Managing employee leave and vacation entitlements is a crucial aspect of compliance and employee satisfaction when operating in Iceland. Icelandic labor law and collective agreements establish clear guidelines regarding various types of leave, ensuring employees receive adequate time off for rest, illness, family responsibilities, and other significant life events. Understanding these regulations is essential for employers to maintain compliance and foster a positive working environment.
Employers in Iceland must adhere to statutory minimums for vacation, public holidays, sick leave, and parental leave, which are often supplemented or enhanced by specific collective bargaining agreements applicable to different sectors and industries. These entitlements are designed to protect employee well-being and provide necessary support during various circumstances.
Annual Vacation Leave
In Iceland, employees are entitled to annual vacation leave. The minimum statutory entitlement is 24 working days per year, which equates to four weeks and two days. However, many collective agreements provide for longer vacation periods, often increasing with years of service. Vacation pay is typically calculated as a percentage of the employee's total earnings during the vacation year (May 1st to April 30th). The minimum vacation pay percentage is 10.17%, but this is also frequently higher under collective agreements.
- Minimum Entitlement: 24 working days (4 weeks and 2 days) per year.
- Accrual: Vacation rights are typically earned during the period from May 1st to April 30th and can be taken in the subsequent vacation year.
- Vacation Pay: Minimum 10.17% of total earnings during the vacation year, paid in addition to regular wages when vacation is taken or as a lump sum.
- Timing: Employees generally have the right to take their main vacation period (usually 2-3 weeks) during the summer months (June 1st to September 30th), provided they give sufficient notice.
Public Holidays
Iceland observes several public holidays throughout the year. Employees are generally entitled to time off on these days. If a public holiday falls on a workday, employees are typically paid for the day. If they are required to work on a public holiday, they are usually entitled to premium pay rates, as stipulated by collective agreements.
Here are the anticipated public holidays for 2025:
| Date | Holiday |
|---|---|
| January 1 | New Year's Day |
| April 17 | Maundy Thursday |
| April 18 | Good Friday |
| April 20 | Easter Sunday |
| April 21 | Easter Monday |
| April 24 | First Day of Summer |
| May 1 | International Workers' Day |
| May 29 | Ascension Day |
| June 8 | Whit Sunday |
| June 9 | Whit Monday |
| June 17 | Icelandic National Day |
| August 4 | Commerce Day (First Monday in August) |
| December 24 | Christmas Eve (afternoon) |
| December 25 | Christmas Day |
| December 26 | Boxing Day |
| December 31 | New Year's Eve (afternoon) |
Note: Some holidays falling on weekends may affect the specific day off depending on collective agreements.
Sick Leave
Employees in Iceland are entitled to sick leave when they are unable to work due to illness or injury. The duration of paid sick leave depends on the employee's length of service.
- Entitlement:
- Employees are entitled to paid sick leave for a certain number of days per month of employment.
- After one year of employment with the same employer, the entitlement is typically 2 days per month, accumulating up to 24 days per year.
- After longer service periods, the entitlement increases significantly under most collective agreements, potentially covering several months.
- Pay: During paid sick leave, employees receive their regular wages.
- Notification: Employees are generally required to notify their employer promptly of their absence due to sickness. A doctor's certificate may be required, especially for longer periods of absence.
Parental Leave
Iceland has a generous parental leave system designed to allow parents to spend time with their new child. The system provides individual, non-transferable leave entitlements for each parent, plus a shared period.
- Total Entitlement: Up to 12 months of paid leave per child.
- Individual Entitlement: Each parent is entitled to 6 months of leave.
- Transferability: 6 weeks of each parent's 6-month entitlement can be transferred to the other parent. This means a maximum of 12 weeks can be transferred between parents.
- Shared Period: The remaining leave (up to 3 months if no leave is transferred, or up to 6 months if the maximum is transferred) is a shared entitlement that either parent can use.
- Pay: Parental leave benefits are paid by the Parental Leave Fund, not directly by the employer. The benefits are calculated based on the parent's average income, up to a certain ceiling. Employers may supplement this pay according to collective agreements.
- Eligibility: Applies to biological parents, adoptive parents, and parents of children born through surrogacy.
Other Leave Types
Beyond the primary categories, Icelandic labor law and collective agreements may provide for other types of leave, though entitlements can vary.
- Bereavement Leave: Employees are typically entitled to a short period of paid leave in the event of the death of a close family member.
- Study Leave: Some collective agreements include provisions for paid or unpaid leave for employees pursuing further education or training relevant to their work.
- Sabbatical Leave: While not a statutory right, some employers or collective agreements may offer opportunities for extended leave (sabbatical) after a significant period of service.
- Leave for Urgent Family Reasons: Employees may be entitled to short-term paid or unpaid leave for urgent family reasons in cases of illness or accident requiring their immediate presence.
