Guide to employment, payroll and benefits in

Faroe Islands

Rivermate offers complete payroll, benefits and compliance services for

Faroe Islands

01. Overview

Last updated: 

August 19, 2021

Currency
Danish Krone
Capital
Torshavn
Ease of doing business
Language
Faroese
Population
48863
GDP growth

02. Grow your team in

Faroe Islands

with Rivermate

Payroll, benefits, taxes, and compliance can be difficult to manage in

Faroe Islands

, particularly if you don't have established local relationships. You can hire employees in

Faroe Islands

effectively, conveniently, and in full compliance with all relevant labor laws using Rivermate's global employment solution. We handle the responsibilities and legal risks associated with foreign employment so you can concentrate on growing your company.

03. Summary

The Faroe Islands, also known as the Faroes, are a North Atlantic archipelago situated 320 kilometers north of Scotland, roughly halfway between Norway and Iceland. It is an independent region within the Kingdom of Denmark, similar to Greenland. The islands cover approximately 1,400 square kilometers and have a population of 52,703 people as of September 2020. The landscape is rugged, and the climate is subpolar oceanic—windy, rainy, gloomy, and cold. Because of the Gulf Stream, temperatures are consistently above freezing during the year. Summers are usually about 12 °C due to the temperate climate and northerly latitude. In the winter, the average temperature is 5 degrees Celsius. Because of the northerly latitude, there is permanent civil twilight during summer nights and very short winter days. The Faroe Islands were a part of the Kingdom of Norway from 1035 to 1814, which was in a personal union with Denmark from 1450. The Treaty of Kiel, signed in 1814, gave Norway to King Gustav III of Sweden, the victorious side in the Napoleonic Wars, while Denmark kept the Faroe Islands, Greenland, and Iceland. The Faroe Islands have been self-governing since 1948, regulating most areas except military defense, policing, courts, currency, and foreign relations, despite being part of the Kingdom of Denmark. Because the Faroe Islands are not part of Denmark's customs union, they have their own foreign policy and can enter into trade agreements with other countries. The Hoyvk Agreement is a comprehensive bilateral free trade agreement between the Faroe Islands and Iceland. They are represented in the Nordic Council as part of the Danish delegation. The Faroe Islands have their own national teams in some sports.

04. Public holidays

05. Types of leave

Paid time off

Public holidays

Sick days

Maternity leave

Paternity leave

Parental leave

Other leave

06. Employment termination

Termination process

At any workplace, circumstances that result in dismissal can arise. A situation involving the employee could include a major breach of the employment contract. Employer/enterprise-specific conditions could include a necessary personnel reduction or reorganization. An employee cannot be terminated due to her pregnancy. If the employer cannot demonstrate that the termination was unconnected to the pregnancy, the termination is illegal. This is a requirement of the pregnancy law.

Notice period

The length of notice is proportional to the employee's seniority. The notice period for an hourly employee who has been employed for six months is at least seven working days. The notice period for a worker receiving regular monthly salaries who has worked for more than 6 months but less than 2 years is 2 months. The notice period for salaried employees who have worked for 6 months to 3 years (excluding temporary or probationary employment) is 3 months. All personal income earned by residents of the Faroe Islands is subject to taxation.

Severance pay

The Faroese labor rules make no provision for severance pay.

Probation period

There is no general legislation regarding probationary periods. However, a probationary period of up to three months may be agreed.

07. Working hours

General

In both the private and public sectors, normal working hours are around 40 hours per week.

Overtime

Overtime compensation is paid for work performed outside of normal working hours.

08. Minimum wage

General

The minimum wage in the Faroe Islands is DKK83.72 per hour.

09. Employee benefits

General

Mandatory benefits postulated by law include a probationary period, pay on annual leaves, public holidays, sick leaves, maternity leave, paternity leave, and overtime pay. Statutory benefits also include social security benefits.

10. Why Rivermate as your Employer of Record / PEO?

Establishing an entity in

Faroe Islands

to hire a team takes time, money, and effort. The labor law in

Faroe Islands

has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into

Faroe Islands

simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record solutions in

Faroe Islands

give you peace of mind so you can focus on running your business.

Please contact us if you'd like to learn more about how Rivermate can help you hire employees in

Faroe Islands

via our Employer of Record / PEO solution.

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