To qualify for unemployment benefits, the applicant must:
have worked in Iceland,
be between the ages of 18 and 70,
be able to do general work,
have legal domicile in Iceland and be in the country.
Final outcome of the rights of an applicant, and amounts, is only clear when an application has been processed.
Other payments
An applicant cannot receive unemployment benefits and these payments at the same time:
Maternity leave
Student loans
Rehabilitation pension
Parental allowance for chronically and severely disabled children.
Accident-day allowance from the Social Insurance Administration.
Healthcare allowance from the Social Insurance Administration.
Healthcare allowance from union sickness funds for incapacity for work in full.
Payments for holiday or retirement.
If you have been working
In order for the Directorate of Labour to calculate insurance and employment periods in another EEA country, periods must be confirmed with a U1 certificate.
A U1 certificate is intended for those who come to Iceland employed but then lose their job. You can also apply for the certificate to obtain a work history from another EEA country.
Individuals from the Nordic countries who have had a work history in Iceland in the last 5 years may also be entitled to apply for a U1 certificate.
Conditions for a U1 certificate
Having been a worker or self-employed.
That a fee has been paid for your salary.
The certificate is applied for in the country in which the applicant intends to live.
If you have been studying
Those who come to Iceland can retain the right to unemployment benefits for up to three months while seeking work in Iceland. The certificate must be called U2. Applications for a U2 certificate are made in the state where the person was studying.
Conditions for a U2 certificate
Being unemployed and having the right to unemployment benefits within an EEA country.
Employees have been in paid employment, at a minimum 25 % employment rate.
The study is based on a 12-month period.
You can look back up to 36 months. Most often the last 12 months from the application are used for calculation, but otherwise it is the 12 months period that grants the most rights that are examined.
If the applicant is on maternity leave or on sickness benefit, the period before that is considered.
Examples of rights
100% employment for 12 months entitles you to 100% payments.
A 100% job for 6 months entitles you to 50% of your payments.
A 75% job for 8 months entitles you to 67% of your payments.
50% employment for 10 months entitles you to 50% payments.
To have a minimum of 25 percent, you must have worked for at least 3 months in a 25 percent capacity.
Insurance fee
To have the right to unemployment benefits, the employer must have paid the insurance premium for the work.
Variable employment rates
This is based on the average employment rate over the 12 months period considered if the applicant has not been in the same employment rate. The right to benefits will never exceed the employment rate during the period or the employment rate that the applicant wants to work in.
Contracting
All jobs are included in the calculation of the rights. If the applicant was also self-employed, the income is also taken into account.
If you quit your job
An applicant who has resigned from work without valid reasons, or was chosen for his own resignation, can expect payments to be delayed at the beginning of the period of benefits. If an explanatory letter is not sent with the application, the processing of the application is delayed.
You can speed up the processing of an application by submitting an explanation of retirement through My pages, select "Explanation letter" as the type of document. The letter must state the reason for leaving the job.
If the applicant has been assisted by a union, in the period leading up to leaving the job, confirmation must be sent from the union that supports that. The applicant must contact his/her union to receive this confirmation.
Fishermen
The wage contribution of fishermen is based on the number of legal registration days. The monthly wage contribution of seafarers is considered to be 21,67 legal registration days. The registration must be completed before the person concerned receives unemployment benefits.
Conditions:
Skatturinn must have been received a notification that an employer's register has been closed. The form is called: Tilkynning um lok starfsemi.
Insurance fee has been paid for the work.
The monthly income tax has been paid on a calculated salary. The amount must have been according to the guidelines of Skatturinn, at the minimum.
This applies to individuals who carry out professional activities on their own kennitala and those who carry out business activities with others. Furthermore, this applies when the applicant is a controlling party because of ownership or control.
Insurance fee
A self-employed person has a 100% right to unemployment benefits if the person has paid a continuing insurance contribution in the last twelve months before applying.
If the insurance premium has been paid for less than 12 months, but more than 3 months, in the twelve months preceding the application, the person concerned is entitled to the amount of the months in which he/she has paid income tax.
Calculated salary
An applicant may be entitled to 100% unemployment benefits if the person concerned has paid monthly income tax on calculated salary. The amount must have been according to the guidelines of Skatturinn, at the minimum.
If the tax paid is less than stated in the guidelines, the amount of the tax is determined by the ratio of the amount of the calculated salary paid and the guideline amount.
If the tax paid is less than 25% of the guideline amount for the relevant profession in the twelve months prior to the application, the right to unemployment benefits is non-existent.
Revenue reported once a year
Individuals who report income once a year must submit with an application:
Contractor's declaration
Confirmation by Skatturinn of payment of the insurance premium and cash payment.
Those who live outside the capital area can contact the District Commissioner.
The rights of students to unemployment benefits depend on the number of credits they are registered for in the semester when they apply.
