Parents in Iceland who worked partially or entirely in another country within the European Economic Area during the relevant period for parental leave may now be entitled to damages if they received payments from the Parental Leave Fund between September 2022 and June 2025. This follows a Supreme Court judgment, highlighted by the Ministry of Social and Housing Affairs and the Directorate of Labour (Vinnumálastofnun), as reported by Fréttatíminn.
The Supreme Court ruling, issued on 23 September 2025 in case no. 50/2025, found that the Icelandic state had incorrectly implemented EEA Agreement rules on calculating parental leave payments. The case specifically concerned how the average of a parent’s total wages should be calculated when the parent has worked in another EEA member state. As a result, the state was ordered to pay damages to the plaintiff for this miscalculation.
According to Fréttatíminn, this entitlement applies only to parents who worked less than four months in Iceland during the twelve months used to calculate the average wage for leave payments. Parents who believe they have been disadvantaged by the calculation method, due to a move to Iceland, may now submit claims to the Directorate of Labour.
The process requires applicants to provide necessary documentation to the Directorate of Labour, which will forward the case to the Office of the Attorney General (Civil affairs) (Ríkislögmaður). This institution is responsible for deciding on the right to damages on behalf of the state. It is now possible to apply for such damages following the Supreme Court decision.
The original case involved a woman who had worked as a doctor in Denmark from 2015 to 2019 before receiving lower-than-expected parental leave payments after moving to Iceland. She brought the lawsuit seeking compensation, which led to these wider entitlements for similar cases.
Background
Sources
Links: dómi Hæstaréttar Íslands í máli nr. 50/2025 · beint kröfum sínum til Vinnumálastofnunar
- Fréttatíminn (first reported) in Icelandic
- mbl.is in Icelandic
- Vísir in Icelandic
