Equal Pay Certification
The purpose of the obligatory equal pay certification is to enforce the current legislation prohibiting discriminatory practices based on gender and requiring that women and men shall be paid equal wages and enjoy equal terms of employment for the same jobs or jobs of equal value. Companies and institutions employing 25 or more workers, on annual basis, will be required to obtain equal pay certification of their equal pay system and the implementation thereof. In accordance to the legislation, certification shall meet the requirements of the Standard ÍST 85, Equal Wage Management System – Requirements and guidance (normally called The Equal Pay Standard). Equal pay certification under the Standard ÍST 85 is designed to confirm that when decisions on wage are taken they are based only on relevant consideration.
The Standard ÍST 85 is a management requirement standard and can be used by all companies and institutions regardless of the size of the workplace, operation, role or gender balance amongst staff. The Standard ÍST 85 ensures professional working methods in order to prevent direct or indirect discrimination. The Standard ÍST 85 can be purchased at Icelandic Standards (Staðlaráð Íslands).
Accredited certification bodies shall confirm that a company’s or institution’s equal pay system and its implementation thereof meet the requirements of the Standard ÍST 85.
In spite of the obligation for equal pay certificaton a company which employs an average of 25– 49 employees can choose to either undergo an equal pay certification or to receive an equal pay confirmation following the submission of documentation showing that its equal pay system and its implementation comply with the requirements of the Directorate of Equality for the confirmation.
Law and regulations on the Equal Pay Certification
- Act on Equal Status and Equal Rights Irrespective of Gender, No. 150/2020.
- Regulation No. 1030/2017, on the certification of equal pay systems of companies and institutions according to the Standard ÍST 85, Equal Wage Management System – Requirements and guidance, (hereafter; Standard ÍST 85).
- Rules on the use of the equal pay symbol (protocol to the regulation).
- Special criteria for certification bodies of the Standard ÍST 85 (guidelines).
- Certification of any management system (in this case, an equal pay management system) is a formal confirmation by a third party that the company or institution operates an management system that meets the requirements of a certain management standard (in this case, of the Standard ÍST 85).
- Equal pay certification performed by accredited auditors is intended to confirm that when decisions on wage are taken, they are based on relevant considerations.
- For this, the company or institution undergoes a particular certification process in order to establish that its equal pay management system and the way it is implemented meet the requirements of the Standard ÍST 85. Certification is then granted by an accredited certification body. This means, among other things, that wages paid by the company or institution in question are at all times determined in the same way for women and men, and that the considerations on which decisions on wage are based do not involve discrimination on grounds of gender.
- Definition in the Act: A written statement from the certifying body, which is provided with the equal pay certificate, following the certifying body’s audit of a company’s or institution’s equal pay system, in which it is stated that the equal pay system and its implementation meet the requirements of the ÍST 85:2012 standard, in keeping with Article 1c of that standard.
- Aim: To reduce gender-based pay discrimination and promote greater equality in wages between women and men, equality of economic standing which will result among other things, eventually, in more equal pension payments for women and men.
- Goal: The equal pay certification process should increase general job satisfaction and a feeling among workers that the human resource management policy followed by their employer is professional and that it will make managers aware of issues regarding staffing and pay, so promoting good relations with employees and facilitating decisions on wages. The end result of this should be a more transparent and a juster pay system.
- Equal pay certification is intended to apply current legislation, which prohibits the payment of different wages to women and men for the same work, or work of equal value, unless such differences can be justified by relevant considerations.
- Companies and institutions employing 25 or more workers, on an annual basis. The calendar year is used as the reference period.
- The Act applies to about 1,180 employers and 147,000 employees, which represents about 80% of those who are active on the labour market.
- The deadline for completion of the certification process varies from entity to entity, depending on the size of the company or institution as defined by the number of employees.
- In view of the time that it will take to adopt equal pay management systems that meet the requirements of the ÍST 85 Standard, the workplaces receive a grace period in which to acquire the certification. Through this arrangement, it can be expected that the experience gained in those companies and institutions that acquire certification first will be of value to those who follow. It is also assumed that smaller workplaces will need more leeway than larger ones.
