Collective redundancy

Icelandic Law no. 62/2000 apply to collective redundancies. These are dismissals by the employer of permanent employees for reasons not related to each of them individually and when the number of employees dismissed in a 30-day period is a certain number. Collective redundancies must be reported to the Directorate of Labour by the employer and the termination of the employment of those who were terminated will occur no later than 30 days after the notice is received by the Directorate of Labour.

Before it occurs, an employer considering collective redundancies must consult with union shop steward in order to find ways to avoid redundancies as much as possible and reduce their consequences. Where there are no shop stewards, the employee representatives must be consulted.

The shop stewards shall then have the right to receive relevant information about the proposed layoffs, i.e. the reason, the number of employees who will be laid off and when the layoffs will take place.

A collective dismissal is considered a collective redundancy if the number of permanent employees laid off in a 30-day period is:

  • at least 10 employees are laid off in companies with 16-100 employees
  • at least 10% of employees in companies with 100-300 employees
  • at least 30 people in companies with 300 employees or more

Thus, it is not considered a collective redundant if all employees in a company with fewer than 16 employees are dismissed.