How to calculate your gender pay gap

Accurate and reliable data is essential for calculating and understanding your organisation’s gender pay gaps. Use data for the previous 12 months.  

There are some important principles that need to be applied to collecting your employee demographic data. 

You need to make sure that all information is:

• Self-identified. Employees must provide their own information. You must not assume any of your employees’ information.  
• Able to be regularly updated. Information should be reviewed and refreshed periodically to ensure accuracy. This includes giving employees the ability to update their own information should they want to.   
• Monitored for response rate. Track participation and consider any data gaps when calculating and reporting pay gaps.  
• Validated regularly: encourage employees to check and confirm their details at least annually. You might do this at the same time as you are updating emergency contact details. 

If your organisation collects health-related information (for example, as part of onboarding or workplace wellbeing programmes), these responses must not be used to determine disability status. You do not need to define “disability” for respondents.  

You can use the data checklist [link] to make sure you have captured all the relevant information. 

The first step you need to do is determine the number of employees you have. Choose a date to count your employees – this can be any date in the year; this is known as a snapshot date. 

Include all employees who have an employment agreement, including the Chief Executive, fixed-term and part-time employees, casual works and non-equity partners. Do not include contractors.  

If you have equity partners, you will need to create two employee lists – one that includes them and one that excludes them. You will need to do a calculation for each list of employees.  

For each employee collect the following demographic data:  

• Gender using the categories women, men, gender diverse and prefer not to disclose.  
• Ethnicity using the categories European, Māori, Pacific, Asian, MELAA (Middle Eastern, Latin American, African), other and prefer not to disclose.  
• Disability using the categories disabled, non-disabled and prefer not to disclose.  

You will need to collect data on the number of hours each employee is contracted for, as well as any paid overtime hours.  

If you have differing definitions of full-time within your organisation (i.e. 37.5 or 40 hours per week) use the highest number as your full-time hours. Convert all salaries to be calculated using full time hours.  

You do not need to collect unpaid overtime hours.  

To calculate your gender pay gap you will need to know the total pay each employee receives. Total pay is made up of base pay, fixed pay and variable pay, it is all cash components that an employee receives. You do not need to include non-monetary benefits such as car parks or phones.   

You can choose whether you capture pay information using an hourly rate or annual salary. You will need to use annual salary if you have any components of variable pay or differing hourly rates for each employee (such as penal rates).   

If you are using annual salary, you will need to convert part-time salaries into full-time equivalent salaries.  

The step-by-step guide includes examples and definitions of what to include under each pay type.  

Once you have the total pay for everyone, you will need to calculate the median total pay for:

• Gender: women, men, gender diverse, those whole selected prefer not to disclose.
• Ethnicity: European women and gender diverse, Wāhine Māori and gender diverse, Pacific women and gender diverse, MELAA women and gender diverse, women and gender diverse who selected ‘other’ and women and gender diverse who selected ‘prefer not to disclose’ their ethnicity.
• Disability: disabled women and gender diverse, women and gender diverse who prefer to not to disclose their disability status.

You do not need to calculate the median for people who did not provide a response.  

The median is the mid-point value, with half the people earning more than that amount and half earning less.  

To find your median, list each person’s total pay figure from lowest to highest and find the midpoint value. If you have an even number of people you will need to add the two mid-point values together and divide by two.  

The base calculation does not change for calculating each pay gap. For a gender pay gap you use the following formula: 

Gender pay gap (%) =

The difference between the median pay for men and the median pay for women, divided by the median pay for men, then multiplied by 100.

To calculate your gender pay gap for gender diverse people, you replace the median value for women with the median value for gender diverse people.   

To calculate a gender-ethnicity or gender-disability pay gap, you replace the median value for women with the median value for women and gender diverse people of each ethnicity group, and disabled women and gender diverse. For each calculation you use the median value for men as the comparator.  

The comparator is the group you are comparing to.

The formula used in this calculation will calculate your pay gaps as a percentage. 

A positive percentage means you have a pay gap in favour of your comparator group (i.e. for a gender pay gap calculation it would mean you have a pay gap in favour of men – men in your organisation tend to earn more than women). 

A negative gender pay gap means you have a pay gap in favour of women or gender diverse depending on what calculation you are doing.   

Once you have calculated your gender pay gap you can use the self-assessment tool to find out actions your organisation can take to help close the pay gap.