How Do I Calculate the Gender Pay Gap Under VSME?

What is the gender pay gap?

The gender pay gap measures the difference in average pay between female and male employees across your entire organisation. It is a workforce-level metric, not a job-by-job comparison.

This is an important distinction, because the gender pay gap is often confused with equal pay. Equal pay legislation concerns whether a man and a woman doing the same job are paid the same amount. The gender pay gap is different: it looks at average pay across the whole company, regardless of role or seniority. A company can fully comply with equal pay principles and still have a gender pay gap, for example if men are more concentrated in higher-paid senior roles and women in lower-paid roles, or vice versa.

For ESG reporting purposes under VSME, it is the organisation-wide average that matters, not individual pay comparisons.

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Who needs to report it?

Here is the good news for most small and medium-sized businesses: under the VSME Standard, companies with fewer than 150 employees (headcount) may omit this disclosure entirely.

This means the vast majority of SMEs using VSME do not need to calculate or report the gender pay gap at all. If your company falls below the 150-employee threshold, you can simply note that the disclosure has been omitted under the VSME size exemption, rather than spending time collecting and calculating pay data.

It is worth keeping an eye on the future, though. This threshold is scheduled to decrease to 100 employees from 7 June 2031, as stated in the VSME Standard. Companies growing toward that size should be aware that the exemption will eventually apply to a smaller pool of businesses.

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How is the gender pay gap calculated?

If your company is above the threshold and needs to report this metric, the calculation is straightforward.

To find the percentage, you use the following formula:

Gender Pay Gap = ((Average Male Hourly Wage - Average Female Hourly Wage) / Average Male Hourly Wage) x 100

In other words, take the difference between the average hourly wage of male employees and female employees, divide that difference by the average hourly wage of male employees, and multiply the result by 100 to express it as a percentage.

A simple worked example

Say your company's average hourly wages are:

• Average male hourly wage: 300 DKK
• Average female hourly wage: 270 DKK

The calculation would be:

(300 - 270) / 300 x 100 = 10%

This means, on average, women at this company earn 10% less per hour than men.

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What does the result mean?

• A positive result, like the 10% above, means average female pay is lower than average male pay.
• A negative result means average female pay is higher than average male pay.
• A result of zero means average pay is equal between male and female employees across the organisation.

There is no universally correct number, as the point of the disclosure is transparency. If a gap exists, it is good practice to explain the context in your ESG report and outline any concrete steps your company is taking to address it.

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What data is required?

To calculate the gender pay gap, you will typically need:

• Total remuneration for each employee included in the calculation
• Gender recorded for each employee
• The employee population included in the calculation, such as all employees during the reporting period

The data should be complete and consistent for the reporting period you are covering. Missing records for a subset of employees, or mixing data from different time periods, will distort the result, so it is worth checking that your remuneration and gender data line up for the same group of employees and the same period before calculating.

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How Wardn helps

Wardn already includes the gender pay gap calculation built into the platform. Rather than working through the formula manually, users simply enter the required remuneration and gender data, and Wardn automatically calculates the gender pay gap according to the methodology described above.

For companies below the 150-employee threshold, Wardn also reflects that this disclosure can be omitted under VSME, so there is no need to collect this data unnecessarily.

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Frequently asked questions

Is the gender pay gap the same as equal pay?

No. Equal pay concerns whether employees doing the same job are paid the same amount. The gender pay gap is a broader, organisation-wide average comparing the pay of all male and female employees, regardless of role.

Do all SMEs need to report the gender pay gap under VSME?

No. Companies with fewer than 150 employees (headcount) may omit this disclosure under the VSME Standard. Most SMEs fall below this threshold and are not required to calculate or report it.

Will the reporting threshold for the gender pay gap change?

Yes. The employee threshold is scheduled to decrease from 150 to 100 employees from 7 June 2031, as stated in the VSME Standard, meaning more companies will eventually need to report this disclosure.

What data do I need to calculate the gender pay gap?

You need total remuneration and gender recorded for each employee in the population you are reporting on, covering a consistent reporting period.

What does a positive gender pay gap percentage mean?

A positive result means average female pay is lower than average male pay across the organisation. A negative result means the reverse, and a result of zero means average pay is equal between genders.

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