- November 14th 2018: The Minister has decided to lengthen the grace period to acquire certification by up to 12 months.
The new deadlines set forth are as follows:
- Workplaces with an average of 250 employees, or more, on an annual basis – no later than 31 December 2019.
- Workplaces with an average of 150-249 employees, on an annual basis – no later than 31 December 2020.
- Workplaces with an average of 90-142 employees, on an annual basis – no later than 31 December 2021.
- Workplaces with an average of 25-89 employees, on an annual basis – no later than 31 December 2022.
- Thus, all companies and institutions where there are 25 employees or more, on an annual basis, shall have acquired certification by 1 January 2021.
- Public institutions, funds and companies that are half-owned or more than half-owned by the state with an average of 25 employees, or more, on an annual basis, shall have acquired certification by 31 December 2019.
- Furthermore, the Icelandic Government Ministries shall acquire certification by 31 December 2018.
The Minister may, by means of regulation, lengthen the grace period to acquire certification by up to 12 months.
- It is an Icelandic Standard, the full name of the Standard is ÍST 85:2012 Equal Wage Management System – Requirements and guidance (normally called the Equal Pay Standard), on which equal pay certification is to be based under the Gender Equality Act.
- It is an administrative tool designed to establish and maintain gender equality in wages within a workplace by eradicating gender-based discrimination.
- When the requirements of the Standard ÍST 85 are fulfilled, the composition of employees’ wages will be viewed in a new way; this should promote greater awareness of gender equality issues and the factors that determine wages.
- The Standard ÍST 85, which was published in 2012, is the product of work that begun by a joint declaration of the than Minister of Social Affairs and Insurance, the Icelandic Confederation of Labour (ASÍ) and Business Iceland (SA) stating their intention of approaching the Icelandic Standards on having it supervise the production of a tandard to serve as the basis for equal pay certification on the labour market, covering gender equality as regards to wage, engagement in employment and dismissal from employment.
- Aim of the Standard ÍST 85 is to enable employers to establish and maintain gender equality at their workplaces and to implement effective and professional methods for pay decisions, effective review and improvement. The Standard ÍST 85 is a ‘requirement standard’, which means that it lays down the requirements made for its introduction and implementation.
- The Standard ÍST 85 requires managers of companies and institutions to classify the jobs done by all their employees and choose the criteria that best characterise the requirements that the jobs make of employees. No specific criteria for calculating wages are set out in the ÍST 85 Standard; it is expected that each company or institution will set its own criteria and aims reflecting the work done by each employee.
- The Standard ÍST 85 requires that, when it is introduced, employers shall decide whether, and if so, how, qualities or skills brought to their work by individuals which are not laid down in the requirements made by the jobs themselves are to be rewarded, what effect they have and whether they play a part in how the individual does the job and whether they involve an assessment of how the job is done, i.e. what relevant considerations are to be taken into account in such an assessment.
- Further information on the origin and contents of the standard can be found (in Icelandic) in the explanatory comments on Act No. 56/2017.
- No. Certification of the fact that a certain company or institution meets the requirements of the Standard ÍST 85 does not prevent it from paying different wages on the basis of relevant considerations, e.g. taking account of each individual’s educational qualifications, experience, knowledge, responsibility, the pressure under which they work or other circumstances of employment. Nor does certification prevent taking individual factors into account when determining wages where these have an effect on how the employee is able to do his or her job, or involve an assessment of his or her success in the job.
- Thus, differences in the wages paid to individuals are not prohibited as such, but where different individuals receive different wages, the difference must be based on relevant considerations in which gender plays no part whatsoever.
- No. Even though the Standard ÍST 85 requires that the equal pay policy of each company or institution must be available, and that it is to contain sufficient information so as to make it possible to assess how well it works, this does not mean that individual employees’ wages will be revealed or that all figures on wages paid should be available.
- The Standard ÍST 85 states that the normal procedure is to be that information on employees’ wages are presented in the form of statistics in such a way that they cannot be traced to the individuals involved.
