The gender pay gap is a measure of labour market or workplace disadvantage, expressed in terms of a comparison between men’s and women’s average (median) hourly rates of pay. It’s about pay, but also about other factors, such as occupational segregation, or the fact that in the main it’s women who look after children and other dependants.

Gender pay gap reporting doesn’t specifically ask who earns what, but what women earn compared with men. It provides a framework within which gender pay gaps can be surfaced, enabling us to constructively consider why they exist and what to do about them.

The gap can be measured in various ways, and it’s important to understand how, in any specific context, the gap is being measured. A gender pay gap can be expressed as:

• A positive measure, for example, a gap of 13.9% – this indicates the extent to which women earn, on average, less per hour than their male counterparts.
• A negative measure, for example, a gap of −9.2% – this indicates the extent to which women earn, on average, more per hour than their male counterparts. This may happen, for example, if you employ a high proportion of men in low-paid, part-time work, and/or your senior and higher-paid employees are women.

Example: A negative gender pay gap

Avocet Care employs 305 staff across six residential homes providing specialist dementia care. The employees are predominantly female. The highest-paid employees are highly qualified nursing and managerial staff, only three of whom are male. At each home four to five men are employed as maintenance staff and drivers. These jobs are relatively low paid.

Avocet’s mean and median gender pay gap calculations show gaps in favour of women, and its pay quartiles show the predominance of women in all four quartiles. The company does not pay bonuses.

In its narrative Avocet points to the predominance of women in the care home sector, and to the shortage of suitably qualified male carers. It also sets out what action it is taking to recruit more men into its caring and nursing roles, and explains that, given its mixed-sex client profile, attracting more men is a business priority.

To fully understand the gender pay gap, we need to think about it in three different ways:

• As a measure of labour market disadvantage – for example, throughout the economy, women are concentrated in lower-paid jobs.
• As a measure of workplace disadvantage – for example, women in your organisation are concentrated in lower-paid jobs; this is where the government wants you to act. Taking steps to reduce the gap at workplace level will help narrow the gap at national level.
• As a measure of the difference between the individual earnings of a man and a woman – a difference doesn’t automatically mean that the woman is missing out on equal pay. To be entitled to equal pay, a woman must be employed by the same employer, on the same terms and conditions, and the work that she does has to be equal to that being done by her male colleague. And even then, there may be an acceptable reason for the pay difference, such as location. However, it’s also important not to lose sight of the fact that unequal pay may be contributing to the gender pay gap.

Gender pay gaps are the outcome of economic, cultural, societal and educational factors. Some argue that they reflect personal choice but, although the decision to seek paid employment may be an individual choice, that choice is strongly influenced by matters outside of the individual’s control, such as the availability and affordability of childcare, and it is still the case that the choices available to women are more constrained than those available to men. The key influences on the gender pay gap are summarised in figure 1.

Unpaid caring responsibilities

The cost of childcare has been identified as a particular problem that affects women’s participation in the labour market. A 2017 report from Working Families found that childcare costs account for a significant proportion of family expenditure and that the high cost of childcare has a great influence on whether parents, particularly mothers, choose to either give up work or reduce their working hours. And, in so far as the care of adults is concerned, women are more likely than men to be carers.

Women as unpaid carers: A survey carried out by Carers UK in 2022 found that 80% of carers are female.

Between 2000 and 2015, time spent caring for adults by people aged over 50 has increased, but there is concern that there may not be enough unpaid carers to meet future demand. Factors such as increasing female employment, fewer children and higher divorce rates among men over 60 years may affect the future availability of children to provide unpaid care for their elderly parents. In 2015/16, an estimated 345,000 unpaid carers aged 16-64 in England, predominantly women, left employment to provide care.

In 2022, 600 people a day, on average, left work to take on caring responsibilities, and 75% of carers still in employment worry about juggling work and care.

Occupational segregation

Despite half a century of equalities legislation, the UK labour market remains highly segregated, with men dominating some types of job and women others; many women are concentrated in the ‘five Cs’ of caring, cleaning, catering, clerical and cashiering, all of which tend to be lower paid. In terms of the gender pay gap, the problem with occupational segregation is not that men and women are doing different types of work, but that segregation is associated with these jobs being valued differently. The introduction of the National Minimum Wage and the National Living Wage provides a wage floor for the lowest-paid jobs but does nothing to challenge any underlying undervaluation of the work.

