This will prevent having to repay overpaid benefits or having payments suspended.
It is important to confirm your job search even if the application is still being processed, and also if payments have been suspended due to violations of the rules.
Report work and income
Extra income and other payments may affect the amount of unemployment benefits.
If a person does not report income, they will be overpaid and will have to refund the amount. Work should be reported on Directorate of labour´s My pages.
Unemployment benefits are reduced by half of the income that exceeds the income limit. The income limit is 94.487 ISK per month.
Example: An individual has 100,000 ISK in income before tax. The amount that goes over the income limit is 5.513 ISK, that is, 100,000 ISK minus 94.487 ISK. That amount is divided by two and the reduction is 2.757 ISK of unemployment benefits per month.
The work must be reported at least one day before it begins.
On My Pages, the ID number and name of the company, the month in which the work is done and the estimated amount of wages before tax are registered. If your income changes, you must contact a service office to make the change.
Unemployment benefits are reduced in proportion to the percentage of employment and by half of the combined income (income from work and unemployment benefits) that exceeds your unemployment benefit entitlement plus the income limit. The income limit is 94.487ISK per month.
Example: Individual that has 100% benefit entitlement and is working a 20% part-time work then has 80% benefit entitlement. Income for the work is 200.000ISK before tax. Total reduction is 91.157ISK per month.
Income from work + unemployment benefits: 200.000(20%) + 307.069(80%) = 507.069
Benefit entitlement + income limit: 383.870(100%) + 94.487 = 478.357
= 507.069 – 478.357 = 28.712/2 = 14.356
The work must be notified at least a day before it begins.
On My pages, you have to register the company ID number and name, beginning date of your job, the percentage of your job and the estimated amount of your salary before tax. If your income changes, you need to contact the Directorate of labour.
If part-time work ends
It is important to inform the Directorate of labour about the termination of part-time work when the work is finished so unemployment benefits will not be reduced.
The termination of part-time work must be reported by turning in Confirmation of employment. An individual must contact their employer to submit the confirmation electronically through the employers My Pages to provide information about the reason for termination and confirm employment period..
Unemployment benefits are not paid on the days when contract work (freelance work) is performed. You must report the days during which the project is ongoing before the project begins.
You must register a day as a working day even if the work performed that day is less than 8 hours. It is not permitted to accumulate hours from contract work. The individual is deregistered on the days when contract work is carried out.
Note that a person is not allowed to register on the Employer Register with Iceland Revenue and Customs(Skatturinn) while receiving unemployment benefits.
Example: An individual teaches twice a week for 2 hours each time and therefore deregisters for 2 days
Other income to be reported:
Pension fund payments
Capital income, own or shared with a spouse (capital income can, for example, be rental income, interest income, dividends or capital gains)
Income from the Social Insurance Administration(TR)
The following payments do not affect the right to unemployment benefits:
Childcare allowance.
Withdrawals from private pension savings.
Inheritance.
Social assistance grants from municipalities.
Single parent allowance
Child pension payments.
Grants from union health funds that are not intended for subsistence. Examples include grants for gym memberships and courses.
Grants from public funds or similar funds that an individual receives to develop their own business idea.
Final settlement from a previous employer, except in cases of payment for accrued holiday leave if the applicant has not used their unused leave.
Other payments made for a period during which the applicant did not receive unemployment benefits.
Accident compensation and sickness benefits paid for an accident or illness during a period when the applicant did not receive unemployment benefits.
The Unemployment Insurance Act further states that the Directorate of Labour shall assess in each case whether payments that are not intended for living expenses should reduce an individual’s unemployment benefits.
Circumstances change
Various changes may affect the right to unemployment benefits, and therefore they must be reported. If this is not done, payments may be cancelled or permanently discontinued.
An individual must deregister from unemployment benefits. This can be done on My Pages by clicking the button on the front page called “Deregister from unemployment benefits.”
Unemployment benefits are not paid for the days when an individual is abroad. This also applies if the trip takes place over a weekend or public holidays.
The individual reports the trip on My Pages clicking the “Report trip abroad” button and registering the dates of departure and return.
Those who have a U2 certificate do not need to report the trip.
The start and end of illness must be reported immediately.
A person who receives unemployment benefits is entitled to 5 days of sick leave. This means that sickness for up to 5 days in total has no effect on the right to benefits.
In each 12-month period, this sick leave can be used a maximum of two times. A person must have been registered for 5 months during the same benefit period.
If an illness prevents a person from actively looking for a job, a medical certificate must be submitted if the Directorate of Labour requests it. The certificate is uploaded to My pages via the Submit documents button. Medical certificate is selected as the type of document.
The Directorate can call for a medical certificate if a person does not attend a course or meeting and reports illness as a reason.
Children's illness
Individuals receiving unemployment benefits do not receive special sick days due to children's illnesses. It is not allowed to use the 5-day sick leave due to children's illness.
If a child's illness prevents a person from actively looking for a job, unemployment benefits are not paid for those days.
You must submit a medical certificate stating your current ability to work, as well as the beginning and percentage of your incapacity for work.
The establishment of a company must be reported. You must also report:
Ownership in a company.
Reopening operations that had been temporarily suspended.
If an employer hires staff but is on benefits themselves.
If part-time work is finished and the individual has been on part-time benefits and wants to increase the rate of benefits, confirmation of the period of employment must be submitted by the employer. Guidelines for employers can be found here.
This obligation to report changes also applies when payments have been postponed due to violation of the rules.
Consequences for breaking the rules
When payments are suspended, it applies from the date of the ruling.
Applicants who are subject to a waiting period at the beginning of a period are not entitled to income related unemployment benefits.
Payments are suspended at the beginning of a period if the applicant:
resigns from their job without a valid reason,
looses their job for reasons that are their own fault,
terminates their studies without a valid reason,
declines to work the notice period.
If a written explanation is submitted with the application can decrease processing time of the application. If a written explanation is not sent the application is postponed and the applicant will be given the opportunity to submit explanations or objections regarding a possible decision by the Directorate of Labour.
Payments can be suspended for:
2 months,
3 months in case of recurrence.
Those who work while receiving unemployment benefits, but do not report it to the Directorate of Labour, have to earn the right to a new benefit period.
Payments are suspended:
If what needs to be reported is not reported,
if a job offer is rejected without valid reasons,
not participating in the creation of a job search plan or not following the plan,
resources offered are rejected, for example attending a course,
not attending scheduled interviews or a meeting without a valid reason.
Cancellation of suspension
Penalties imposed for two months can be cancelled. The conditions are that:
The person worked for at least 2 weeks before reapplying and was deregistered from unemployment benefits.
The job was not terminated without valid reasons.
The person did not lose their job for reasons that were their own fault.
If these conditions are not met, the suspension of payments is still in effect when applying for unemployment benefits again.
Those who work alongside benefits without reporting the work.
Those who are subject to suspension of payments and have received benefits for 24 months or more.
Those who are subject to suspension of payments for breaking the rules for the third time. In that case, the individual must work for 24 months in order to earn a new entitlement period.
