Premium reduction younger employees (from July 2014)

In the Profit CLA and Basic CAO the following wage components are present for this purpose:

  • 100.005.115 'Premiekorting jongeren'
  • 100.005.116 'Premiekorting jongeren (corr vorige periode)'

Tax authority agency

If an employee is eligible for the premium reduction for younger employees, you apply this at the employee level.

  1. Go to:HR / Employee / Employee.
  2. Open the properties of the employee.
  3. Go to the tab:Agency.
  4. Open the agency properties of the tax authority.
  5. Open the period line.
  6. Go to the tab:Special situations.
  7. Select Younger employee in Premium reduction.
  8. Click on: OK.

Conditions for premium reduction

Employees are entitled to a premium reduction for young people for a maximum of 2 years. The most important conditions for applying the premium reduction are:

  • The employee starts employment on or after 1 January 2014 and before 1 January 2016; and
  • The employee’s age when entering employment is at least 18 but not yet 27 years;
  • Directly prior to entering employment, the employee is entitled to a 'WW' or ‘Wwb’ benefit;
  • An employment contract is entered into for at least 6 months, with working hours of at least 32 hours a week;
  • The written employment contract and target group declaration (a declaration issued by the ‘UWV’ or municipality stating that the employee was entitled to a ‘WW’ or ‘Wwb’ benefit directly prior to the employee entering employment) are stored in the salary administration.

More information about the terms and conditions and how the premium reduction for young people works is available from the tax authority. Here we have in mind the following (this is not an exhaustive list):

  • Certain kinds of employments are excluded;
  • Changing or terminating the employment contract;
  • Duration of the premium reduction;
  • The contract period is less than 32 hours a week, for instance, due to full or partial unpaid leave;
  • The employee or employer is a conscientious objector (premium reduction may be applied);
  • The employee is an intern (premium reduction may be applied);
  • The employee is a temporary employment agency worker (premium reduction may be applied);
  • Minimum-maximum contract;
  • Several concurrent employments.

Premium reduction calculation

The premium reduction is calculated as follows:

  • A check is carried out to determine whether the employee is aged between 18 and 27 years at the time of entering employment;
  • It is determined whether the employee is insured for one of the 'SV’ premiums;
  • It is determined whether the employee is on a work timetable of at least 32 hours a week (see below);
  • Based on the amount in the salary table, a check is carried out to determine that the annual salary maximum is not exceeded;
  • The premium reduction is applied pro rata, based on employment start/end;
  • The premium reduction is applied pro rata if a deviating number of calendar days are entered.

Work timetable of at least 32 hours

There are some aspects for consideration which are important if the work timetable is not at least 32 hours. The contract has to be for a minimum of a six months, for at least 32 hours a week.

  • If there is no timetable, then no premium reduction is calculated. Exceptions are:
    • A value is entered in the 'Deviating calendar days in period' field in the entry program.
    • The premium reduction is calculated manually and entered as a deviating value.
  • Check for 32-hour work timetable. This needs to be evaluated per week, even if wages are processed every four weeks or on a monthly basis. No premium reduction can be applied for each week in which an employee works less than the minimum of 32 hours. (The premium reduction is reduced by 7 calendar days for each week.) Profit cannot check properly if the employee’s wage is processed per month or every four weeks. In the following cases, no premium reduction is calculated, except if deviating calendar days have been entered:
    • Unpaid hours have been processed in the period.
    • The average number of hours in the period is less than the standard of 32 hours a week, converted to an average per period.
    • The number of hours in the timetable in the last week that falls within the period is less than the standard of 32 hours a week.
  • The amount must be converted on the basis of calendar days for a period of a month or four weeks. You can enter the number of calendar days over which the premium reduction must be calculated in the 'Deviating calendar days in period' field in the entry program. For example, if there is unpaid leave in a week (even if it is only two days), which means that the week does not qualify for the premium reduction, the total number of calendar days to be entered must be reduced by 7.

    A deviating amount based on calendar days applies if the premium reduction starts or stops in the middle of a period. You can enter the number of calendar days over which the premium reduction must be calculated in the 'Deviating calendar days in period' field in the entry program.

    In the case of four-weekly wage processing with the employment start/end in period 7 of 2014, Profit cannot calculate the premium reduction. You can enter the number of calendar days over which the premium reduction must be calculated in the 'Deviating calendar days in period' field in the entry program. Alternatively, you can enter the amount yourself in the ‘Deviating value’ field. Be aware that you are expanding the entry layout with a second entry value.

Note:

The premium reduction for an employee can be higher than the premiums that have been paid for that employee. The premium reduction is settled at the collective level and is therefore deducted from the total in premiums owed. The total amount of the premiums owed (at a collective level) cannot be less than zero. Any surplus of premium reduction can be settled in a future time frame. If there is still an amount to be settled when it is time for the December declaration (or the thirteenth 4-week declaration), this can be settled with earlier time frames. Settlements across years are not allowed. Using the wage component with root number 100.005.116 ‘Premiekorting jongeren (corr vorige periode)’, a correction can be entered in the following period, should the collective premium be negative in this period in the wage declaration.

Note:

Using the VCR methodology may give rise to differences in periods.