How much parental leave am I entitled to and what will I be paid?
The entitlement is 12 months in total — 6 months for each parent — and the payment is 80% of average wages, but never more than ISK 900,000 a month in 2026. Under the Act on Maternity/Paternity and Parental Leave no. 144/2020, the leave is split equally: each parent has an independent right to 6 months, and only 6 weeks may be transferred between parents. The payment is 80% of average total wages over a set period, but the maximum payment is ISK 900,000 a month for leave taken from 1 January 2026. Here is a classic out-of-date figure: the cap was long ISK 600,000 and many older sources still quote it — that is wrong today. The Maternity/Paternity Leave Fund at the Directorate of Labour (Vinnumálastofnun) pays, and full payment requires 6 months of continuous work before the birth. The minimum payment is ISK 275,688 for a 50–100% job and ISK 207,708 for a 25–49% job; below 25% you apply for a birth grant instead. The myth that the mother gets almost all the leave is wrong — the 6 non-transferable months lapse if they are not used.
📋 The rules
- Act no. 144/2020: parental leave is 12 months in total, with an independent 6 months for each parent.
- Only 6 weeks may be transferred between parents; the other 6 months lapse if the parent who holds them does not use them.
- Payment is 80% of average total wages, but the cap is ISK 900,000 a month for leave taken from 1 January 2026 (long ISK 600,000).
- The Maternity/Paternity Leave Fund at the Directorate of Labour pays; the condition is 6 months of continuous work in the Icelandic labour market before the birth.
- The minimum payment is ISK 275,688 for a 50–100% job and ISK 207,708 for a 25–49% job; below 25% you apply for a birth grant.
🔓 Exceptions
- Parental leave also applies to first adoption and when a child is taken into permanent foster care, not only to birth.
- Students and people who have worked abroad in the EEA may be entitled to have months excluded from the calculation and thereby raise their payment.
- A sole parent (for example an unregistered father or where the other parent has died) may be entitled to the leave of both parents.
⚠️ Penalties & fines
Parental leave is a right, not a criminal matter, but there are real traps that cost money and time. The biggest is the use-it-or-lose-it rule: the 6 months each parent holds independently — minus the 6 weeks that may be transferred — lapse if they are not taken, and the family then loses leave that cannot be recovered. If people rely on the out-of-date ISK 600,000 cap instead of ISK 900,000, they may under- or over-estimate the payment and end up with a hole in the household budget. If a parent is overpaid by the fund, for example through wrong wage information or through working alongside the leave, the Leave Fund reclaims the difference and can add a surcharge to the claim. If a parent works more than the leave percentage allows, payments are reduced. Failing to submit the application documents on time can also delay matters, because payments do not start until the documents are in. Finally, parents on leave enjoy protection against dismissal, and an employer who breaches it can incur liability for damages.
📎 Official sources
- Althingi · Act on Maternity/Paternity and Parental Leave no. 144/2020 →
- Ísland.is · parental leave, amounts and calculation →
- Directorate of Labour (Vinnumálastofnun) · Maternity/Paternity Leave Fund →
❓ Frequently asked
How much parental leave am I entitled to?
Parental leave is twelve months in total and is split so that each parent has an independent right to six months under Act no. 144/2020. Only six weeks may be transferred between parents, so the months a parent holds beyond that lapse if they are not used.
How high are the parental leave payments?
The payment is 80% of average total wages over a set reference period, but it is never higher than ISK 900,000 a month for leave taken from 1 January 2026. This cap was long ISK 600,000 and many older sources still quote that figure, so it is a common mistake to plan around too low a ceiling.
Can I transfer all the leave to my partner?
No, each parent has an independent right to six months and only six weeks may be transferred between parents. This split is designed to encourage both parents to take leave, and the non-transferable part simply goes unused if the parent does not take it themselves.
How much must I have worked to be paid by the fund?
To be entitled to payments from the Maternity/Paternity Leave Fund you must have been in continuous work in the Icelandic labour market for six months before the birth. The minimum payment is ISK 275,688 a month for a 50–100% job and ISK 207,708 for a 25–49% job, but below 25% you apply for a birth grant instead.
Does parental leave apply to adoption?
Yes, the right to parental leave arises not only on birth but also when a child is adopted for the first time or taken into permanent foster care. Adoptive parents therefore have a comparable right to birth parents, and payments are calculated under the same 80% of wages rule with the same ISK 900,000 cap in 2026.
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