Unions are warning of a wave of lay-offs if the cabinet goes ahead with plans to scrap the penalty for companies that dismiss employees while receiving state support during the coronavirus outbreak.

The FNV union said the move would defeat the purpose of the emergency support for businesses whose turnover has slumped as a result of government-imposed restrictions. Companies can apply for up to 90% of their wage bill to be paid by the state, depending on how badly their business has been affected.

Social affairs minister Wouter Koolmees told talk show Op1 on Friday that the government would be extending the compensation scheme for a further three months in June but abolishing the penalty so companies could lay off staff.

That’s sometimes necessary in order to retain other jobs in the business. Companies need to be able to restructure,’ Koolmees said.

Zakaria Boufangacha, the union’s co-ordinator on working conditions, said abolishing the fine would give companies no incentive to retain their staff. ‘That will mean employers focusing their calculations even more than now on the short-term interests of their business.

‘The social significance of retaining work and income will no longer be paramount. That’s not a responsible way to use taxpayer’s money.’

The union said strict conditions needed to be attached to any state funding for business in order to protect jobs. ‘If the support measures enable companies to start making profits again, it shouldn’t be the shareholders that profit from it first,’ said Boufangacha.

Hans Biesheuvel, co-founder of business owners’ organisation Ondernemend Nederland, said companies needed to be able to cut their workforce during a coronavirus recession. ‘Conditions are fine and companies are stimulated by them, but we need to look at it from their position economically.

‘Companies need to be able to reorganise and reduce costs in order to survive, otherwise we just won’t make it through.’