If you are looking to fill specific roles within your company and you can’t locate the right candidate within Iceland, it is worth looking for an employee from abroad. However, hiring foreign workers in Iceland is not a process to be taken lightly.
As you do not want to run afoul of employment laws, it’s important to consider all the legal requirements before tapping into foreign talent.
This guide will equip you with the knowledge and tools you need to successfully navigate the international hiring process.
4 Steps to Recruiting and Hiring Foreign Workers in Iceland
According to Statistics Iceland’s (SI) labor force survey, the demand for labor is particularly high in Iceland’s construction sector. There are nearly 1,500 job openings, representing 8% of all available positions in the industry.
The construction industry in Iceland is currently grappling with a severe labor shortage, a fact underscored by a Gallup survey cited by Íslandsbanki.
This survey highlights that 53% of Iceland’s major companies are experiencing workforce shortages. Among these, construction companies bear the brunt, with 78% of them reporting understaffing issues.
For this reason, hiring foreign employees in Iceland presents a viable solution for addressing labor shortages. This stands as the primary motivation driving local companies to engage with the global labor market.
However, the Icelandic Government also extends the opportunity to employ other categories of foreign workers, including expert professionals and athletes.
In the following sections, we’ll look at the steps you need to follow when hiring non-EU employees in Iceland.
Step 1: Identify the Right Type of Work Permit
Here are the most common types of work permits you can apply for in Iceland:
- Work permit for experts – Available to individuals possessing specialized knowledge in a particular field.
- Work permit for labor shortages – Granted when there is a lack of suitable employees in Iceland or another EU country.
- Work permit for athletes – Designed for athletes associated with sports clubs within the Icelandic Sports and Olympic Federation.
Step 2: Check If You Meet the Requirements to Hire Foreign Workers in Iceland
Based on the type of work permit you need to apply for, you must meet specific requirements, as outlined below.
Work Permit for Experts
- You must request the assistance of the Directorate of Labor to find a suitable employee in Iceland, the EU, or the Faroe Islands.
- The foreign national will enter into an employment contract for a specific job that requires specialized expertise as outlined in Article 8 of the Foreign Nationals’ Right to Work Act, no. 97/2002.
- The foreign national’s expertise is of vital importance to your company.
- The foreigner has unique skills that encompass university-level education and specialized training recognized in Iceland.
Work Permit for Labor Shortages
- You must reach out to the Directorate of Labor to assist in finding a suitable employee in Iceland, the EU, and the Faroe Islands.
- The foreign national will formally enter into an employment contract with your company.
- You have acquired the opinion of the relevant labor union.
- You are able to justify the necessity to employ foreign workers in Iceland from countries outside the EU. This requires you to explain how the foreign employee will benefit your business’s operations, among other considerations.
Work Permit for Athletes
- The foreign national must officially sign a job contract with a sports club, either for active involvement in a specific sport or as a dedicated coach for a particular sport. Please note that you must bring the foreign national on board as an employee, not a self-employed contractor.
- In certain instances, the sports club must undertake the expenses for the foreign national’s return travel once their employment term concludes.
Step 3: Recruit the Right Candidate & Sign an Employment Contract
If you meet the requirements above, you may proceed with the international recruitment process.
To do so, the most convenient step to take is to use VideoWorkers, an innovative recruitment platform with a high-quality candidate database. What makes VideoWorkers truly stand out is the inclusion of a brief skill presentation video for each candidate profile.
This eliminates the need to spend countless hours reviewing resumes, which often fall short of accurately representing a candidate’s true skills.
Once you’ve identified the ideal candidate, you can move forward by signing an employment contract.
Step 4: Apply for a Work and Residence Permit
As an employer, it is your responsibility to submit an application for a work permit together with an application for a residence permit based on work.
You must submit the application to the Directorate of Immigration. You can either send the application by regular mail or place it in the dropbox at the Directorate’s reception.
If you meet all the requirements, the Directorate of Immigration will send the application to the Directorate of Labor to process it.
Work and Residence Permit for Iceland: Supporting Documents
Here are the supporting documents you must include in the application:
- Proof of paid application fee (ISK 16,000). Do note that the Directorate of Immigration can accelerate the processing of the application upon payment of a service fee. This service fee is 48,000 ISK, in addition to the standard processing fee, totaling 64,000 ISK.
- A passport-size photo of the worker (35 X 45 mm)
- Copy of the worker’s passport, valid for at least 90 days beyond the expiration date of the work permit
- Criminal record certificate not older than 12 months
- Health insurance covering at least ISK 2,000,000
- Job description
- Application for the appropriate work permit confirmed by the relevant trade union and signed by both you and your prospective employee:
- Employment contract
- If applicable, information regarding your attempts to find a suitable candidate in Iceland, EU, and the Faroe Islands before hiring foreign workers in Iceland
- For a work permit for experts:
- Certified copy of the worker’s diploma translated into Icelandic or English
- If applicable, a copy of the required license issued by the competent Icelandic authority
- Evidence of the foreign national’s relevant work experience, showcasing their expertise
- For a work permit for labor shortages:
- Comprehensive justification outlining why it is crucial for your business operations to hire the specific foreign national
- For a work permit for athletes:
- Confirmation that you will fund the foreign national’s return travel if their employment ends due to non-employee fault or long-term disability from illness or accident. You can include this information in the employment contract.
For information on the application processing time, please refer to the following link: https://island.is/en/o/directorate-of-immigration/waiting-time.
After Obtaining a Work and Residence Permit
Upon approval of the work and residence permit, you will receive a notification.
If your future employee needs a visa to enter Iceland, the competent authorities will send a request for an entry visa to the relevant Embassy. The foreign national must use the visa to enter the country.
Within two weeks of entering Iceland, your employee should undergo a medical examination. This requirement depends on their country of origin.
Additionally, they must attend an appointment for a Residence Permit Card. They can attend the appointment either at the Directorate of Immigration or at district commissioners outside the capital area.
To obtain a Residence Permit Card, they must submit the following documents:
- Original passport
- Notification of Residence
- Results of the medical examination, if applicable
Hiring Foreign Workers in Iceland: The Bottom Line
The Icelandic job market has seen substantial changes in recent years. A period of sustained economic growth has led to an increase in job opportunities, particularly in labor-intensive fields like tourism and construction.
However, the ability of the local workforce to meet the rising demand for labor in these rapidly expanding sectors is limited.
That’s why foreign labor plays a crucial role in allowing Icelandic businesses to adequately staff their expanding operations.
If you’re looking to hire foreign workers in Iceland, make sure you consider the legal steps outlined in this guide. This will help you effectively tap into the international talent pool while staying compliant with the country’s immigration laws.
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