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Collective bargaining agreements are common in Iceland and set many of the terms for most workers’ employment. In most circumstances, a written contract or terms of the employment must be provided in writing. The terms must include the:

• identities of the parties,

• place of work,

• nature of the employee’s job,

• date the employee will begin work,

• duration of the contract (if it is for a fixed term),

• information about paid leaves,

• notice period in the event of termination,

• employee’s pay, and

• normal working hours for the work week.

The contract or written statement must also state what pension fund the employee will be affiliated with and identify any applicable collective bargaining agreement and trade union.

The standard workweek in Iceland is 40 hours. Most employees work eight hours per day and five days per week. Employees may not work more than 48 hours on average over a four-month period. Employees who work in excess of normal hours are entitled to extra pay or compensatory time off instead.

In Iceland, the public holidays are:

• New Year's Day

• Maundy Thursday

• Good Friday

• Easter Sunday

• Easter Monday

• First Day of Summer

• Labor Day

• Ascension Day

• Whit Sunday

• Whit Monday

• Icelandic Republic Day

• Commerce Day

• Christmas Eve (from noon)

• Christmas Day

• Second Day of Christmas

• New Year's Eve (from noon)

Employment termination in Iceland must be in writing and effective at the beginning of the following month. The notice period generally is between one and three months, but longer notice periods may be provided as part of a collective agreement. Severance is not required but may be provided per agreement.

In Iceland, bonuses are commonly included within employees’ compensation packages and may be set as part of a collective bargaining agreement. If a bonus is included as part of an employee’s compensation, the employer typically pays it as a lump sum in December.