Under Directive (EU) 2023/970, the gender pay gap is the difference in average pay levels between female and male workers, expressed as a percentage of the average pay level of male workers. A practical expression of that definition is: (average male pay minus average female pay) divided by average male pay, multiplied by 100. The calculation is only meaningful if the employer applies consistent worker-population and pay definitions. Article 9 requires this overall gender pay gap as one of the seven core reporting metrics, while national implementing rules may provide more detailed calculation instructions.
Jurisdiction: European Union
The Directive Defines the Gender Pay Gap Using Average Pay Levels
Article 3 defines the gender pay gap as the difference in average pay levels between female and male workers of an employer, expressed as a percentage of the average pay level of male workers. This is the basis for the overall gender pay gap required by Article 9(1)(a). The measure is therefore an organisation-level average comparison. It should not be confused with the median gender pay gap, which is a separate Article 9 metric, or with a worker-category equal-pay analysis, which compares workers performing the same work or work of equal value.
A Practical Formula Uses Average Male Pay as the Denominator
The Directive's definition can be written as a practical formula: subtract average female pay from average male pay, divide the result by average male pay, and multiply by 100. If average male pay is 50,000 and average female pay is 45,000, the difference is 5,000. Dividing 5,000 by 50,000 produces 0.10, or 10%. This means the average female pay level is 10% lower than the average male pay level under that calculation. A negative result can occur where average female pay exceeds average male pay.
Average Pay Means the Mean, Not the Median
For the overall gender pay gap, the relevant concept is the average pay level, commonly understood as the arithmetic mean. The employer therefore aggregates the relevant pay values for female workers and divides by the number of female workers, then performs the same calculation for male workers. The two average pay levels are then compared using the gender pay gap formula. This measure can be influenced by very high or very low pay values, which is one reason Article 9 separately requires the median gender pay gap. The mean and median measures should be calculated and reported as distinct metrics.
Use a Consistent Definition of Pay
The calculation depends on what counts as pay. Directive (EU) 2023/970 uses a broad definition of pay that includes ordinary basic or minimum wage or salary and other consideration, whether in cash or in kind, received directly or indirectly in respect of employment. Article 9 also requires separate reporting for complementary or variable components, so employers should map payroll and reward data carefully. Inconsistent treatment of allowances, bonuses, incentives or non-cash elements can distort the result. The reporting methodology should therefore document which components are included in each metric and how each component is valued.
Use a Consistent Worker Population
A pay-gap percentage is only comparable when the employer applies a consistent population rule. The reporting process should define which workers fall within the relevant employer population, how joiners and leavers are treated, how workers with incomplete data are handled and how national rules address atypical working arrangements. The Directive establishes the reporting duty, but country-level implementation may supply detailed methodology. Employers should avoid changing population rules from one reporting cycle to another without documenting the reason because methodological changes can create apparent movement in the gap even where underlying pay patterns have not changed.
The Overall Gap Is a Diagnostic, Not Proof of Individual Pay Discrimination
An organisation-wide gender pay gap shows whether average female and male pay levels differ. It does not by itself identify the reason for that difference or prove that an individual worker has been paid unlawfully. A gap can reflect workforce composition, occupational segregation, representation at senior levels, variable-pay patterns or differences within categories of workers. Article 9 therefore requires several additional measures, including quartiles and category-of-worker gaps. Employers should use the overall percentage as a starting point for deeper analysis rather than treating it as the complete equal-pay assessment.
Frequently Asked Questions
What is the EU gender pay gap formula?
A practical expression of the Directive's definition is: (average male pay minus average female pay) divided by average male pay, multiplied by 100.
Is the gender pay gap based on the mean or median?
The overall gender pay gap uses average pay levels. The Directive separately requires a median gender pay gap metric.
Does a positive gender pay gap prove discrimination?
No. It shows an average difference between female and male pay levels, but further analysis is needed to understand the cause and whether unlawful discrimination is involved.
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Requirements and practices differ by jurisdiction and organisation. Check current local law, official guidance and professional advice for a specific situation.