Working Hours and Overtime in Iceland

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 37.5 to 40 hours per week. A minimum meal interval of 30 minutes must be observed by employees who work more than 5 hours in a day. In typical working hours, Monday through Friday, the hours are 09:00 to 17:00.

Maximum Working Hours In Iceland

Under most Icelandic collective agreements, standard full-time daytime work is 37.5 hours per week, usually structured as 7.5 hours per day over five days. The absolute legal ceiling for normal working time, excluding overtime, is generally 8 hours per day and 40 hours per week. Any work beyond these thresholds is treated as overtime and must be compensated at premium rates.

Employers must schedule working hours so that employees do not regularly exceed the agreed full-time hours over the settlement period defined in the collective agreement. Working time records must be kept accurately to demonstrate compliance with daily and weekly limits. You should also ensure that overtime remains occasional and does not undermine required daily and weekly rest periods.

Industry-Specific Exceptions

Companies hiring in sectors like healthcare, transportation, manufacturing, or hospitality may be subject to special scheduling rules. These rules often allow for longer individual shifts, such as 10 to 12 hours, provided that equivalent compensatory rest and premium pay are granted. Collective agreements in these sectors typically define specific shift patterns, on-call arrangements, and averaging periods for calculating weekly working time.

In healthcare and similar continuous-operation services, employees may work compressed workweeks or rotating shifts that include nights and weekends. Transport workers must comply with EU-aligned rules on maximum driving time and minimum rest, which can be stricter than general labour rules. Manufacturing and security staff often rotate through night or weekend shifts under rosters that must still respect daily and weekly rest requirements.

• Healthcare professionals may work 12-hour shifts with extended rest periods.
• Transport workers must comply with EU-aligned rest and driving limits.
• Manufacturing and security staff often rotate through night or weekend shifts.

Even in these sectors, you must ensure the average weekly limit is respected over a reference period. Averaging periods are typically 4 to 12 weeks under collective agreements, during which average weekly hours must not exceed 48 hours including overtime. You should document the chosen reference period and communicate it clearly in work schedules.

Managerial And Exempt Employees

Senior managers and certain key employees in Iceland may be exempt from some detailed working-time rules, particularly regarding overtime compensation. Their contracts often provide for a fixed salary intended to cover additional hours beyond the standard 37.5 to 40 hours per week. However, they are still protected by fundamental rules on health and safety, daily and weekly rest, and maximum average weekly working time.

When classifying an employee as managerial or exempt, you should base the decision on actual duties, decision-making authority, and level of independence, not just job title. The employment contract should clearly state that the salary includes compensation for additional hours and specify any limits or expectations regarding availability. Misclassifying employees to avoid overtime obligations can expose you to back-pay claims and penalties.

Statutory Full-Time Working Hours In Iceland

In practice, full-time work in Iceland is defined by collective agreements as 37.5 hours per week for daytime work, typically 7.5 hours per day over five days. Some agreements still use 40 hours per week as the full-time benchmark, especially where part of the time is classified as paid breaks or where shift work is involved. You should always check the sectoral agreement that applies to your employees.

Full-time hours may be arranged as fixed schedules, rotating shifts, or flexible working-time systems, provided the average weekly hours remain within the agreed full-time limit. Any hours worked beyond the agreed full-time schedule are normally treated as overtime and must be compensated at least at the minimum overtime rates set in the relevant collective agreement. Part-time employees are generally entitled to proportional rights and overtime premiums once they exceed the standard daily or weekly hours for comparable full-time staff.

Overtime Regulations In Iceland

Employers in Iceland must monitor and record all hours worked beyond the agreed full-time schedule, as these hours usually qualify as overtime under collective agreements. You are responsible for ensuring that overtime is authorized in advance, accurately tracked, and paid at the correct premium rates, typically at least 1.0385x to 1.375x of the daytime hourly rate for regular overtime and up to 1.875x for major holidays. Failure to comply with overtime rules can lead to back-pay claims, fines from the Directorate of Labour, and reputational damage.

What Counts As Overtime In Iceland?

Overtime in Iceland generally means work performed beyond 8 hours in a day or beyond 40 hours in a week, or beyond the lower full-time limit of 37.5 hours where that is defined in the collective agreement. Work performed outside the agreed daytime span, often 09:00 to 17:00 or 08:00 to 16:00, can also attract overtime or shift premiums. For part-time employees, hours beyond their contracted schedule but below full-time may be paid at the normal rate, while hours beyond full-time thresholds are paid as overtime at premium rates.

Work performed on weekly rest days, typically Sunday, or on public holidays is usually treated as overtime or special-rate work. Collective agreements commonly require at least 1.375x to 1.875x of the daytime hourly rate for such hours, depending on the time of day and the specific holiday. You should define in writing how overtime is requested, approved, and recorded to avoid disputes.

Maximum Overtime In Iceland

Iceland follows the EU Working Time Directive principle that average weekly working time, including overtime, must not exceed 48 hours over a reference period, typically 4 to 12 months. In practice, many collective agreements limit overtime to about 2 to 4 hours per day and 10 to 20 hours per week, with a common cap of around 200 to 260 overtime hours per year per employee. You should verify the exact numerical caps in the applicable sectoral agreement and reflect them in your internal policies.

