Unemployment benefit in Iceland

Atvinnuleysisbætur á Íslandi
Here you can find information on how a person becomes eligible for unemployment insurance in Iceland and assured of income when unemployed.

It is important to acquaint yourself well with the rules on income during unemployment when you move between Nordic countries. In Iceland, the Directorate of Labour handles all administration, registration, counselling and supervision of unemployment insurance.

Unemployment benefits

    Employees and self-employed

    To be entitled to unemployment benefits in Iceland, you must have worked there for a certain period. It is primarily workers and self-employed persons aged 18-70 years who are entitled to unemployment benefits under certain conditions:

    • A recipient of benefits must have worked in at least 25% of a full-time position for three months in the last twelve months.
    • The person must be unemployed, actively seeking employment, able to work and prepared to accept any type of general work anywhere in Iceland.
    • The recipient must also be resident and present in Iceland.
    Students

    Students are not insured under the Unemployment Insurance Act, except when their study programme is part of labour market actions, as determined by the Directorate of Labour.

     

    How long can you receive unemployment benefits?

    An individual can be entitled to unemployment benefits for a total of 30 months from the time application was made to the Directorate of Labour for benefits.

    How much are unemployment benefits?

    During the first two weeks of unemployment a basic allowance is paid. After that, the benefit is income-linked for three months if the conditions for income-linking are satisfied.

    A person who receives full unemployment benefits and has children under age 18 receives 4% of the basic allowance for each child.

    Statutory pension fund contributions must be paid on unemployment benefits, and the Unemployment Insurance Fund will pay the matching employer's contribution. The Directorate of Labour will deduct and remit union fees from benefits upon request.

    How do I apply for unemployment benefits in Iceland?

    Applications for unemployment benefits are available on the website of the Directorate of Labour or at service outlets of the Directorate. An applicant for unemployment benefits also signs up to search for work.

     

    Persons working in more than one country

    As a general rule, persons should be eligible for unemployment insurance in the country in which they work. Information on the rules which apply to persons working in more than one country can be obtained from the unemployment insurance fund where the person is insured.

     

    Unemployment rights transferred between countries

     

    Unemployment benefits can be transferred between countries in the European Economic Area (European Union member states, Norway, Iceland and Liechtenstein) by obtaining the certificate PD U1. To be eligible for the U1 certificate a person must have been an employee or self-employed in work giving entitlement to benefits. Self-employed persons must have paid a social security contribution on their imputed salary. The Directorate of Labour provides further information in this regard. To be entitled to unemployment insurance based on a U1 certificate from another country you must have worked in Iceland for at least one month.

     

    Persons who have earned the right to unemployment benefits in Iceland at some time during the past five years can maintain their entitlement to unemployment insurance by being in continuous work giving entitlement to benefits when working in the Nordic countries. Doing so may entitle them to unemployment benefits in Iceland without having to have worked there after they return. The condition is that they were entitled to unemployment benefits before their departure. These individuals should obtain a U1 certificate to confirm their entitlement to unemployment insurance.

    Individuals who have worked in Denmark

    A person who has worked in Denmark and was a member of a Danish unemployment insurance fund, must apply for the PD U1 document from his/her unemployment insurance fund. If the person did not belong to a Danish unemployment insurance fund, the form will be issued by the Danish Agency for Labour Market and Recruitment (Styrelsen for Arbejdsmarked og Rekruttering).

     

    Individuals who have worked in Finland

    A person who has worked in Finland and was a member of a Finnish unemployment insurance fund, must apply for the PD U1 document from his/her unemployment insurance fund. Persons who did not belong to an unemployment insurance fund can obtain the certificate from the Finnish Social Insurance Institution (Kansaneläkelaitos (Kela) or Folkpensionsanstalten).

    Individuals who have worked in Norway

    A person who has worked in Norway can obtain the PD U1 certificate from the Norwegian Labour and Welfare Administration (NAV) to enable them to transfer their entitlement to per diem unemployment benefits to Iceland. The NAV website provides information on how to apply for the certificate PD U1 and what verification is needed for application. The application must be submitted to NAV with confirmation of employment in Norway, a copy of an employment contract, a copy of pay slips, and a tax return for the period for which the PD U1 certificate is requested.

     

    Individuals who have worked in Sweden

    A person who has worked in Sweden and was a member of a Swedish unemployment insurance fund, must apply for the PD U1 document from his/her unemployment insurance fund. Persons who did not belong to an unemployment insurance fund can obtain the certificate from Alfa kassan.

     

    Icelandic unemployment benefits while looking for work abroad

     

    Under certain conditions it is possible to continue to receive unemployment benefits for up to three months while seeking a job in another Nordic country. Persons seeking work within the European Economic Area, including the Nordic countries, must obtain a U2 certificate in their home state. To be able to reside abroad and look for work while receiving unemployment benefits you must have a U2 certificate.

    Upon arriving in the country in which you intend to seek work, you must notify the employment service within seven days of the date of your departure from Iceland in order to be entitled to unemployment per diem allowance from that date. If you register after more than seven days have elapsed, you will only be entitled to per diem allowance from the date of registration. Note that applicants must take care to follow the rules which apply in the respective Nordic country when applying for a job.

      If the job search is not successful

      Persons who fail to find work abroad during these three months must return to Iceland to maintain their entitlement to the Icelandic unemployment benefits and register with the Directorate of Labour. A person who does not return home after a three-month stay abroad is no longer eligible for benefits.

      If the job search is successful

      If the person concerned finds work abroad, he/she generally has to obtain unemployment insurance in the new country of work. This means that the person must register with an unemployment insurance fund in the new country. The PD U1 form must be used to transfer rights from the Directorate of Labour to the unemployment insurance fund in the new working country. In Iceland, the Directorate of Labour issues the PD U1 certificate.

      Who should I contact if I have questions?

      For more information see the website of the Directorate of Labour (Vinnumálastofnun). You can also get information by telephone at +354 515 4800. 

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