Surveillance - Overpayments - Collection

• According to Article 25, paragraph 1, of the Act, it is stipulated that parents must fulfill the requirements for the right to maternity/paternity leave in order to be entitled to payments while on maternity/paternity leave. Payments from the employer to a parent on maternity/paternity leave which are higher than the difference of payment amounts from The Maternity/Paternity Leave Fund and the parent’s average gross wages according to Article 23, paragraphs 1.-3, proportional to the arrangement of the parent’s maternity/paternity leave in the calendar month or part of the calendar month for which payments are made shall be deducted from payments from The Maternity/Paternity Leave Fund. Only payments from the employer intended for the period the parent is on maternity/paternity leave shall be deducted from payments from The Maternity/Paternity Leave Fund. It is though permitted to take into account salary increase according to collective agreements, other payments according to collective agreements, and salary changes related to a parent’s job change until the first day of maternity/paternity leave.

1. Example: If parents’ average gross wages are 500.000 kr., then they are entitled to a payment of 400.000 kr. from The Maternity Paternity Leave Fund (e.g. the period January 1.-31.) if they take full maternity/paternity leave. During the same period parents can receive up to 100.000 kr. from their employer without deduction of payments from The Maternity/Paternity Leave Fund. 
2. Example: If parents’ average gross wages are 500.000 kr., then they are entitled to a payment of 200.000 kr. (e.g. the period January 1.-31.) if they take 50% of full maternity/paternity leave. During the same period parents can receive up to 300.000 kr. from their employer without deduction of payments from The Maternity/Paternity Leave Fund.

• In Article 25, paragraph 2, of the Act, it is stipulated that a parent in the domestic labour market who is entitled to maternity/paternity leave according to Section III and IV but does not fulfill the conditions of Article 21 is entitled to a maternity/paternity grant according to Article 26 or 27, as applicable. Payments from an employer to a parent during maternity/paternity leave that are higher than the difference of a maternity/paternity grant payment amount and the parent’s average gross wages,shall be deducted from the grant. The period for calculating average gross wages according to the clause shall be two months before the month when a child is born or the month when a child enters a home after adoption or permanent foster care.

Article 53, of the Act, discusses incompatible rights:

• Parents who receive payments from The Unemployment Insurance Fund according to the legislation on Unemployment Insurance, cannot use their entitlement to a maternity/paternity grant, payments from The Maternity/Paternity Leave Fund or parental leave for the same period according to the Act.
• Parents who receive accident per diem payments according to laws on social security accident insurance, sickness per diem payments according to legislation on health insurance, or rehabilitation pension according to laws on social assistance, cannot use their entitlement to a maternity/paternity grant or payments from The Maternity/Paternity Leave Fund for the same period according to the Act.
• Parents who receive payments according to legislation on payments to parents of chronically ill or severely disabled children, cannot use their entitlement to a maternity/paternity grant or payments from The Maternity/Paternity Leave Fund for the same period according to the Act.
• Parents who receive vacation pay or an employment termination payment, cannot use their entitlement to a maternity/paternity grant or payments from The Maternity/Paternity Leave Fund for the same period as these payments according to the Act.
• Payments from other countries due to the same birth, primary adoption or permanent foster care and for the same period will be deducted from payments of a maternity/paternity grant and payments from The Maternity/Paternity Leave Fund.

• In Article 41, paragraph 2, of the Act, it is stipulated that when parents have received higher payments from The Maternity/Paternity Leave Fund than they were entitled to, according to the assessment of the tax authorities, or for other reasons, The Directorate of Labour shall send a payment request letter to the parent due to the overpayment with additional 15% surcharge.
• When parents believe that they are not to blame for the shortcomings which lead to The Directorate of Labour’s decision of overpayments from the fund, the parent shall submit written arguments to support this within four weeks from the verifiable reception date of the payment request letter. The Directorate of Labour shall decide whether the surcharge will be revoked within four weeks from when the parent’s written arguments were submitted to the directorate.
• It is permitted to reimburse the overpaid amounts from The Maternity/Paternity Leave Fund with payments received by the parent due to overpaid taxes, child benefits, and interest relief.
• If a parent does not reimburse the overpayments according to a payment request letter, The District Commissioner of North Iceland will be entrusted with the collection of the payments. Further information regarding the collection process, payment distribution, and more can be found here:

The Maternity/Paternity Leave Fund shall be informed of any instances that could lead to overpayments, including potential changes to income, or the intended period of maternity/paternity leave that can influence the parent's right to payments and/or lead to overpayments from The Maternity/Paternity Leave Fund.

A parent may be entitled to maternity/paternity leave and payments from The Maternity/Paternity Leave Fund following a reimbursement, if other conditions of the Act are met, such as an agreement with their employer about a plan for maternity/paternity leave, and that the entitlement to a maternity/paternity leave has not been revoked due to the child’s age or the time from when the child entered the home after adoption or permanent foster care.