Workers from Europe

The EEA Agreement confers direct rights on EEA citizens to look for and take up paid employment in Iceland. A work permit is not required. Included is the right to reside in Iceland and to have his family join him. The rights of these workers are regulated in the Act respecting the right of workers for Employment and Residence within the European Economic Area, No. 47/1993.

Posted workers

Act No. 45/2007 on the rights and obligations of EEA-undertakings which post their workers temporarily to Iceland and their remuneration applies to undertakings that undertake one of the following international measures:
  • post workers to Iceland on their account and under their direction, under a contract concluded between the undertaking making the posting and the party for whom the services are intended, operating in Iceland, or
  • post workers to an establishment or to an undertaking owned by the group in Iceland, or
  • being a temporary employment agency, hire out a worker to a user undertaking established or operating in Iceland.
Posted workers on the Icelandic labour market enjoy rights under Icelandic law and collective agreements regarding minimum pay and other terms of employment, and the rights to vacation and vacation pay. Additionally, the rules on maximum work time and minimum rest should be abided by. The law stipulates their right to pay in sick or accident situations and to accident insurance. Their employer must furthermore ensure their health and safety in the workplace according to law.

Allowances specific to the posting are considered to be part of the minimum wage, unless they are paid in reimbursement of expenditure actually incurred on account of the posting, such as expenditure on travel, board and lodging. 

The provisions of the legislation apply without prejudice to better terms of wages and terms for workers according to their employment contracts with the relevant undertaking or to collective agreements or legislation in the state where they normally work. 

An EEA-undertaking intending to provide services in Iceland for a total of more than ten working days in any twelve-month period is required to submit information to the Directorate of Labour not later than the same day as operations in Iceland commence. This includes the name of the undertaking, a survey list of the workers, information as to whether the workers are covered by social security in their home country, confirmation that workers are covered by accident insurance while in Iceland and more.

Undertaking providing services in Iceland for a total of more than four weeks in any twelve months shall have a representative in Iceland. The representative may be one of the undertaking´s workers who are temporarily employed in Iceland. It is not necessary to nominate a representative if fewer than six workers normally work in Iceland on the undertaking’s account.

Temporary agency workers

Temporary work agencies (TWA), domestic or foreign, that provide services in Iceland have a duty to notify their businesses to the Directorate of Labour and must disclose certain information according to the Act on Temporary work agencies No. 139/2005. Act no. 45/2007 also applies to foreign TWA´s.  

TWA’s must provide their workers with a written contract of employment and provide their workers with written information about the work they are about to undertake in each user undertaking. 

According to act no. 139/2005, as amended in 2013, a TWA worker is entitled to a salary which equals the same amount that he would receive in case he was in a direct employment relationship with the user company. 

TWA’s are prohibited from claiming, to negotiate or receive a fee from their workers for offering or providing them employment, whether at the start or during the course of the employment relationship. TWA’s are in principle not allowed to hire out a worker to a user undertaking if the worker was in direct employment with the latter undertaking in the previous six months. They are also prohibited from banning or restricting their workers from resigning from their employment contracts in order to form a direct employment relationship with any of the user undertakings where they have been working.