Unemployment insurance

Entitlement to unemployment benefit

Employees and self-employed persons aged 16-70 are entitled to unemployment benefit providing they have earned insurance entitlements and are:

• Unemployed
• Resident in Iceland
• Actively seeking work
• Able to work and are willing to take any usual work
• Prepared to accept work anywhere in Iceland

Benefit entitlement

The benefit entitlement is based on work and the amount of work over the last 12 months.

• The unemployment benefit is income-related for three months starting 10 days after application. The benefit is then 70 per cent of the average total wage over a six month period that begins two months before the application up to a certain maximum. The basic benefit entitlement is payable after three months.
• Full basic unemployment benefit is a given amount per day.
• The minimum benefit entitlement is 25 per cent that is reached after three months' full-time work. The minimum entitlement to unemployment benefit gives ¼ of the basic unemployment benefit.
• The self-employed persons who belong to the group “annual individuals”, i.e. those who pay preliminary tax and social security contributions once a year are not entitled to unemployment benefit.
• Unemployment benefit is paid for all days except Saturdays and Sundays.
• A jobseeker who has earned the minimum benefit entitlement and who has also completed training that has lasted at least six months can have the training counted as 13 weeks work. Part-time studies and courses do not provide extended benefit entitlement.
•  If certain criteria are met, the benefit entitlement is not affected even through the jobseeker is out of the job market for up to 24 months. Students can save their entitlement for up to 36 months.
• A benefit is paid for each child below the age of 18 irrespective of the amount of the benefit.
• Unemployment benefit is not paid in the event of sickness or for a sick child.
• The benefit entitlement cannot exceed the degree of work that the jobseeker is prepared to take.

Decision on unemployment benefit

The Directorate of Labour (Vinnumálastofnun) decides on the entitlement and the loss of entitlement to unemployment benefit. Payment is made on the first weekday of each month for unemployment days for the period 20 to 19 months previously. The directorate’s payment office at Skagaströnd deals with payments.