Iceland: Companies must prove female employees are not underpaid

The law was passed in Reykjavik by a large majority last June and came into effect this year.

Companies with more than 25 employees will be required to gain certification from an approved auditor evidencing that their pay differences are based on legitimate factors such as skills and performance.

Large companies with more than 250 workers will have until the end of this year to become accredited while the smallest firms will have until the end of 2021, with renewal required every three years.

Iceland is thought to be the first country to make it compulsory for both private and public firms to have equal-salary certification policies in place.

Some academic economists have argued that the gender pay gap comes from non-gender factors that would be visible if statistical measures were perfect. A separate, explicable pay gap of 22 per cent is based on different levels of work undertaken by men and women.

Stefan Olafsson of the University of Iceland authored a report for the European Social Policy Network on the gender pay gap.

“That is still a gendered pay difference rooted in the fact that women take greater responsibility for care tasks within the household, while men spend more time in paid work,” Mr Olafsson wrote.

“Still, one may assume that the certification requirement will forward the ethos of gender and other equality issues in Icelandic society, both directly and indirectly,” he added.