Minimum Wage (Collective Agreements)
Written in plain language for general understanding. This is educational content, not legal advice. Based on Icelandic Acts of the Althingi, statutory instruments, and official guidance.
Icelandic National Law
What is this right?
Iceland has no statutory minimum wage. Instead, minimum pay is set through collective bargaining agreements between trade unions and employer confederations.
- ASI (Icelandic Confederation of Labour) and SA (Confederation of Icelandic Enterprise) negotiate multi-year agreements that set pay floors for most private-sector workers.
- Under Act No. 55/1980, collective agreements are automatically binding on all workers and employers within their occupational and geographical scope — even non-union members.
- Approximately 88–90% of Iceland's workforce is covered by a collective agreement.
- Union density exceeds 80%, one of the highest rates in the world.
If your sector has an active collective agreement, your employer must pay at least the minimum rate it specifies.
When does it apply?
- You are an employee — full-time, part-time, temporary, or casual.
- Your occupation falls within the scope of a collective agreement registered under Act No. 80/1938.
- Even if you are not a union member, the agreement covering your sector still sets your minimum wage (Act No. 55/1980).
What should you do?
- Check your union's collective agreement — your union (e.g., VR, Efling, BSRB) publishes wage tables online.
- If underpaid, raise the issue with your employer first.
- If that fails, contact your trade union — unions enforce collective agreements on members' behalf.
- Disputes can be referred to the Labour Court (Félagsdómur) for binding adjudication.
- You can also contact the Directorate of Labour (Vinnumálastofnun) for guidance.
What should you NOT do?
- Don't agree to work below the collective agreement rate — any such agreement is void under Act No. 55/1980.
- Don't assume you have no minimum — even without a statutory law, your sector's collective agreement functions as binding law.
- Don't ignore your payslip — verify that your hourly or monthly rate meets the agreement's floor.
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