Working
Starting a new job is a big step, whether it’s your first time or at a new workplace. Many of us begin our career at the municipalities’ youth work programs during the summer, where teenagers can earn their first paychecks doing light gardening and beautification work for their municipalities. Then we age and add to our education, and with that we find that our job opportunities become more and more diverse. And when those later years in our career comes, there are many things to consider.
When starting a new job
When we start a new job, we have the right to sign a written employment agreement within the first two months. This employment agreement should include information regarding the agreeing parties, i.e. the names and social security numbers of both the employee and the employer, the place of work and its address, job title, job description, first day, the period of employment (temporary or permanent), holiday rights, term of notice, wages, work hours, pension fund, and the collective wage agreement on which the employment agreement is based. It’s always good to remember that in Iceland it is illegal to make an employment agreement that is in some way worse than the collective wage agreement between your labour union and the relevant employer organisation.
You can not be forced to join a labour union, but it is recommended as the unions’ main role is to negotiate the collective wage agreements on behalf of their members and when an agreement has been reached the members of the union in question get to vote on the agreement. If collective wage agreements are approved, they will apply to you whether you have your say as a member of a union or not. The union you choose can be selected based on the job you do, the location of your job or your education.
In addition to choosing a union, you also have to select a pension fund. You can also choose to add a contribution to a supplementary pension savings fund. Payments to pension funds are deducted from your wages, at least 4% per month. Your employer also makes a contribution to both your pension fund and your supplementary pension savings.
Wages and pay slips
Collective wage agreements provide for minimum wages and wage rates for a particular job, taking into account age and/or length of service. Your employment agreement allows you to negotiate with the employer for better terms than provided in the collective agreements.
When wages are paid you should get a pay slip, a sort of a receipt for the payment of wages and any other fees. The pay slip should show any wage related payments, deducted taxes and other public fees, your and your employers contributions to pension funds, labour union premium, and other fees if applicable.
Taxes and the tax statement
On the year children reach 16 years, they start paying taxes like adults and return their first tax statement. Income tax on a wage earner’s income is typically withheld and paid to the tax authorities by the employer. This means that information regarding wages and tax payments are in most cases prefilled in the tax statement when it is opened and you only need to review the information before returning your tax statement.
Your rights as a worker
In Iceland, a certain set of rights is laid out in legislation and regulation. These legally established rights include workplace conditions, health and safety standards, working hours, vacation time (summer vacation), protection for pregnant and new parents, measures to prevent harassment, abuse and violence, protection of personal information, equality in the workplace and provisions for termination of employment. In addition, collective wage agreements include terms for sick leave, working hours and provisions for hiring and termination.
Termination of employment
If an employer terminates your contract, the termination takes effect from the last day of the current month. The same applies when you terminate your contract with an employer. Your term of notice depends on the collective wage agreement applicable to your job. During the period of notice you are required to work as usual and you do have the right to receive full wages according to your agreement. You are free to negotiate these terms with the employer, i.e. when you leave the workplace for good, but it is recommended that you seek counsel with your union and start looking for another job.
If you have not found another job when the period of notice has passed, you might be entitled to unemployment benefits. It is important that you apply for unemployment benefits at the latest on the day that you leave your former workplace, i.e. the last day of the period of notice. You can submit your application up to a month before your last day. If you were the one to terminate the contract with your employer, you might have to wait two months before you can receive unemployment benefits. Nevertheless it is important that you submit your application as soon as possible.
New workplace
When you start a new job after termination and if you’ve been receiving unemployment benefits, you must alert the Directorate of Labour. Then you sign a new employment agreement, give your new employer your information regarding a labour union, pension fund, and supplementary pension savings fund, and of course take on the challenges we all face when starting a new job, get to know your new coworker and start new projects.
And then what?
This is how our careers pass, some of us stay in the same workplace for long while others stay for shorter periods and are a little more adventurous. But as we reach our later years, we all start considering retirement, whether it comes at the traditional 67 years of age, sooner or later. When that day of retirement comes, it is good to be prepared. When you’re close to retirement it is good to focus on pension, finances and housing, rights, and of course how to spend this valuable time.