Working Hours and Overtime in Iceland

In Iceland, your company must comply with working hour and overtime laws – including daily limits, overtime thresholds, and rest requirements – to stay compliant and build a strong employee experience.

As regulations and collective agreements continue to evolve toward shorter effective workweeks and stronger protections, you should regularly review your policies, timekeeping systems, and contracts to ensure they reflect current standards through 2026. Expect closer scrutiny of excessive overtime, night work, and rest-period compliance, along with potential updates to sectoral agreements that further reduce standard hours or increase premiums for inconvenient work times. Proactive compliance – including consultation with unions where applicable – will help you avoid disputes and maintain a sustainable working-time culture.

• Standard Working Hours
• Overtime Thresholds
• Overtime Pay Rates
• Daily And Weekly Rest Requirements
• Night Work Restrictions
• Penalties For Non-Compliance

What Are The Standard Working Hours In Iceland?

An employee whose age is 17 or younger has a maximum of 8 hours per day and 40 hours per week. An employee whose age is 18 or older is allowed to work 40 hours per week. A minimum meal interval of 30 minutes must be observed by employees who work more than 6 hours in a day. In typical working hours, Monday through Friday, the hours are 9:00 to 17:00.

Maximum Working Hours In Iceland

Under Icelandic law and collective agreements, the standard reference for full-time work is 40 hours per week, usually spread over five 8-hour days. In many sectors, collective agreements further reduce the effective weekly hours to around 36–38.5 hours through paid breaks or shorter daily schedules, but 40 hours remains the statutory benchmark for calculating overtime. Daily working time is generally limited to 8 hours within a 24-hour period, excluding meal breaks, and weekly working time – including overtime – must not exceed the limits set in applicable collective agreements and the Working Environment Act.

Industry-Specific Exceptions

• Healthcare And Emergency Services
• Tourism, Hospitality, And Restaurants
• Fisheries And Maritime Operations
• Transport, Aviation, And Logistics
• Agriculture And Seasonal Work
• Security, Surveillance, And On-Call Services

Managerial And Exempt Employees

Senior managers and certain employees in positions of trust may be partially or fully exempt from standard working-time limits and overtime compensation rules, provided this is clearly reflected in their employment contracts and aligned with collective agreements. For these employees, working time is often considered included in their overall salary, and they may not receive separate overtime pay. However, you must still respect general health and safety requirements, including reasonable limits on total hours and guaranteed daily and weekly rest. You should document the rationale for classifying an employee as exempt, ensure that their salary reasonably reflects the expected workload, and periodically review workloads to avoid excessive working hours.

Statutory Full-Time Working Hours In Iceland

Statutory full-time work in Iceland is based on a 40-hour week, typically Monday–Friday. Many collective agreements convert this into a shorter effective workweek by counting part of the time as paid breaks or by reducing daily hours, but for legal and payroll purposes, 40 hours remains the key threshold for determining overtime. When designing work schedules, you should ensure that normal hours do not exceed 8 hours per day and 40 hours per week, that working time is recorded accurately, and that any deviations – such as shift work, compressed weeks, or rotating schedules – comply with the applicable sectoral collective agreement.

Overtime Regulations In Iceland

What Counts As Overtime In Iceland?

In Iceland, overtime is generally any working time performed at the employer’s request beyond the agreed normal daily or weekly hours, usually beyond 8 hours per day or 40 hours per week for full-time employees. Collective agreements may define more specific thresholds, such as overtime starting after the standard daytime span (for example after 17:00) or when work is performed on weekends, public holidays, or designated rest days. Standby and on-call arrangements can also generate overtime or special premiums when the employee is required to be available or to report to work on short notice. You must clearly define normal working hours in employment contracts and apply the relevant collective agreement to determine when overtime begins.

Maximum Overtime In Iceland

Icelandic rules and collective agreements limit the amount of overtime that can be required to protect employee health and safety. As a general guide, overtime should not exceed an average of 16 hours per week over a reference period, and total working time – normal hours plus overtime – should not regularly exceed 48 hours per week on average. Short-term peaks may be allowed, but you must ensure that employees still receive their minimum daily and weekly rest. Excessive or systematic overtime can be considered a breach of working-time legislation and may trigger intervention by labour authorities or unions. You should monitor overtime closely, require prior managerial approval, and adjust staffing levels if overtime becomes routine.

Overtime Payout Rates In Iceland

Overtime pay in Iceland is primarily governed by sectoral collective agreements, which set minimum premiums above the employee’s regular hourly rate. A common structure is a 80% premium (1.8x) for standard overtime hours worked outside normal daytime hours on weekdays, and higher premiums – often 100% (2x) or more – for work performed at night, on Sundays, or on public holidays. Some agreements also provide special rates for shift work, split shifts, or work during particularly inconvenient hours. Overtime is usually calculated on the basis of the employee’s monthly salary converted into an hourly rate, and must be itemised clearly on payslips. Instead of cash payment, you may agree with the employee – where permitted by the collective agreement – to grant time off in lieu at the corresponding premium rate, ensuring that compensatory rest is taken within the required timeframe.

Rest Periods And Breaks In Iceland

Employees in Iceland typically work up to 8 hours per day and 40 hours per week, and the law requires that these working hours be organised around adequate rest periods and breaks to protect health and safety. Within each workday, employees who work more than a set number of hours must receive a meal break, and over each 24-hour and 7-day period they are entitled to uninterrupted daily and weekly rest. When you schedule shifts, overtime, or on-call duties, you must ensure that these statutory breaks and rest periods are preserved or that equivalent compensatory rest is provided without delay.

• Meal Break Requirements
• Daily Rest
• Weekly Rest
• Minors
• Employer Duties