Iceland December Bonus Increases to ISK 114,000 on December 1, 2026

Unionized employees in Iceland will receive an annual December bonus (Desemberuppbót) of ISK 114,000 effective December 1, 2026. This is the third of four mandatory annual December bonuses established under the collective wage agreement reached in March 2024, with the bonus amount increasing each year through 2027.

Who is affected

This mandatory bonus applies to all unionized employees in Iceland covered by the collective wage agreement. Employers with union members on payroll must pay this bonus equally to all eligible employees on the specified payment date.

What's changing

The December bonus amount increases annually as part of the multi-year collective wage agreement:

The 2026 bonus represents an increase of ISK 4,000 from the 2025 amount. Employers must pay this bonus to all union members equally on December 1, 2026. While employers may provide additional discretionary bonuses, these must be processed separately from the mandatory December bonus.

What NEO partners and clients should do

• Submit payroll adjustments before the November 2026 payroll cutoff to ensure the ISK 114,000 bonus is paid on December 1, 2026
• Verify all unionized employees are included in the bonus payment at the full mandatory amount
• Process any discretionary bonuses separately from the mandatory December bonus to maintain compliance
• Prepare for the final increase to ISK 118,000 for December 1, 2027