Where higher overtime is temporarily necessary, some agreements allow exceeding the normal weekly cap with union or employee representative approval, but the 48-hour average weekly limit including overtime must still be respected. For example, an employee might work up to 54 to 56 hours in a peak week, provided that over the reference period the average does not exceed 48 hours and compensatory rest is granted. You must keep detailed records to demonstrate that these numerical limits are not breached.

Overtime Payout Rates In Iceland

Overtime pay in Iceland is primarily governed by collective agreements, but typical minimum rates are well established. Regular overtime worked on weekdays outside daytime hours is often paid at approximately 1.0385x to 1.375x of the daytime hourly rate for the first block of overtime hours, then rising for additional hours or late-night work. Many agreements set a standard overtime premium of at least 80% above the daytime rate, equivalent to 1.8x, for certain categories of overtime.

Work performed on Sundays and public holidays usually attracts higher premiums, commonly around 1.375x to 1.875x of the daytime hourly rate depending on the agreement and time of day. Night work between 23:00 and 06:00 often carries an additional premium of 25% to 45% on top of the basic hourly rate, resulting in total pay of about 1.25x to 1.45x for night hours. You must always check the exact numerical rates in the relevant collective agreement and ensure your payroll system applies them correctly.

Rest Periods And Breaks In Iceland

Employees in Iceland typically work 7.5 to 8 hours per day and 37.5 to 40 hours per week, and rest periods and breaks are designed to protect health and safety within these limits. The law and collective agreements require employers to provide meal breaks during the working day and to respect minimum daily and weekly rest between shifts. When you plan schedules, you must align working hours with these mandatory rest periods so that total work and overtime do not erode required rest.

• Meal Break: Employees who work more than 5 consecutive hours are generally entitled to at least a 30-minute meal break, which may be paid or unpaid depending on the collective agreement. In many Icelandic workplaces this break is counted as working time if the employee must remain available to the employer.
• Daily Rest: Employees must receive at least 11 consecutive hours of rest in every 24-hour period, which means you cannot schedule back-to-back shifts that cut this rest below 11 hours. Only in exceptional circumstances, such as emergencies or specific shift systems allowed by agreement, may this rest be temporarily reduced with compensatory rest granted later.
• Weekly Rest: Employees are entitled to at least 24 consecutive hours of weekly rest, usually including Sunday, in addition to the daily rest. If business needs require Sunday or rest-day work, you must provide a substitute rest day and pay the applicable Sunday or holiday premium, often between 1.375x and 1.875x of the daytime rate.
• Minors: Young workers under 18 are subject to stricter limits on daily and weekly hours and must receive longer rest periods. They are generally prohibited from night work and from work that would interfere with compulsory schooling, and you must ensure their schedules provide adequate breaks.
• Employer Duty: Employers must design rosters that comply with daily and weekly rest rules and must keep records to prove compliance. If you introduce shift work or flexible hours, you remain responsible for ensuring that employees still receive at least 11 hours daily rest and 24 hours weekly rest.

Night Shifts And Weekend Regulations In Iceland

Night and weekend work are legal in Iceland but subject to additional employer responsibilities and employee protections. You must ensure that such work does not breach daily and weekly rest requirements and that employees receive the correct numerical premium rates where required by collective agreements. Particular care is needed for vulnerable groups such as young workers and pregnant employees.

Night work in Iceland is generally understood as work performed between 23:00 and 06:00, although some collective agreements may define a slightly different window. Employees who regularly perform at least 3 hours of their daily working time during this period, or who are likely to perform at least one third of their annual working time at night, are considered night workers. For these workers, you must monitor health and safety risks more closely and respect limits on average working time.

• Premium Pay: Collective agreements in Iceland typically provide a night work premium of about 25% to 45% above the normal daytime hourly rate, resulting in total pay of approximately 1.25x to 1.45x for hours worked between 23:00 and 06:00. Sunday and public holiday work often attracts even higher premiums, commonly around 1.375x to 1.875x of the daytime rate depending on the agreement.
• Health Monitoring: Regular night workers are entitled to appropriate health assessments at intervals, often annually, to identify any adverse effects of night work. If a doctor finds that night work is harming an employee’s health, you should, where possible, transfer the employee to suitable day work without loss of pay or rights.
• Workplace Restrictions: Minors under 18 are generally prohibited from night work and from late-evening shifts that would cut into required rest periods. Pregnant workers and new mothers may request adjustments or removal from night work if medically necessary, and you must accommodate such requests or provide alternative duties where reasonably possible.

Weekend work, particularly on Sundays, is treated as work on a weekly rest day and is therefore more tightly regulated. If you require employees to work on Sunday, you must provide a substitute rest day and pay the applicable Sunday premium, which under many Icelandic collective agreements ranges from about 1.375x to 1.875x of the daytime hourly rate. You should plan rosters so that weekend work is shared fairly and does not push average weekly working time above 48 hours including overtime.