In terms of gender pay gap reporting, a lot of attention has been paid to vertical segregation – jobs in the higher echelons of an organisation being dominated by men – but horizontal segregation also contributes to the gender pay gap. Horizontal segregation occurs lower down the hierarchy and manifests as men and women doing distinctly different types of work, with the ‘male’ jobs being paid more than the ‘female’ jobs. When the reverse is true – the ‘female’ jobs being paid more than the ‘male’ jobs – a negative gender pay gap may arise. In the first two years of gender pay gap reporting, some employers have been paying increasing attention to the impact of horizontal segregation and are looking to find ways of tackling it.

Pay discrimination

In terms of the gender pay gap’s contribution to actual inequalities in pay, horizontal occupational segregation presents a high risk of equal pay claims, as does a high mean bonus gap. We look at this later in What your measures tell you, but it would be sensible to take account of the risk of equal pay claims being brought. In 2017/18, the Employment Tribunal received 35,558 equal pay claims. In 2018/19 the figure fell to 26,860, but as the reports only provide the headline figures for the number of cases filed, it is not possible to form a view as to why there has been a substantial drop.

Part-time working

Looking only at part-time employees, we see a negative gender pay gap, with median pay for part-time employees being higher for women than for men. However, hourly rates of pay for part-time work tend to be lower than for full-time work and, with such a high percentage of women working part-time, their low hourly rates of pay mean that the gender pay gap for all employees is greater than that for full-time employees alone. Seventy-one per cent of part-time workers are women; 38% of women work part-time, compared with 14% of men. And whereas men tend to work part-time at the beginning and end of their working lives, women do so in their middle years.

As well as the moral case for making access to work and progression opportunities more equal for men and women, the economic benefits of closing the gap are considerable. Because of this, the government considers that the rate of progress is too slow and has committed to closing the gap within a generation. Gender pay gap reporting is one way of fulfilling that commitment. We look at the benefits in more detail in the section 'Why should the gender pay gap be addressed?’.

Promoting pay transparency

Pay transparency, which provides people with the information to assess the fairness of the way in which pay is allocated, is increasingly being demanded by regulators and the public. For some time now, companies have been required to disclose their directors’ pay, while public bodies must disclose the pay of their senior officers.

The pay transparency afforded by gender pay gap reporting helps to illuminate the structural drivers of inequality, such as occupational segregation or the unequal distribution of family responsibilities.

It also prompts employers to examine structural or cultural barriers within the organisation that may be contributing to the pay gap and, ideally, tackle them. In other words, addressing the factors that are creating a ‘glass ceiling’, preventing women from progressing to the most senior roles.

Gender pay gap reporting is also consistent with the kind of transparency that has long been required by the equal pay legislation, namely that everyone involved in a pay system should know how it operates. This means employees and their managers knowing what an employee must do to earn each component of their pay packet. For example, what does an employee have to do to earn their salary, or why does one employee receive a particular allowance, but another employee doesn’t?

Putting the kind of transparency afforded by the equal pay legislation alongside gender pay gap reporting means we have the information needed to uncover the causes of gender pay inequality. An example of how, in the context of gender pay gap reporting, these two kinds of transparency complement each other would be to know why you are paying someone a bonus, information which could help you to explain the bonus gap reported in your gender pay gap report.

At whole economy level, the gender pay gap is calculated from data drawn from the Annual Survey of Hours and Earnings (ASHE), which is carried out by the Office for National Statistics (ONS). ASHE is based on a 1% sample of employee jobs, drawn from HMRC Pay As You Earn records. ASHE collects information on the levels, distribution and make-up of earnings and hours paid. Results are produced by gender and by various industrial, occupational and geographic breakdowns, as well as by public and private sectors and by age group.

In the absence of an annual report on the overall gender pay gap in the UK (such as, for example, that produced by Belgium), ASHE is the key official source of information on the gender pay gap in the UK, but to get a full picture of women’s earnings relative to men’s, it’s important to read the annual survey in its entirety, and not just the section on the gender pay gap. Knowing, say, that average earnings in the private sector are lower than those in the public sector, and that in 2018 earnings growth was greater for full-time than for part-time workers, helps to put the gender pay gap into context.

In April 2023, the UK’s gender pay gap for full-time employees was 7.7%, meaning that average pay for full-time female employees was 7.7% lower than for full-time male employees, or for every £1 a full-time male employee earned, a full-time female worker earned 92.3 pence.

