10.6092/issn.1561-8048/10945
The Icelandic response to the COVID-19 has been based to follow evident based measures to curb the spread of the virus and save lives at the same time as the Icelandic Government tries to keep the economy afloat. Several masures have been adopted to mitigate the economical and societal effects of the outbreak. The Social Partners have played a substantial role in the design of the measures taken by the Government.
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Elín Blöndal
Italian Labour Law e-Journal
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COVID-19 and Labour Law: Iceland
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National Reports
2020-05-11
2020-05-08
2020-04-15
2020-09-15
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Elín Blöndal
2020/05/11
10.6092/issn.1561-8048/10945
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COVID-19 and Labour Law: Iceland
https://illej.unibo.it/article/download/10945/10820
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COVID-19 and Labour Law: Iceland                                                  Italian Labour Law e-Journal
Elín Blöndal                                                                     Special Issue 1, Vol. 13 (2020)
elinblondal@bifrost.is                                             Covid-19 and Labour Law. A Global Review
                                                                                               ISSN 1561-8048
                                                                https://doi.org/10.6092/issn.1561-8048/10945




                   COVID-19 and Labour Law: Iceland
                            Elín Blöndal*

                                                 Abstract
     The Icelandic response to the COVID-19 has been based to follow evident based measures to
     curb the spread of the virus and save lives at the same time as the Icelandic Government tries
     to keep the economy afloat. Several masures have been adopted to mitigate the economical and
     societal effects of the outbreak. The Social Partners have played a substantial role in the design
     of the measures taken by the Government.



     Keywords: Covid-19; Labour Law; Unemployment; Unemployment benefits; Homework;
     Telework; Social partners.




 1. General Framework.

    As a result of the outbreak of the COVID-19 an emergency phase, the existence of highest
 alert level, was declared by Icelandic authorities on March 61. The response has been based
 on evidence-based measures that have a successful track record, such as quarantine at home
 (self-quarantine), isolation for infected persons, early diagnosis of infection and effective
 information disclosure to the public. A ban on gatherings for 100 people or more was
 imposed and on March 24, a stricter measure was enforced with a ban on gatherings for 20
 people or more until May 42.
    Grocery stores and pharmacies may still allow up to 100 people inside at once, provided
 space allows for a 2-metre distance between individuals. Authorities ordered the closure of
 swimming pools, gyms, bars, clubs, slot machines, and museums as of midnight on March
 23. Operations and services that require close contact between individuals or risk close
 contact were also prohibited. This includes sports clubs, hairdressers, beauty salons, and
 massage parlours3. Universities and junior colleges (menntaskólar) have been closed, while
 primary schools and preschools have remained open, but subject to stricter measures.4 These



 *
   Adjunct at Bifröst University, Iceland. Self-employed expert, consultant & Business owner.
 1 The declaration was made by the Iceland´s Chief Epidemiologist and the National Commissioner of the
 Icelandic Police‘s Department of Civil Protection and Emergency Management.
 2 https://www.covid.is/categories/icelands-response
 3 https://www.icelandreview.com/ask-ir/whats-the-status-of-covid-19-in-iceland/
 4 https://www.icelandreview.com/ask-ir/whats-the-status-of-covid-19-in-iceland/
    Elín Blöndal                                                                     Italian Labour Law e-Journal
                                                                                    Special Issue 1, Vol. 13 (2020)
                                                                       Covid-19 and Labour Law. A Global Review
                                                                                         Section: National Reports




measures have meant limited services and hours in many primary schools and preschools.
These measures will be lifted in stages, starting on May 45.
    Since March 19 all Icelandic residents that enter the country are obligated to go into 14
days of quarantine6 and from April 24 all foreign travellers entering Iceland are required to
present a Public Health Passenger Locator form and undergo a 14-day quarantine upon
arrival.
    Clearly, the economic impact of the COVID-19 in Iceland will be considerable. The
effects are already visible in many places, including in tourism, commerce and industry.
Demand has been declining rapidly, tourists are almost completely gone, and household
consumption is declining. The government's struggle has been to curb the spread of the virus
at the same time as they try to keep the economy afloat. The Icelandic economy was already
in a downturn when the virus epidemic struck in Iceland7. The total unemployment rate in
March was 9,2% and had then increased from 5,0% in February.8 The Directorate of Labour
expects that unemployment will grow to 16,9% in April but will decline something in May
due to increased activity in certain areas of the economy9.



