Employees aged 18-70 are entitled to unemployment benefits provided they have earned social security entitlements and meet the following conditions: 

  • They are actively seeking employment 
  • They are domiciled and present in Iceland 
  • They are permitted to work in Iceland without restriction 
  • They have been an employee during the accrual period 
  • They submit a confirmation from their former employer and a certificate from their school where applicable 
  • They have been seeking employment continuously for three working days since their application for unemployment benefits was received by The Directorate of Labour. 

An employee is anyone who works in paid employment in other services in a minimum of 25% employment ratio each month, and a social security contribution is paid for the work according to the Social Security Act. 

An employee is considered fully insured after having worked continuously for the last 12 months in the domestic labour market before applying for unemployment benefits at The Directorate of Labour. 

An employee who has worked for less than 12 months but for more than 3 months in the last twelve months in the domestic labour market before applying for unemployment benefits to The Directorate of Labour is considered insured in proportion to the length of employment. 


Example of calculating the right to benefits:

  • An employee who has worked in a 100% employment ratio for 12 months has earned a 100% entitlement to benefits. 
  • An employee who has worked in 100% employment ratio for 6 months has earned 50% entitlement to benefits. 
  • An employee who has worked in 75employment ratio for 8 months has earned 67entitlement to benefits. 
  • An employee who has worked in 50employment ratio for 10 months has earned 50% entitlement to benefits. 

The applicant's entitlement to benefits will never exceed the employment ratio during the period of employment or the employment ratio in which they are willing to be employed. If the employee has not been in the same employment ratio for the entire employment period, the average employment ratio at that time shall be used. 


Studies

Studies that the employee has pursued for at least six months in the last twelve months before they applfor unemployment benefits corresponds to a thirteen-week full-time contribution, providing that they have verifiably completed their studies and worked for at least three months in the domestic labour market during the accrual period.

  • A certificate from the school in question must accompany the application for unemployment benefits confirming the completion of studies. 
  • This authorization can only be used to increase the employee's benefit entitlement once in each benefit period. 

In instances when studies are not considered to be part of the work contribution, it is permissible to take into account work performed while studying when calculating the employee's unemployment benefit entitlement. 

Vocational rehabilitation

Vocational rehabilitation in which an employee has participated during the time they are considered incapable of work, corresponds to thirteen weeks of full-time work contribution, providing that they have verifiably completed vocational rehabilitation and worked for at least three months in the domestic labour market during the accrual period. 

  • A certificate from the Vocational Rehabilitation Fund shall accompany the application for unemployment benefits confirming that the employee has participated in and completed vocational rehabilitation. 
  • This authorization can only be used to increase the employee's benefit entitlement once during the benefit period

The fishermen's contribution

The fishermen's contribution is based on the number of legal registration days. The monthly work of fishermen is considered to be 21.67 legal registration days. 

The employee shall be 16 years of age at the beginning of the accrual period. 

If an employee has also been self-employed in the last twelve months before applying for unemployment benefits, all their work must be taken into account when calculating their unemployment benefit entitlement.  


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