Payroll in Iceland

Wages

Minimum wage rates in Iceland are determined through collective agreements.  

• As of 2025, the minimum monthly wage is 425,985 ISK, applicable to employees over 18 who have worked at least six months in one company. 

Certain sectors may have specific wage benchmarks that differ slightly from standard agreements. These benchmarks are established to ensure fair compensation across various industries. 

By gender, a wage gap exists with average annual salaries for men typically exceeding those for women. Efforts to reduce this disparity continue through targeted government initiatives and policy reforms.

Salaries

The overall annual average salary in Iceland is approximately 6,000,000 ISK per year, with monthly earnings varying significantly by position, experience, and region.  

The median monthly salary is estimated to be around 500,000 ISK . 

As your employment partner in Iceland, we can provide you with the latest resources and insights on average employee compensation across various roles and regions, ensuring that you make competitive and compliant employment offers.

Salaries by location in Iceland

• Reykjavík: Known for offering salaries above the national average, particularly in sectors such as finance, technology, and healthcare.
• Akureyri: Offers competitive compensation in industries like tourism, education, and trade, with wages generally reflecting the cost of living.
• Selfoss: While salaries in Selfoss are competitive, certain sectors may offer compensation slightly below the national average, influenced by regional economic factors.

Payroll frequency

In Iceland, employees are typically paid on a monthly basis, with salaries disbursed on a fixed, predetermined date specified in the employment contract or workplace regulations. Icelandic labor law mandates that remuneration must be paid at least once a month, ensuring regular income for employees. 

In addition to regular monthly wages, employees receive additional compensation such as annual bonuses or incentives. These payments are often stipulated in collective bargaining agreements or internal company policies and are disbursed according to the terms outlined therein. Employers are required to adhere to the agreed-upon schedules for these payments to maintain compliance with labor regulations.