2. Regulatory Interventions to Support Affected Businesses and Workers.

   Several masures have been adopted by the Icelandic Government to mitigate the
economical and societal effects of the COVID-19 outbreak. The first-phase response
measures, announced 21 March, had primarly the aim to counteract unemployment and
temporary loss of personal income10. The second phase was announced 21 April, focusing
on support and protections for small enterprises, innovation and vulnerable groups11.
   Among the first measures taken is a legislation allowing companies to reduce the
employment rate of workers down to 25%, due to a temporary contraction in the employer's
activities, the wages from the employer being paid in conjuction with and not reducing


5  See https://www.government.is/news/article/2020/04/14/Restrictions-to-be-gradually-lifted-starting-4-
May-/
6   Transportation (i.e. airline and freighter) crews are excepted from this rule. See
https://www.icelandreview.com/ask-ir/whats-the-status-of-covid-19-in-iceland/
7 Economic growth was slow and unemployment was growing.

See: https://www.si.is/frettasafn/vidtaek-efnahagsleg-ahrif-covid-19
8 In February 2019 the total unemployment rate was 3,1%.

https://vinnumalastofnun.is/frettir/2019/03/skrad-atvinnuleysi-i-februar-var-31percent
9   https://www.vinnumalastofnun.is/media/2529/mar2020skyrsla.pdf. The final figures concerning
unemployment in April have not been publised yet.
10 This was especially made through the introduction of partial unemployment benefits, access to third-pillar

(private) pension savings, deferral of corporate tax payments, and operational loan facilities for companies. See:
https://www.frettabladid.is/frettir/bein-textalysing-rikisstjornin-bregst-vid-efnahagslegum-ahrifum-covid-
19/
11 Among these measures are dedicated support to jobseekers and vulnerable groups, immediate support loans

for small and medium-sized enterprises, creation of summer jobs and summer term for students and a one-off
bonus to front-line healthcare workers, who have been under additional strain and are at elevated risk of
contagion, to reflect their service.
See: https://www.government.is/news/article/?newsid=5a7b7cb1-83f7-11ea-9467-005056bc4d74

https://doi.org/10.6092/issn.1561-8048/10945                                                                      2
     Elín Blöndal                                                                     Italian Labour Law e-Journal
                                                                                     Special Issue 1, Vol. 13 (2020)
                                                                        Covid-19 and Labour Law. A Global Review
                                                                                          Section: National Reports




employment benefits12. Self-employed and part time working students are also covered by
the legislation subject to certain conditions13. The overall aim of this legislation is to
encourage businesses to keep employees on their payrolls, rather than lay them off, and to
protect the employment relationship14. However, to avoid insolvencies, increased support
for companies was introduced on 28 April, providing the opportunity to apply for temporary
government support15 to pay a portion of salary costs for any staff member during their
notice period16.
    As law and collective agreements concerning sick leave do in general not apply to workers
in quarantine without being infected, employers who have paid wages and employees who
have not received wages in this situation can according to new legislation17 apply for
Governmental support/payments to the Directorate of Labor Office. The same applies to
self-employed persons. Public employees have been guaranteed the right to payments under
the same circumstances18.
    In the public sector specifically, amendments have been made to the Civil Defence Act
stipulating that Public bodies may temporarily assign employees to changed duties and to
transfer employees between establishments and public bodies to carry out priority tasks in
crisis situations. Employees keep unchanged pay in such circumstances19.
    Before the epidemic, homework/telework was not very common in Iceland but this has
changed swiftly and substantial number of workers are now working from home, at least
partly. Children have in many instances also been at home due to the situation. The emphasis
in recent collective agreements20 on balance between work and family life, especially with the

