Disability work contract

Employers can get a portion of salaries refunded with a disability work contract. Conditions are that:

• the employee is under 67 years of age,

• the position is on the general labour market,

• the person concerned receives a disability pension, disability grant and/or rehabilitation pension from the Social Insurance Administration.

Contact the Directorate of Labour if you want more information on the employment of an employee with reduced work capacity.

E-mail: ams@vmst.is

Refund

• The rate of reimbursement is 75% for the first two years of employment. The rate then decreases by 10% every twelve months until the minimum rate of reimbursement of 25% is reached.

• Refund is never for more than 100% work.

• Refunds cover fixed wages. In special cases, overtime, bonus or overtime payments are also refunded. This must be stated in the application for a work contract.

• The contracts for reimbursement shall be in accordance with the applicable collective agreements in the profession to which the work belongs. The contract shall in no case be lower than the minimum wage.

• A contract for reimbursement is not a contract of employment.

About the agreements

• The period of validity may never exceed the duration of the invalidity assessment, rehabilitation pension or accidental disability benefits.

• The term of the contract may be up to two years at a time. The term of the contract may be extended.

• If wages with all the allowances exceed ISK 914,824 per month the Social Insurance Administration's payments will be cancelled and the contract will therefore expire.

• In the event of termination of employment between the employer and the employee during the period of validity of the contract, the contract shall also expire.

• If the employee's pension payments cease, the contract shall expire.

Disclosure

Changes in the operation

If there are changes in the operation of an enterprise, for example on ownership or registration, it is necessary for new parties to take over a work contract if they want to keep an employee on a work contract. The Directorate of Labour will evaluate whether a contract can be taken over.

Managers

The Directorate of Labour's consultants are responsible for the award of contracts. Contact: ams@vmst.is

Information to the tax authorities

The Directorate of Labour shall provide the tax authorities with information on the annual payment of the employer for work contracts for disabled persons.