Completing studies
The applicant must have completed a course of study before applying, and must have worked during the period used for calculation.
Leaving a study programme
When an applicant stops studying and applies for unemployment benefits, it matters how the study was completed. If study is stopped without valid reasons or credits are reduced to qualify for a study contract, payments may be delayed at the beginning of the benefit period.
If there are no valid reasons for the termination of studies, the processing of the application is expedited by sending a letter of explanation. If such letter is not sent, the processing of the application is postponed. The person concerned is not entitled to income-linked benefits if payments are postponed.
The processing of an application can be sped up by submitting an explanation of your study completion through My pages by clicking on the "Send data" button and selecting "Explanatory Letter" as the type of document. If such a letter is not sent, the processing of the application is delayed.
While studying
Individuals studying are not usually entitled to unemployment benefits. There are exceptions:
Study is 12 credits or less.
A person loses a job while studying and is finishing a semester.
Programme is defined by the school as study with work.
Study contract
You must always apply for a study contract if you wish to receive unemployment benefits during your studies. The application is sent to: radgjafar@vmst.is.
Obligations
Individuals who are studying and receive unemployment benefits have the same obligations as others who receive unemployment benefits.
Be actively seeking a job and willing to take a job if offered.
Confirm job search monthly.
Attend meetings and interviews the Directorate of Labour may invite you to.
1. Study is 12 credits or less
Individuals who study a maximum of 12 credits at secondary school or university can be entitled to unemployment benefits. The student may not be eligible for a student loan at the Icelandic student loan fund.
Applicant must:
Submit a confirmation from the relevant educational institution on the amount of credits.
Submit a confirmation of the extent of your studies on My pages.
Apply for a student contract.
You can study in day school, evening school, or through distance learning.
2. A semester completed
If an individual loses a job after a semester has begun, the semester may be completed. The condition is that the semester has begun when the individual lost the job.
Applicant must:
Submit a confirmation of the extent of your studies on My pages.
Apply for a student contract.
3. Study defined as study with work
If studies at the upper secondary school level or university level are defined as studies with work by the school itself, they may be pursued while unemployment benefits are paid without the right to benefits being affected. The student may not be eligible for a student loan at the Icelandic student loan fund.
Applicant must:
Submit a confirmation of the extent of your studies on My pages.
Apply for a student contract.
More than 12 credits per semester
You may not study beyond 12 credits at the upper secondary school level or university level when you receive unemployment benefits. Special reasons must be present and the Directorate of Labour must approve in advance.
The maximum amount of such authorisation is 20 credits along with the payment of unemployment benefits. The student may not be eligible for a student loan at the Icelandic student loan fund.
Applicant must:
Submit a confirmation of the extent of your studies on My pages.
Apply for a student contract.
Reduction of benefits
If a course of study is approved with more than 12 units, unemployment benefits are reduced in proportion to the size of the course.
13 units - unemployment benefits reduced by 43%
14 units - benefits reduced by 47%
15 units - benefits reduced by 50%
16 units - benefits reduced by 53%
17 units - benefits reduced by 56 %
18 units - benefits reduced by 60%
19 units - benefits reduced by 63%
20 units - benefits reduced by 66%
Working while studying
The employment of a student may be taken into account when calculating unemployment benefits, but then the study programme does not count as a work contribution. This authorisation may only increase the right of employees to unemployment benefits once in each 30 month period of benefits.
If a person applies for unemployment benefits and has been on maternity leave, another 12-month period in the last 36 months is considered, not the period the person was on maternity leave.
If a person applies for unemployment benefits and has been in work-related rehabilitation, another 12-month period in the last 36 months is considered, not the period in which the person was unable to work.
Individuals who are waiting for final settlement of wage claims and are unemployed during the notice period may be entitled to unemployment benefits.
Individuals must meet general conditions for the right to unemployment benefits.
The portion of the wage claim that amounts to the sum of benefits paid at that time must be transferred. The claim is transferred to the unemployment insurance fund.
An application for unemployment benefits also includes an application for participation in labour market measures.
Payment is made from the date the notice period starts to apply. After the notice period has ended, the person concerned can receive general unemployment benefits. Employees of a bankrupt company can receive income-related unemployment benefits.
You cannot apply for unemployment benefits until the company has been declared bankrupt.
Active job search
While receiving unemployment benefits, people must be in active job search. This means:
showing initiative in the job search,
take paid work, even without special notice,
take a job anywhere in the country,
take a job regardless of whether it is full-time or part-time, or working shifts,
participate in the labour market measures available,
provide the Directorate of Labour with the necessary information to increase the likelihood of obtaining a suitable job.
The Directorate of Labour aims to find jobs that suit job seekers based on their experience and current location. However, the conditions above are obligations according the law so it is good to keep them in mind.
Service provider
Directorate of Labour