Holiday and December bonuses
The collective agreements of BHM member unions contain provisions on holiday and December bonuses.
Such personal allowances are negotiated for each year. The allowance is a fixed amount of króna and does not count towards vacation.
State and City of Reykjavik
Holiday allowance
In the year 2025 60,000 kr.
In the year 2026 62,000 kr.
In the year 2027 64,000 kr.
Holiday pay is based on full-time work during the previous holiday year, but is otherwise calculated proportionally based on work rate and working hours.
December bonus - the state
In the year 2025 110,000 kr.
In the year 2026 114,000 kr.
In the year 2027 118,000 kr.
December bonus - City of Reykjavík
In the year 2025 123,000 kr.
In the year 2026 127,000 kr.
In the year 2027 132,000 kr.
The bonus is proportional if the employee was part-time or worked part of the year.
Municipalities other than the City of Reykjavík
Personal allowance based on 100% employment rate during the contract period is as follows:
May 2025 ISK 59,500
December 2025 NOK 140,000
May 2026 ISK 62,000
December 2026 NOK 145,000
May 2027 ISK 64,000
December 2027 NOK 150,000
General labor market
Employees, other than managers, receive paid December and holiday bonuses in accordance with the main collective agreements of the Confederation of Icelandic Employers (SA) in the general labor market, cf. Article 1. 5 of the agreement between the member associations of BHM and SA.
The holiday allowance for each holiday year (May 1 to April 30) based on full-time work is:
In the vacation year beginning May 1, 2024, the vacation bonus will be ISK 58,000.
In the vacation year beginning May 1, 2025, the vacation bonus will be ISK 60,000.
In the vacation year beginning May 1, 2026, the vacation bonus will be ISK 62,000.
In the vacation year beginning May 1, 2027, the vacation bonus will be ISK 64,000.
The December bonus for each calendar year based on full-time work is:
In the year 2025 110,000 kr.
In the year 2026 114,000 kr.
In the year 2027 118,000 kr.
Absences
The determination of personal compensation under a collective agreement is based on the employee having been employed and paid by the employer during the reference period defined in the agreement. Special rules apply if the employee has been absent due to illness or maternity leave.
Illness
Public sector employees who are off work due to illness and are on sick pay are entitled to December compensation at the same time.
Similarly, an employee who has left their job but has worked continuously for at least 3 months (13 weeks) during the year shall also be paid personal allowance in December, based on working hours and employment ratio. The same applies even if the employee is off work due to illness after the institution's payment obligation ends or for up to 6 months due to maternity leave, cf. Article 1.7.1 in the collective agreements of the member associations of BHM and the state. A similar rule applies in the case of holiday allowance, cf. Article 4.2.2.
For employees in the general labor market, the December bonus is calculated based on the weeks they have been paid. The December bonus is reduced if the employee has used up their sick leave entitlement and has been removed from the payroll. The same rule applies when calculating vacation bonus.
Maternity leave
Public sector employees on maternity leave are entitled to payment of summer leave, personal and holiday allowances, cf. Article 13.2.3 in the collective agreements of the member unions of the Icelandic Labour and Social Security Association and the state. The said allowances must therefore be paid at the appointed time, i.e. in June and December, even if other salary payments are cancelled due to maternity leave.
In the general labor market, however, such a rule does not apply until after one year of employment with the same employer. In that case, absences due to statutory maternity leave shall be counted as working time when calculating December and vacation pay.
The same applies if a woman needs to stop working during pregnancy for safety reasons, cf. the regulation on measures to increase safety and health at work for women who are pregnant, have recently given birth or are breastfeeding, cf. article 1.5.3 of the collective agreement of the member associations of BHM and SA.
Collective agreements for employees
Employee collective bargaining agreements are available for review below in chronological order as far as possible.
- Minister of Finance on behalf of the Treasury - collective agreements:
- Municipalities and the City of Reykjavík - collective agreements:
- Business Association
- Association of Welfare Service Companies SFV - collective agreements:
