Unemployment benefits

Income-related unemployment benefits are 70% of the average total wages.

To calculate, an 8-month period is checked from the date of application. The last 2 months are not taken into account.

Income-based unemployment benefits for self-employed are 70% of the average total wages and are based on the income year preceding the year in which the applicant became unemployed.

Unemployment benefits are reduced by half of the income that exceeds the income limit.

Example 1

A person has 100,000 ISK in income before tax. The calculation is then as follows:

349,851 ISK, which is 100% unimpaired benefits, plus 100,000 ISK totals 449,851 ISK.

ISK 349,851 + the maximum free income of ISK 86,114, totals ISK 435,965.

ISK 449,851 – ISK 435,965 is a total of ISK 13,886. Half of that amount is ISK 6,943. The reduction in benefits is then ISK 6,943.

Example 2

A person has 100,000 ISK in income before tax.

The amount above the free income limit is ISK 13,886, that is, ISK 100,000 minus ISK 86,114. This amount is divided by two and the reduction is ISK 6,943 of unemployment benefits.

Example 3

The average income per person is ISK 113,458.

The maximum free income limit of ISK 113,458 - ISK 86,114 - totals ISK 27,344.

The decrease is then ISK 27,344 divided by two, which is ISK 13,672.

Overpaid unemployment benefits are collected as follows:

Refund:

You can pay off a debt with Vinnumálastofnun by transferring it to the following bank account:

Bank: 0160-26-004404, kt. 440407-0640

Note that if payment is not executed from the debtor's account, the debtor's ID number must be included in the explanation.

The applicant will continue to receive unemployment benefits:

• The applicant is informed of the decision of the Directorate of Labour and the amount of overpaid unemployment benefits on my pages or by letter.

• Overpaid unemployment benefits are offset against the same person's subsequent unemployment benefits amounting to 25% of the subsequent unemployment benefits each month.

Applicants who do not receive unemployment benefits:

• If the applicant deregisters from the unemployment register, the remaining debt due to overpaid unemployment benefits is collected according to the above.

• The applicant is informed of the decision of the Directorate of Labour and the amount of overpaid unemployment benefits with a 15% levy by sending a collection letter.

• The burden shall be waived according to Article 39 (2) of Act No. 54/2006, if the insured would argue that he will not be blamed for the deficiencies that led to the decision of the Directorate of Labour.

• If the applicant does not meet the payment requirement of the Directorate of Labour, the case is sent to the District Commissioner’s Collection Centre in Blönduós for further collection.

The decisions of the Directorate of Labour on reclaiming overpaid unemployment benefits are enforceable. It should be noted that an administrative complaint does not delay the legal effects of the collection except to the extent that the enforceability is delayed until the Welfare Authority's ruling is available.

Payment distribution:

If payment distribution is required, the claim can be sent to the Collection Centre at Blönduós. The additional cost of the claim is not added when it is sent to the Collection Centre at Blönduós. Note that 30 days from the date of the collection letter or the penalty decision, the debt will be transferred there for further processing.