Published On: Tue, Jun 9th, 2020

Payroll support program shrouded in mystery

PHILIPSBURG – Based on current regulations, the government will not be able to publish the names of companies that have so far received payroll support. Finance Minister Ardwell Irion said during a press briefing that 479 companies had received funding from the program, and SMCP-leader Wycliffe Smith recently asked the government to publish the names of these companies.

Public Health Minister Richard Panneflek has tasked SZV with the execution of the program, but the ministerial decree that regulates this contains an article that looks like a confidentiality clause: “The USZV does not provide information about individuals or companies to third parties, other than to the applicant for the payroll support or to the Minister of Finance and the Minister of Public Health (VSA).”

While this article prohibits SZV from divulging specific information, it does not prohibit the ministers from doing so. Or does it? If the ministers do disclose the names of the receiving companies, the government could run the risk of getting sued. While the payroll support program was set up with the best of intentions, its execution so far has raised plenty of questions about its effectiveness and transparency.

Depending on the loss of turnover, employers may qualify for payroll support between 60 and 80 percent. At the same time, companies are held to keep their employees on the payroll and to pay them their full salaries if they apply for payroll support. The requirement to not lay off the employees is clear. What is not clear is whether employees will accept a reduction in working hours equivalent to the percentage they are not being paid. The maximum payout is the health insurance wage ceiling of 5,651.36 guilders ($3,157.18) per month.

The ministerial decree describes the loss of income between 20 and 50 percent as “average impact.” Losses between 50 and 80 percent are considered “average high impact” and losses above 80 percent are labeled as “high impact.” No kidding. The respective payroll support for these categories is 60, 70 and 80 percent. However, the conditions of the Dutch Kingdom government for further liquidity support requires the government to adopt a one-to-one compensation scaling system. We gathered this information from a letter of the Prime Minister to the civil servants dated May 27, 2020, regarding the government’s cost-cutting measures.

Presently, an employer who saw 50 percent of his or her turnover go up in smoke will get 60 percent payroll support, but he (or she) will have to come up with the remaining 40 percent of the payroll. That will be a bridge too far for companies that have already exhausted their reserves by paying out the March payroll.

The situation for independent workers (like bus and taxi drivers) is even more awkward because to qualify for the support program, they have to prove that they have filed a tax return in 2018. The reality is that many of these independents do not file tax returns; hence, they don’t qualify. This explains in part why many members of this group haven’t seen a penny yet. While one could argue that they had it coming (by not filing tax returns), it is fair to say that they are being left out in the cold because of bureaucratic rules.

As long as there is no clarity about the way the government is spending the money it received from the Netherlands for payroll support, State Secretary Knops might become reluctant to provide even more money for the period after June.

Apparently, qualifying companies only received their payroll support for the month of April on June 5. In the meantime, at least some of these employers have been telling their employees that they did not receive any support yet and used this argument to justify dismissals.


Related links:
Payroll-distribution system ignores Cft-advice
Open letter Wycliffe Smith to Minister of Finance about payroll support
Decree tasking SZV with payout of payroll support
Letter Prime Minister to civil servants re: cost-cutting measures