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 provide robust frameworks for various types of leave, ensuring employees receive adequate time off for rest, illness, family responsibilities, and other significant life events. Understanding these entitlements is essential for employers to maintain legal compliance and foster a positive working environment.
Icelandic legislation and collective bargaining agreements establish minimum standards for vacation, public holidays, sick leave, and parental leave. While the law sets baseline requirements, collective agreements often provide more generous terms regarding accrual rates, duration, and payment for different types of leave. Employers must be aware of both the statutory requirements and any applicable collective agreements that may apply to their workforce.
Annual Vacation Leave
Employees in Iceland are entitled to annual vacation leave. The minimum statutory entitlement is 24 working days per year, which accrues at a rate of 10.17% of the employee's salary. However, many collective agreements provide for a higher minimum entitlement, often starting at 25 days and increasing with seniority, sometimes reaching up to 30 days or more. Vacation pay is typically calculated based on the employee's average earnings during the vacation year.
| Entitlement Type | Minimum Statutory | Common Collective Agreement | Accrual Rate (Statutory) |
|---|---|---|---|
| Annual Vacation Days | 24 working days | 25-30+ working days | 10.17% of salary |
The vacation year typically runs from May 1st to April 30th. Employees earn vacation rights during this period, which they are generally entitled to take in the subsequent vacation period, usually from May 1st to September 30th. Unused vacation days may be carried over under specific conditions or paid out upon termination of employment.
Public Holidays
Iceland observes several public holidays throughout the year. Employees are generally entitled to time off on these days, often with specific rules regarding payment if they are required to work. The exact days can vary slightly year to year depending on which day of the week they fall.
Here are the typical public holidays observed in Iceland in 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 |
| December 24 | Christmas Eve (afternoon) |
| December 25 | Christmas Day |
| December 26 | Boxing Day |
| December 31 | New Year's Eve (afternoon) |
Note that Christmas Eve and New Year's Eve are typically half-day holidays starting at noon.
Sick Leave
Employees in Iceland are entitled to sick leave if they are unable to work due to illness or injury. The entitlement to paid sick leave is based on the length of employment with the current employer.
| Length of Employment | Entitlement to Paid Sick Leave |
|---|---|
| Less than 1 month | Unpaid leave |
| 1 month to 3 months | 2 days paid leave |
| 3 months to 6 months | 1 week paid leave |
| 6 months to 1 year | 2 weeks paid leave |
| 1 year or more | 2 months paid leave |
After the initial period of paid sick leave based on length of service, employees who have been employed for at least one year are typically entitled to additional unpaid sick leave for up to 6 months. Collective agreements often provide more favorable sick leave entitlements, including longer periods of paid leave. Employers may require a doctor's certificate for absences exceeding a certain number of days.
Parental Leave
Iceland has a comprehensive parental leave system designed to allow parents to spend time with their new child. The system provides individual, non-transferable rights to both parents, as well as a shared period.
| Parent Type | Individual Entitlement | Shared Entitlement | Total Entitlement | Payment Rate (from Social Insurance) |
|---|---|---|---|---|
| Mother | 6 months | 6 weeks | Up to 12 months | 80% of average salary (capped) |
| Father/Co-parent | 6 months | 6 weeks | Up to 12 months | 80% of average salary (capped) |
| Total (per child) | - | - | Up to 12 months | - |
Each parent has an individual right to 6 months of parental leave. Additionally, parents share a right to 6 weeks of leave, which can be used by either parent or split between them. This results in a total potential leave period of up to 12 months per child, which can be taken until the child reaches 24 months of age. Parental leave is primarily paid by the Social Insurance Administration (Tryggingastofnun) at a rate of 80% of the employee's average salary, up to a certain cap. Collective agreements may supplement this payment or provide additional rights. Parental leave also applies to adoption and foster care.
Other Leave Types
Beyond the main categories, Icelandic law and collective agreements may provide for other types of leave, although entitlements can vary significantly. These can include:
- Bereavement Leave: Time off following the death of a close family member. The duration and whether it is paid often depend on collective agreements.
- Study Leave: Some collective agreements grant employees the right to take paid or unpaid leave for further education or training, often linked to their field of work and length of service.
- Sabbatical Leave: Less common as a statutory right, but some employers or collective agreements may offer opportunities for extended leave after a certain period of service.
- Leave for Urgent Family Reasons: Short-term leave may be available in cases of urgent family illness or accident where the employee's immediate presence is indispensable.
The specifics of these additional leave types are highly dependent on the applicable collective bargaining agreements and individual employer policies.
