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.
To be entitled to unemployment benefits in Iceland, you must have worked in the country at some time. It is primarily employees 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 a minimum of three months during 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 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 benefits are income-linked for three months if the conditions for income-linking are satisfied.
Statutory pension fund contributions must be paid on unemployment benefits, and the Unemployment Insurance Fund pays the matching employer's contribution. The Directorate of Labour will deduct and remit union fees from benefits upon request.
Note that the duration of income-linked unemployment benefits has been temporarily extended from 3 months to 6 months. This applies to all those who have not fully exercised their entitlement to income-linked unemployment benefits. The change will last until 30 September 2021.
How do I apply for unemployment benefits in Iceland?
Application for unemployment benefits can be made on the website of the Directorate of Labour or at service outlets of the Directorate. An applicant for unemployment benefits signs up to search for work at the same time.
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 entitlement transferred between countries
It is possible to transfer your right to unemployment benefits between countries within the European Economic Area (European Union, Norway, Iceland and Liechtenstein) with the PD U1 certificate. 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 on this. 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 right if they are continuously entitled to unemployment insurance 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 requirement is that they were entitled to unemployment benefits in Iceland before their departure. These individuals should obtain a U1 certificate to confirm their entitlement to unemployment insurance.
Support for children under 18 years of age
A person receiving basic unemployment benefits also receives an additional 6% of the full basic unemployment benefit, ISK 18,445 per month, for each child supported.
While a person receives income-linked unemployment benefits, an additional 4% of full basic unemployment benefit, ISK 12,297 per month, is paid for each child supported.
A person who has worked in Denmark and been a member of a Danish unemployment insurance fund must apply for a PD U1 certificate from the Danish unemployment insurance fund. Persons who did not belong to a Danish unemployment insurance fund can obtain the certificate from the Danish Agency for the Labour Market and Recruitment (Styrelsen for Arbejdsmarked and Rekruttering).
A person who has worked in Finland and been a member of a Finnish unemployment insurance fund must apply for a PD U1 certificate 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 Folkepensionsanstalten). Folkepensionsanstalten
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 statement for the period for which the PD U1 certificate is requested.
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
If certain conditions are satisfied, unemployed persons can 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.
The primary condition for the issuance of a U2 certificate is that the person must be completely unemployed, has been receiving benefits continuously for four weeks prior to departure and has not rejected a job offer.
The certificate must be applied for 3 weeks before departure. It is valid for up to 3 months.
Upon arriving in the country in which you intend to seek work, you must register with 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.
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 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 country of work. 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 obtain information by telephone at +354 515 4800.
If you have any questions, please fill in our contact form.
NB! If you have questions regarding the processing of a specific case or application, or other personal matters, please contact the relevant authority directly.