In the Icelandic labour market, the general rule applies that parties to an employment relationship, i.e. employer and employee, are free to terminate employment contracts without having to justify such termination or provide a reason thereto. In some cases, however, there are provisions for certain notification-of-termination protection or limits in laws and collective wage agreements.
The following consist of limits to the dismissal of an employee:
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It is prohibited to dismiss an employee who has notified their employer of their intention to take parental leave or is on such leave, or a pregnant woman or a woman who has recently given birth, unless valid reasons exist. In such cases, the dismissal must be accompanied by a written explanation of the reasons. These reasons must not be related to the employee’s taking maternity leave and/or parental leave or to notification of intended leave. This is addressed in Article 50 of the Act on Maternity/Paternity Leave and Parental Leave No. 144/2020.
An individual who has notified their employer of a pregnancy and intended maternity/paternity leave is protected against dismissal. Most employers respect the employee’s legal position, but in some cases it is important to have proof that the employer received the information, as notification often takes place in a private conversation between two people, which can be difficult to verify. If notification has not already been submitted to the Parental Leave Fund, you can access the pregnancy notification form here.
Notification to the Maternity/Paternity Leave Fund must be submitted no later than 6 weeks before the expected date of birth of the child. The notification form is available on the Maternity/Paternity Leave Fund’s website, see here. The employer must sign this form, as it is used to agree upon or notify the arrangements for the maternity/paternity leave.
It should be noted that the parent who is not carrying the child and is therefore not required under Article 8 of the Act on Maternity/Paternity Leave and Parental Leave No. 144/2020 to take maternity/paternity leave during the first two weeks after the birth of the child does not enjoy protection against dismissal until the employer has been formally notified of the arrangements for the maternity/paternity leave.
Parental leave may be arranged to begin immediately following maternity/paternity leave. It is unpaid leave from work pursuant to Chapter 7 of the Act on Maternity/Paternity Leave and Parental Leave. The employer must be notified of the intention to take parental leave as soon as possible, and no later than 8 weeks before the intended start date of the parental leave.
Application for parental leave can be accessed here.
An employer cannot object to planned parental leave if it is taken immediately following maternity/paternity leave.
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An employee who has notified of the intention of taking bereavement leave, or who is on such leave unless there are valid reasons for doing so, in which case the dismissal must be sent with written reasoning thereto. This is provided for in Article 30 of the Bereavement Leave Act No. 77/2022. (Icelandic only)
Bereavement leave is leave from paid employment, the right to which is established at the moment of the loss of a child younger than 18 years of age.Benefits to parents who are eligible for benefits according to the provisions of the act are provided by the Directorate of Labour. For further details, see the website of the Directorate of Labour. On the website of the Directorate of Labour, bereavement leave is applied for and there is a form which must be filled out by both parties in order to ensure the protection. Should the parties fail to reach an agreement regarding the arrangement of bereavement leave, employees are nevertheless entitled to exercise their right to bereavement leave in one continuous time period from the beginning date of their own choosing.
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The appointed Union Shop Steward enjoys special workplace protection according to Article 11 on Trade Unions and Industrial Disputes No. 80/1938. According to this Act, employers may not terminate the employment of the shop steward as a result of their work as shop steward nor may shop stewards be made to suffer any adverse consequences due to the fact that a union has asked them to undertake shop steward duties for the union. The shop steward shall also have preferential right to employment in the event that the number of employees in a company needs to be reduced.
The shop steward must fulfil his duties to the company. If he does not do so, however, he may be dismissed, but the violations must be several and the employer must have issued several reprimands or admonitions before this is possible to enable the shop steward to remedy his violations or conduct.
In order for the shop steward to enjoy protection, he must have been formally appointed by VR. Each appointment period is two years. -
Workers’ safety representatives and workers’ representatives on the safety committee, elected by employees on the basis of Section II of Act No. 46/1980 on Working Environment, Health and Safety enjoy the same protection as shop stewards.
Safety representatives may not be dismissed due to their work as safety representative or due to their membership in the safety committee. Moreover, they may not be penalised for their membership in the safety committee or in any other manner penalised because they have been entrusted to sit on the committee or been elected as safety representatives. These employees shall have preferential right to employment in the event that the number of employees in a company needs to be reduced.
These employees must fulfil their duties to the company. If they do not do so, however, they may be dismissed, but the violations must be several and the employer must have issued several reprimands or admonitions before this is possible to enable the application of remedial actions or improvement of conduct.
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Article 4 of Act No. 72/2002 on Workers’ Rights in the Event of Transfers of Undertakings states that: Employers are not permitted to dismiss an employee due to changes in ownership of the company, or part thereof, both before and after the change in ownership unless economic, technical or organisational reasons so require which entail changes to the company’s human resources.
This prohibition, however, is not universal, and each case must be examined individually. This rule, for example, does not apply if the change in ownership is due to bankruptcy.
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According to the Act No. 27/2000 on Prohibition on Termination of Employment Due to Family Responsibilities, an employee may not be dismissed solely on the grounds of family responsibilities that he bears. This applies to the duties of the employee as regards children, spouse or close relatives that reside in the same household and clearly require his/her care or guardianship due to e.g. illness or disability.
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It is prohibited to dismiss an employee who has requested changes on the basis of Act No. 150/2020 on the Equal Status and Equal Rights of Women and Men.
This prohibition applies for one year after the corrective measure request has been submitted.
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A new Act on the Protection of Whistleblowers came into force on 1 January 2020. The Act provides for certain protection for employees who provide information on legal infractions or other objectionable conduct practised in the operation of their employer. The protection is on the condition that the employee has followed the provisions of law and follows the rules provided therein. The objective of the Act is to encourage the disclosure of violations of law and other objectionable behaviour in the operations of companies and thereby reduce such conduct. Employees are thereby provided with the opportunity to disclose information and/or share data in good faith as regards violations of law to parties who can ensure the cessation of such violations of law or objectionable conduct.
The protection means that the dissemination of this information is not considered a breach of the confidentiality obligations to which the employee is bound. Such disclosure is not considered criminally punishable or liable for the person in question and cannot lead to administrative consequences or onerous measures against employee rights.
The Act states that in companies employing, as a rule, 50 employees on a yearly basis must, in consultation with employees, establish rules of procedure regarding these laws. The purpose of this is to make it easier for employees to utilise the laws and to make it easier for employers to respond to such dissemination. AOSH is responsible for monitoring that employers establish such rules.
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According to Article 1 of Act No. 80/1938 on Trade Unions and Industrial Disputes, employers, foremen and other representatives of employers are not permitted to attempt to influence the political views of their workers, their attitude to dealing with trade unions or political association or industrial disputes by terminating their employment or threatening such termination. It also prohibits influencing employees through monetary payments, promises of profit or refusal to effect just payments.