As of April 2025, the gender pay gap in the UK stands at 12.8% across all employees. That means that, for every pound the average man earns, the average woman earns around 87p. And the picture is similar across much of Europe, where women earn 12% less per hour than men on average.
But… isn’t it illegal to pay women less than men for the same work?
Well, yes. In the UK, this is covered by the Equality Act 2010. And there’s similar legislation in other European countries.
But here’s the thing: the gender pay gap isn’t (just) caused by companies paying men and women different amounts for the same job (which, again, is illegal).
It’s driven by a whole number of different structural and societal factors. And to understand it, we need to distinguish between two key concepts: pay equity and pay equality.
Pay equity vs. pay equality: What’s the difference?
Here’s a brief definition:
- Pay equality ensures employees receive the same pay for identical or similar work, regardless of gender or other protected characteristics.
- Pay equity is a broader concept ensuring fair compensation across roles of equivalent value, accounting for systemic factors and occupational segregation.
Let’s take an in-depth look at the differences.
What is pay equality?
- Definition: Pay equality means employees doing the same or similar job receive the same pay, regardless of gender or any other protected characteristic.
- Focus: Compares individuals in identical or similar roles, to catch direct wage discrimination.
- Core question: Are a male manager and a female manager in the same role, at the same location, paid the same base salary?
- Legal framework: In the UK, the Equality Act 2010 gives employees the right to equal pay for equal work.
There may still be fair differences in pay due to things like performance, qualifications or tenure – what employers can’t do is pay people differently because of who they are.
What is pay equity?
- Definition: Pay equity means employees receive comparable pay for work of equal value, even when their jobs are different.
- Focus: Examines roles requiring similar skill, effort and responsibility – surfacing systemic undervaluation and occupational segregation (think nursing versus construction).
- Core question: Is the compensation for our administrative staff balanced fairly against our technical staff of comparable responsibility?
- Actionability: The EU pay transparency directive requires employers to assess and report pay across categories of workers doing work of equal value. Running a regular pay equity analysis is how most companies meet that requirement.
Can a company have one without the other?
Yes – and it’s common. A company might have pay equality – its female marketing director earns the same as the male marketing director – but lack pay equity. This may occur if female-dominated administrative roles are systematically paid less than male-dominated technical roles of comparable complexity and responsibility.
That’s why checking that people in the same job are paid the same is only the first step. True fairness means looking across roles, not just within them. Remember also that transgender employees have the same legal rights to equal pay for equal work in the UK as cisgender employees, protected under the 2010 Equality Act.
The legal framework
- UK: The Equality Act 2010 gives employees the right to equal pay for equal work – defined as ‘like work’ (the same or broadly similar work), work rated as equivalent, or work of equal value.
- EU: The EU Pay Transparency Directive introduces mandatory gender pay gap reporting, pay transparency in recruitment, and joint pay assessments where unjustified gaps exceed 5%. Enforcement begins in June 2026.
What does ‘work of equal value’ mean – and what is comparable worth?
‘Work of equal value’ is the principle that different jobs requiring similar levels of skill, effort and responsibility should be paid comparably – even if the day-to-day work looks nothing alike. A nursing role and a construction role, for example, can be of equal value despite sitting in completely different functions.
In practice:
- UK: The Equality Act 2010 allows equal pay claims across different job types where the work is of equal value.
- EU: The EU Pay Transparency Directive requires employers to assess pay across categories of workers performing work of equal value – not just identical roles.
Tying it to the gender pay gap: Adjusted vs. unadjusted
Do you know the difference between your adjusted pay gap and your unadjusted pay gap? Here’s a quick refresher in case you need it:
- Your unadjusted gender pay gap is the overall difference in hourly pay between all men and all women across an organisation (or a country).
- Your adjusted gender pay gap is the difference in pay between men and women holding the same role at the same location.
In other words, a company’s adjusted pay gap is related to pay equality, whereas its unadjusted pay gap is more related to pay equity.
While your adjusted gender pay gap is a pure compensation metric, your unadjusted pay gap is a bit more complicated.
There are a lot of reasons why women might earn less than men on average within an organisation, even if that organisation is committed to equitable pay.
