How to prepare a gender pay gap report: data, calculations and practical steps

Pay transparency is becoming a defining feature of the workplace across Europe. Organisations are under increasing pressure to clearly explain how employees are paid and how pay decisions are made.

The EU Pay Transparency Directive is accelerating this shift by introducing new requirements around reporting, employee access to pay information and accountability.

At the same time, employees are placing greater importance on fairness, clarity and trust when it comes to pay.

In this context, gender pay gap reporting is becoming both a regulatory requirement and a strategic tool for understanding workforce structure and pay practices.

This guide explains the data, calculations and reporting processes organisations can use to measure and report on gender pay gaps.

Key insights

• Gender pay gap reporting measures differences in average pay, not equal pay compliance
• Accurate reporting relies on high-quality payroll and workforce data
• Payroll, HR, and finance teams must collaborate
• Reporting requirements vary across jurisdictions
• Organisations increasingly use reporting to inform workforce strategy, not just compliance

What is gender pay gap reporting?

Gender pay gap reporting is the process of measuring and publishing the difference between average pay for men and women across an organisation. It usually draws on payroll and workforce data to calculate figures such as mean pay gap, median pay gap, bonus gap and the distribution of employees across pay quartiles.

In practice, gender pay gap reporting is usually produced by Payroll, HR, Reward, Finance and Compliance teams working together. Payroll teams provide the pay and bonus data, HR teams provide workforce and organisational data, and Reward or Compliance teams often support interpretation, governance and reporting sign-off.

For UK employers, official guidance states that organisations with 250 or more employees on the relevant snapshot date must report and publish their gender pay gap data within a year of that snapshot date. The guidance also explains that employers need to prepare payroll data before making calculations, including ordinary pay, bonus pay, weekly working hours and hourly pay [gov.uk]

It's important to distinguish gender pay gap reporting from equal pay compliance:

Gender pay gap reporting shows the difference in average pay between groups across the workforce. It can highlight patterns in representation, seniority, bonus eligibility or progression.

Equal pay relates to whether people are paid equally for equal work or work of equal value. In the UK, equal pay is addressed under the Equality Act framework and related equal pay guidance.

The two areas are connected, but they are not the same. A gender pay gap does not automatically mean there is an equal pay issue, and equal pay compliance does not necessarily mean an organisation has no gender pay gap. For payroll and HR teams, this distinction matters because gender pay gap reporting is primarily a workforce reporting and transparency exercise, while equal pay requires a different legal and pay governance assessment.

Why organisations are reporting on gender pay gaps

Compliance requirements

Gender pay gap reporting requirements vary by jurisdiction, but organisations are increasingly expected to collect, analyse and explain pay data in a consistent way.

In the UK, official guidance states that employers with 250 or more employees on the relevant snapshot date must report their gender pay gap data. Employers must publish and report this information within a year of the snapshot date, and private and voluntary sector employers must also provide a written statement confirming the accuracy of their data. [gov.uk]

Across the EU, the EU Pay Transparency Directive is increasing expectations around pay transparency, equal pay and reporting. The directive includes measures around access to pay information, gender-neutral pay structures and gender pay gap reporting, with reporting obligations being phased in for employers depending on workforce size. [eur-lex.europa.eu]

For payroll and HR teams, this means gender pay gap reporting is becoming less of a one-off compliance exercise and more of an ongoing data, governance and transparency requirement. Organisations need to understand which rules apply in each market, while also building reporting processes that are accurate, repeatable and easy to evidence.

Under the directive, organisations will need to:

• Report on gender pay gaps
• Give employees a right to access pay information
• Clearly define how pay and progression are determined
• Take action where gaps exceed defined thresholds

This means gender pay gaps are no longer internal — they become visible, measurable and actionable.

Transparency and workforce planning

When employees don’t understand how pay decisions are made, or believe they may be unfair, it directly affects how they feel about their employer.

In this context, gender pay gaps become more than a statistic — they become a signal of fairness.

Organisations use reporting to:

• Understand workforce representation
• Identify barriers to progression into senior roles
• Support clearer pay and progression frameworks

What data is needed for gender pay gap reporting?

 Gender pay gap reporting depends on more than payroll figures alone. Payroll, HR and organisational data need to be combined and validated so the reporting population, pay elements and calculations are applied consistently. For multi-country organisations, this also means understanding where data sits, who owns it and whether definitions are consistent across systems and entities.

