Unemployment benefits

• The average salary over a 12-month period is reviewed in order to calculate benefit entitlement.

• It is possible to look back up to 36 months. Usually, the last 12 months prior to the application are used to calculate the benefit percentage.

• If the applicant is on parental leave or receiving sickness benefits, the period prior to that is reviewed.

Examples of entitlements

• 100% employment for 12 months gives the right to 100% payments.

• 100% employment for 6 months gives the right to 50% payments.

• 75% employment for 8 months gives the right to 67% payments.

• 50% employment for 10 months gives the right to 50% payments.

To qualify for the minimum entitlement of 25%, one must have worked for at least 3 months at a minimum of 25% employment.

Social security tax

For employees to be entitled to unemployment benefits, the employer must have paid the social security tax for the employment.

Variable employment rates

If the applicant has not worked at the same percentage of employment, the average employment ratio over the 12-month period being reviewed is used. The right to benefits will never be higher than the average employment ratio during that period or the employment ratio the applicant wishes to take on.

Contract work

All jobs are included in the calculation of entitlements. If the applicant has also been self-employed, that work is also taken into account.

If you quit your job

An applicant who has resigned without valid reasons, or who is responsible for their own termination, may expect payments to be withheld at the beginning of the benefit period. If an explanatory letter is not submitted with the application, its processing will be delayed.

It is possible to speed up the processing of an application by submitting an explanation of the termination of employment through My Pages. Click the “Submit data” button and select “Explanatory letter” as the document type. The letter must state the reason for the termination of employment.

If the applicant has contacted a trade union regarding the termination, or the circumstances leading up to it, confirmation from the union must also be submitted to show that the applicant has sought their assistance. Applicants must contact their trade union to obtain this confirmation.

Fishermen

The work contribution of seafarers is based on the number of registered days at sea. One month of work for seafarers is counted as 21.67 registered days. Registration must be closed before the individual can receive 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.

Individuals may be entitled to unemployment benefits even if they have just moved to Iceland, if the country they moved from is within the EEA. A person who intends to seek employment in Iceland can be certified as having been unemployed in another EEA country with a U1 certificate. This can increase the right to unemployment benefits in Iceland.

Further information on U1-Certificates

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.