The recruitment grant facilitates employers to hire staff and increase employment opportunities to jobseekers. An employer can receive 100% of basic unemployment benefits, and in addition, an 11,5 % contribution is paid to the pension fund for up to 6 months paid with a new staff member, or up to  342.784 kr. grant per month.  

The employer must submit an application for the recruitment grant via ‘My pages’ for employers 

Please note that it is not possible to conclude an employment grant agreement for a new employee at the same time as other employees of the company are on partial benefits due to a reduced employment ratio 

For further inquiries please email vinnumidlun@vmst.is 

 


Objective

The employer must meet the following conditions:  

The employment grant must include an increase in the number of employees of the company or institution in question. The employee must be hired as a wage earner and not as a contractor.  

At least one employee must be on the payroll of the company or institute in question, before applying for the recruitment grant.  

The company / institute must not have laid off employees in the last 6 months who have held the same job position that is intended to hire into 

The company / institute has no debt with regard to salary related fees and public fees, such as pension fund premiumslabour union fees and social insurance taxes 

Conditions

The employer must meet the following conditions:  

The employment grant must include an increase in the number of employees of the company or institution in question. The employee must be hired as a wage earner and not as a contractor.  

At least one employee must be on the payroll of the company or institute in question, before applying for the recruitment grant.  

The company / institute must not have laid off employees in the last 6 months who have held the same job position that is intended to hire into 

The company / institute has no debt with regard to salary related fees and public fees, such as pension fund premiumslabour union fees and social insurance taxes 

Jobseekers must meet the following conditions: 

The jobseeker must be registered as for a jobseeker and be entitled to unemployment benefits with The Directorate of Labour for at least 3 months after the loss of their previous employment.  

Special initiatives:  

When national unemployment exceeds 6%, certain conditions for employment grants are waived.  

The condition that the company / institution has not laid off employees who have held the same job for the past 6 months is waived.  

A jobseeker must be registered as a jobseeker with the Directorate of Labour for at least 1 month after the loss of their previous employment, instead of 3 months.  

  

Implementation:

The employer fills out an application for the recruitment grant on My pages for employers  

The employer must also register the position on The Directorate of Labour’s website. See further instructions on how to advertise a job here.  

The following documents must be submitted with the application:  

Withholding tax statements (staðgreiðslu skilagreinar) for the last 6 months.  

An overview of the company’s debt position with the Treasury.  

Withholding tax statements can be accessed on the Icelandic Revenue and Customs’ website skattur.is and an overview of the company's debt position with the Treasury on island.is 

For public institutes, it is sufficient to submit an application and register the position 

Recruitment and contract period: 

  • The jobseeker will not commence employment until a tripartite agreement regarding the recruitment grant has been concluded with av employment consultant at The Directorate of Labour.  
  •  A copy of a signed employment contract between the employer and the employee must be submitted. The contract must fulfill provisions of the relevant collective agreements.  
  • The maximum duration of the contract is 6 months, except in instances where the jobseeker has a reduced ability to work. In such cases the employer must contact an employment consultant at The Directorate of Labour to review the length of the contract 
  • In general, a 100% employment rate is assumed in regard to employment grants.  
  • The contract and payments cease to apply if the jobseeker in question discontinues their employment for any reason during the term of the agreement.  
  • The period of employment with a recruitment grant is considered a benefit entitlement accrual period 
  • A jobseeker is deregistered from the unemployment registry during the employment period.  

 

Payments:

The payment to a company takes into consideration how long a jobseeker has been registered as a jobseeker.  

If a jobseeker has been registered for 3 to 6 months, the employer receives 50% of the basic unemployment benefits and in addition an 11,5% counter contribution to their pension fund as a grant.  

If a jobseeker has been registered for 6 months or longer, the employer receives 100% of basic unemployment benefits and in addition an 11,5 % counter contribution to their pension fund as a grant.  

For example: 

  • A jobseeker who has been registered for unemployment benefits for 4 months: 

Amount of monthly financial support: kr. 171.392 based on 100% employment.  

  • A jobseeker who has been registered for unemployment benefits for 7 months: 

Amount of monthly financial support: kr. 342.784 based on 100% employment.  

Payments can be collected monthlyor at the end of the employment period. An employer must submit an invoice that is numbered and from the company’s or institute’s accounting department and without VAT. 

Special initiatives:  

When national or regional unemployment exceeds 6%, the criteria for payments of recruitment grants change.  

If a jobseeker has been registered for unemployment benefits for 1 month or more, the employer receives 100% of the basic unemployment benefits and an additional 11,5% counter contribution to the pension fund.  

The employer must submit an electronic invoice to the Unemployment Insurance Fund via The Financial Management Authority’s website. fjs.is or from its own accounting system. Pay slips and receipts must be attached. The precondition for payments is that pay slips are attached to the invoice.  

Detailed settlement instructions are sent to employers after the signing of an employment contract. 

 


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