Iceland Work Culture

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Work Culture

To succeed in business in Iceland, it is vital for both employers and employees to have a strong understanding of the business culture. As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about Icelandic work culture, we want to support your global expansion plans. Therefore, we will address all the aspects of the work culture in Norway to start your expansion well-informed.

The Republic of Iceland … the ‘Land of Fire and Ice’ with glaciers, volcanoes, geysers and hot springs, snow, green valleys, and the breathtaking sights of the Northern Lights. Few nations can offer these spellbinding and spectacular ingredients among the attractions to entice foreign workers.

Iceland’s economy has rebounded strongly from the banking crash of 2008 and now its population ranks as the sixth richest in the world on per capita Gross Domestic Product. Iceland’s population also has a reputation as one of the happiest in the world – and they make the most of their glorious surroundings with an enviable work-life balance.

Iceland is not part of the European Union but enjoys a strong mutual relationship through the European Economic Area Agreement of 1994. This brought together the EU states and the four members of the European Free Trade Association (EFTA) – Iceland, Liechtenstein, Switzerland, and Norway – to benefit from freedom of movement for people, goods, services, and capital.

Encouragingly for jobseekers, Iceland is expected to need 2,000-plus foreign workers each year to join the workforce and balance the effects of an ageing population. Recruits who can offer the expertise to match the skills shortages will have an advantage when they find companies in the relevant sectors.

Iceland is the size of Belgium, the Netherlands and Denmark combined, but with a sparse population of barely 400,000 and few urban hubs. This makes for a concentrated employment market and incomers must be up to speed to make their mark in this unusual employment environment.

Ready for the challenge? Now is the time to get down to business. So here are a few tips on taking the best steps and clearing those cultural barriers.

  • Language: The official language is Icelandic, but fluency in English is common, particularly in business. English and Danish are compulsory subjects at school
  • Punctuality:  Being on time is appreciated as being businesslike and courteous. Best to use the 24-hour clock when arranging meetings and appointments
  • Attitudes: Iceland is a largely classless society. Workplaces and offices have an inclusive atmosphere in terms of gender equality, workers’ rights and rejecting any discriminatory behavior. Unlike most of their Scandinavian neighbors, Icelanders can be spontaneous, flexible, and happy to change their plans
  • Business Meetings:  Unlike in some hierarchical business structures, don’t be surprised to see the decision makers taking part in the meetings from day one. Icelanders do like a joke as a means of deflecting awkward moments … or deflating over-effusive visitors
  • Greetings: Icelanders may use their first names in greeting, as original surnames are rare. Full names are a combination of first name, mother, or father’s first name with a suffix for ‘son’ or ‘daughter’
  • Dress Code:  Formal issafest for men and women, but as some companies may be more relaxed in this area there is no harm in asking what is acceptable ahead of the meeting
  • Gift-giving: Small, modest, and thoughtful gifts from the home country will be appreciated
  • Out of Hours:  Icelanders are happy to ‘oil the wheels’ at business dinners and lunches

Iceland’s Minimum Wage

Iceland does not have mandatory minimum wages set at state level. Minimum pay is usually agreed contractually, by Collective Bargaining Agreements (CBAs) or trade union negotiations. For example, in 2021 one of the largest workers’ unions, Efling, dictated a minimum gross monthly wage for its full-time workers over 18 years old of ISK 351,000 (€2,410, US$ 2,720).

However, average wages are generally higher, vary between cities and regions and are among the highest in Europe. The average monthly salary in 2021 after tax was roughly ISK 410,000 (€2,815, US$3,175).

Probation Periods in Iceland

Trial or probationary periods cannot exceed three months. There is no provision under the Labor Code for probationary periods, so these are governed by business practice or collective agreements.

Working Hours in Iceland

Collective and trade union agreements generally set the limits on working hours, which are normally 40 hours over a five-day week. The working day includes 35 minutes, split for two paid ‘coffee breaks’ making a total of 37 hours and five minutes per week. Working days generally begin between 8.00 and 10.00am. Collective agreements can negotiate shorter meal and coffee breaks, enabling overtime to begin earlier. Employees are entitled to 11 hours of continuous rest between workdays, considering time spent travelling to and from work. Sundays should always be free.

Overtime in Iceland

Extra pay for extra hours worked is calculated as 0.875% of the monthly salary per hour for up to 162.5 hours of overtime during the month. The rate is 1.0385% of monthly salary per hour overtime for hours above 162.5 in a month.