- Nevertheless, employees shall at all times be permitted to state the wages and terms at which they are employed if they choose to do so. This authorisation has been enshrined in the Gender Equality Act since 2008. This means that employers are not able to demand that their employees enter into wage agreements including a provision not to reveal their contents. Such provisions are unlawful, and therefore have no validity.
- A certification body is an entity which handles certification.
- Under Regulation No. 1030/2017 on the certification of equal pay systems of companies and institutions according to the ÍST 85 Standard, certification bodies must have received accreditation from the accreditation department of the Icelandic Patents Office or a comparable authority in the European Economic Area.
- Accreditation under the above-named regulation confirms (when the accreditation certificate is shown) that the accreditation body meets the requirements of ÍST EN ISO 17021-1:2015 Conformity assessment - Requirements for bodies providing audit and certification of management systems - Part 1: Requirements and is regarded as competent to certify the equal pay systems of companies and institutions in accordance with the Standard ÍST 85 and the requirements stated in the regulation.
- Regulation No. 1030/2017, on certification of equal pay systems of companies and institutions according to the Standard ÍST 85, lays down, among other things, the requirements made of certification bodies.
- Special criteria have also been developed as guidelines for certification bodies dealing with the certification of companies and institutions according to the Standard ÍST 85. They explain and reiterate the requirements made in the ÍST EN ISO 17021-1:2015 Standard, and are intended to ensure that the procedures followed in the course of auditing and certifying the equal pay management systems of companies and institutions is in accordance with the ÍST 85 Standard, are in conformity with the requirements made regarding the auditing and certification of management systems.
- The company or institution applies for certification of its equal pay management system by a competent body.
- A certification body directs and carries out an audit of the equal pay management system of the company or institution.
- When the certification body has completed examination establishing that the equal pay management system of the company or institution meets the requirements of the Standard ÍST 85 (i.e. that its equal pay management system and the way it is applied meets the requirements of the Standard ÍST 85 and, consequently, that the handling and setting of wages in the entity concerned does not involve gender-based discrimination), the certification body takes a decision on certification and issues a certificate in confirmation thereof.
- The certification body then informs the Centre for Gender Equality of the outcome of the audit and sends it a copy of the certificate, together with a report on the outcome of the audit. Such reports contain details of how the company or institution has met the requirement of the Standard ÍST 85 and also confirm that the company or institution has set itself an equal pay policy and documented rules of procedure on its application, and that a review by the management has taken place and that measures have been taken where they were considered necessary.
- As a means of further securing the aims of the legislation in the long term, companies and institutions are required to have their equal pay certification renewed every three years.
- When the Centre for Gender Equality has received a copy of the certificate confirming that the equal pay system of the company or institution, and the way it is applied, meets the requirements of the Standard ÍST 85, it confers the equal pay symbol on the company or institution.
- It is a symbol which confirms that a company or institution has established procedures which ensure that its’ handling of, and decisions on, pay issues do not include gender-based discrimination.
- It is intended as a quality stamp and part of the image and reputation of companies and institutions that use it.
- Companies and institutions are welcome to use the equal pay symbol as a means of showing that they have acquired equal pay certification.
- Applications for authorisation to use the equal pay symbol are made to the Centre for Gender Equality. The applicant (a company or institution) is to submit a copy of its certificate in accordance with the Regulation on the certification of the equal pay systems of companies and institutions according to the Standard ÍST 85, confirming that it meets the requirements of the Standard ÍST 85, and the Centre for Gender Equality shall then grant it authorisation to use the symbol.
- Use of the symbol may not commence before authorisation has been issued by the Centre for Gender Equality, and the authorisation shall remain valid for the same length of time as the certificate, i.e. three years.
- The equal pay symbol shall be used in accordance with rules that have been approved by the Minister of Social Affairs and Equality, which are published as a protocol to the Regulation on the certification of the equal pay systems of companies and institutions according to the Standard ÍST 85 and also the instructions set out in the equal pay symbol style manual.
