Low-income benefit (LIV)

From 1 January 2017, employers are entitled to the low-income benefit (LIV). The other labour cost benefits will take effect next year.

Low-income benefit

The low-income benefit is designed to encourage employers to hire more workers from the lower end of the labour market. Exactly how big the benefit is depends on the number of hours worked and the average hourly wage of the employee concerned.

The employer is eligible for the LIV if the employee:

• has an average hourly wage of up to 125% of the minimum wage;
• has at least 1,248 hours worked per year;
• Has not yet reached the state pension age.

Amounts

You will find the specific amounts involved in the table below (the indicated amounts of average hourly wages are provisional).

The maximum LIV per employee per year shown in the table is based on a 40-hour working week.

Automatic, but CAUTION!

The employer receives the low-income benefit automatically. That is, no request needs to be submitted for it. The UWV assesses for which employees an employer is entitled to the low-income benefit on the basis of the wage declarations submitted to the Tax and Customs Administration.

Importantly, the number of paid hours correctly entered in the payroll records. What exactly under paid hours is understood (and what is not), we explain in our article Hours paid clarified.

The employer would obviously be wise to monitor carefully that the employee achieves the minimum required number of 1,248 hours worked. Those hours must have been paid to the same employer during the calendar year. The maximum is not recalculated for employees who enter or leave employment during the year.

Payout in 2018

Payment of the benefit will be made only in 2018. Only after all wage declarations for 2017 have been submitted can the total number of hours worked and the average hourly wage be determined. UWV will provide the employer with a provisional calculation of the low-income benefit before 1 May 2018. Correction proposals to this can be submitted until 1 May 2018. Before 1 August 2018, the final low-income benefit will be determined. This amount is then paid out by the Tax and Customs Administration within 6 weeks.