Am I entitled to overtime pay?
Yes — work outside daytime hours or beyond a full working week is paid as overtime. On the general market overtime pay is 1.0385% of monthly wages per hour, which for general workers equals an 80% premium on the daytime rate (SA, collective agreements). For general workers overtime generally starts after an 8-hour day or beyond a 40-hour week; for craft and technical workers it is measured against 36 active hours a week with overtime 1 and 2, and for shop and office staff only once a full month's daytime hours are worked. The myth that costs money: that "averaged pay" or a fixed monthly salary means overtime is included. It takes a clear agreement — otherwise the employee is owed overtime on top. Work in meal and coffee breaks during daytime hours is also paid as overtime.
📋 The rules
- Overtime is work outside daytime hours as defined in the collective agreement, or work beyond full daytime hours per day, week or month.
- Overtime pay is 1.0385% of monthly wages per hour. For general workers that equals an 80% premium on the daytime hourly rate.
- For general workers overtime generally starts after an 8-hour day (or 40-hour week); for craft workers it is measured against 36 active hours a week with overtime 1 and 2.
- For shop and office staff overtime is paid only once a full month's daytime hours are worked (167.94 hrs shop, 159.27 hrs office); evening pay applies until then.
- Work in meal and coffee breaks during daytime hours is paid as overtime. Full daytime hours on the general market have been shortened to up to 36 active hours a week.
🔓 Exceptions
- It is permitted to agree averaged pay or to calculate overtime on lower wages than total pay — but it takes a clear agreement, otherwise the employee is owed full overtime.
- Shift work follows special rules with shift premiums (33%, 45%, 55% and so on) instead of ordinary overtime outside daytime hours.
- Pay above the rate (agreed over-rate) on daytime work does not necessarily form the base for calculating overtime if that is specifically agreed.
⚠️ Penalties & fines
Overtime pay is an earned right: where work is done outside daytime hours or beyond a full working week, the employee is entitled to 1.0385% of monthly wages per hour, and a contract that sidesteps that does not hold unless clear averaged pay is agreed. The most common dispute is precisely "averaged pay": a fixed monthly salary does not automatically mean overtime is included, and without a clear clause the employee is owed the overtime on top. Unpaid overtime is a wage claim the union can collect back in time with default interest, and it rests on time records — so logging hours is key for both sides. The hidden cost for employees is not recording time and then being unable to prove the overtime; for employers it is underestimating when daytime hours end and thereby owing premiums that surface later at an audit or on leaving.
📎 Official sources
- Samtök atvinnulífsins (SA employers) · overtime →
- ASÍ (Confederation of Labour) · labour law portal (pay and hours) →
- Starfsgreinasamband Íslands (SGS union) · working and rest hours →
❓ Frequently asked
How high is overtime pay?
Overtime pay on the general market is 1.0385% of monthly wages per hour, which for general workers equals an 80% premium on the daytime hourly rate. It is permitted to agree calculating overtime on lower wages, but without such an agreement the percentage applies to the employee's monthly wages.
When does overtime start?
It depends on the collective agreement. For general workers overtime generally starts after an 8-hour day or beyond a 40-hour week, for craft workers beyond 36 active hours a week, and for shop and office staff only once a full month's daytime hours have been worked.
Is overtime included in a fixed monthly salary?
Not automatically. A fixed monthly salary or averaged pay does not mean overtime is included unless that is clearly agreed in the employment contract. Without such a clause the employee is owed overtime on top of the fixed salary for work outside daytime hours.
Am I paid for working through meal breaks?
Yes, work during meal and coffee breaks in the daytime period is paid as overtime. This applies on the general market, though special rules exist for part-time shop staff, who are paid evening pay for such work rather than full overtime.
Can I collect unpaid overtime?
Yes, unpaid overtime is a wage claim the union can collect on your behalf, where applicable back in time and with default interest. The claim rests on time records, so it is important to log your hours so the overtime can be proven.
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