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Low-income benefit (LIV) will go down by 2021

The LIV is an annual allowance for employers who employ employees with a low wage. This reduces wage costs for the employer. The chance of work for these employees then increases. The right to and the amount of the LIV is determined in the year after the calendar year for which the LIV is calculated.

The amount per hour paid of the low-income benefit (LIV) will be reduced from € 0.51 to € 0.49 as of 2021. The current maximum amount of € 1000 per year will be reduced proportionally to € 960. Minister Koolmees of Social Affairs and Employment announced this in a memorandum of amendment to the Collective Insurance Act 2021.

To cover the costs of a slower rise in the state pension age, the high LIV rate of a maximum of € 2000 was halved as of 2020. The youth LIV has also been lowered by 2020 and will even disappear completely by 2024. The decline continues: the LIV's budget will be reduced by € 14.3 million per year by 2022. As a result, the rate of the LIV will also go down from 2021, because the payment will take place one year later. This means that the current amount per hour paid will decrease from € 0.51 to € 0.49 and the current maximum amount of € 1000 per year will be reduced proportionally to € 960.

Wage cost benefit should replace the youth LIV
Minister Koolmees is working on a solution for the disappearance of the youth LIV. For example, he has made agreements with employers about the future of the LKV and (youth) LOV. He wants to use the LIV in a more targeted way and transform it into a wage cost benefit (LKV) for potentially vulnerable young people. Together with the agreement to make the LKV structural for job agreements, this must continue to encourage employers to hire and keep people with a vulnerable position in the labor market.

The conditions for a low-income benefit
The LIV is, just like the youth LIV and the wage cost benefits (LKVs), an allowance that employers can receive per paid hour. The employee must then meet the following three conditions:

  • The employee has at least 1,248 paid hours for the organization in the calendar year.
  • The average hourly wage per calendar year of the employee is a minimum of 100% and a maximum of 125% of the statutory minimum wage for a 40-hour working week.
  • The employee is insured for one or more employee insurance policies.