Working in Iceland
With the exception of EU and EEA citizens, all prospective migrants to Iceland, who wish to work, must have a Residence Permit (dvalarleyfi) and a Work Permit (atvinnuleyfi). These permits must be acquired before migrating to Iceland.
In order to receive an Employment Permit you must already have a Residence Permit. To receive a Residence Permit you must show that you have the means to support yourself and in most cases you will need to show that you have found employment.
Wages
While situations may vary slightly for different trade and professional unions the following generally applies:
The minimum wage for each position is settled on by an agreement made by each trade union with the employers’ representatives. Your wages should never be lower than that which is stated in this agreement.
For public holidays that fall on a weekday, daytime wages are paid. In most situations if you work during a holiday you will receive both daytime and overtime wages.
It should be noted that the rules governing working hours and salaries paid on legal and contractual holidays may be different for those who work in shifts. For workers in this category, there may be special shift bonuses paid in addition to the fixed salary. There may also be special conditions regarding winter vacations.
Remember that the wage schedule agreed upon by your union or professional society refers only to minimum wages and conditions, and therefore you can not legally be hired for lower wages than that stipulated in that agreement.
Vacation Pay (orlof)
The general rule is that you are entitled to two vacation days for each month worked. This rule does not apply if you are absent from work, with the exception of days when you are absent due to sickness. In all wage contracts, there is a clause concerning vacation pay (orlofslaun). The minimum amount is 10.17% in addition to your base salary. There are four ways in which vacation wages are paid. The money may be paid each month into a special bank account (orlofsreikningur).
You can keep track of the amounts as they are shown on your monthly paycheck. Secondly, the money may be paid out in the last check you receive before you go on vacation. In the third instance, you receive your normal salary while on vacation.
For those who have worked overtime over the year, extra vacation pay may be paid into your account or may be paid out when your vacation starts. In the fourth instance the money may be paid in one lump sum when your contract is over or when you stop working for that company. It is not advisable to have your vacation pay paid as a part of your monthly wages.
Pension Funds and Life Insurance Funds
The general rule is that the premium paid into a pension fund or reversionary annuity is 10% of the total salary package. The employee pays 4% of that amount, and the employer pays the additional 7%. The employee may also choose to make use of an additional savings package (viðbótarsparnað) in which the employee pays 4%, the employer pays 2%, and the federal government pays an additional 0.4% in the form of a tax discount.
The aim of these savings options, and pension funds are to ensure compensation to retired persons, those disabled during employment, and life insurance survivor’s benefits for children and spouses.
Sick Pay and Compensation for Accidents Occurred While on the Job
Right from the first day of employment, the employee has the right to receive daily wages for up to three months after a work related accident (vinnuslysalaun). Work related injuries include injuries occurred while working, running any errands connected with work and also on the way to and from work.
To receive sick pay you must have worked for at least one month with the same employer. After one month the employee has the right to two paid sick days every month. The amount of sick days increases after 2, 3, and 5 years worked for the same employer.
Shop Steward or Union Confidant
Companies that employ five people or more usually have one employee who acts as a liaison officer between the union, management and employees. This representative should have all the information concerning the rights and obligations of the employee. He or she also sees to it that all the rules are being adhered to.
If you have any questions about your rights or obligations it is a good idea to discuss them with the union confidant (trúnaðarmaður) at your workplace. If there isn’t any such person that you know of you may contact your union or The Intercultural Center (Alþjóðahús) for assistance.
The information above can be found on the Intercultural Center website along with further information about living and working in Iceland.