Posted workers

Duty to provide information

Act No. 45/2007 applies to companies (service companies) which are established in another EEA Member State, another EFTA State or the Faroe Islands and which post workers to Iceland on a temporary basis in connection with the provision of services in any of the following ways.

  1. Workers are posted to Iceland by the company and work under its direction in connection with a contract with a user undertaking covering the provision of services in Iceland;
  1. Workers are posted to Iceland by the company to its branch or to a company in Iceland owned by the same corporate group, or
  2. Workers are posted to Iceland by the company and are hired out in return for a fee to carry out work at the workplace of a user undertaking and under its direction. This refers to temporary-work agencies, and therefore Act No. 45/2007 also applies to temporary-work agencies.

A further condition is that a contractual relationship shall exist between the company and the worker during the time when he or she works in Iceland. Consequently, the Act does not apply to work done by independent contractors.

The Act prescribes the duty of a company intending to provide services in Iceland for a total of more than ten working days in each twelve-month period to provide the Directorate of Labour with information on, amongst other things, the provision of the services and a survey of the workers who will be working in Iceland under the company’s auspices.

Exemption from service companies’ obligation to provide information applies in cases involving services that consist of specialist assembly, installation, monitoring or repairs of equipment, which is not intended to take more than four weeks in each twelve-month period; in such cases the company is not required to register.

  • In the event of doubt as to whether a service company should report to the Directorate of Labour, the Directorate shall in all cases be contacted for guidance.

Posted workers’ terms of service

During the time when posted workers are working in Iceland, Icelandic law applies to their terms of service. This includes the Working Terms and Pension Rights Insurance Act, No. 55/1980, as regards minimum wages and other wage-related issues, overtime payments, the right to vacation pay, maximum working hours and minimum rest periods. The Act specifies that wages and other terms of service negotiated by the organisations of the social partners are to be minimum terms. Thus, Icelandic collective agreements lay down minimum terms for foreign workers who are posted to Iceland on a temporary basis during the time that they work in Iceland. Furthermore, these workers are entitled to wages during absence from work due to illness and in consequence of accidents while they are working in Iceland in connection with the provision of services.

  • In order to ensure that foreign workers’ terms of service are in accordance with Icelandic collective agreements during the periods in which they work in Iceland, the Directorate of Labour requests to have copies of the employment contracts of workers posted in Iceland.

Terms of service and entitlement to sick-leave do not, on the other hand, have to be in accordance with Icelandic law in the case of the first assembly and/or first installation of a product which forms part of a contract on the provision of the product and is necessary in order to begin using the product and is carried out by professional or specialist employees of the company, if the period during which the worker is in Iceland does not exceed eight days.


If a company provides a service in Iceland for a total of more than four weeks in any twelve months, it shall have a representative in Iceland. The representative may be one of the company’s workers who are temporarily employed in Iceland. It shall not be necessary to nominate a representative if fewer than six workers are normally working in Iceland under the company’s auspices. The company’s representative shall represent it and be responsible for providing the authorities with information according to Act No. 45/2007.

User undertakings

An Icelandic user undertaking that makes use of the services of a foreign service company shall be obliged to request a written confirmation that it has discharged its duty to provide information to the Directorate of Labour. If the service company does not comply with the user undertaking’s request, the Directorate of Labour shall be notified of this, and shall also be given information on the company’s name, the name of its official representative, its address in its home state and the type of service to be provided.

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