Pay gap guide
What is the gender pay gap?
The gender pay gap is the difference in average hourly earnings between men and women. It is caused by a range of complex, inter-related factors including occupational segregation (where men and women do different types and levels of work), lack of flexible working opportunities and discrimination in pay and grading structures. These three causes are common across all workplaces and sectors.
The gender pay gap is not the same as equal pay, although unequal pay between men and women is a major cause of pays gaps at the enterprise level. Equal pay law covers the concept of equal pay for equal work, making it unlawful to pay a woman less than a man (and indeed vice versa) for the same job or jobs of equal value. Tackling equal pay alone is not enough to close your gender pay gap.
To close your pay gap you need to understand its causes, and the solutions to tackle those. The Close Your Pay Gap tool can help you do this.
How to calculate your pay gap
There are two measures of the pay gap, mean and median.
Both figures are important as they can highlight the different causes of your pay gap.
The mean average is calculated by adding all individual employees’ hourly rate of pay and dividing by the total number of employees.
The median average is calculated by listing all employees’ hourly rate of pay and finding the midpoint.
The pay gap regulations require you to calculate and publish both figures.
Calculating the pay gap
The single pay gap figure should include all employees, including those in senior grades, even if pay in those grades is determined in a different way from other employees. It should also include all full-time and part-time employees, and employees on permanent and fixed term contracts.
Calculating hourly rates of pay
Determine the basic (excluding overtime) hourly rate of pay for each employee. If the basic pay data is expressed an annual salary, then employers should divide this until they have an hourly rate. This will enable the pay of part-time employees to be compared with full-time employees.
The pay gap regulations also require you to publish your mean and median gender bonus gap figures, and the proportion of men and women who received bonus payments. You can use the same method detailed above to calculate these figures.
Simply substitute the mean average bonus paid to men for the mean hourly rate of pay for male employees, and the mean average bonus paid to women for the mean hourly rate of pay for female employees, to calculate your mean gender bonus gap. Follow the same method for your median gender bonus gap.
If you haven’t calculated your gender pay gap and gender bonus gap figures yet, or you want to check your calculations, you can use our handy calculators.