Iceland Labor Law and Employment Policy Overview

Employment Law Overview

• Key Legislation:
  • Labor Relations Act
  • Collective Bargaining Act
  • Occupational Safety and Health Act
• Legal Characteristics:
  • Emphasis on social dialogue and collective bargaining
  • Aims to protect employee rights and promote workplace equality

Employment Contract Requirements

• Contract Types:
  • Fixed-term contracts
  • Indefinite-term contracts
• Contractual Provisions:
  • Mandatory inclusions:
    • Parties' identities
    • Place of work
    • Nature of work
    • Start date
    • Contract duration (if applicable)
    • Paid time off information
    • Notice period for termination
    • Salary
    • Regular working hours
  • Other common provisions:
    • Pension plans
    • Collective bargaining agreements
    • Union membership
• Language and Currency:
  • Contracts must be written in Icelandic
  • Currency is the Icelandic króna (ISK)

Working Time Regulations

• Standard Working Hours: 40 hours per week
• Rest Days and Breaks:
  • Minimum of 24 hours of rest per week
  • Minimum of 11 hours of rest per day

Leave Policies

• Annual Leave: Minimum of 24 days per year
• Public Holidays: 12 days
• Special Leave:
  • Sick leave: 2 days per month, accumulating to 24 days per year
  • Maternity leave: 6 months, with 1 month transferable to the father
  • Paternity leave: 6 months, with 1 month transferable to the mother
  • Parental leave: Up to 13 weeks, unpaid

Employee Dismissal and Contract Termination

• Notice Periods:
  • 1 year of service: 1 month
  • 3 years of service: 2 months
  • 5 years of service: 3 months
• Severance Pay: Not legally mandated, but may be provided by collective agreements
• Unfair Dismissal Protection: Employees are protected against dismissal for:
  • Discrimination
  • Pregnancy or childcare
  • Union activities

Taxation

• Personal Income Tax:

  • Salary Range (ISK)	Tax Rate
    0 - 409,986	31.45%
    409,987 - 1,151,012	37.95%
    1,151,012 and above	46.25%

• Social Security Contributions:

  • Employee: 11.5%
  • Employer: 22.07%

Health Insurance

• Insurance Policy: All residents must participate in the national healthcare system
• Coverage: Covers most medical services

Compensation and Benefits

• Minimum Wage: Set by collective agreements
• Salary Structure: Typically includes base salary, bonuses, and allowances

Work Permits and Visas

• Permit Requirement: Non-European Economic Area (EEA) citizens require a work permit
• Application Process:
  • Employer applies to the Directorate of Immigration
  • Employee applies for a visa at the local Icelandic embassy or consulate

Confidentiality and Non-Compete Clauses

• Enforceability: Enforceable, but must be reasonable and limited
• Common Provisions:
  • Confidential information
  • Non-competition obligations

Training and Development

• Legal Requirements:
  • Employers must provide safety training
• Government Support: Government-funded training programs available

Workplace Diversity and Inclusion

• Legal Requirements: Prohibits discrimination based on race, gender, religion, or sexual orientation
• Enforcement: Office of the Equality and Human Rights Ombudsman responsible for enforcement

Remote Work Policies

• Legal Framework: No specific regulations, but remote work is permitted
• Tax and Insurance Implications: Tax and social security implications of remote work depend on the specific circumstances

Authoritative Website Addresses

• Icelandic Confederation of Labour: https://www.afl.is/
• Icelandic Social Security Administration: https://www.tryggingastofnun.is/