The Commercial Federation of Iceland (LÍV) has signed collective wage agreements with SA, The Confederation of Icelandic Enterprise, and FA, The Icelandic Federation of Trade, valid until the end of January 2028. The agreements will be put to a vote by members of Félag verslunar- og skrifstofufólks (FVSA) from Monday, 18th of March, at 10:00 am until 12:00 noon on Thursday the 21st of March 2024.
A link to ballots will be available on www.fvsa.is when the voting begins.
See VR and SA wage agreement here
See VR and FA wage agreement here
See a special agreement for employees of gas stations here (Icelandic only)
English translation of the wage agreements will be published soon.
Objective of the agreements
The main goal of these agreements is to contribute to the reduction of inflation and interest rates,, which is a matter of great interest to households and companies. Furthermore, the aim of the agreement is to increase the purchasing power of wage earners, create predictability in the economy, reduce inflation expectations and strengthen the competitiveness of the Icelandic economy.
This agreement also stipulates a productivity increase for all employees, which is based on measured productivity, and a purchase rate increase on the purchase rate of collective agreements.
Wages
Wages take a proportional increase during the contract period, with a minimum ISK increase, as stated:
Salary-related items increase correspondingly.
December- and vacation bonuses
The December bonus for each calendar year based on full-time employment is:
Holiday bonus for each holiday year (May 1 to April 30) based on full-time employment is:
Increased vacation
As of 1 May 2025, there will be a holiday entitlement which reads (due to leave taken in the holiday year commencing 1 May 2026):
Productivity and purchasing rate increases
Government actions
In connection with the signing of collective agreements, the Government of Iceland has presented an action package of ISK 80 billion, which supports the goal of increasing the purchasing power of workers.
The government's actions stipulate, among other things:
Other matters
A special chapter on remote work is now part of a collective agreement that better defines what is included in such a work arrangement and stipulates that a written agreement must be made on regular remote work. A telecommuting agreement must, among other things, stipulate that each employer compensates or pays direct costs resulting from remote work and provides workforce for appropriate technical assistance.
Employees now have the right to devote up to 16 daytime working hours per year to attending professional courses without a reduction in salary.
Employees who complete vocational training in trade and services or receive confirmed skills with a professional certificate are now entitled to request a review of their salary and its composition.
It will now be permitted to elect three union representatives within a company if the number of members exceeds 120 in the same workplace. Union representatives also get an increased right to attend courses without a reduction in pay.
A clause in the collective agreement stipulates the importance of employees being able to disconnect outside of defined working hours, in order to, promote a healthy working environment. Employers and staff must agree on normal standards.
Conditional clauses
In order to strengthen the objectives of the collective agreements, a special wage and conditions committee shall be set up, made up of SA representatives and representatives nominated by the negotiation committees of the ASÍ member companies that are responsible for the common contract conditions.
The task of the committee is to monitor the progress of those factors in the economy that can affect the objectives of the agreement, make a formal assessment of the conditions of the collective agreement and, as the case may be, negotiate a response to the failure of the conditions or prerequisite.
In September 2025, a formal position must be taken on the following assumptions:
In September 2026, a preliminary position must be taken on the following assumption:
Prerequisite failure
If the wages and conditions committee comes to the conclusion that the prerequisite of the agreement have not been met. A response must be negotiated that has a positive effect on the progress towards goals that the parties to the agreement have set for themselves regarding lower inflation, inflation expectations, a reduction in the key interest rate and improved benefits for workers and improved competitiveness of the Icelandic economy.
If an agreement cannot be reached on a response to a breach of the prerequisites, the contracting parties have the right to terminate the contract in the following manner:
Special wage agreements
An amendment was made to the special wage agreement between LÍV and SA regarding staff in pharmacies, which stipulates that in those pharmacies where special footwear is required at work, the employer must provide permanent staff with one pair of shoes per year.
A change was made to the special wage agreement between LÍV and SA for the reception staff, which stipulates that trips to and from the workplace in the capital area will be paid for by the employer, during the time that the buses are not running. The same rule applies in other urban areas where public buses run from morning to night every day of the week. The payment is 1,975, but the amount must be updated at the same time as general salary increases according to the consumer price sub-index 07322 taxi (227.1).
Link to a calculator to see potential financial impact of the collective agreement here
Please note that this is a translation, in matters of dispute, please refer to the original in Icelandic.