Labor law in Iceland

Icelandic labor law is based on Acts and collective agreements between trade unions, employers and public-sector negotiating bodies. A trade union is a stéttarfélag. Union membership is voluntary, but a kjarasamningur normally applies to employees within its occupational and geographical scope regardless of whether they belong to the union. General and public-sector arrangements can differ, so the applicable agreement must be identified from the occupation, workplace and sector. An employer must give a written employment contract or statement within two months after work begins when the employment lasts more than one month and averages more than eight hours per week. It should identify the parties and their kennitala, workplace and address, role and duties, start date, fixed-term or indefinite duration, holiday rights, notice period, wages, working hours, pension fund and applicable kjarasamningur. The agreement should state the wage basis clearly. A contractor or self-employed worker does not automatically receive the core protections that apply to an employee, so the actual working relationship matters. Working time may not exceed an average of 48 hours per week, including overtime, measured over a period of up to four months. Employees generally receive at least 11 hours of daily rest in each 24-hour period and at least one weekly rest day linked to the daily rest. A break is required when daily work exceeds six hours. Collective agreements can adjust working-time arrangements within the legal framework. Employers must keep time records, and employees must be able to access them for 12 months. Statutory annual leave is at least 24 paid working days per year. A collective agreement can provide better holiday rights. Holiday pay and accrual follow the Holiday Allowance Act No. 30/1987 and the applicable agreement. Pay rates, overtime, shift work, holiday pay and bonuses depend heavily on the relevant kjarasamningur. Holiday bonuses and December bonuses are common but agreement-specific. The employee receives a payslip for each payment showing hours, wage components, overtime or shift additions, holiday amounts, taxes and public charges, pension deductions and union fees. The employee pension contribution is at least 4% of total wages, alongside the employer contribution. Union fees vary and commonly amount to about 1%. Every employer must maintain a written health and safety plan with a risk assessment and prevention measures under the Working Environment Act No. 46/1980. Employees must report hazards and accidents. Vinnueftirlitið, the Administration of Occupational Safety and Health, inspects workplaces and can issue correction orders and administrative fines. Since 1 January 2025, an appeal against such a fine must generally be filed with the Ministry within three months. An occupational accident generally must be reported by the employer within seven days. Work-related safety duties also continue during remote work. Workplaces with 10 to 49 employees generally have a safety representative and workplaces with at least 50 employees generally have a safety committee. The Equality Act No. 86/2018 prohibits direct and indirect discrimination, including discrimination based on race or ethnic origin, religion, disability, age, sexual orientation, gender identity or expression, sex characteristics and sex. Employers must also prevent gender-based discrimination, harassment and violence. Each parent can receive up to six months of paid maternity or paternity leave, giving up to 12 months jointly. Eligibility generally requires six continuous months of work in Iceland at an employment level of at least 25%. The employer should receive notice eight weeks before the expected birth, and the application should ideally be submitted six weeks in advance. Payment is generally 80% of average wages, subject to a monthly cap of ISK 800,000 and a minimum of ISK 262,061 for an employment level between 50% and 100%. Unpaid parental leave provides four months per child until the child reaches age eight when the employee has worked for the same employer for six months. Statutory sickness protection provides at least two paid sick days for each month worked, while seniority and collective agreements may provide more. A work accident or occupational disease can provide wage protection for up to three months under Act No. 19/1979. Trade unions negotiate collective agreements, advise employees and may pursue wage claims. ASÍ, BSRB, BHM, SA and public-sector negotiating bodies represent different parts of the labor market. Safety representatives are separate from trade-union representatives. Strikes and lockouts are governed by Act No. 80/1938, and a valid collective agreement normally creates industrial peace during its term. The State Mediator may mediate collective bargaining disputes. An employee with a workplace dispute can preserve the contract, payslips, time records, notices, medical certificates and relevant collective agreement, then seek advice from the stéttarfélag. The parties may negotiate or use a grievance process. Félagsdómur handles breaches of Act No. 80/1938, unlawful work-stoppage damage and disputes about the breach, interpretation or validity of a collective agreement, as well as cases assigned to it by agreement. Unpaid wages are generally pursued in the ordinary courts rather than Félagsdómur. Vinnueftirlitið accepts safety complaints and anonymous tips and provides whistleblower protection. Equality complaints can go to the Directorate of Equality or the Equality Complaints Committee. Decisions of the Directorate of Labour can be appealed to the Welfare Appeals Committee, while benefit appeals follow their separate procedures. An indefinite employment contract can generally be terminated by either party without stating a reason, subject to the applicable notice rules. Notice must be in writing and commonly takes effect at month-end or on a weekly turn. Notice periods range from about 12 days to six months, with approximately three months being common, but the occupation and collective agreement control the exact period. Pay and contractual duties normally continue during notice. Unlawfully short notice can create a damages claim. Immediate termination is reserved for exceptional cases such as gross misconduct, serious danger or sufficiently inadequate conditions. Pregnancy, parental-leave, equality and safety protections continue to apply. Accrued holiday must be paid out when employment ends. A person seeking unemployment benefit should apply by the last day of work; a voluntary resignation may lead to a two-month waiting period. The same Icelandic wage and employment standards generally apply to posted and foreign workers, including applicable minimum terms, overtime, holiday pay, maximum working time and rest. Immigration and work-permit rules are separate, although they can affect the ability to start or continue the job. For posted workers, notification to Vinnueftirlitið is generally required for assignments exceeding 10 working days or 12 months; specialist assembly, installation or repair can qualify for an exemption of up to four weeks within 12 months. Ísland.is and My Pages, the Directorate of Labour, Vinnueftirlitið, the Directorate of Equality and the relevant trade union are the main access points. Icelandic original legislation prevails over English translations. Exact wage tables, notice periods, sickness rights, bonuses, holiday enhancements, claim deadlines and dispute steps depend on the current collective agreement, occupation, sector and circumstances.