Business Culture in Iceland

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Vík covered in snow along Iceland's south coast

When most people think of Iceland, they imagine volcanoes, snow, waterfalls and possibly Sigur Ros. 

Sure all of those things are associated with Iceland, but the country has so much more to offer than that. Not many would think about the fact that Iceland actually has a thriving and exciting economy. 

Iceland consistently ranks highly on lists like; the happiest people in the world, the highest-paid per capita, best gender equality in the workplace and many more. As a nation, it has managed to do a lot of this without compromising on output, quality of life, or workers’ rights. 

So if Iceland is indeed all of these things I’ve stated above, what is it actually like to work there? What is the business culture like that close to the north pole? What are the rights of Icelandic employees? 

Read on to find out all this and more.

How is Iceland’s Work Culture Different?

Icelandic horses grazing with a snow-covered mountain in the distance

Iceland, of course, has the same basic business principles as most developed nations. There are employers, employees, goods and services, and profit to be made. However, if there was one key element of Icelandic business culture that is different, it would be the relationship between work and life outside of work. 

Family, friends, social connections and leisure are all integral parts of Icelandic life. Icelanders are hard-working people, but they don’t live to just work; there needs to be a work/life balance as well. 

Icelandic workplaces tend to be more relaxed, open, friendly, and more flexible than workplaces in other countries. 

This isn’t typical for every workplace, but it’s not uncommon to see a child or two hanging out in the break room every now and then because a babysitter fell through or school closed early. In many countries, employees wouldn’t dare do this. Still, there is a strong understanding that people have lives outside of work in Iceland. 

Parenting symbol in Iceland representing the progressive parental aspects of Icelandic business culture

Business culture is more in line with the understanding that to get the most out of an employee, there needs to be an understanding that they don’t solely exist to serve an employer. 

Perhaps this attitude is a side effect of being such a small population. The people who work for you are more likely to be someone you will actually get to know, rather than just a cog in a wheel of productivity. 

Another thing that sets Icelanders apart from other Nordic Nations is that they are more spontaneous and adaptable to changes in situations or plans. 

A crossword reading nothing endures but change, highlighting business culture in Iceland

For example, the Danish tend to be very organised with plans for the future. There are jokes made by Icelandic comedians about this, where the Danish will mention that they will not be free for a meeting till week 34. This isn’t really something you will come across in Iceland.

The last main difference in the culture of business in Iceland is that a company’s staff turnover is almost a direct representation of the level of satisfaction employees have. This is because there has been a relatively low rate of unemployment in Iceland for a long time. 

To put it simply, a large portion of the Icelandic workforce know that they could find another job somewhere else relatively fast, so fewer people are staying in positions because they feel they ‘don’t have any other choice.’ 

So when you land a job interview, if you discover the job has been advertised 4 times in the last 18 months, you probably won’t need to dig too far to realise that’s a huge red flag.

What Are Iceland’s Working Hours?

A clock symbolising Iceland's shorter working week

Legally the Icelandic Government currently defines a full-time workweek as 37.5 to 40 hours.

This is typically done over a 5 day week, Monday to Friday. Staff usually have a lunch break or typically half an hour to one hour. In total, this usually equals around 40 hours in the office. 

The starting times of the workday can vary depending on the industry, but most offices begin their hours of operation sometime between 8 am and 10 am.

In some businesses, there isn’t really a set start or finish time. In these cases, normally, it’s just expected that you are in the office by 10am and leave when you have finished your hours for the day. 

As mentioned earlier, there’s not really a strict hold on your whereabouts during the workday in Iceland. If, for example, you have a doctor’s appointment, most companies are completely fine with you heading out to do that, as long as you have made the time up somewhere else in the week. 

Are There Labour Unions in Iceland?

A symbol of Icelandic workers supporting each other

Iceland has strong labour unions, and almost all workers in Iceland are a member of a trade union. The role of Icelandic trade unions is to negotiate wages and terms of employment in collective agreements on behalf of their members. They are there to look out for the best interests of employees. 

Icelandic trade unions also manage funds that are designed to benefit members. These funds can assist with things like illness, vacations, education and professional development. The trade unions of Iceland can also offer legal services to their members in matters of dispute.

Although almost every person employed in Iceland is a trade union member, it isn’t a legal requirement to have union membership. If an employee has decided not to be a union member, they still have to follow the terms of collective agreements and pay dues, so it makes sense to be a member anyway.

Trade unions in Iceland are also very important because they negotiate things like minimum wage and working conditions.