Among all employees, the gender pay gap decreased to 14.3% from 14.9% in 2022. The Office for National Statistics notes that during the COVID-19 pandemic period, earnings estimates were affected by changes in composition of the workforce and the impact of the Coronavirus Job Retention Scheme (furlough) making interpretation difficult. Additionally, data collection disruption and lower response rates mean that, for 2020 and 2021, data were subject to more uncertainty and should be treated with caution.

Source: The gender pay gap 2023

How the ONS estimates the UK gender pay gap

The ONS estimates the gender pay gap based on hourly earnings, excluding overtime, and bases its calculations on median rather than mean earnings.

• Hourly earnings are used because they take account of the fact that men are proportionally more likely than women to work full-time. At ages 16–21, men’s jobs are split almost equally between full-time (52.1%) and part-time (47.9%), but, between the ages of 30–39 and 40–49, more than 90% of men’s jobs are full-time (93.7% and 92.8% respectively). For women, only 67.5% (ages 30–39) and 64.1% (ages 40–49) hold full-time jobs.
• Overtime is excluded because, as it is still in the main women who bear the day-to-day responsibility for looking after children or dependent relatives, they are less likely than men to work overtime.
• The ONS prefers median rather than mean earnings because the median is not affected by extreme values. However, as the mean gap captures the fact that the upper end of the earnings distribution is dominated by men, the mean is an important measure of women’s labour market disadvantage.

Women’s patterns of paid work differ from those of men, and this can put them at a disadvantage, but men’s and women’s work experience is converging – the proportion of men working part-time, for example, rose from around 7% in 1992, to 13% in 2010 and to 15.2% in 2021. And for women, full-time employment has grown more quickly than part-time employment.

While the baseline measurement for both ASHE and gender pay gap reporting is of hourly earnings, it’s also possible to calculate the gender pay gap by weekly, monthly and annual earnings, and by occupation, age, ethnicity and disability status, and to analyse the gap at various points in the earnings distribution. You probably feel that the six measures you are being asked to produce are more than enough, but it’s worthwhile bearing in mind that the deeper down you drill into your people and pay data, the more likely you are to recognise what it is you need to do to take effective action to reduce your gender pay gap.

Over the past 30 years the gender pay gap in full-time employment has narrowed, but the pace of improvement has been uneven and there’s still a way to go. Knowing where the sticking points are may help you deal with your organisation’s own gender pay gap.

As can be seen from figure 2 above, the gender pay gap has decreased markedly over time, but what the figure doesn’t show is that the extent to which it has done so has varied across different age groups. The gender pay gap is small or negative for employees in their 20s or 30s but widens considerably for older age groups.

The gender pay gap within different groups of occupations also varies considerably, and in different ways for different occupations. The pay gap has been consistently high for those in the skilled trades, and for managers and directors. It has been consistently lower than the national average for professional and associate professional occupations, because, with increased attendance at universities, there have been proportionately more women entering professional and associate professional occupational groups. However, a lack of flexible working arrangements on offer at senior levels more generally is a factor affecting women’s progression opportunities.

In addition to the moral and social justice case for gender equality, there are further national and organisational benefits of seeking to close the gender pay gap (figure 3).

With women outperforming men educationally, the case for ensuring their skills are fully utilised is incontestable. In addition, failing to tackle a gender pay gap is likely to cause damage to your organisation’s reputation in the eyes of both current and potential clients and employees.

The economy: Gender equality, economic growth, pay and pensions

A key source of evidence on the economic dimensions of the gender pay gap is the report of the 2016 inquiry into the gap by the Women and Equalities Committee (WEC). The WEC found that the UK’s 19.2% gap (2016) was not only an equality issue, it also represented a significant loss to UK productivity and, in the face of an ageing workforce, a skills crisis, the need for a more competitive economy, and that the gap needed to be addressed. The WEC concluded that tackling the underlying causes of the gender pay gap would not only increase productivity and address skills shortages, but it would also improve the performance of individual organisations.

