Workers' Rights
Pay under collective agreements, working hours, parental leave, workplace safety, unfair dismissal, discrimination, trade-union rights and whistleblower protection under Icelandic law.
Covered in this guide:
Work in Iceland is built on collective agreements — there is no statutory minimum wage. The Trade Unions and Labour Disputes Act (Lög nr. 80/1938) and the Act on Workers' Terms of Employment (Lög nr. 55/1980) make agreed pay scales binding on every employee and employer covered by the agreement. Workplace safety falls under Lög nr. 46/1980; parental leave under Lög nr. 95/2000 provides 12 months in total, of which 6 are reserved for each parent. Equal-pay certification is mandatory for companies with 25+ employees under Lög nr. 150/2020. Collective disputes go before the Labour Court (Félagsdómur); individual disputes before the district courts.
Key Laws
Lög um stéttarfélög og vinnudeilur
Lög nr. 80/1938
Protects freedom of association, collective agreements and the right to strike
Lög um aðbúnað, hollustuhætti og öryggi á vinnustöðum
Lög nr. 46/1980
The employer's duties on workplace safety, risk assessment and the health protection of staff
Lög um fæðingar- og foreldraorlof
Lög nr. 95/2000
12 months of parental leave in total, with 6 months reserved for each parent
Lög um jafna stöðu og jafnan rétt kynjanna
Lög nr. 150/2020
Gender equality, equal-pay certification and the ban on discrimination in the labour market
Minimum Wage (Collective Agreements)
Iceland has no statutory minimum wage. Minimum pay is instead set by collective agreements negotiated between trade unions (under the umbrella of ASÍ) and employers (SA). Under Lög nr. 55/1980, the...
Working Hours and Rest
Icelandic law limits working hours and guarantees rest, transposing the provisions of the EU Working Time Directive through the EEA Agreement:Ordinary full-time hours: 40 hours a week (set in...
Unlawful Dismissal and Notice Periods
Iceland has no single comprehensive law on unfair dismissal. Protection at the end of employment comes from collective agreements, individual contracts and general labour-law principles.A dismissal...
Parental Leave
Iceland offers one of the world's most generous parental-leave systems. After the 2021 changes under Lög nr. 144/2020 the following rules apply:Total leave: 12 months per family.Each parent: An...
Workplace Safety
Icelandic law places the main responsibility for workplace safety on the employer:Right to refuse dangerous work: Employees may refuse to do work that involves an imminent and serious danger to life...
Workplace Discrimination
Two main laws apply against workplace discrimination in Iceland:Gender equality (Lög nr. 150/2020, the Gender Equality Act): Prohibits discrimination on grounds of sex in all areas. Equal-pay...
Trade-Union Rights
The right to form and join a trade union is a constitutionally protected right in Iceland (Art. 74 of the Constitution).Trade-union membership: Over 80% of employees are members — one of the highest...
Whistleblower Protection
Iceland's first comprehensive whistleblower-protection law (Lög nr. 40/2020) protects employees who report wrongdoing:Scope: Covers employees in both the public and the private labour market.What may...
Seafarers: Catch Shares, Hiring, Safety and Immigration
Crews on Icelandic fishing vessels work under a unique blend of labour law, maritime law and fisheries law. Pay is based on catch shares rather than a fixed wage, safety and certification are tightly...
Vacation Fund — Annual Leave and Holiday Pay in Iceland
The Annual Leave Act (Orlofslög nr. 30/1987) provides that every employee in Iceland accrues 10.17% of total wages as holiday pay. The holiday year runs from 1 May to 30 April. The minimum...
Trade Unions — The Role of Labour Unions (Iceland)
In Iceland, trade unions play a key role in labour law. Trade-union membership covers about 90% of employees — the highest rate in the West — and almost every employee is protected by a collective...