There are things that all workers must have in mind. Wages must be in accordance with collective wage agreements and working hours may not be longer than the working hours permitted by law and collective agreements. Leave must be also be paid 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. The employer must pay taxes on all wages and must pay contributions to the relevant pension funds and workers unions.
All wage earners are entitled to at least two days of holiday for each month of employment during the holiday year (May 1. to April 30.). The minimum holiday entitlement is therefore 24 days a year, based on full-time job ratio. Employees must consult with their employer when to take time off work.
The employer defrays, at minimum, 10.17 % of the wages on to a separate bank account which is in the employee’s name. This amount substitutes wages when the employer takes time off work due to a summer holiday.
If the employee becomes sick while s/he is on her/his summer holiday, the sick days do not count as vacation days and therefore do not subtract from the number of days the employee is entitled to. If illness does occur during summer holiday the employee must submit a health certificate when s/he returns to work. The employee must exploit the days s/he got left before 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. A normal work week in Iceland is 40 hours from Monday to Friday. 11 hours continuous rest is a minimum every 24 hours.
Workers have a right to food and coffee breaks during their work day. If an employee agrees on working during his breaks that should be paid for as overtime. Food break should be 30 – 60 minutes, unpaid.
Employees should get one coffee break before noon and one after noon. The break is from 15 to 35 minutes and counts as paid for working time.
Salaries are paid during holidays and other days off. If someone works on a holiday, he should get paid extra for that.
On the „main“ holidays (new years day and new years eve after 12 o‘clock, Good Friday, Easter day, Pentecost/Whitsun, 17. of June, Christmas eve after 12 o‘clock and Christmas day), during these days an employee, if working, should get paid higher than the usual overtime pay.
On other holidays (second day of Christmas, Maundy Thursday, Easter Monday, first day of summer, Ascension Day, 1. of May, Whit Monday, first Monday of August) an employee, if working, get´s paid overtime.
Sick leave while employed
If you are unable to attend work because you are ill, you should be paid your wages for a certain number of days. To receive sick pay you must have worked for at least one month with the same employer. After one month the employee has the right to two paid sick days every month. The amount of sick days increases after 2, 3, and 5 years worked for the same employer.
Right from the first day of employment, the employee has the right to receive daily wages for up to three months after a work related accident. Work related injuries include injuries occurred while working, running any errands connected with work and also on the way to and from work.
Employees who are absent, due to illness or accident, for longer than their right to wages extends, may apply for per diem payments from their union’s sick leave fund.
Compensation for illness or accident
Those who do not have any income during illness or cause of accident may be entitled to compensation, daily payments from 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 rehabilitation to return to the labor market. The main condition for the granting of a rehabilitation pension is that the applicant participates in rehabilitation under the supervision of a professional with the aim of working ability.
More information about rehabilitation pension can be found on the Social Insurance Administration website. Request information via this form.
Wage payments must be accompanied by a payslip clearly indicating the amount paid, how this amount is calculated and what charges have been deducted. Information on tax payments, leave payments and other elements appearing on payslips.