Questions and answers

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Here are som questions and answers about unemployment benefits


Why do I receive so little take-home pay?

  • Did you forget to confirm your job search activity between the 20th-25th of the month? Those who confirm their job search activity during the period from the 26th of the month to the 3rd day of the following month will get paid 5 weekdays after the first payout date. Those who confirm after the 3rd day of the month get paid at the beginning of the next month.
  • Has your application been processed?  The processing time of individual applications may vary. Sometimes documentation is lacking and then these must be requested etc. and if these are not received prior to the 20th of each month then you can not be sure that you will get paid at the beginning of the following month.
  • Unemployment benefits are always disbursed on the 1st weekday of each month. If the 1st day of the month is a Saturday then the unemployment benefits are disbursed on the following Monday.
  • Did you possess any leave period that you did not use? Any unused leave from the previous leave period you must complete before you begin receiving unemployment benefits. Any leave that you have acquired during the new leave period you may use during the following leave period. The leave period is from 1 May until 15 September every year. Any holidays that you acquire prior to 1 May each year must be used during the next leave period (which will then begin on 1 May).

 Am I entitled to income indexing?

  • An applicant for unemployment benefits can obtain income indexing on one occasion at the beginning of the benefits period (24 months) for up to 3 months.
  • Base unemployment benefits are disbursed during the first two (2) weeks and then follows the income indexation for the next 3 months.
  • The maximum amount of income indexed unemployment benefits for each month are based on the insurance ratio of the insured person but however are never more than ISK 318.532 per month for unreduced unemployment insurance benefits.
  • Income indexed unemployment benefits for wage earners are 70% of the average amount of total pay and has as a reference point a six months period that begins two months prior to when the applicant became unemployed.
  • Income indexed unemployment benefits for self-employed persons are 70% of the average total pay and the previous income year prior to the year when the applicant became unemployed should be used for reference.
  • Those who are subject to a qualifying period before unemployment benefits may be claimed are not entitled to income indexed unemployment benefits


What is the amount of unemployment benefits?

The following amounts shall apply as from 1 Januar 2017:

Basic unemployment benefit payments are calculated  follows:

  • Unemployment benefit is ISK 217.208 per month (100% entitlement).
  • Unemployment benefit is ISK 162.906  per month (75% entitlement).
  • Unemployment benefit is ISK 108.604 per month (50% entitlement).
  • Unemployment benefit is ISK 54.302  per month (25% entitlement – minimum entitlement).

ISK 7.368 is paid each month for each dependent child under the age of 18 for whom the recipient is responsible. (This is 4% of full basic unemployment benefit).

Income-related amounts

  • Unemployment benefit will be paid at the basic rate for two weeks following your first registration, after which income-related amounts take effect.
  • The maximum of income-related unemployment benefit is ISK 342.422 per month.
  • Income-related amounts are calculated as follows:
    Wage-earners: Income-related unemployment benefit is 70% of your average gross income, based on the six-month period ending two months before you became unemployed.   
    Self-employed individuals: Income-related unemployment benefit is 70% of your average gross income, based on the income year preceding the year in which you become unemployed.
    Your benefit entitlement: The amount of income-related benefit also depends on your benefit entitlement. For example, if you have maximum income-related benefit, but only 50% benefit entitlement, then the maximum amount you can receive is 50% of ISK 342.422, i.e. ISK 171.211. ISK. 

  • Your right to receive income-related unemployment benefit is valid for 3 months from the beginning of the benefit period, providing you meet the requirements.
  • If a waiting period is imposed on your unemployment benefit, you will not be entitled to income-related benefit.
  • Applicants only have the right to receive income-related benefit once in each benefit period, this being at the beginning of the period. 

What will cause unemployment benefits to be reduced?

  • Income from a part-time job
  • Income from incidental work
  • Old age or disability pension payments from the Social Insurance Administration
  • Old age or disability pension payments from conventional pension funds
  • Capital income
  • Interest relief is not capital income but rather a tax discount and will therefore neither reduce payments for unemployment insurance nor from social security
  • When the actual income of the insured, i.e. the combined income from work and his/her unemployment benefits are higher than what amounts to his/her unreduced entitlement to unemployment benefits with the addition of the maximum allowable income of ISK 59,047, his/her unemployment benefits shall be reduced by half the amount of the exceeding income.

 What do I have to do if I am offered a part time job or incidental work?

  • The job-seeker must inform the Directorate of Labour immediately of any changes to the circumstances of the job seeker that may affect his or her entitlement during the period when the job seeker receives unemployment benefits. Therefore any part-time job or incidental work must be reported. If such a change of circumstances is not reported it may result in debt creation, a qualifying period or other statutory sanctions.
  • You need to fill in the form on "Mínar Síður"
     and return it to the employment office or fill it in through My Pages.
  • If this is a part time job it is important to record the full-time job ratio (%), the income plan, and the beginning date? Ath. so that the part-time job can be created.
  • It is important that the income plan is as correct as possible in order not to create a debt to the Directorate of Labour as this may happen when actual income is higher than estimated income.
  • A part-time job will reduce the unemployment benefits by the full-time job ratio and approximately half the income that exceeds any unreduced entitlements to unemployment benefits in addition to maximum allowable income (ISK 59,047).
  • When the actual income of the insured, i.e. the combined income from work and his/her unemployment benefits are higher than what amounts to his/her unreduced entitlement to unemployment benefits with the addition of the maximum allowable income of ISK 59,047, his/her unemployment benefits shall be reduced by half the amount of the exceeding income.
  • It must be noted that applicants for unemployment benefits need to give an account of any income that they may receive during the same period when they receive unemployment benefits, but also if income is lower than maximum allowable income.

 What do I need to do when the part-time job or the incidental work is over?

  • Termination of a part-time job must be reported to the Directorate of Labour by submitting an attestation from the employer.
  • The attestation from the employer must be submitted to inform of the reasons for the termination of employment.
  • It is important to notify of the termination of employment ath. for a part-time job so that the full-time job ratio and the income estimate stops reducing unemployment benefits
  • In the case of incidental work there is no need for notifying of its termination as the income stops reducing the unemployment benefits when the work is terminated and no wage payments take place.

May I undertake a project as a contractor while I am receiving unemployment benefits?

  • No, working as a contractor concurrently with receiving unemployment benefits is not permitted.
  • If you intend to undertake a project as a contractor you need to de-register from unemployment benefits during the days when the project is being undertaken.
  • De-registration needs to take place before the project begins and when the project has been completed you need to visit the employment office and request to be re-registered and you must also submit a copy of the invoice for the job or provide explanation if an invoice has not been issued.
  • A copy of the invoice must be received by the Directorate of Labour when it is issued.
  • If you undertake contractual work you need to de-register from unemployment benefits the day when you engage in the project even though the work odes not last more than 8 hours.
  • It is not permitted to collect work hours for contractor jobs.
  • Compare an applicant who teaches 2 x 2 hours per week = de-registration for 2 days. 

Do I need to confirm active job seeking between the 20th and the 25th of each month while I am subject to a qualifying period/sanctions?

  • Yes, if unemployment is not confirmed during the specified period the qualifying period/sanctions is suspended until the confirmation has taken place.

 

 
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