Iceland has become the first country in the world to make it illegal to pay men more than women.
Under the legislation, companies and government agencies with more than 25 employees will be required to obtain government certification for their equal-pay policies.
Those failing to demonstrate pay equality will face fines.
"It's a mechanism to ensure women and men are being paid equally," Dagny Osk Aradottir Pind, a board member of the Icelandic Women's Rights Association, told Al Jazeera.
"We have had legislation saying that pay should be equal for men and women for decades now but we still have a pay gap."
The law came into effect on Monday, the first day of the new year. It was announced on International Women's Day on 8 March last year.
The legislation was supported by Iceland's centre-right coalition government, as well as the opposition, in the country's parliament, where nearly 50 per cent of members are women.
"I think that now people are starting to realise that this is a systematic problem that we have to tackle with new methods," Ms Aradottir Pind told Al Jazeera.
She added: "Women have been talking about this for decades and I really feel that we have managed to raise awareness, and we have managed to get to the point that people realise that the legislation we have had in place is not working, and we need to do something more."
Iceland, which has a strong economy based on tourism and fisheries, has been ranked the best in the world for gender equality by the World Economic Forum for nine years in a row.
The UK came in 15th place in 2017, with a 16.9 per cent pay gap between men and women.
Iceland's government has committed to eradicate the gender pay gap by 2022.
