Hire Employees & Contractors


Compliantly hire your distributed team members in


Person working on laptop

Hiring in


isn't so simple. Borderless can help.

To hire new employees in


, your business must have a local legal entity or an Employer of Record like Borderless in place already. Then there’s the management of local employment compliance, taxes, benefits, payroll, and more. Hiring contractors poses similar challenges.

Borderless handles all of that for you, so you can focus on getting to work with your new team member in


while staying fully compliant with local laws and compliance.

Primary Language



Icelandic krona (kr, ISK)

Payroll Frequency


Public Holidays

14 days

Employer Taxes


Cost of Living Index

$$$$ (8 of 140, 2023)

Statutory Leave

24 days

Sick Leave

24 days

Maternity Leave

6 months

Important: Risks of misclassification

In many countries like


, the treatment of employees and contractors is different. If you misclassify a new team member, you could be subjected to penalties and fines. Let Borderless get this right for you, so you don’t have to worry.

Payment Information

Minimum Wage

There is no minimum wage in Iceland.

Overtime Pay

Standard working hours are 8 hours per day, 40 hours per week. The standard workweek is from Monday to Friday. Overtime is defined as any time worked beyond the normal working day. Employees can work a maximum of 162.5 hours of overtime a month.  Employees are compensated for overtime as follows:

  • 0.875% of the hourly rate, the first 162.5 hours of overtime a month.
  • 1.0385% of the hourly rate, the first 162.5 hours of overtime a month if they work from home.

Overtime payment is not mandatory for managerial roles in Iceland.

Additional Pay

There is no additional pay detail for Iceland.

Payroll Cycle

For Borderless customers, all employee payments will be made in equal monthly installments on or before the last working day of each calendar month, payable in arrears.

Employer Costs & Taxes

  • 11.50%: Mandatory Pension Fund
  • 2.00%: Supplementary (optional) Pension Fund (the employee can elect to supplement their pension by either 2% or 4%, and the employer then is obliged to match this with 2% in either case)
  • 6.10%: Social security contribution (calculated based on the Gross salary + Mandatory Pension Fund + Supplementary Pension fund amounts)
  • 1.55%: Union fee
  • 0.10%: Rehabilitation Fund
  • 10.17% - 13.04%: Annual Vacation Allowance (percentage depends on tenure)

Employee Costs & Taxes

  • 4%: Pension fund contribution
  • 31.45%: On the first ISK 4,188,216
  • 37.95%: On the next ISK 7,569,948
  • 46.25%: On any income over ISK 11,758,159

Employment Information

Termination Process

Contracts with employees may be canceled at any time with sufficient notice. Employers are not compelled to provide an employee a particular reason for being let go.

Notice period

The minimum notice period is 7 days and will be increased according to the length of the employment.

  • 1 week for the first 3 months of the probation period
  • 1 month following the end of probation period
  • 3 months after 6 months of employment

Probation Period

Probations periods are typically capped at three months into the new job.

Severance Details

Severance compensation is not required by law, although unions may bargain for a mutual rate that applies to their members.

Benefits of working in a country abroad

Borderless Benefits Packages in


When the world is your competition, it pays to incentivize new hires and existing alike. Borderless benefits packages typically include:

Medical Insurance
Dental Insurance
Vision Insurance
Life Insurance
Retirement Contributions

Learn how to hire quickly and easily in


Book your demo of Borderless to help you hire, pay, and take care of new employees and contractors in 170+ countries.

Book a demo