Several studies support the WEC’s conclusion:

• In its evidence to the inquiry, the former UK Commission for Employment and Skills (UKCES) quoted research suggesting that the underutilisation of women’s skills costs the UK economy between 1.3% and 2% of GDP every year. The UKCES also suggested that eradicating the full-time gender pay gap would contribute an additional £41 billion of spending into the economy each year.
• McKinsey’s 2016 report, The Power of Parity: Advancing women’s equality in the United Kingdom, suggested that even partial progress towards parity had the potential to add as much as £150 billion to GDP by 2025, over and above the business-as-usual scenario – in fact, an estimated 6.8% more. This would be the equivalent of raising GDP growth by 0.7% per year for the next 10 years.
• The Gender Pensions Gap Report 2022 study showed that while women’s expected retirement income is increasing and the gender gap is shrinking, women’s pension wealth is only 33.5% of men’s, or for every £1 a man had in his pension pot, a woman had just 33.5 pence. Closing the gap by bringing women’s earnings up to the level of men’s would increase the likelihood of women being able to provide for their own pensions, thereby reducing both pensioner poverty and the welfare support needed to counter it.

The workplace: Gender equality, talent and reputation

At an organisational level, promoting gender equality is part of being a good employer, one that strives to achieve fairness. Being open about your gender pay gap and how you’re tackling it increases employee confidence in you as an employer, and in your pay and reward processes.

Organisations with gender-diverse profiles at senior levels make a better financial return than those who do not. McKinsey’s Diversity Matters research has shown that for every 10% increase in gender diversity in a UK company’s executive team, earnings before interest and taxes rose by 3.5%. But the national ratio of women in leadership relative to men is poor (there are currently two male managers for every female manager), with the UK lagging behind comparable economies such as the United States, Sweden and Canada.

Women make up around half the talent pool, so attracting and retaining them is central to future success. Women are better qualified than ever before with girls still doing better than boys at both GCSE and A level in England, Wales and Northern Ireland.

Even before gender pay gap reporting was introduced, employees and job seekers were taking pay gap data into account when applying for a job or considering whether to stay in one. Now, with gender pay gap reports available on the government’s gender pay gap viewing service site, school-leavers, graduates and older workers looking to change jobs are all now able to access information about your gender pay gap, and they are sure to do so.

CIPD guidance on reward

For more on employee attitudes to reward, take a look at the CIPD’s factsheet on reward and pay. For women, an employer’s record on equality, inclusion and diversity is especially important. PwC’s report, The Female Millennial: A new era of talent, shows that young women seek out employers with a strong record on equality, diversity and inclusion. Eighty-five per cent of female millennials surveyed said an employer’s policy on equality, diversity and workforce inclusion was important when deciding whether or not to work for them. Being open about your gender pay gap, and proactive in tackling its causes, will reduce the likelihood of your organisation being seen as a second- or third-choice employer.

Regulations introduced in 2017 require public, private and voluntary sector organisations, with 250 or more employees, to report annually on their gender pay gap using a specified ‘snapshot date’ relevant to their sector (see figure 5).

The snapshot date will always be 31 March for public authorities, and 5 April for all other employers, in any year in which they have 250 or more relevant employees. This date is:

• the date which determines who counts as an employee for the purposes of gender pay gap reporting
• the date used to determine employees’ hourly pay (your gender pay gap calculations are based on hourly pay, as defined by the Regulations)
• the date from which you have a year to publish your gender pay gap report.

Most employers will know if they have 250 or more employees on the relevant snapshot date (figure 5). Those whose headcount hovers around or varies above and below the 250 threshold, is so close to 250 that the definition of employee used in the Regulations means they may end up hitting 250, or includes a large number of non-standard employees employees (such as agency workers, or self-employed workers), will need to check if the Regulations apply. It’s also important to note that the definition of employee used to work out if you are a relevant employer may not be one you are used to using, and that duration of employment is not taken into account.

If your organisation employs fewer than 250 people, it is still a useful discipline for you to calculate the size of your organisation’s gender pay gap and think about what action may be required. We encourage all employers of whatever size to calculate and publish their pay gaps. And if your employee numbers cross over the threshold or the government should at any time lower the 250-employee reporting threshold, if you’re already collecting and analysing the data, you will be ahead of the game.

There are six different measures (figure 6) of the gender pay gap and each provides a slightly different take, but each is more meaningful if read alongside the others and in the context of your overall HR and payroll policies and practices, such as training and development, or recruitment and selection. It is likely that your recruitment practices, for example, will impact on starting salaries, which will in turn feed into both your mean and median gender pay gap figures, while the way in which you manage performance may well feed into your bonus pay gap. You will also want to read each year’s figures alongside those of previous years, both to measure progress and to gain a greater understanding of your gender pay gap.