Data type	Examples	Why it matters for reporting	Common issues to check
Employee population data	Employee status, employment type, start/leaver dates, full-pay relevant employee status, country, legal entity	Determines who should be included in the report and which calculations apply	Incorrect inclusion/exclusion of employees, inconsistent treatment of leavers, part-time workers or employees on leave
Payroll data	Ordinary pay, gross pay, bonus payments, allowances, overtime where applicable, pay period information	Forms the basis of pay gap and bonus gap calculations	Inconsistent pay element mapping, missing bonus data, different payroll calendars or pay frequencies
Working time data	Weekly working hours, full-time/part-time status, working patterns	Supports calculation of hourly pay where required and helps make comparisons more consistent	Missing or outdated hours, inconsistent treatment of variable-hours workers
Workforce and job data	Gender data, job family, grade, department, seniority level, location	Helps interpret results and understand whether gaps are linked to workforce structure or progression patterns	Inconsistent job grades, missing demographic data, different job architecture across countries
Organisational structure data	Legal entities, business units, countries, reporting lines	Helps define reporting scope and compare results across entities or markets	Misaligned entity structures, unclear reporting ownership, inconsistent country-level data
Governance and audit data	Data source, extraction date, calculation method, exclusions, approvals, sign-off records	Supports repeatability, audit readiness and confidence in published results	Lack of documentation, manual spreadsheet changes, unclear ownership or missing approval trail

 Before calculations begin, teams should agree which data sources are authoritative, how pay elements are mapped and who is responsible for validating each dataset. This is especially important where organisations operate across multiple payroll systems, countries or legal entities.

Why gender pay gap reporting becomes more complex in multi-country organisations

Gender pay gap reporting can be relatively straightforward when workforce and payroll data sit within a single system and jurisdiction. As organisations expand internationally, reporting becomes more complex.

Multiple payroll and HR systems

• Different payroll providers
• Different HRIS platforms
• Inconsistent employee identifiers
• Data consolidation challenges

Different reporting requirements across countries

Reporting expectations may differ, creating additional complexity in aligning approaches across countries.

Inconsistent workforce data

Examples:

• Job grades
• Job families
• Gender data collection practices
• Bonus classifications

These factors can remain hidden without clear analysis.

Ownership and governance challenges

One of the most overlooked issues is ownership.

• Who owns payroll data?
• Who owns HR data?
• Who owns remuneration data?
• Who is responsible for final reporting?

Without clear ownership, consistent reporting is difficult to achieve.

How gender pay gap calculations are typically performed

Mean pay gap	The difference in average pay between men and women.
Median pay gap	The difference between the midpoint of male and female pay distributions.
Bonus gap	The difference in bonus earnings between men and women.
Pay quartiles	Employees are grouped into four equal pay bands to show gender distribution across the organisation.

A step-by-step process for building a gender pay gap report

Gender pay gap reporting works best when treated as a repeatable reporting process, not a one-off calculation. Payroll, HR, compensation and compliance stakeholders should agree the scope, data sources, methodology and review process before calculations begin.

Step 1 — Define reporting scope

Start by confirming which countries, legal entities and employee populations are included. For UK reporting, official guidance states that employers with 250 or more employees on the relevant snapshot date must report their gender pay gap data, but multi-country organisations may also need to consider local reporting requirements or internal reporting standards.

This step should clarify:

• which entities are in scope
• which employee groups are included or excluded
• which snapshot date or reporting period applies
• which teams are responsible for final sign-off
• Clear scope avoids later disputes about whether results are comparable across entities, countries or reporting cycles.

Step 2 — Confirm the source data

Identify where payroll and workforce data will come from before extracting it. In practice, this may involve payroll software, HR systems, local payroll providers, compensation systems or manually maintained files.

Teams should agree which source is authoritative for:

• pay and bonus data
• working hours
• employee status
• gender or sex data, depending on the relevant reporting framework
• legal entity, country, job level, department and grade

This matters because incorrect or inconsistent source data can distort the final report. For UK reporting, includes preparing payroll data before calculations, including ordinary pay, bonus pay, weekly working hours and hourly pay.

Step 3 — Validate the data before calculating

Validation should go beyond checking whether fields are populated. Teams need to test whether the data is complete, consistent and suitable for the reporting methodology.

Common checks include:

• whether all in-scope employees are included
• whether pay elements are mapped correctly
• whether bonus payments are classified consistently
• whether working hours are complete and up to date
• whether employee identifiers match across payroll and HR systems
• whether any exclusions are documented and justified

If data is inaccurate, the priority should be to identify whether the issue sits in payroll, HR, system configuration or local data collection. The report should not rely on manual fixes unless those changes are documented and approved.

Step 4 — Apply the required calculations consistently

Gender pay gap reporting typically includes calculations such as mean pay gap, median pay gap, bonus gap and pay quartiles. The key issue is not usually “choosing” between mean and median — both may be required depending on the reporting framework — but making sure each calculation is applied consistently to the right population and pay elements.

Teams should document:

• which formulas are used
• which pay elements are included
• which employees are included in each calculation
• how bonus payments are treated
• how local differences are handled, if reporting across countries

This creates a clearer audit trail and makes it easier to explain results internally or externally.

Step 5 — Review the results for anomalies and patterns

Reviewing the results should not mean simply checking whether the final numbers look right. Payroll and HR teams should look for anomalies that may indicate data or methodology issues, as well as patterns that may explain the gap.

Useful review checks include:

• unexpected changes from previous reporting cycles
• unusually large differences between entities or countries
• unusual pay quartile distribution
• gaps linked to job level, function, location or bonus eligibility
• discrepancies caused by missing or inconsistent data

This stage helps distinguish between reporting errors and genuine workforce patterns that require further analysis.