12 Act No. 23/2020, on amendments to the Unemployment Insurance Act and the Act on the Guarantee Fund
(reduced employment rate). It is provided that the previous employment rate must have fallen by at least 20%
and the employee has kept a mininmun 25% employment rate. However, wages from the employer and total
unemployment benefits may never exceed a certain maximum amount per month12 and shall not exceed 90%
of the average total wage of the employee. See: https://www.althingi.is/altext/150/s/1173.html
13 Students are covered by the Act if they have taken on a reduced work rate. Self-employed persons may qualify

for employment benefits, even though they have not reported an end of operation to the Icelandic Revenue if
sufficient reductions have been reported as well as a change in the calculated. remuneration. See:
https://www.althingi.is/altext/150/s/1173.html
14 https://www.government.is/news/article/?newsid=afa0d410-6b79-11ea-9462-005056bc4d74. Employer´s

organizations have taken on to encourage companies that have temporary problems due to the crisis to take
advantage of this rather than resort to dismissals. See: https://www.althingi.is/altext/150/s/1173.html
15   This government support will be available from 1 May through 30 September. See:
https://www.government.is/news/article/2020/04/28/Government-of-Iceland-announces-increased-
support-for-companies-and-extension-of-part-time-unemployment-benefits/
16 According the Government’s announcement these amendments will include the employees concerned having

priority access to jobs when business activities resume, and they will retain certain specified accrued rights from
that employer. However, it is still unclear how this will be implemented.
17 Act no. 24/2020, on temporary payments for wages of individuals subject to quarantine in accordance with

instructions         from         the       health        authorities        without          being        infected.
https://www.althingi.is/altext/150/s/1174.html
18 According to declarations made by the Minister of Finance and Economy and the Association of Icelandic

Local Authorities, public employees will be paid wages if they quarantine under these circumstances and this
measure will not impair their sickness rights.
See https://www.althingi.is/thingstorf/thingmalalistar-eftir-thingum/ferill/?ltg=150&mnr=667
19 Act No. 27/2020, amending the Civil Defence Act No. 82/2008. This provision expires on 1 January 2021.

According the the law, an employee is exempt from this duty if his or her health, or any other person he is
repsonsible for, is such that his safety and health are endangered by entrusting him with such duties.
20 https://www.sa.is/media/26490/lifskjarasamningur-2019-2022.pdf



https://doi.org/10.6092/issn.1561-8048/10945                                                                       3
     Elín Blöndal                                                             Italian Labour Law e-Journal
                                                                             Special Issue 1, Vol. 13 (2020)
                                                                Covid-19 and Labour Law. A Global Review
                                                                                  Section: National Reports




reduction of working time, has not been in the focus. Rather one could describe the situation
in some instances as a merger of work and family life. However, it can be assumed that these
changes will to some extent be permanent, and evidently worker’s rights regarding telework,
now according to collective agreements, have to be followed up more closely than is currently
the case21.


3. The role of Social Partners in the design of the measures.

    The Social Partners have played a substantial role in the design of the measures taken by
the Government and seem in general to approve them. This applies to the Economic
Packages which have been announced by the Government.
   Some measures have been taken on the basis of a joint declaration by the Government,
The Confederation of Icelandic Enterprise (SA) and The Icelandic Confederation of Labour
(ASÍ), on the social need to slow the spread of the COVID-19 virus22. This applies e.g. to
measures concerning payment of wages to workers in quarantine. Clearly, there has however
not been scope for traditional consultation given that this is an unprecedented situation. The
opposition has supported the Governmental measures but at the same time called for greater
actions23 and critisised the Government for lack of consultation before issues have formally
been addressed in the Parliament (Alþingi)24.




   Copyright © 2020 Elín Blöndal. This article is released under a Creative Commons
Attribution 4.0 International License




21  The Framework agreement of the the European social partners ETUC (and the liaison committee
Eurocadres-CEC), UNICE, UEAPME and CEEP on telework, from 16 July 2002, was implemented in Iceland
by collective agreements:
https://www.asi.is/vinnurettarvefur/vinnurettur/rettindi-og-skyldur/radningarsambond-stofnun-og-
edli/fjarvinna/
22 https://www.althingi.is/altext/150/s/1131.html
23 See e.g. https://www.visir.is/g/2020390902d/stjornarandstadan-gerir-miklar-athugasemdir-vid-adgerdir-

rikisstjornarinnar
24 See e.g. https://www.althingi.is/altext/raeda/150/rad20200414T150626.html




https://doi.org/10.6092/issn.1561-8048/10945                                                               4
