The obligations of the fund extend to claims for wages, compensation for lost wages as a consequence of the cancellation of an employment agreement, vacation pay, compensation in respect of damage caused by a work-related accident and pension fund premiums against an insolvent employer who is resident and has been operating in Iceland. 

A requirement for the fund’s guarantee is that the claims have been recognized as privileged claims under the Insolvency Act. 

The Wage Guarantee Fund operates under Act no. 88/2003.  The guarantee fund shall be managed by a three-man board appointed by the Minister of Social Affairs for terms of four years in accordance with nominations made by the Icelandic Federation of Labour and the Confederation of Icelandic Employers.  The Directorate of Labour is in charge of the fund’s day-to-day operation.  The fund’s annual accounts shall be audited by the National Audit Bureau and published in Section B of the Law and Ministerial Gazette