What Are The Public Holidays in Iceland in 2026?

List of Public Holidays in Iceland (2026)

Iceland has a mix of religious and national public holidays that are observed nationwide. Use the table below to plan staffing, leave, and payroll for your Iceland-based team in 2026.

Do Employers Have to Provide Paid Leave on Public Holidays?

Yes, under Icelandic law and collective agreements, public holidays are generally treated as paid days of rest for employees who would normally be scheduled to work on those days. If a public holiday falls on a day when an employee is not normally working, there is usually no extra paid day off, but if the holiday falls on a regular working day, the employee is entitled to pay as if they had worked.

Most employees in Iceland are covered by sectoral collective bargaining agreements, which set detailed rules on holiday pay, shift supplements, and rest periods. These agreements typically require premium pay when employees must work on public holidays, often at double pay or more, plus compensatory rest. Part-time employees are usually entitled to holiday pay in proportion to their contracted hours, so your company should pro-rate benefits based on their normal schedule.

When a public holiday falls on a Sunday, it is still treated as a holiday, and Sunday/public holiday pay rules apply for any work performed. For Christmas Eve and New Year’s Eve, the public holiday status and premium pay normally apply from 13:00 onwards, not for the entire day, so you should distinguish between hours worked before and after that time in your payroll system.

Legal Penalties for Not Providing Paid Holiday Leave

If your company fails to respect Icelandic public holiday rules, you can face claims from employees, enforcement by unions, and administrative sanctions. Trade unions in Iceland play a central enforcement role and can bring claims or support employees in seeking back pay, premium rates, and damages for breaches of collective agreements or statutory rules.

Authorities such as the Directorate of Labour and, where relevant, the Administration of Occupational Safety and Health may become involved if there are systematic violations, especially around working time and rest periods. Non-compliance can lead to orders to correct practices, payment of arrears with interest, and fines. In serious or repeated cases, disputes can escalate to the Labour Court, which can issue binding decisions and financial penalties.

Common mistakes include treating public holidays as ordinary working days without premium pay, failing to pay employees who are off because the workplace is closed on a holiday, misapplying the special rules for Christmas Eve and New Year’s Eve after 13:00, and not pro-rating holiday entitlements for part-time staff. Keeping clear records of schedules, hours worked, and applicable collective agreements is essential to defend your company if a dispute arises.

How Do Holidays Affect Overtime Thresholds?

In Iceland, public holidays interact with working time and overtime rules primarily through collective agreements, which sit on top of the Working Environment Act and other labour legislation. These agreements usually cap normal daily and weekly hours and require overtime or premium pay for work beyond those limits or on particularly sensitive days such as Sundays and public holidays.

For many employees, hours worked on a public holiday are paid at a higher rate than standard overtime, often at double pay or more, and may also generate compensatory time off. In practice, this means that if an employee works on a public holiday, you will often owe both a public holiday premium and, if total hours exceed the normal daily or weekly threshold, overtime on top of that according to the applicable agreement.

Because rules differ by sector and union, you should always check the specific collective agreement covering your Iceland-based employees to confirm how public holiday hours count toward overtime thresholds, how to handle split shifts that cross midnight, and whether different rates apply to evening, night, or weekend work. When in doubt, applying the more favourable interpretation for the employee is generally the safest approach and reduces the risk of later claims.

Stay 100% Compliant with Leave Regulations Using Playroll

Managing Iceland’s mix of statutory rules and powerful collective agreements can be challenging, especially if your HR and payroll teams are based outside the country. Public holidays, Sunday work, and special half-day rules on Christmas Eve and New Year’s Eve all need to be reflected accurately in contracts, schedules, and payslips.

Playroll helps you hire and pay Iceland-based employees compliantly, without having to become an expert in every Icelandic collective agreement. Our in-country specialists track public holiday calendars, sector-specific premium rates, and changing labour rules, then build them directly into your employment documentation and payroll calculations.

When you use Playroll, you can:

• Issue locally compliant employment contracts that reflect Icelandic holiday and working time rules
• Configure accurate public holiday calendars and premium rates in payroll from day one
• Pro-rate holiday pay correctly for part-time and variable-hours employees
• Reduce the risk of underpaying for work on Sundays and public holidays
• Get expert guidance when unions or employees raise questions about holiday entitlements

Instead of juggling multiple sources and worrying about missing a rule, you get a single, reliable system that keeps your Iceland operations aligned with local expectations. Playroll gives your team the confidence to plan leave, schedule work on public holidays when necessary, and pay your people correctly every time.