Worker's rights

Being well informed about unions and workers’ rights in Iceland is very important.  Things like for example:


  • 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 is available and workers can apply for compensation and rehabilitation pension after illness or accident.

We all have human rights: Work-related rights

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.

Here is a video about labour market rights in Iceland. it has Useful information about the rights of workers and illustrates the experiences of people with international protection in Iceland.


Made by Amnesty International in Iceland and The Icelandic Human Rights Centre.

Paid leave

All wage earners are entitled to approximately two days of paid holiday leave for each month of fulll time employment during the holiday year (May 1. to April 30.). Holiday 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 commonly 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.  It is required if illness occurs during holiday leave 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 and national holidays

Working hours are governed by specific legislation. This entitles workers to certain rest times, meal and coffee breaks, and statutory holidays. A normal workweek in Iceland is 40 hours from Monday to Friday.


Workers have a right to a meal break and coffee breaks during their workday. If an employee agrees on working during his breaks that should be paid for as overtime. Meal breaks are usually between 30 – 60 minutes, unpaid.

Employees usually receive one coffee break in the first half of the workday and one in the second half. Coffee breaks are usually between 15 and 35 minutes and are included within paid working hours.


National holidays are paid-free days when they occur on a scheduled workday.  If an employee works on a holiday, he/she receive an extra percentage of wage (overtime) on top of their regular salary. The percentage is in accordance with rates documented in collective wage agreements.


The primary national holidays’ in accordance with this rule follow:


  • New Year’s Day 
  • New Year’s Eve ( hours after 12 o‘clock pm)
  • Good Friday
  • Easter
  •  Pentecost
  • Independence Day 17th of June
  • Christmas Eve (after 12 o‘clock pm)
  • Christmas day 


Following are additional holidays in Iceland which an employee if working, would receive paid overtime for:


  • 2nd Day of Christmas (26th December)
  • Maundy Thursday
  • 2nd Day of Easter (Monday)
  • 1st day of summer (first Thursday after 18th April)
  •  Ascension Day
  • May Day (May 1st)
  • Day after Pentecost (Monday following Pentecost)
  • Labor Day (first Monday in August) 

Sick leave while employed

If you are unable to attend work due to illess, you have certain rights to paid sick leave. To qualify for paid sick leave an employee 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. In many instances, the designated amount is 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.


From the first formal day of employment, an employee has the right to receive daily wages for up to three months if they are involved in a work-related accident. Work related injuries include injuries occurred while working, due to running any errands connected with work for an employer, and on the way to and/or from work.


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.

Compensation for illness or accident

Those who are not entitled to any income during illness or due to an accident may be entitled to compensation in the from of a calculated daily amount rom the Social Insurance Administration.



The employee needs to…


  • 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.


It is also possible to 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.


  • Sickness benefits are paid from the 15th day of illness if the applicant is unable to work for at least 21 days.
  • Sickness benefits can be paid two months back from the time the application and all necessary documents are received. This period may be extended for up to six months if the right is unequivocal.
  • Sickness benefits can be paid for up to 52 weeks every 24 months.
  • For the year 2021, full sickness benefits are ISK 1,940 per day and a half ISK. 970. Supplement for children is ISK 533.


The amounts of sickness benefits from The Icelandic Health Insurance do not meet the subsistence level. It is therefore important that individuals examine their right to payments from trade unions and municipal social services.


Keep in mind


  • Sickness benefits are not paid for the same period as rehabilitation pensions 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 in parallel with 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 after illness or accident

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 the granting of a rehabilitation pension is that the applicant participates in a designated rehabilitation program under the supervision of a professional with the aim of reestablishing his/her ability to work working.


More information about rehabilitation pension can be found on the Social Insurance Administration website. 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 being 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 come to affect wages.


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

Unemployment benefits

In another section here on the MCC website you can find detailed information about unemployment benefits and other financial support.

The Icelandic Confederation of Labour (ASÍ)

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, seamen, 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

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