For example:
- There are more men than women in the highest-paid job families and in management positions. This pushes up the average male salary compared to the average female salary.
- Job groups which have historically been filled by women, like nursing or childcare, tend to be lower paid than those typically filled by men, like building or construction.
- Women are disproportionately forced to leave the workforce to accommodate childcare and other unpaid obligations. This means they may have fewer years of experience than their male colleagues, even if they started work at the same time.
- Women are more likely to hold part-time roles than men, often because of their childcare obligations or other unpaid responsibilities. These roles tend to pay less per hour and come with fewer benefits than full-time positions.
When we talk about a country’s overall gender pay gap, we’re normally talking about the unadjusted pay gap. That means that tackling it isn’t just about raising women’s pay – it’s about providing equal opportunities for high-paid work to men and women alike.
What about other pay gaps?
So far, we’ve mostly talked about pay equity and equality through the lens of gender. This is because it’s a good entry point to the conversation and because it’s the focus of a lot of legislation around pay equity.
But it’s also important to note that there are a lot of different gender pay gaps too. For example, in the UK, Black, African, Caribbean or Black British employees consistently earn less on average than their white counterparts.
There are also pay gaps between people of different abilities, sexual orientations and socio-economic backgrounds – and all of these different pay gaps intersect with each other. For example, a disabled woman is likely to earn less than a non-disabled woman, who is in turn likely to earn less than a non-disabled man.
While you might start working towards pay equity by focusing on gender, it’s important to keep different characteristics in mind as you put the tips below into action.
First steps to a pay equity analysis
If you want to know where your organisation actually stands, a pay equity analysis is the place to start. Here’s how to approach it:
- Define the scope. Decide which roles and which protected characteristics you’ll analyse – gender is the usual starting point, but it doesn’t have to be the only one.
- Gather and clean your compensation data. Base salary at a minimum; include bonus and equity for the full picture.
- Identify comparable groups. Group employees into roles of equal value – by job, level and location.
- Calculate the pay gap within each comparable group. This is your adjusted gap, and it tells you whether you have a pay equality problem.
- Build a remediation plan. Fix current outliers first, then address the root causes behind any recurring patterns.
Tools like Figures automate steps 3-5 of this process – identify pay gaps with Figures and meet EU Pay Transparency Directive requirements without the spreadsheet gymnastics.
Working towards pay equity: Where to start
Closing your adjusted gap is the first step – the structural work takes longer. These are long-term plays that won’t pay off overnight, but they set you on the right path.
1. Rethink your recruitment strategy to attract diverse talent
Getting women and underrepresented groups through the door is step one. Studies show ‘masculine’ wording in job descriptions puts off female candidates. Beyond job ads, diverse interview panels, structured interview questions, blind CV screening and less emphasis on ‘culture fit’ all widen your talent pool.
2. Develop your junior talent (especially from underrepresented groups)
Women make up 48% of entry-level employees, but only 28% of the C-suite. Start by tracking who’s being promoted (and who isn’t), then build ‘talent escalators’ – mentorship, job shadowing and development programmes targeted at underrepresented groups.
3. Offer benefits that support work-life balance
Mothers experience a 60% drop in earnings compared to fathers in the decade after a first child. Generous parental leave for both parents – plus flexible working arrangements – helps dismantle this ‘motherhood penalty’ and keeps career progression open to everyone.
4. Encourage the next generation of underrepresented talent
In some industries, diverse talent is scarce at the source. Partner with schools, colleges and universities on mentorship programmes, internships or scholarships for students from underrepresented groups – you’ll widen your own future pipeline while you’re at it.
Figures helps HR teams analyse pay gaps and prepare EU pay transparency reports without spreadsheet complexity.
Ask a demoFAQs
1. Is ‘comparable worth’ just another term for pay equity?
Broadly, yes. ‘Comparable worth’ is the US term for the principle underpinning pay equity: that different jobs of equal value – similar skill, effort and responsibility – should be paid comparably.
2. What is another way to say pay equity?
The phrase used in most legislation is ‘equal pay for work of equal value’. You’ll also see ‘comparable worth’ (mainly in the US) and ‘fair pay’ used to describe the same idea.
Learn more
Want to learn more about pay equity, pay equality and the EU directive? Check out these past articles from our archive:
