Employment allowance

The employer must meet the following conditions:

• The jobseeker will not commence employment until a tripartite agreement regarding the recruitment grant has been concluded with an employment consultant at The Directorate of Labour.

• The employment grant must include an increase in the number of employees of the company or institution in question. The employee must be hired as a wage earner and not as a contractor.

• At least one employee must be on the payroll of the company or institute in question, before applying for the recruitment grant.

• The company / institute must not have laid off employees in the last 6 months who have held the same job position that is intended to hire into.

• The job seeker in question must not have held the same position at the relevant company, institution or non-profit organization in the past 12 months.

• The company / institute has no debt with regard to salary related fees and public fees, such as pension fund premiums, labour union fees and social insurance taxes.

Jobseekers must meet the following conditions:

• The jobseeker must be registered as for a jobseeker and be entitled to unemployment benefits with The Directorate of Labour for at least 3 months after the loss of their previous employment.

• The employer fills out an application for the recruitment grant and registers the position on My pages for employers.

• The employer must apply for a recruitment grant and register a job before an employee starts working.

• A copy of a signed employment contract between the employer and the employee must be submitted. The contract must meet the conditions of the relevant collective agreements.

• The maximum duration of the contract is 6 months.

• In general, a 100% employment rate is assumed in regard to employment grants.

• The contract and payments cease to apply if the jobseeker in question discontinues their employment for any reason during the term of the agreement.

• The period of employment with a recruitment grant is not considered a benefit entitlement accrual period.

• A jobseeker is deregistered from the unemployment registry during the employment period.

The amount paid to a company takes into consideration how long a jobseeker has been registered as a jobseeker:

• If a jobseeker has been registered for 3 to 6 months, the employer receives 50% of the basic unemployment benefits and in addition an 11,5% counter contribution to their pension fund as a grant.

• If a jobseeker has been registered for 6 months or longer, the employer receives 100% of basic unemployment benefits and in addition an 11,5 % counter contribution to their pension fund as a grant.

For example:

A jobseeker who has been registered for unemployment benefits for 4 months:
Amount of monthly financial support is 203.429 ISK based on 100% employment.

A jobseeker who has been registered for unemployment benefits for 7 months:
Amount of monthly financial support is 406.858 ISK based on 100% employment.

Payments can be collected monthly, or at the end of the employment period. A condition for payment from The Directorate of Labour is that the employee‘s salary has been paid to them and salary-related expenses have been paid to the tax authorities. Each application must be accompanied by a payslip for the relevant month applied for.

• When national or regional unemployment exceeds 6,5%, the criteria for payments of recruitment grants change.

• If a jobseeker has been registered for unemployment benefits for 1 month or more, the employer receives 100% of the basic unemployment benefits and an additional 11,5% counter contribution to the pension fund.

• The employer applies for the grant payment via My pages.

• A condition for payment from The Directorate of Labour is that the employee‘s salary has been paid to them and salary-related expenses have been paid to the tax authorities. Each application must be accompanied by a payslip for the relevant month applied for.

• Detailed instructions regarding settlement are sent to employers once the registration of the employment grant has been completed.