Workers' rights

• Wages must be in accordance with collective wage agreements.
• Working hours may not be longer than the working hours permitted by law and collective agreements.
• Different forms of paid leave must also be in accordance with law and collective agreements.
• Wages must be paid during sickness or injury leave and an employee must receive a payslip when wages are paid.
• Employers are required to pay taxes on all wages and must pay appropriate percentages to the relevant pension funds and workers’ unions.
• Unemployment benefits and other financial support are available, and workers can apply for compensation and rehabilitation pension after illness or accident.

Find out more about your rights and obligations here.

The Icelandic Confederation of Labour (ASÍ) runs a very informative website for people that are new in the labour market in Iceland. The site is in many languages.

The site contains for example information about basic rights of those on the labour market, instructions on how to find your union, information about how pay slips are set up and useful links for working people in Iceland.

From the site it´s possible to send questions to ASÍ, anonymous if preferred.

Here you can find a brochure (PDF) in many languages that is full of useful information: Working in Iceland?

The Act on Equal Treatment in the Labor Market no. 86/2018 explicitly prohibits all discrimination in the labour market.  The legislation prohibits all forms of discrimination on the basis of race, ethnic origin, religion, life stance, disability, reduced working capacity, age, sexual orientation, gender identity, gendered expression or sexuality.

The legislation is directly due to the Directive 2000/78 / EC of the European Parliament and of the Council on general rules on equal treatment in the labour market and economy.

Through defining a clear ban on discrimination in the labour market, we are enabled to promote equal opportunity to active participation in the Icelandic labour market and prevent forms of social isolation.  Additionally, the aim of such legislation is to avoid the persistence of divided racial merit taking root in Icelandic society.

The general rule is that children may not work. Children in compulsory education may only be employed in light work. Children under the age of thirteen may only take part in cultural and artistic events and sporting and advertising work and only with the permission of the Administration of Occupational Safety and Health.

Children aged 13-14 may be employed in light work which is not deemed to be dangerous or physically challenging. Those aged 15-17 may work up to eight hours a day (forty hours a week) during school holidays. Children and young adults may not work at night.

All wage earners are entitled to approximately two days of paid holiday leave for each month of full-time employment during the holiday year (May 1 to April 30). Annual leave is primarily taken between May and September. The minimum holiday leave entitlement is 24 days a year, based on full-time employment. Employees consult their employer regarding the amount of earned holiday leave and when to take time off work.

Employers defray, at minimum, 10.17 % of the wages into a separate bank account registered in each employee’s name. This amount substitutes wages when the employee takes time off work due to holiday leave, most taken in the summer. If an employee has not accrued enough in this account for a fully financed holiday leave, they are still permitted to take a minimum of 24 days leave in agreement with their employer with a portion being holiday leave without pay.

If an employee becomes sick while s/he is on her/his summer holiday, the sick days do not count as vacation days and are not subtracted from the number of days the employee is entitled to.  If illness occurs during holiday leave, then the employee must submit a health certificate from their doctor, health clinic, or hospital when s/he returns to work. The employee must utilize the days s/he has remaining due to such an occurrence before the 31st of May the following year.

Working hours are governed by specific legislation. This entitles workers to certain rest times, meal and coffee breaks, and statutory holidays.

If you are unable to attend work due to illness, you have certain rights to paid sick leave. To qualify for paid sick leave, you must have worked for at least one month with the same employer. With each additional month in employment, employees earn an additional amount of accrued paid sick leave. Usually, you are entitled to two paid sick leave days every month. The amounts vary between different fields of employment in the labour market but are all well documented in collective wage agreements.

If an employee is absent from work, due to illness or accident, for a period longer than they are entitled to paid leave/wages, they may apply for per diem payments from their union’s sick leave fund.

Those who are not entitled to any income during illness or due to an accident may be entitled to sick leave daily payments.

The employee needs to fulfil the following conditions:

• Be insured in Iceland.
• Be completely incapacitated for minimum of 21 consecutive days (incapacity confirmed by a doctor).
• Have quit doing their jobs or experienced delays in their studies.
• Have stopped receiving wage income (if there was any).
• Be 16 years or older.

An electronic application is available in the rights portal at The Icelandic Health Insurance website.

You can also fill out an application (DOC document) for sickness benefits and return it to The Icelandic Health Insurance or to a representative of district commissioners outside the capital area.

The amount of sick leave benefits from The Icelandic Health Insurance do not meet the national subsistence level. Make sure you also check your right to payments from your union and financial assistance from your municipality.

Read more about sickness benefits on island.is

Keep in mind:

• Sickness benefits are not paid for the same period as rehabilitation pension from the State Social Security Institute.
• Sickness benefits are not paid for the same period as accident benefits from the Icelandic Health Insurance.
• Sickness benefits are not paid parallel to payments from the Maternity / Paternity Leave Fund.
• Sickness benefits are not paid in parallel with unemployment benefits from the Directorate of Labour. There may, however, be a right to sickness benefits if unemployment benefits are cancelled due to illness.

Rehabilitation pension is intended for those who are unable to work due to illness or accident and are in a rehabilitation program with the aim of returning to the labour market. The main condition for being eligible for rehabilitation pension is to participate in a designated rehabilitation program under the supervision of a professional, with the aim of re-establishing their ability to return to work.

You can find more information about rehabilitation pension on the Social Insurance Administration website. You can request information via this form.

Payment of wages must be documented in a payslip. A payslip must clearly display the amount paid, the formula used to calculate the amount of wages received, and any amounts that have been deducted or added to an employee’s wages.

An employee may see information regarding tax payments, leave payments, overtime pay, non-paid leave, social insurance fees, and other elements that can affect wages.

An overview of taxes, tax allowances, the tax card, tax returns and other tax-related matters in Iceland can be found here.

Sometimes people are asked not to declare the work they do for tax purposes. This is known as ‘undeclared work’. Undeclared work refers to any paid activities which are not declared to the authorities.  Undeclared work is illegal, and it has a negative impact both on society and the people who take part in it. People who do undeclared work do not have the same rights as other workers, which is why it is important to know the consequences of not declaring work.

There are penalties for undeclared work as it is classified as tax evasion. It can also result in not being paid wages according to collective wage agreements. It also makes it challenging to demand unpaid salary from the employer.

Some people may see it as a beneficiary option for both parties – the employer pays a lower salary, and the employee gets a higher wage without paying taxes. However, the employees do not gain important worker’s rights such as pension, unemployment benefits, holidays etc. They are also not insured in case of an accident or illness.

Undeclared work affects the nation as the country receives less taxes to run public services and serve its citizens.

The role of ASÍ is to promote the interests of its constituent federations, trade unions, and workers by providing leadership through co-ordination of policies in the fields of employment, social, education, environment and labour market issues.

The confederation is compiled of 46 trade unions of general workers in the labour market. (For example, office and retail workers, sailors, construction and industrial workers, electrical workers, and various other professions in the private sector and part of the public sector.)

About ASÍ

Icelandic Labour Law

The Icelandic Labour Market

Check out this brochure made by ASÍ (The Icelandic Confederation of Labour) to find out more about your working rights in Iceland.