from social partners, the bill, if passed, promises to be robust and structurally executable legislation that will be rapidly deployable in future crises.

The scheme comes into effect when a crisis, as defined by law, occurs. In some cases, a crisis is automatically recognised, such as fire, extreme weather, or certain government measures. In other cases, such as pandemics, wars, natural disasters, or the failure of vital infrastructure, the Minister of Social Affairs and Employment must designate the situation as a crisis through a ministerial regulation. The scheme applies when an employer experiences an average loss of at least 20% in work capacity over a two-month period. These must be circumstances that fall outside normal business risks. The WPC can be applied for a maximum of six months and offers two core instruments to prevent layoffs and preserve employment.

1. Temporary reassignment within the organisation

Employers are allowed to temporarily assign employees to other suitable tasks. This change may be implemented unilaterally, provided that full wages continue to be paid. Travel time to another location counts as working time, and any additional travel expenses must be reimbursed.

2. Partial wage payment with wage subsidy

The second instrument is partial wage payment with a wage subsidy. If less work is available, the employer may pay 90% of the wage for non-worked hours, provided the employee's wage does not fall below the statutory minimum wage. A subsidy can be requested from the UWV for the remaining wage costs, covering 65% of those costs. The employer covers the remaining 25%. In this way, employer, employee, and government share the burdens and risks of a crisis. The subsidy includes an allowance for employer contributions and is financed by the General Unemployment Fund (Awf), for which a limited premium increase is expected. Importantly, the wage subsidy can only be requested after reduced wage payment has been applied.

Reassignment and partial wage payment may be combined, provided they do not apply to the same working hours.

In the event of a major crisis, the government can establish central criteria in advance. For example, specific postal code areas may be designated after a flood. This means the UWV no longer needs to assess each company individually to determine whether a crisis exists, allowing for faster and more uniform processing of applications. Legal procedures have also been simplified: employers can appeal a UWV decision directly to the administrative court, without first going through an objection phase. This ensures greater speed and clarity during crises.

The bill includes explicit safeguards to protect employees' rights. First, employee participation must be involved before an employer submits an application. Additionally, employees have individual legal protection. They can object to both temporary reassignment and wage adjustments by appealing to the subdistrict court. A third important safeguard is dismissal protection. During a crisis period and for four months afterward, affected employees should not be dismissed on economic grounds.

After the Council of State issues its advice, the bill will go to the House of Representatives for debate and passage. The date the draft law is expected to go into effect has not been announced.

Would you like to know more or exchange ideas about the above developments or would you like to discuss its potential long-term implications of the bill for Employee Retention in Crisis (Wpc)? Please contact us, we look forward to discuss this with you.