The societal changes caused by COVID-19 have been far-reaching, causing challenges for employees around the world. The aim of this study was to assess the effect of the COVID-19 restrictions on mental well-being, working life, family life and social life among Faroese employees within a broad range of professions. A total of 1328 Faroese employees answered an anonymous self-report survey from 13 April to 4 May 2020. Employee mental well-being was only modestly affected by the restrictions and the respondents had a mean score of 50.7 on the Warwick–Edinburgh Mental Wellbeing Scale where a score between 41–44 is found to correspond with possible depression. Work commitment, work and family life, work satisfaction and work ability were all rated significantly worse after the COVID-19 outbreak than before (all p values < 0.005). Contrary to previous research, employees in health services assessed their work ability significantly higher than employees in teaching, and child and youth care (p < 0.05). Working parents had higher levels of stress and assessed their work ability significantly lower than employees without children (p < 0.05), and women tended to be more worried than men because of the pandemic. In conclusion, the overall mental well-being of Faroese employees was on an average level during lock-down in April and May 2020. Their working life seemed, however, to be worse than usual.