That employers maintain an employment relationship with employees.
Ásmundur Einar Daðason, Minister of Social Affairs and Children, presented a bill to amend the Unemployment Insurance Act and the Wage Guarantee Fund Act in relation to the reduced working hours of employees in Parliament yesterday.
"It was quite clear that we needed to introduce measures to respond to the constraints that are occurring, temporarily I want to believe, in the Icelandic economy and Icelandic labour market due to Covid-19. We had anticipated this and have had discussions about it, including with labour market parties, that these resources would be drawn up. Many other measures are being drawn up to address this group of people and businesses that are going through these constraints. We had anticipated taking about two weeks which is not a particularly long time for legislation. On Thursday morning, when it became clear that the United States had closed all flights from Europe and thus the tourism sector was in even more turmoil than planned, we decided that we should finish this bill and try to get it into parliament as soon as possible so that companies that were starting to reorganise, and are doing so just these hours, could respond. Just over a day later, about 30 hours later, this bill was approved by the government, by the parliamentary groups of the ruling parties, and was then distributed to Parliament on Friday evening," said Ásmundur Einar.
"It is quite clear that we will need to make changes to this bill and go further than what is presented here. We can discuss that in the discussion afterwards. As I said, this bill is presented in light of unprecedented circumstances in the labour market. The bill seeks, among other things, to accommodate businesses that are facing temporary operational difficulties and at the same time to prevent mass layoffs and increased unemployment due to the downturn in tourism and other industries here in the country."
The aim of the bill is to help employers maintain their employment relationship with their employees as much as possible even though it may be necessary to reduce their working hours to some extent. The bill is also intended to accommodate the circumstances of employees who need to accept a reduction in wages in the form of reduced working hours due to the temporary operational difficulties of the company they work for. It is clear that it is beneficial for society as a whole that as many people as possible maintain an active employment relationship with their employer despite a temporary contraction in the labour market.
This bill provides for an individual applying for unemployment benefits alongside reduced working hours to be entitled to receive payment of unemployment benefits for the reduced working hours without the wages for the working hours they retain counting against the unemployment benefits, provided certain conditions are met.
It is also provided for that a self-employed individual will be able to apply for unemployment benefits if they have reported a significant reduction in business and a change in the calculated remuneration to the wage payment register of the national tax authority. It is then provided for changes to the Wage Guarantee Fund Act so that in cases where the working hours of an employee have been reduced due to a downturn in the operations of the employer, the employee's income will be used for calculations on payments from the fund as it was before the working hours were reduced.
"Then I will briefly touch on the provisions of the bill. It is proposed in the bill that working hours can be reduced proportionately by at least 20% and that an employee can maintain a minimum of 50% working hours. The bill provides that the individual should be in 51–80% employment but can receive part-time benefits in return.
It is also proposed that wages from the employer and payments of unemployment benefits together can never amount to more than 80% of the average total wages of the employee and despite that there are provisions that this amount combined, i.e. the reduced working hours and unemployment benefits, can never exceed 650,000 ISK per month. In light of the circumstances and the changes that have occurred, I believe that these provisions will need to be relaxed. We are currently calculating what costs that may entail and whether it could then apply to more businesses. I expect that in that work we will need to collaborate closely with the Welfare Committee and I reiterate my pleasure in having had the opportunity to present this matter to them. When we are in situations that are unprecedented and when we are moving faster than the system expects us to, it is extremely important that the collaboration between us is good," said Ásmundur Einar.
