Definition of collective redundancies 

Article 1 of the Act on Collective Redundancies stipulates that it applies to the employer's redundancies of permanent employees for reasons that are not related to any of them, when the number of employees dismissed during a thirty-day period is: 

  • At least 10 employees in companies that usually have more than 20 and less than 100 employees at work. 
  • At least 10% of employees in companies that usually have at least 100 employees, but less than 300 employees. 
  • At least 30 employees in companies that usually have 300 or more employees. 

When calculating the number of redundancies according to the first paragraph, the termination of employments contracts of individual employees shall be considered, which is equivalent to collective redundancies, provided that there are at least five redundancies. 


Scope of the legislation

Article 2 of the Act provides for exemptions from the provisions of the Act. The Act on Collective Redundancies does not cover: 

  • Redundancies that are implemented according to employment contracts that are made for a certain period of time or due to special projects, unless such redundancies occur before the contracts expire or the project is completed. 
  • Crew of ships. 

According to Article 3, the provisions of Article 7 and the first paragraph of Article 8 do not apply when the operations of a company are suspended due to a court ruling. However, the employer shall send a notification to the regional employment agency in accordance with Article 7, if so requested. 

Article 4 stipulates that the legislation applies, regardless of whether the decision on collective redundancies is made by the employer themselves, or a company that is in a more dominant position. In the event of a statement of breach of information, consultation and notification requirements under this Act, the employer cannot claim that they have not received the necessary information from the company where the decision on collective redundancies was made. 

The purpose of the Act on Collective Redundancies is twofold: 

  1. Firstly, to look for ways to avoid collective redundancies or reduce the number of employees who are exposed to them. Therefore, the proposed collective redundancies shall be presented to and discussed with the shop steward or employee representative, substantiated and given an opportunity to present their views and proposals before a final decision is made. 
  1. Secondly, the public employment agency in Iceland (The Directorate of Labour) has sufficient information about the planned redundancies of employees, so that it can in time come to a solution to the problem that the planned redundancies will cause. 

Information about group redundancies

Procedures for publishing information on collective redundancies received by The Directorate of Labour will continue be as such that on the 2nd working day of each month, at 12 pm, a summary of the number of collective redundancies received by the directorate in the previous month, in which industry and their location, the number of employees laid off, when they will lose their employment, and the total number of employeeswill be published on the directorate’s website. 

It is necessary for the directorate to have some time to review notices of collective redundancies before information is published, but in most cases, they are received by the directorate on the last day of the month and are then reviewed immediately in the first days of the new month. 


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