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Unemployment benefits in Iceland

In what situation can I claim?

If you are a wage earner in Iceland or a self-employed individual, and lose your job, you may be entitled to unemployment benefits (atvinnuleysisbætur).

In order to be entitled to unemployment benefits, you must register with the Directorate of Labour and fulfil the following conditions:

Be unemployed.
Reside in Iceland (domiciled).
Actively seek employment.
Be able to work.
Be ready to undertake unskilled work.
Have authorisation to undertake work here in Iceland without limitations.
Have been employed in at least a 25% position for 3 months in the past 12 months before applying for unemployment benefits.
Reached the age of 18 but not yet the age of 70.

What am I entitled to and how can I claim?

Wage earners and self-employed individuals may be entitled to the basic unemployment benefits for the first half-month (10 working days) after they lose their job.
After having been paid basic benefits for the first two weeks after losing their work, wage earners and self-employed individuals may be entitled to income-linked unemployment benefits for up to three months.
If you have been employed in a 100% position for 12 months, you may be entitled to 100% unemployment benefits.
If you have been employed in a 100% position for 6 months, you may be entitled to 50% unemployment benefits;
If you have been employed in a 75% position for 8 months, you may be entitled to 67% unemployment benefits;
If you have been employed in a 50% position for 10 months, you may be entitled to 50% unemployment benefits.
The income-linked benefits of self-employed individuals can be up to 70% of their average income during the preceding income year in which the individual became unemployed.

Extra payment for children:
Persons receiving unemployment benefits who have children under the age of 18 to provide for may be entitled to an additional 4% of undiminished basic benefits for each child.

How much and how long?

Despite the income linkage, there is a certain maximum in the amount of monthly payments of unemployment benefits.
After three months of unemployment, the income-linked benefits are cancelled, and only basic benefits are paid thereafter. The monthly amount of basic benefits is determined annually.
Unemployment benefits are paid for a maximum of thirty months. If the person accepting unemployment benefits is temporarily employed, the period is extended in accordance with the period of employment.
When a total of three years on unemployment benefits has passed, 24 months must elapse before you are again entitled to unemployment benefits. During these 24 months, you must be employed for at least 6 months to earn your right to unemployment benefits again.
A person who resigns, or who is responsible for the termination of their employment, may have to undergo a waiting period for unemployment benefits for a certain amount of time after having applied for unemployment benefits. The same applies to those who discontinue their studies without valid reason.
If you have been engaged in part-time work,you may be entitled to proportional unemployment benefits in accordance thereto.

Applications for unemployment benefits are submitted to the service offices of the Directorate of Labour all over Iceland. Unemployment benefits are paid on a monthly basis.

Jargon busters

A wage earner or employee is a person who is hired to work for someone else, enters into an employment contract and is paid a wage by the person who hired him.

A self-employed individual is a person who works for himself and must pay, on a monthly basis, or in another regular manner according to the rules of the Directorate of Internal Revenue, withholding tax on calculated remuneration and a social insurance contribution.

Work capability A person who is healthy enough to work either part-time or full-time is capable of working. A person who, due to his/her health, cannot work, either full-time or part-time, is unable to work, either partially or wholly. A person who is wholly unable to work does not fulfil the conditions for the payment of unemployment benefits. Physicians are responsible for assessing work capability.