Am I entitled to annual leave?
Yes — every employee is entitled to annual leave. The minimum is 24 working days a year plus holiday pay of 10.17% of all wages. This is set out in Holiday Act no. 30/1987, and collective agreements add to it. Leave accrues over the holiday year, 1 May to 30 April, at two days for each month worked. On the general market (SGS/SA) the right grows with seniority: 25 days and 10.64% after age 22 and six months, 28 days and 12.07% after five years with the same company, and 30 days and 13.04% after ten years. The myth many believe: that holiday pay is a "bonus" on top of wages. It is not — it is earned pay you are owed whether you take the leave or have it paid out. Untaken leave at the end of employment must always be paid.
📋 The rules
- Minimum leave is 24 working days a year with holiday pay of 10.17% of all wages (Holiday Act no. 30/1987). This is an inviolable minimum.
- Leave accrues over the holiday year 1 May – 30 April, at two days for each month worked, and holiday pay is calculated at each payment.
- On the general market: 25 days and 10.64% after age 22 and six months' service; the right grows with seniority at the same company.
- After five years with the same company: 28 days and 12.07%; after ten years: 30 days and 13.04% holiday pay (SGS and SA agreement).
- Untaken leave must be paid at the end of employment. Holiday pay is earned pay, not a bonus — you are owed it whether you take the leave or not.
🔓 Exceptions
- Collective agreements can grant more than the statutory minimum, both more days and a higher holiday-pay percentage by sector and seniority.
- Seniority for extra leave often counts continuous service at the same company; after five years you keep part of the right even if you change jobs.
- Illness during leave can give a right to postpone the leave days if properly notified — leave is rest, not sick leave.
⚠️ Penalties & fines
The right to leave is protected by mandatory law: a contract giving less than 24 days or 10.17% holiday pay does not hold, and the employee has a claim to the difference. The most common dispute is the payout of untaken leave: at the end of employment all earned but untaken holiday pay must be paid, and if the employer fails to do so the employee — with union support — can collect the claim with default interest. The hidden cost for employees is treating holiday pay as a bonus and not checking whether it shows up correctly on the payslip; it is earned pay that accrues whether the leave is taken or not. For employers the risk is undercounting the percentage by seniority — 12.07% after five years and 13.04% after ten — and thereby owing holiday pay that later surfaces at an audit or on leaving.
📎 Official sources
- Alþingi (Parliament) · Holiday Act no. 30/1987 →
- Starfsgreinasamband Íslands (SGS union) · annual leave →
- ASÍ (Confederation of Labour) · labour law portal (leave) →
❓ Frequently asked
How many days of leave am I entitled to?
The minimum is 24 working days a year under Holiday Act no. 30/1987, accruing at two days for each month worked. Collective agreements raise the right with seniority — up to 28 days after five years and 30 days after ten years with the same company.
How much is holiday pay?
Holiday pay is at least 10.17% of all wages and is calculated at each payment. The percentage rises with seniority under the collective agreement: 10.64% after age 22 and six months, 12.07% after five years and 13.04% after ten years with the same company.
When is the holiday year?
The holiday year runs from 1 May to 30 April, and leave accrues over that period at two days for each month worked. The leave built up in one holiday year is then taken in the next, unless a different arrangement is agreed.
Do I get untaken leave paid at the end of a job?
Yes, untaken leave must be paid out at the end of employment, because holiday pay is earned pay and not a bonus. If the employer fails to do so, the employee can collect the claim, with union support and, where applicable, with default interest.
Can I postpone leave if I fall ill during it?
Yes, illness during leave can give a right to postpone the leave days if properly notified and backed by a medical certificate. Leave is meant as rest rather than sick leave, so days lost to illness can be moved to later under the rules of the collective agreement.
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