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This is the difference between the pay that the average man receives and the pay that the average woman receives. The calculation is:
Average can be defined in two ways – mean and median. Both the mean and median pay gaps are provided as they have different strengths.
Mean is what people generally refer to when they say average. It is the sum of all the pay divided by the number of people. This is useful as it includes all pay in the company. However, if there are some very high or very low pay amounts in comparison to the rest, these may skew the figures.
Median is the ‘middle’ number. So, 50% of the pay is higher than this value and 50% of the pay is lower. This removes any skewing from outliers, but is sometimes misleading.
The numbers that companies use to calculate the pay gap are hourly rates, in order to ensure that all employees are compared fairly. Allowances are included within hourly rates. If employees have a salary sacrifice scheme for pensions or other benefits, the hourly rate is after these deductions.
Employees are included in the calculations if they were employed on the ‘snapshot’ date – 5 April for private sector, 31 March for public sector – and were not on any leave at that time that wasn’t paid at the full amount. Therefore people on unpaid leave or leave where they are paid a lower amount rather than full pay are not included.
