Before you use the gender pay gap toolkit, you’ll need to understand how the gender pay gap is calculated and prepare your pay data.
The Ministry for Women has worked with organisations and business leaders to agree a common methodology for calculating a gender pay gap.
A common methodology helps organisations, regardless of size or sector, follow the same standard, making it easier to assess industry-wide progress, and drive collective action toward closing the gender pay gap.
A comprehensive methodology, which includes the formulas and calculation examples, is available in the toolkit resources.
Components of the methodology
1. Size of organisation
We recommend all organisations measure their gender pay gap, regardless of size or sector.
However, if your organisation has less than 10 people in each gender cohort (those who self-select as women, men, and/or gender diverse), your results should only be used for HR purposes and not published internally or externally.
Having a minimum of 10 or more women and 10 or more men in public reporting is recommended, as this ensures that data published is not presented in a way that could easily identify employees.
2. Employees included in calculation
All employees who have an employment agreement with your organisation, including the Chief Executive, fixed-term, and part-time employees, are included in the calculation.
Exclude contractors or anyone else who is paid by the organisation but does not have an employment agreement.
3. Types of pay included in the calculation
Total pay (remuneration) includes all actual cash paid over a 12-month period:
- Base pay (include any salary sacrifice amount).
- Fixed pay.
- Variable pay.
- Overtime pay.
- Extra pay (for example, for working night shifts).
- Higher duties allowance.
- On-call pay.
- Bonus or performance-based pay – include the bonus pay paid in the previous year (the amount that was paid, not the amount they were eligible for).
- Tenure or retention bonus.
- Commission-based pay.
- Profit sharing or equity payments.
- KiwiSaver contributions.
- Any form of cash allowance (such as wellbeing, clothing, car, or accommodation).
- Any other cash paid.
Exclude any non-monetary benefits, such as carparks.
4. Types of calculation
For the purposes of a universal pay gap number, organisations should calculate their organisation wide median gender pay gap.
The median is found by listing all employees’ hourly rate of pay or annual salary and finding the midpoint.
Organisations with a partnership model should report two median numbers – one that includes equity partners, and one that excludes equity partners.
5. Frequency of calculating and reporting
Employers should calculate and report their gender pay gap annually on a consistent snapshot date chosen by their organisation.
Only report if there are more than 10 people in each gender cohort.
Preparing your data
To be able to calculate your gender pay gap using this toolkit, you will need to gather specific sets of information for each employee in your organisation.
We recommend you use the gender pay gap toolkit workbook to help you capture and prepare this information (if it is not readily available through your own pay system). Use the checklist to ensure you have captured all the information that you need.
Read through the guide to understand how to gather the required data.
Once you have the required data, you can enter it into the workbook to calculate your gender pay gap.
You can also enter it into the online gender pay gap tool and complete the self-assessment questionnaire to help you get started on your taking action to address your pay gap.
Your results
Once calculated, if the pay gap percentage generated is positive (i.e.: 4.1%), this means there is a gender pay gap in favour of men in your organisation.
If the pay gap percentage generated is negative (i.e. -4.1%), this means there is a gender pay gap in favour of women or gender diverse employees in your organisation.
Alternative methods to calculate the gender pay gap
The methodology in the gender pay gap toolkit differs to other calculation methods in use, such as Stats NZ’s measurement of the New Zealand national gender pay gap and the public sector pay gap.
The toolkit's methodology includes more components of pay and offers less flexibility in the calculation, which results in a measure that better reflects the ‘true’ gender pay gap of an organisation.
Other methods also use different types of calculation factors, such as hourly earnings (instead of total pay) and the mean (instead of the median).