The holiday period is from 1. May to 30. April each year and the summer holiday period is 2. May to 15. September.
An agreement between the worker and the employer determines when the holiday is taken and the wishes of the employees are to be complied with, as far as possible. The employer must notify the worker as soon as possible and no later than one month before the start of the holiday when the holiday is to begin. It is therefore a good idea for employees to request in good time when they want to go on holiday.
Employees are entitled to 20 consecutive days of holiday during the summer holiday period, which runs from 2. May to 15. September each year. If the employer requests that the employee take part of the holiday outside the period 2. May to 15. September, the part of the holiday taken outside the aforementioned period or a payment of 25% of the holiday pay shall be extended by 25%. On the other hand, if it is the employee himself/herself that wishes to take leave outside the summer holiday period, there will be no extension of the holiday taken.
When employees retire, all earned and unpaid holiday leave at the end of their employment must be settled with their final paycheck.
Employees need to monitor their holiday rights and make comments if necessary.
Increased holiday rights
From May 1, 2024, the accrual of vacation entitlements for the period from May 1, 2024, to April 30, 2025, for vacations taken in the summer of 2025, changed as follows:
The minimum vacation is 24 working days (two vacation days are accrued for each month worked in the vacation year). Vacation pay is 10.17% of total earnings.
- After 6 months with the same company and having reached the age of 22, or after 6 months with the same company following a secondary school graduation, one is entitled to 25 days of vacation, with vacation pay being 10.64%.
- After 5 years in the same profession, an employee is entitled to 25 days of vacation, with vacation pay being 10.64%.
- Parties may agree that the vacation period each year will be 26 days, with vacation pay then being 11.11%.
- After 5 years with the same company or 10 years in the same profession, an employee is entitled to 27 days of vacation, with vacation pay being 11.59%.
- Parties may agree that the vacation period each year will be 28 days, with vacation pay then being 12.07%.
- Parties may agree that the vacation period each year will be 29 days, with vacation pay then being 12.55%.
- After 7 years with the same company, an employee is entitled to 30 days of vacation, with vacation pay being 13.04%.
The above vacation percentages came into effect on May 1, 2024, and should be calculated on salaries if vacation is calculated at the end of each month on the payslip and paid into the bank.
Students may need to provide confirmation that they have completed a secondary school examination.
If vacation entitlement accrual is in terms of vacation hours or vacation days, the above vacation entitlement is accrued for the summer of 2025. Vacation hours on the payslip increase accordingly.
2026
Starting May 1, 2025, holiday rights will apply to summer holidays taken from May 1, 2026.
The minimum holiday right is 24 working days, with holiday pay calculated as 10.17% of total wages.
- After 6 months in the same company and reaching the age of 22 or 6 months in the same company after completing secondary education, the holiday right is 25 days, and holiday pay shall be 10.64%.
- After 5 years in the same occupation, the employee shall have 26 days of holiday days, and holiday pay shall be 11.11%.
- After 5 years in the same company or 10 years in the same occupation, the employee shall have 27 holiday days, and holiday pay shall be 11.59%.
- Parties may negotiate for 28 holiday days each holiday period, with holiday pay then being 12.07%.
- Parties may negotiate for 29 holiday days each holiday period, with holiday pay then being 12.55%.
- After 7 years in the same company, the employee shall have 30 holiday days, and holiday pay shall be 13.04%.
Parties can negotiate for additional holiday days and increase holiday pay accordingly.
Earned rights due to work in the same company are renewed after three years of work in a new company, provided that this has been confirmed. Granting holiday time in excess of 20 days during the winter is permitted unless otherwise agreed.
Leave instead of December- and holiday bonuses
The employee and the employer may reach an agreement to waive or reduce holiday and/or December bonuses in exchange for time off. Such leave must be granted in the form of whole or half days.
Example: An employee earns ISK 150,000 for full-time work. His daytime wages are therefore ISK 6,922 (150,000/21.67). The holiday bonus is ISK 15.900 in the year 2004. The employee and employer may agree that the employee gets paid two days off for the holiday bonus (ISK 6,922 x 2) in addition to a payment of ISK 2,056, which is the remainder of holiday pay.