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Collective agreement

The Icelandic labour market is from a regulatory point of view usually characterized as flexible as compared to the labour markets in mainland Europe. The workforce is considered adaptable due to both varied skills and a high level of education to meet new challenges from changes in the demand for products and services, new technologies etc. Labour participation is also very high for both genders.

The labour market is for the most part regulated by means of collective bargaining. The social partners, therefore, play an important role in setting wages in different sectors of the economy, setting working hours and various employment rights of workers. Collective agreements cover approximately 88% of the workforce.

Collective agreements are the minimum as regards wages and other employment terms. According to Icelandic law. Wages and other terms of employment as negotiated by the trade unions and employers organizations in collective agreements are the minimum irrespective of gender, nationality, or employment period for all employees in the relevant field of work in the area covered by their collective agreement.

If you are paid in accordance with the collective agreement made by any of the unions that belong to LIV, then the collective agreement found here will apply to you. If you have any questions concerning your contract we would advise you to contact your union representative or the union directly. Minimum terms set by collective agreements do not stand in the way of higher wages and/or better terms negotiated between workers and their employers if the economic situation in the relevant sector warrants it.

Employers on the general labour market organize themselves in a similar manner to the unions, the most representative being The Confederation of Icelandic Employers (SA).

Content of collective agreements

The content of general collective agreements can be divided into three parts. In the first part are provisions on wages and working time, meal and coffee breaks and minimum hours of daily and weekly rest.

The second relates to holiday payments, health and safety at the workplace, payments in cases of sickness and work-related accidents, working clothes, trade union and pension fund fees, rules on notice of dismissal, selection and duties of trade union representatives etc.

The third part concerns the term of the agreement and in some cases, dispute resolution of the negotiating parties and how to deal with changes that occur in underlying economic factors, such as inflation, which affect the expected outcome of real wages during the validity of the agreement.