.png)
* Playroll continues to analyse immediate opportunities and fulfilled roles by recruitment partners, contractors and employers to identify in-demand jobs.
Iceland's competitive operating environment positions it among leading industrial nations globally.
With low taxes, high education standards, and competitive skilled labor costs, it attracts international businesses.
s an EEA member, Iceland aligns closely with EU commercial legislation, offering tariff-free access to key EU markets.
Its increasingly favorable business climate, coupled with the lowest corporate income tax rates in the EU, make it an attractive investment destination, supported by industrial sites and skilled labor availability.
Icelandic labour law categorises contracts as either fixed-term or permanent, with no requirement for contracts to be in Icelandic. However, for employment lasting more than one month with a commitment of more than 8 hours weekly, a written employment contract is mandatory. This contract must include the following basic terms of employment:
Typically, probation periods in Iceland extend for about 3 months.
The standard workweek in Iceland consists of 40 hours, distributed across five 8-hour days.
According to Icelandic Labour Law, any work exceeding the standard 8-hour workday qualifies for overtime compensation. The official hourly overtime pay rate is 1.0385% of the regular pay rate. Specific regulations exist for shift workers, and the total working hours, including overtime, should not surpass 48 hours per week.
In Icelandic law, there is no national minimum wage; instead, it is established by the Trade Union to which the employee belongs. These Trade Unions set the minimum wage, taking into account factors such as the employee's age and job type.
Icelandic law does not mandate a 13th or 14th-month salary. Nevertheless, collective agreements specify that employees are entitled to a Christmas bonus in December and a holiday bonus given between 1 May and 15 August.
Income tax in Iceland follows a progressive rate structure, with various factors, including household status and the number of children, potentially influencing the overall tax rates.
Individuals aged 16 to 70, both employees and employers, are required to contribute to a pension fund in Iceland. The minimum contribution rate stands at 15.5%, with employers contributing 11.5% and employees contributing 4%. The employee's contribution is deducted from their taxable income.
The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in Iceland tailored to your needs.
In Iceland, employers are not permitted to terminate employment at will outside the probation period and must have a just cause for termination. Compliant terminations include:
The minimum notice period for Icelandic employees is set at 7 days and will be increased according to the length of employment:
Icelandic labour law lacks specific provisions regarding severance payments. Nevertheless, employers are obligated to settle accrued benefits such as unused paid time off, Christmas bonuses, vacation bonuses, etc. upon termination.
Employees are entitled to paid holidays during festival holidays, which encompass both public and religious celebrations. This includes memorial holidays and religious holidays of Christian origin. The following are the 15 public holidays in Iceland:
The following are the benefits provided in Iceland:
Legal and compliance experts are readily available to provide guidance and case-by-case Q&A support.
By leveraging dedicated support from in-house legal and compliance experts for case by case questions and more.
Acquiring a visa without an entity has never been easier, leverage Playroll's global coverage to sponsor and hire employees.
.webp)
Access a free set of tools to navigate international hiring across 180+ countries, while staying up to date on hiring news with global insights into the changing employment landscape from Playroll.
.png)
