As a posted employee, you are entitled to a safe workplace, just like other employees in the Icelandic labour market. While working in Iceland, you are guaranteed certain rights regarding pay and other terms and conditions of employment in accordance with Icelandic collective agreements.

Legislation applicable to the terms and conditions of employment of posted employees

Under the Act on Posted Workers and the Obligations of Foreign Service Providers, the following legislation, among others, applies to the terms and conditions of employment of posted employees in their employment relationship with foreign service providers:

Please note that the Acts are only available in Icelandic

• Act on the Terms of Employment of Workers and Compulsory Pension Insurance

• Act on Working Environment, Health and Safety at Work

• Holiday Allowans Act

• Act on Maternity/Paternity Leave and Parental Leave, Articles 16, 49 and 50

• Act on Equal Status and Equal Rights Irrespective of Gender

• Aviation Act, Chapter VI

• Temporary-Work Agency Act, if the posted employee is employed by a temporary-work agency.

As a general rule, posted workers who stay in Iceland for more than six months are required by law to notify the authorities of their stay and register their legal domicile in Iceland. An employer cannot apply for such registration on behalf of an employee.

Registers Iceland is responsible for the registration of legal domicile in Iceland. Please note that different rules apply to nationals of countries outside the EEA. They must obtain a specific residence permit in order to acquire the right to reside in Iceland.

The rules on notification of residence and registration of legal domicile depend on how long the employee stays in Iceland and their nationality.

Further information is available on the Registers Iceland website:

• EEA/EFTA nationals

• Nordic nationals

• Nationals of countries outside the EEA/EFTA

As a posted worker, you are entitled, as a minimum, to pay in accordance with Icelandic collective agreements. However, if your employment contract provides for more favourable terms and conditions of employment, those terms and conditions continue to apply.

Posted workers of foreign service providers are subject to tax in Iceland on income earned from work carried out in Iceland.

If the foreign service provider is exempt from taxation under a double taxation agreement, its employees are likewise exempt, provided that their stay in Iceland does not exceed 183 days in any twelve-month period.

Employees who stay in Iceland for more than 183 days in any twelve-month period are subject to unlimited tax liability in Iceland from the first day and must pay income tax on their total income from the date of their arrival in Iceland.

See further information on Taxes and charges.

Posted workers entitlement to pay in the event of illness or an accident depends on how long they have worked for their employer. During the first twelve months, an employee accrues entitlement to two days’ pay for each month worked. The entitlement is based on the employee’s working hours.

If an employee works in Iceland for more than one year, their entitlement to sick pay is governed by Article 5 of the Act on Workers’ Rights in the Event of Termination of Employment and to Wages in the Event of Illness and Accidents. Under the Act, employees’ entitlement to pay in the event of illness or an accident must be respected.

See further information on the right to pay during absence.

In some cases, an Icelandic collective agreement may provide an employee with a more favourable entitlement to sick pay. Entitlement to sick pay varies between collective agreements, so the applicable collective agreement must be consulted in each case. Trade unions can provide further information on the provisions of collective agreements.

As you are working in Iceland on behalf of your employer, your employer should provide you with accommodation during your stay in Iceland. Your employer should either pay for the accommodation directly or pay you a per diem allowance to cover the cost of accommodation.

If your employer dismisses you, you should contact your trade union in your home country to find out about your rights.

Icelandic undertakings that use the services of foreign service providers in construction or civil engineering may be liable for unpaid wages and other unpaid wage components due to employees of foreign service providers.

Find out more about chain liability in construction and civil engineering.

No. As the work does not involve the provision of services in Iceland, there is no requirement to notify AOSH.

No. Only self-employed individuals who are nationals of EEA Member States are permitted to work in Iceland as self-employed posted workers.