Managing employee leave entitlements in Iceland requires a clear understanding of the country's labor laws and collective agreements. These regulations ensure employees receive adequate time off for rest, holidays, illness, and significant life events, contributing to a balanced work environment. Compliance with these standards is essential for employers operating in Iceland.
Icelandic law provides a framework for various types of leave, including mandatory annual vacation, public holidays, sick leave, and comprehensive parental leave. While the law sets minimum standards, many collective agreements negotiated between unions and employers offer more generous terms, which employers must also adhere to if applicable to their workforce.
Annual Vacation Leave
Employees in Iceland are entitled to paid annual vacation leave. The minimum legal entitlement is 24 working days per year, which accrues at a rate of 2 days for each month of employment. However, many collective agreements provide for increased vacation days based on 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 often higher under collective agreements.
Vacation must generally be taken between May 1st and September 30th, unless otherwise agreed upon. Employees are usually entitled to take their accrued vacation in a continuous block.
| Service Length | Minimum Annual Leave Entitlement (Days) | Minimum Vacation Pay Percentage |
|---|---|---|
| Less than 1 year | 2 days per month worked | 10.17% |
| 1 year or more | 24 | 10.17% |
| Often higher based on collective agreements and service length | Often higher | Often higher |
Public Holidays
Iceland observes several public holidays throughout the year. Employees are generally entitled to time off on these days. If an employee is required to work on a public holiday, they are typically entitled to premium pay rates, often significantly higher than their standard wage, as stipulated by law or collective agreements. The specific days observed as public holidays in 2025 are as follows:
| 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 a weekend may affect entitlement or substitute days depending on specific collective agreements.
Sick Leave
Employees in Iceland are entitled to paid sick leave if they are unable to work due to illness or injury. The entitlement to sick leave and the duration of paid leave are typically based on the employee's length of service. While the law provides a basic framework, collective agreements often significantly enhance these entitlements.
A common structure for sick leave entitlement under collective agreements includes accrual based on service, such as 2 days per month during the first year of employment, increasing thereafter. Employees are generally entitled to full pay during their sick leave for a specified period, which also increases with service length. After exhausting the employer-paid sick leave period, employees may be eligible for sickness benefits from the Social Insurance Administration (Tryggingastofnun).
| Service Length | Typical Sick Leave Accrual (Days per month) | Typical Full Pay Period (Days) |
|---|---|---|
| Less than 1 year | 2 | Varies, often 2 days per month worked |
| 1 - 3 years | Often higher than 2 | Often 1-3 months |
| 3+ years | Often higher | Often 3-6 months or more |
| Entitlements vary significantly based on collective agreements. | Entitlements vary significantly based on collective agreements. | Entitlements vary significantly based on collective agreements. |
Employees are typically required to notify their employer promptly of their absence due to sickness and may be required to provide a medical certificate, especially for longer periods of absence.
Parental Leave
Iceland has a comprehensive parental leave system designed to allow parents to balance work and family responsibilities. The system provides a combined entitlement for both parents, which can be shared. As of 2025, the total entitlement for parental leave is generally 12 months for each child, with 6 months allocated to each parent individually and 6 months that can be transferred between the parents.
Parental leave is typically paid by the Social Insurance Administration (Tryggingastofnun). The payment is calculated as a percentage of the parent's average income over a specific reference period, up to a certain monthly cap. Employers do not typically pay the parental leave benefit directly, but they must allow employees to take the leave.
- Maternity Leave: Part of the total parental leave entitlement, typically 6 months specifically allocated to the mother.
- Paternity Leave: Part of the total parental leave entitlement, typically 6 months specifically allocated to the father/co-parent.
- Shared Leave: The remaining 6 months can be used by either parent or shared between them.
- Adoption Leave: Similar entitlements apply to parents who adopt a child.
Leave can be taken continuously or in parts until the child reaches a certain age (currently 24 months).
| Leave Type | Individual Entitlement | Transferable Entitlement | Total Per Child | Payment Source | Payment Calculation |
|---|---|---|---|---|---|
| Parental Leave | 6 months per parent | 6 months | 12 months | Social Insurance Admin. | Percentage of average income (up to a monthly cap) |
Other Types of Leave
In addition to the primary categories of leave, employees in Iceland may be entitled to other types of leave, often governed by collective agreements or specific circumstances. These can include:
- Bereavement Leave: Time off following the death of a close family member. The duration and terms are typically defined in collective agreements.
- Study Leave: Some collective agreements provide for paid or unpaid leave for employees pursuing further education or training relevant to their work.
- Sabbatical Leave: Less common and usually subject to employer discretion or specific provisions in high-level collective agreements.
- Force Majeure Leave: Short-term urgent leave due to unforeseen family emergencies, such as a child's sudden illness.
- Leave for Union Activities: Employees who are union representatives may be entitled to time off for union duties.
The specifics of these leave types, including eligibility, duration, and whether they are paid or unpaid, depend heavily on the applicable collective agreement and the employer's internal policies.