- If an audit conducted by a certification body in connection with the renewal of a certificate reveals that the equal pay management system of a company or institution, and the way it is applied, no longer meets the requirements of the Standard ÍST 85, the certification body shall report this to the Centre for Gender Equality. The Centre for Gender Equality shall examine matters involving the use of the equal pay symbol in such cases (cf. the rules on the use of the equal pay symbol set by the Minister) and shall, in doing so, follow the rules of the Administrative Procedure Act, including those regarding parties’ right to be heard.
- The Directorate of Equality maintains a register of companies and institutions that have acquired certification and publishes it in an accessible manner on its website.
- The organisations of the social partners are to monitor to ensure that companies and institutions with an average of 25 or more employees, on an annual basis acquire certification and renew it every three years.
- Companies and institutions are to provide the organisations of the social partners with the information and materials which the organisations consider necessary in order to carry out their monitoring.
- This arrangement is comparable to the monitoring procedure which applies in connection with workplace certificates set forth in the Workplace Certificates and Monitoring Act, Article 6 of which states that monitoring officers of the organisations of the social partners may, if they are refused access to an employer’s workplace or if the employer or his employees do not carry their certificates on them while at work, report this to the Directorate of Labour. The Directorate of Labour may then demand that the employer rectify the situation within a suitable period, failing to do so, per diem fines may be imposed.
- Where a company or institution has not acquired certification, or renewal of its certification, or fails to submit the necessary information or materials, the organisations of the social partners may report this to the Centre for Gender Equality. Thus, the organisations of the social partners can, for example, notify the Directorate of Equality if a company or institution has not completed its acquisition of equal pay certification because the entity in question has not yet applied for an audit by a certification body or if it has not passed such an audit.
- The Directorate of Equality may instruct the company or institution in question to take satisfactory measures to rectify the situation within a suitable period, failing with it shall be subject to per diem fines. This could apply, for example, in cases involving the submission of information, the delivery of materials to the Directorate of Equality or the drawing up of a scheduled plan of action on how the workplace intends to meet the requirements of the Standard ÍST 85.
- Decisions on per diem fines are to be announced to the parties to which they are directed, in writing and in a demonstrable manner. Should an entity not respect the Directorate of Equality’s request for data or information or not comply with the Directorate’s instructions in keeping with Article 5(2 and 3) of this Act, or Article 5(3) or Article 10(1) of the Act on Equal Status and Equal Rights Irrespective of Gender, the Directorate of Equality can levy per diem fines against the entity in question until the appropriate improvements have been made. Per diem fines can amount to as much as 50 000 ISK per day, starting on the day when they are determined and ending on the day when the Directorate of Equality considers the obligation to have been fulfilled. Things to be taken into account when determining a per diem fine include the number of employees of the company, institution or civil society organisation in question, the scale of the operations and the nature and severity of the case. Appeals can be referred to the Prime Minister against a decision to impose per diem fines.
- A large number of salary surveys and studies of gender-based wage discrimination have been carried out in Iceland. Recent survey findings shows that the wage gap between men and women has narrowed in recent years, and this applies equally to income from work, the unadjusted wage gap and the adjusted wage gap. The report by the Statistics Iceland found that women typically had 4.3% lower wages than men in 2019 while the difference was 6.2% in 2010 according to the adjusted wage gap. The unadjusted wage gap was however 17.5% in 2010 and 13.9% in 2019. Looking at income from work, which does not consider factors that can explain different income levels such as working hours and type of employment, women typically had 32.9% lower income than men in 2010 and 25.5% in 2019.
- In 1961, when the first act on equal wages for women and men was passed in Iceland, it was believed that the major obstacle would be to change people’s attitudes towards the positions of the sexes, while the easiest thing would be to abolish the gender pay gap, and that this would disappear within a few years. Now, nearly 60 years later, the gender pay gap is still in existence.
- The proportion of women who are active on the labour market in Iceland is one of the highest in the OECD countries. In 2019, 79.0% of women aged 16-74 were active in the labour market. In the light of this, measures to combat gender discrimination in wages and establish wage equality are seen as an urgent priority.