What Are the Main Labour Unions in Iceland?

Icelandic labour union ASI logo
Picture: ASÍ.is

There are a lot of different trade unions in Iceland. They provide representation across every kind of employee, and they are generally industry-based or geographically based.

Many of the unions join forces with other unions that represent employees in similar sectors or industries. There are four main trade unions in Iceland. 

ASÍ (Alþýðusamband Íslands) is the oldest and arguably the largest. It was formed in 1913 and today represents just over half of the total Icelandic workforce.

Traditionally ASÍ has been involved with the fishing industry, electrical industry, skilled labour, and other technical industries but through some of its affiliations, it’s also now linked closely with other sectors like hairdressing and flight attendants.

 
Picture: Efling.is

The other three main trade unions are; BSRB (the Federation of State and Municipal Employees), BHM (the Confederation of University Graduates), and (the Icelandic Teachers’ Union).

Other trade unions exist outside the big four, like Efling, representing over 27000 workers in the greater Reykjavík area. Due to the high representation of foreign workers in Reykjavík in tourism and hospitality, many are members of this union.

How Can I Join an Icelandic Labour Union?

An Icelandic union membership book

This is incredibly simple; it’s typically taken care of on your first day of employment or before then. As you are filling in your paperwork, there’s usually a form or box to nominate which trade union you would like to be represented by for this particular job. 

In most cases, an employer would have a main union that most of their employees are with, and you can choose to go with them, but you can also choose a different one altogether. It is entirely up to you, but no employer is allowed to stipulate that you must select one particular union over another.

Of course, if you were working in an office administrator role in Reykjavík, it would make more sense to be represented by VR (who deals a lot with office workers in Reykjavík) than it would to be represented by AI (the Icelandic Architects Association).

What Are My Rights As an Employee in Iceland?

An Icelandic construction workers hat on the concrete floor of a building site

The complete list of rights for an employee in Iceland is extensive. In many cases, the specific details depend on which industry you are working in and what collective bargaining agreements have been made by the union you pay dues to. 

Having said that, there are some fundamental rights that all employees, including those who are foreign, are entitled to when working here.

Contract of Employment

A worker signing an Icelandic job contract

A contract must be written and signed by both the employer and the employee within two months of the initial start date of employment. 

In Iceland, an employment contract has to include the names of both parties, the place of work, a short description of the job, the terms of wages, the time expectations, and also pension funds and union membership. 

If you come from outside the EU/EEA, the contract must also include evidence of your work permit. This is something to take note of if you are a British citizen working in Iceland after Brexit.

Pay Statement

A singular one dollar bill on a brown table top

All employees in Iceland are entitled to a detailed statement of their salary, or ‘Pay Slip’. It must contain a breakdown of the employee’s wages and how they are calculated. All deductions must be itemised so the employee can easily identify which amounts were for taxes, pension and union membership etc. 

This is especially important in Iceland because if there is a mixup with your taxes, in the eyes of the Icelandic Government, it’s the employees’ responsibility to find it, not the employer or the tax office. 

Working Time

A clock symbolising the shorter Icelandic working hours

As mentioned earlier, the typical working week in Iceland is between 37.5 hours and 40 hours. This is dependent on the sector you work in as the trade unions have negotiated shorter working weeks for office workers and commercial workers.

The minimum lunch break for a worker is 30 minutes, but most workers usually take a 60-minute lunch break. There are also typically two 20 minute coffee breaks in a workday.

Periods of Rest

A remote worker in Iceland with his feet up

Workers in Iceland are entitled to a minimum resting period of 11 hours for each 24-hour period of work. These 11 hours must be consecutive. The maximum working time per week should not exceed 48 active working hours, including overtime. 

Illness and Accidents 

A traffic cone on some dark tarmac symbolising work-related accidents in Iceland

If an employee cannot work due to sickness or accident, they are entitled to paid sick days from their employer for a limited time. Generally, in their first year of employment, an employee will earn 2 days of paid sick leave each month. 

If an employee is unfortunate enough to sustain a work-related injury that takes them out of action, they will receive their accrued paid sick leave, in addition to three months pay by their employer.

Holidays

A remote worker in Iceland enjoying Iceland's incredible nature

All employees in Iceland on full-time contracts are entitled to paid annual leave from work. Just as with sick leave, the minimum amount of annual leave accrued by an employee each month is two working days.

Income Tax

A person calculating Iceland income tax

Employers are responsible for deducting personal income tax and municipal tax from their employees’ wages each month to pay to the Icelandic tax office.