Step 6 — Interpret the contributing factors

A gender pay gap figure needs context. The results may reflect workforce composition, seniority distribution, working patterns, bonus eligibility, promotion rates, recruitment patterns or progression into higher-paid roles.

This stage should bring payroll, HR, compensation and possibly finance together to explain what the data shows and what it does not show. The aim is to move from “what is the gap?” to “what appears to be driving the gap, and what can realistically be addressed?”

This is also where organisations can begin shaping the narrative for leadership, employees or external reporting.

Step 7 — Prepare reporting outputs and next actions

Once the figures and interpretation have been reviewed, prepare the outputs needed for each audience. These may include:

• statutory reporting submissions
• leadership dashboards
• internal HR or compensation analysis
• employee-facing communications
• action plans or progress updated

The report should explain the results clearly, avoid overstating conclusions and identify the next actions the organisation intends to take. Reporting should help leaders understand where change may be needed, not simply confirm that a compliance task has been completed.

Step 8 — Create an ongoing reporting cycle

Gender pay gap reporting is most useful when results are tracked over time. A repeatable reporting cycle helps organisations monitor progress, improve data quality and evaluate whether actions are making a difference.

This should include:

• agreed reporting ownership
• documented methodology
• recurring data validation checks
• version control and sign-off
• comparison with previous reporting periods
• review of actions taken since the last report

This turns reporting into a governance and workforce insight process, rather than a once-a-year spreadsheet exercise.

Common challenges in gender pay gap reporting

Incomplete or inconsistent data

Gender pay gap reporting depends on complete and comparable payroll and workforce data. Missing job grades, inconsistent employee identifiers or incomplete bonus classifications can affect reporting accuracy.

Multiple payroll and HR systems

Multi-country organisations may need to consolidate data from different payroll providers, HR systems and local entities. This can create reconciliation challenges and increase reliance on manual checks.

Different reporting requirements

Reporting rules may differ by jurisdiction, which makes it important to define a consistent internal methodology while also meeting local requirements.

Interpreting results correctly

A gender pay gap can reflect workforce structure, seniority distribution, bonus eligibility or progression patterns. Results should be reviewed alongside workforce data before deciding which actions are appropriate.Without clear analysis, gender pay gaps — and their causes — can remain difficult to understand.

Creating a reporting framework that can scale

• Establish a single reporting methodology: Consistency is essential for accurate reporting.
• Define data ownership and validation processes: Clear roles improve accuracy and accountability.
• Maintain an audit trail: Document how data is collected, calculated and reported.
• Create a repeatable reporting cycle: Enable consistent and ongoing reporting as requirements evolve.

Preparing for pay transparency requirements

Gender pay gap reporting is increasingly connected to wider pay transparency expectations. Under the EU Pay Transparency Directive, employers will need to provide greater visibility into pay information, pay progression criteria and gender pay gaps, with reporting obligations phased in depending on employer size.

For payroll and HR teams, this means the reporting process needs to be more than a completed calculation. Organisations should be able to explain where the data came from, how calculations were applied, who reviewed the results and what actions may follow.

To prepare, organisations should focus on:

• Documenting data sources and definitions
  Record which payroll, HR and organisational datasets were used, including pay elements, bonus classifications, employee populations and reporting periods.
• Maintaining a clear audit trail
  Keep evidence of data extraction, validation checks, calculation methodology, exclusions, approvals and final sign-off.
• Aligning pay and progression criteria
  Ensure pay structures, salary ranges, bonus eligibility and progression criteria are documented and applied consistently where possible.
• Preparing for employee and leadership questions
  Reporting teams should be able to explain what the figures show, what they do not show and which workforce factors may be contributing to the results.
• Connecting reporting to action planning
  Where gaps are identified, the next step is to assess whether they relate to representation, progression, recruitment, bonus participation or other workforce patterns

This turns gender pay gap reporting into a repeatable governance process, rather than a one-off compliance task. It also gives leaders a stronger basis for explaining results, prioritising action and tracking progress over time.

How payroll and HR teams can work together

Gender pay gap reporting requires collaboration across:

Payroll	HR	Rewards	Compliance
Payroll teams play a central role by: Providing accurate pay data Ensuring consistency in pay elements Supporting validation of payroll outputs	HR teams are responsible for workforce data, including: Gender identifiers Job roles, grades and structure Organisational data They also support interpretation of results and workforce analysis.	Reward teams contribute by: Defining pay structures and frameworks Supporting interpretation of pay differences Aligning reporting with pay governance	Compliance teams help ensure: Alignment with regulatory requirements Consistency with transparency expectations Readiness for reporting and disclosure

Working together ensures data accuracy, consistent methodologies and effective reporting.

Moving from reporting to action

Gender pay gap reporting identifies patterns, representation issues and progression barriers.

However, reporting alone is not enough.

Addressing gender pay gaps supports employee trust, engagement and long-term organisational performance.

Learn how integrated payroll and HR data can support pay transparency, workforce reporting and gender pay gap analysis