It has now been almost a year and a half since corona broke out in the Netherlands. Never before the Dutch economy has shrunk so much. Many shops, cafes and restaurants had to close their doors and many companies had to make a cut back and had an economical set back. The economy could use a boost. Due to the uncertainty during the corona crisis, the Dutch government has decided to give the business community a financial injection in order to compensate entrepreneurs in the Netherlands.

A premium drop of 2.36 percent

The unemployment premium (WW) which employers has to pay to the government, or rather the General Unemployment Fund (AWF), will be reduced with effect from the 1st of August 2021 for employers who pay wage tax on a monthly basis. For employers who pay wage tax per 4 weeks this deduction will start on the 16th of August. The new percentages apply for the remainder of the year 2021. The employers who have employees with a permanent contract pay a low premium of 2.7 percent calculated over their gross salary. This will now be reduced to 0.34 percent. The employers who have employees with a flexible contract pay a higher premium of 7.7 percent of their gross salary. This will be reduced to 5.34 percent. So a decrease of 2.36 percent for both premiums.

Reason for lower unemployment premium

What exactly was the reason for lowering the premium? Normally, this premium is set by the government for a full calendar year and it is unusual to adjust it at a later date during that year. All this has to do with the disappearance of the so-called Job-related Investment Discount, or in short the BIK arrangement. This scheme was introduced at the end of last year as a crisis measurement to maintain the investments in business assets by the business community. The BIK scheme will be withdrawn with retroactive effect from the 1st of January 2021. Employers can therefore no longer claim the BIK discount, even if an employer has already invested in business assets.

An advantage for both employer and employee

Since the reduction of the unemployment premium is a compensation for entrepreneurs, this measurement could also be seen as an advantage for the employee. Due to the lower unemployment premium, the employer will pay less premium and the chance for the employee to get a permanent contract will be higher. The employer pays a lower unemployment premium for employees with a permanent contract and a high unemployment premium for employees with a flexible contract.

Precisely during this corona crisis, which will be amongst us for still some time and has its negative influence to the economy , this allowance is not only a financial advantage, but it offers entrepreneurs and therefore also employees a little certainty in this uncertain time. This boost should ultimately yield a desired result, which makes it easier for an employer to consider the decision to offer an employee a permanent contract, as this saves costs for the company.

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