Great talent is everywhere. Well known for its stunning volcanic landscapes, Iceland is also home to a young, dynamic, and highly-skilled talent pool. But sometimes, the problem is legally hiring the talent that you need.
An Employer Of Record (EOR) can be ideal for companies looking to hire and pay talent around the world without the legal hassle.
This article will walk you through the reasons, processes, and advantages of hiring employees in Iceland through an EOR.
Why Hire Talent in Iceland?
Over the past decade, Iceland has made headlines when it comes to technological development and green energy innovation. It is home to some of the largest data centers in the world, serving global companies with high computing requirements.
As a result, there are many innovative and highly-skilled IT professionals based in Iceland. There is a robust community in data center and cloud technologies, blockchain (backed by local policies), and green energy.
Another advantage of hiring in Iceland is the country’s multilingual workforce. In addition to Icelandic, most locals speak fluent English and many have a working knowledge of other European languages.
Finally, Iceland ranks fourth on the global happiness index. Hiring happy employees will be an asset to your team’s morale and productivity.
How Can I Legally Hire an Employee in Iceland?
Things can get tricky if you want to hire talent legally in Iceland on your own. Essentially, hiring in Iceland requires companies to set up an entity based in Iceland. The process can be a legal nightmare and is only worth it if you are going to set up long-term operations in the country.
This is where EORs come in handy. An EOR acts as a broker for hiring talent outside of the country you legally operate in. It will already have an entity set up and the legal framework in place to do the hiring for you. Meanwhile, you will manage the relationship with your employees.
Going through an EOR is possibly the easiest way to hire talent in Iceland without all the legal hassle.
What Does an EOR Do?
Simply put, EORs take care of the legal procedures while you manage your employees. The legal frameworks for hiring in Iceland can be quite different from those in the US and Canada. EORs handle worker visas and work permits, employment contracts, payroll, local compliance, termination, and any other HR services.
For example, did you know that there is no national minimum wage in Iceland? Instead, each industry negotiates the minimum wage separately under a collective agreement. An EOR can help you understand what you are required to pay your employees in Iceland and so much more.
Contracts and Documentation
An EOR will handle the tedious administration involved in preparing and collecting contracts and documentation. This includes employment offers, signed contracts, banking information, and more so you can focus on growing your business.
Employee Insurance and Benefits
When the world is your competition, it pays to incentivize new and existing hires with attractive benefits like medical, dental, vision and life insurance, and retirement savings plans. A comprehensive EOR will have those kinds of benefits built into its service offering.
Vacation and Public Holidays
Employees in Iceland are entitled to 24 working days of annual paid annual leave (2 days per month of service). Companies must offer leave during the summer months unless otherwise agreed upon. There are also other types of leave, such as parental leave. An EOR can keep track of all this and the corresponding payments for you.
In addition, Iceland has several paid statutory holidays that companies are obligated to provide to their employees.
- January 1: New Year’s Day
- Thursday, Friday, and Monday of the Easter weekend: Easter (Western Christian)
- First Thursday after April 18: First Day of Summer
- May 1: Labor Day
- 39 days after Easter Sunday: Ascension Day
- Seventh Sunday after Easter and Monday thereafter: Whitsun and Whit Monday
- June 17: Icelandic National Day
- First Monday in August: Commerce Day
- December 24, 25, and 26: Christmas
- December 31: New Year’s Eve
Taxes
Both employers and employees in Iceland pay a range of taxes or social security contributions. For employers, these amount to just over 22% of an employee’s salary on average. These include the provident fund, pension, insurance, sick leave, training, and more.
This can be a tedious process but it is necessary to ensure you are paying employees in a compliant manner. Thankfully, an EOR can handle the logistics and ensure that payroll is processed properly and per local regulations.
What Are Your Responsibilities?
While the EOR handles everything related to legal and HR processes, many aspects of the company’s workings fall under your purview. So, you take care of your staff in the same way you would with your local hires. That means search and recruitment, company onboarding, training, management, day-to-day communications, progress tracking, and so on, should be managed by you.
While the relationship with the employee won’t be all that different through an EOR, you need to be clear with your staff on the legalities of their contracts. Of course, retention is also up to you. You will need to consider how you help your staff grow and succeed in their new roles at your organization.
What Are the Advantages of Going Through an EOR in Iceland?
Using an EOR to hire talent in Iceland will save you time, reduce costs, and mitigate risks.
Setting up a legal entity for hiring in Iceland is time-consuming and frankly, can be a huge headache. Since the EOR is already set up to hire employees in the country, it will be faster and easier to start hiring right away. In fact, the process won’t be that much different from hiring locally.
The set-up and HR costs can also be quite high, so going through an EOR can save you money.
Most importantly though, you’ll be mitigating the risks associated with non-compliance. Because EORs have extensive experience in navigating complex local HR policies, you won’t have to worry about any issues arising from improper hiring practices.
How Do I Choose the Right EOR for Me?
There are a few key things to consider when you are selecting an EOR in Iceland.
- Local Experience: Does the EOR have experience hiring in Iceland? As discussed earlier, one of the biggest advantages of hiring an EOR is the assurance of compliance. Often, this requires a lot of experience, so check the EOR’s track record in the country.
- Service Scale: Do you need someone who offers a full suite of services? If you want happy employees that you can retain in the long run, then you may need to offer them benefits like insurance and other welfare. Some EORs have systems in place for this but others may not. Also, certain EORs will offer consulting services to optimize your global hiring practices.
- Data and Systems Security: Protecting intellectual property in a remote working environment is critical. Ensure your vendor of choice has a specific agreement outlining how they plan to keep your sensitive information safe and secure.
- Collaboration: Ensure your vendor’s approach to communication and collaboration with its clients is aligned with your organization’s approach. Love having a point of contact person? Perhaps all you need is access to a Slack channel so you can quickly reach your vendor. Whatever your communication style, ensure your vendor can meet your needs.
Borderless: The Employer of Record your Company Needs
Need an EOR? Look no further than Borderless. We can help you hire employees in Iceland – giving you access to the local talent pool without the headaches of traditional global expansion.
Book a demo today and see how we can help you quickly and easily hire, onboard, pay, and retain the Iceland-based talent your organization needs.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