Each employee has the ability to check online how much tax has been deducted, and it is their responsibility to maintain that this information is correct. It is also the responsibility of each individual to file their annual tax return on time. 

Equal Status of Women and Men

A symbol of strong workers writes in Icelandic business culture

All employees in Iceland employed by the same employer are entitled to equal pay regardless of their gender. This extends to pension payments, sick pay and any other monetary value given to an employee.

Maternity and Paternity Leave

A pregnant woman symbolising maternity and paternity regulations in Iceland

Yes, this might come as a shock for people from non-Nordic countries, but if you and a partner are having a child, you are entitled to paid leave in Iceland

Anyone living and working in Iceland for 6 months is entitled to Maternity and Paternity leave. This applies to those who are giving birth, adopting or having a baby through other means. 

The amount is 80% of the couple’s combined average income paid over 12 months. It can be accessed a month before the arrival of the child.

Are There Statutory Pension Contributions in Iceland?

A a cup of pennies with a plant in it symbolising personal savings

Statutory pension contributions absolutely exist in Iceland. Each employee must have a pension fund. Every month, contributions are made to it from both the employer and the employee. 

At the time of writing, each month, your employer must contribute a minimum of 11.5% of the amount you earn to your pension fund. This is a payment from the employer’s own pocket, in addition to your salary.

Whereas, the employee must contribute a minimum of 4% of their gross salary to their Icelandic pension each month, and can choose to also set up an additional private pension.

How Do I Set Up a Pension in Iceland?

A jar of spilled over change symbolising pensions in Iceland

Much like signing up with a trade union, this usually happens when you begin your first day of work or before. Often an employer will have a recommended pension fund, but you can choose to go with any. 

You can also have a managed private pension set up through your bank. 

Employee Private Pensions

A person depositing some money in a piggy bank symbolising pensions in Iceland

As an employee, you must make a minimum 4% contribution of your wage to your pension fund. This is deducted from your monthly salary before tax. In most cases, this is done for you when your salary is processed each month.

An additional private pension can be set up which allows the employee to sacrifice up to an additional 4% of their gross salary into their pension pot each month.

And, though the policies vary from company to company, the employer usually offers to contribute an additional 2% to your pension should you set up a private pension.

What Are the Main Industries in Iceland?

A fishing ship navigating the seas around Iceland

Iceland in the past was traditionally a nation that relied on fishing. Modern-day Iceland has expanded beyond that

There is still a strong fisheries sector, but there are several other strong economic sectors, including; tourism, software and development, biotech, food technology, aluminium processing, geothermal energy production, genetics research, pharmaceuticals and many more. 

Iceland is also experiencing a boom in its gig economy thanks to an influx of remote workers who have come to experience the country’s natural attractions while maintaining their income through short term contracts.

How Swapp Agency Can Help 

A Swapp Agency infographic of business culture in Iceland

When it comes to all business-related matters in Iceland, Swapp Agency can assist you. 

Swapp Agency’s foundation purpose is to find people who work in Iceland and connect companies with skilled potential employees. In doing so, they have accumulated an extensive pool of knowledge, connections and resources that are invaluable for anyone considering a venture in Iceland. 

If you are a company looking to hire some freelancers in Iceland, Swapp Agency has already vetted and curated the best the market has to offer. If you are a freelancer looking to partner with some incredible international companies, Swapp Agency can connect you to work that is perfectly matched to your skillset. 

Perhaps you have a project you need to get off the ground in Iceland, and outsourcing an element will enable you to save costs and gain valuable time. 

Maybe you would like to investigate the possibility of relocating to Iceland and want to test the waters with a job swap.

Everything from visa support to recruitment to legal services falls under the umbrella of what Swapp Agency can do and excels at. 

Conclusion

Tjornin pon by Reykjavik on a blue sky day

As a foreigner who has lived and worked in Iceland for over half a decade, I can honestly say that as a nation, it has some of the best working conditions I have ever experienced. 

I am as dubious as anyone when reading online materials about the conditions of working abroad, but the reality is that Iceland wouldn’t consistently rank so highly for its business culture if there wasn’t some truth to that. 

If you ever get the chance to spend some time working in Iceland, take it. You won’t be disappointed. 

ABOUT SWAPP AGENCY

Swapp Agency is an innovative recruitment firm in Reykjavik that focuses on helping people find jobs and companies to fill their openings in Iceland.

Swapp offers a range of services to their clients in operational supports.

Contact us

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