Is job evaluation required by law in Iceland?

What Iceland's law requires

Iceland operates the strongest pay equity mandate anywhere in the world. Under the Act on Equal Status and Equal Rights Irrespective of Gender (Act No. 150/2020), employers with 25 or more employees must obtain accredited Equal Pay Certification — externally audited proof that their pay system delivers equal pay for work of equal value.

Certification is not a report or a pledge. It verifies that the employer runs an Equal Wage Management System that conforms to the Icelandic standard ÍST 85:2012, and that system has analytical job evaluation at its core. Every job must be classified against objective, gender-neutral criteria — responsibility, workload and effort, competence and qualifications, and working conditions — and pay must then be analyzed against that classification to show that jobs of equal value receive equal pay. Where most countries' pay transparency laws stop at disclosure, Iceland legislates the method itself.

This makes Iceland the clearest example of a global trend: pay equity law converging on the compensable-factor model. The four criteria in ÍST 85 are the same four factors that appear in ILO Convention 100 and, more recently, in the EU Pay Transparency Directive's definition of work of equal value.

Who must comply

The certification duty applies to companies and institutions with an average of 25 or more employees over a calendar year, across both the private and public sectors:

• 50 or more employees — must be certified by an accredited, independent certification body.
• 25–49 employees — may choose the full certification route, or submit their documentation directly to the Directorate of Equality for a lighter-weight Equal Pay Confirmation.

The original phase-in ran from the largest employers down: organizations with 150–249 employees had to certify by the end of 2020, with smaller bands following through 2022. The system is now in steady state — every in-scope employer is expected to hold a current certificate or confirmation.

Enforcement, renewal, and penalties

Equal Pay Certification is not a one-time exercise. Certificates and confirmations must be renewed every three years, which means the underlying job evaluation and pay analysis have to be maintained, documented, and re-audited on a rolling cycle.

Enforcement sits with the Directorate of Equality, which can require non-compliant employers to amend their pay systems within a set timeframe and can impose daily fines of up to ISK 50,000 until compliance is achieved. Because certification status is verifiable, non-compliance is also visible — a reputational exposure that has proven at least as motivating as the fines.

How point-factor job evaluation supports compliance

ÍST 85 is, in substance, a requirement to run disciplined point-factor job evaluation. To pass an audit, an employer needs to show:

• a documented classification of every job against the four factor families, applied consistently and free of gender bias;
• a pay analysis that compares pay across jobs of equal value, not just identical roles;
• repeatability — the same methodology, applied the same way, at every three-year renewal.

That is precisely what a structured point-factor system produces. Jobs are scored on defined levels within each compensable factor, scores roll up to a transparent ranking of job value, and pay can be regressed against that ranking to surface unexplained gaps. For Icelandic employers, the practical question is not whether to run analytical job evaluation — the law has settled that — but whether their system is documented and consistent enough to survive an accredited audit, three years apart, without rework.

For multinational employers, Iceland is also a preview: the EU Pay Transparency Directive borrows the same equal-value logic and the same four factors. A pay equity methodology built to Icelandic standards travels well.

The law

Frequently asked questions

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