When a claim is filed for lost wages, compensation for lost wages in the termination notice period or vacation pay due to the employer’s financial difficulty, the amount of those claims shall be before taxes.  The Wage Guarantee Fund pays taxes to the tax authorities.


In the case of insolvency of an employer an administrator is appointed.  An invitation in the Official Gazette will be made by the insolvency administrator to creditors to present their claims which determines the closing of the period during which claims are to be presented.  A claim against The Wage Guarantee Fund will only be accepted if it is received within six months of the publication of the invitation.  The fund may however, accept a claim received within twelve months of the publication of the invitation if it is demonstrated that it was not possible to present the claim earlier. 


When a meeting has been held by the administrator with claimants, the administrator sends written comments on claimwhich have been accepted as privileged claims.  Usually it takes 3-4 months from the date of the insolvency until the written comments have been received from the administrator.  Within four weeks the guarantee fund will generally decide whether a claim will be paid from the fund If it is not possible to decide within the deadline an announcement is made to the claimant and the opportunity to present new evidence and arguments is given. 

The fund pays interest on claims under the Interest Act No. 38/2001.  The interest is calculated from the due date of the claims to the date on which the claims are paid by the guarantee fund. 

The Wage Guarantee Fund is liable to tax the wage claims and compensation for lost wages in the termination notice period and pay those taxes to Iceland Revenue and Customs according to Laws of public charges No. 45/1987.  If a wage earner has personal tax credit in the same year as the payment is made, it is possible to use it to lower the tax withdrawn from the salaries. 

A wage earner’s claim

Press here for an application (pdf format, excel format).  Necessary information and  

supporting documents: 

  • Name, ID no., address and the claimant’s bank account number 
  • Name, ID no. of your employer 
  • What day the estate was accepted for insolvency proceedings and the deadline 
  • Claimants’ occupation, the beginning and end of employment, their wages and on which wage agreements they were based 
  • Detailed information regarding the claim and for which period the claim is made 
  • The amount of salaries, cost and interest 
  • A declaration confirming that an exemption from the liability of the guarantee fund does not apply to the claimant 

Claim for pension

When a claim for pension is filed, necessary information and supporting documents are: 

  • Name and ID No. of each wage earner 
  • Name, ID No. and the employer’s address 
  • What day the estate was accepted for insolvency proceedings and the deadline 
  • The claim must be divided by months for each wage earner 
  • The amount of pension, cost and interest 
  • declaration confirming that an exemption from the liability of the guarantee fund does not apply to the claimant 

Claim for vacation pay due to employer’s financial difficulty

Wage earners or their union on their behalf can apply for vacation pay using a special form.  Press here for the form.  Necessary information and supporting documents: 

  • Name, ID No., address and the claimant’s account no. 
  • Name, ID No., and employer’s address 
  • The claim’s amount and for which period 
  • The wage earner’s line of work for the employer 
  • declaration confirming that an exemption from the liability of the guarantee fund does not apply to the claimant 


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