Understanding Employee Leave Entitlements in Iceland

Icelandic labor law provides comprehensive leave benefits for employees, balancing work commitments with personal and family needs. As an international HR professional, understanding these regulations is crucial for managing a compliant workforce in Iceland.

Annual Leave Provisions

The Icelandic leave year runs from May 1st to April 30th. Full-time employees accumulate 2 days of paid vacation per working month, resulting in a minimum of 24 days annually. Part-time workers receive proportional entitlements based on their employment percentage. Many collective agreements provide enhanced benefits beyond these statutory minimums.

Parental Leave Framework

Iceland's progressive parental leave system offers each parent up to 6 months of leave for birth, adoption, or fostering children under 8. The leave period begins at childbirth or when the child joins the family, with rights expiring when the child turns 24 months. Parents can transfer up to 6 weeks to their partner, with extended provisions available in special circumstances.

Employees must notify employers at least 8 weeks before expected leave commencement. For example, a Reykjavik-based technology company successfully implemented a flexible leave program that allowed parents to split their leave into segments with managerial approval.

Childcare and Family Leave

Beyond parental leave, employees receive 4 months of childrearing leave until the child reaches age 8. Additionally, parents can take child care leave for sick children under 13—2 days monthly during the first 6 months of employment, increasing to 12 days annually thereafter.

Sick Leave Accumulation System

Iceland's sick leave benefits increase with tenure:

Year 1: 2 days monthly
After 1 year: 2 months annually
After 5 years: 4 months annually
After 10 years: 6 months annually

Employers must cover transportation costs for work-related injuries and report incidents to relevant authorities.

Bereavement Leave Provisions

Employees receive up to 6 months of bereavement leave for the death of a child under 18, with 2-3 months for stillbirth after 22 weeks pregnancy or foster care termination after 18 weeks. Notice must be provided at least one week in advance, with flexibility for segmented leave by mutual agreement.

2025 Public Holidays

Holiday	Date
New Year's Day	January 1
Maundy Thursday	April 17
Good Friday	April 18
Easter Monday	April 21
First Day of Summer	April 24
Labour Day	May 1
Ascension Day	May 29
Whit Monday	June 9
National Day	June 17
Commerce Day	August 4
Christmas Eve	December 24
Christmas Day	December 25
Boxing Day	December 26
New Year's Eve	December 31

Work on major holidays entitles employees to premium pay at 1.375% of monthly salary per hour. SailGlobal provides comprehensive leave management solutions to ensure compliance with Icelandic regulations while optimizing workforce productivity.

Iceland Employee Leave Guide: Annual, Parental & Sick Leave Regulations 2025