To succeed in your expansion into Iceland, it is vital for both employers and employees to have a strong understanding of the Icelandic work culture. As a global Professional Employment Organisation (PEO), 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 the Icelandic work culture, we want to support your Global Expansion plans.
Iceland does not have mandatory minimum wages set at the 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 monthly average wage in 2021 after tax was roughly ISK 410,000 (€2,815, US$3,175).
Trial or probationary periods cannot exceed three months. There is no provision under the Labour Code for probationary periods, so these are governed by business practice or collective agreements.
Collective and trade union agreements generally set limits on working hours, which are normally 40 hours over a five-day week. The working day includes 35 minutes, split into two paid ‘coffee breaks’ making a total of 37 hours and five minutes per week. Working days generally begin between 8.00 and 10.00 am. 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.
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 the monthly salary per hour overtime for hours above 162.5 in a month.