As with the snapshot date, the deadline varies depending on the sector (see figure 5 above). If you decide to publish before the deadline, which we would encourage, you may find it helpful to stick to the same date every year to ensure consistency, and help your readers gain a clearer understanding of any gender pay gap.

You must publish the required data on the UK Government’s gender pay gap reporting service website. For private and voluntary sector employers, the information will have to be accompanied by a statement confirming its accuracy, signed by a director or equivalent, which includes their name and job title. Once you have published your report on the reporting service website, it automatically appears on the government’s viewing service website, where any interested person is able to access it. The viewing service website also lets people know if a report is late.

You must also publish your pay data on your own organisation’s website in a manner that is accessible to employees and the public, and you will have to ensure that it remains there for at least three years.

We look in detail at how to calculate employee earnings in this guide. Here, you simply need to know that your calculations will be based on:

• gross ordinary pay (including basic pay, piecework pay, shift premiums, paid leave pay and allowances)
• bonus pay (personal, team bonuses and so on)

Paid in the relevant pay period (pay period including the snapshot date) and by the snapshot date (31 March for public sector, 5 April for businesses and charities).

What you say about your gender pay gap, and where and how you choose to say it, is of paramount importance. While the reporting process makes publication of your figures and the sign-off of those figures compulsory, you also have the option of including an accompanying narrative and an action plan. Communication is also about how you inform your employees and the wider world about your organisation’s gender pay gap report. We look at this in the section: How to communicate your gender pay gap.

Although there is currently no legal obligation, the government strongly encourages employers to produce a voluntary accompanying narrative that provides context, explains any pay gaps, and sets out what actions will be taken. We also encourage you to produce a narrative, and the Regulations may change in the future.

The government’s reporting site enables you to include a link to where your full report appears on your own site. The government’s viewing service site (which mirrors the reporting site) provides readers with a link headed ‘See what this employer has to say about their gender pay gap’; clicking on this takes readers through to where your report appears on your own site.

The Regulations do not require you to publish an action plan either, or even to draw one up, but the government encourages you to do so, as do the CIPD. Uploading an action plan on your website, alongside a narrative, lets people know what action you are planning to take to address the gap, and that you are serious about doing so. In addition to helping you tackle the gender pay gap itself, drawing up an action plan will help you to answer questions about what you are doing.

We also recommend that you draw up a communications plan well before you publish any data, to ensure that you tell the story you want to tell and are ready to respond to questions. We look at this in the 'How to communicate your gender pay gap' section.

• the Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017 – these apply to public bodies
• the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 – these apply to private and voluntary sector organisations.

Payroll software should do most of the work for you, so do engage with your software provider. You will also want, as with any major HR or payroll project, to ensure that you have the right skills on board to interpret your figures and understand the causes of any gap, communicate effectively to your various stakeholders, and plan how you will address your gap. Larger organisations may want to create a team that includes people with knowledge of the organisation’s payroll and HR systems, a communications expert, and someone with an understanding of statistics. The Royal Statistical Society has noted that with the introduction of gender pay gap reporting, the government is, in effect, asking HR professionals to take on some important statistical tasks, and one of the aims of this guide is to support HR professionals in obtaining, analysing and taking action on their data.

If you think you are at risk of equal pay claims

Despite some overlap, the gender pay gap is a different issue to equal pay, and the two should be considered independently. Reducing a gender pay gap does not necessarily reduce the risk of equal pay claims. The gender pay gap regulations and equal pay regulations provide more information on each.

Failure to comply amounts to a breach of the Equality Act 2010 and would therefore open an organisation up to action by the Equality and Human Rights Commission (EHRC). The EHRC have a series of actions and penalties that they can impose on organisations depending on the type of business and nature of the breach. We provide focused legal guidance on each of these stages in our dedicated Gender pay gap law page.

CIPD sources

Employment law: Equal pay: UK employment law
Topic page: Flexible and hybrid working
Topic page: Recruitment
Topic page: Reward
Factsheet: Induction

External sources

Acas
Business in the Community
Equality and Human Rights Commission
Equal Pay Portal

Gov.UK
Gender pay gap reporting service
Gender pay gap viewing service website
Equality Act 2010 (Gender Pay Gap Information) Regulations 2017
Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017