Gender Pay Gap Explained: What the Numbers Actually Mean

What Is the Gender Pay Gap?

The gender pay gap is the difference in average hourly pay between men and women across an entire organisation. It is crucially different from unequal pay. Unequal pay is when a man and a woman are paid differently for doing the same job, which has been illegal in the UK since 1970 under the Equal Pay Act. The gender pay gap, on the other hand, measures a structural difference — it reflects the distribution of men and women across different roles and seniority levels within the organisation.

A company can have a significant gender pay gap without paying any individual woman less than a man in the same role. This happens when men are disproportionately represented in senior, higher-paid roles while women are concentrated in junior or lower-paid positions. The gender pay gap is therefore a measure of workplace structure and progression, not necessarily of discrimination in individual pay decisions.

Mean vs Median Hourly Pay Gap

Employers are required to publish both the mean and median hourly pay gap. The mean gap is calculated by adding up all hourly pay rates for men and all for women, dividing each by the number of employees of that gender, and comparing the two averages. The median gap takes the middle value from the list of men's hourly pay and the middle value from women's hourly pay, and compares them.

Most analysts consider the median to be the more useful measure because it is not distorted by a small number of very high earners. If a company has a few very highly paid male executives, the mean gap will be inflated even if pay is relatively equal for the vast majority of staff. The median gives you a better sense of the "typical" experience. That said, a large mean gap with a smaller median gap tells you something specific: there is a concentration of high earners who are predominantly male, which is itself informative about the company's leadership structure.

What Is a "Good" Gap?

The UK national median gender pay gap stands at approximately 14% (as of the most recent ONS data), meaning that on average women earn 14% less per hour than men. However, this varies significantly by sector. Construction and finance tend to have larger gaps; education and health tend to have smaller ones.

As a rough guide, a median pay gap under 5% is strong and suggests the company has achieved relatively balanced representation across pay levels. A gap between 5% and 14% is around or below the national average and is reasonable for most sectors. A gap between 14% and 25% is above average and worth investigating further. A gap above 25% is significantly above the national average and suggests pronounced structural imbalance. A negative gap (where women are paid more on average) is uncommon but does occur, particularly in some public sector organisations.

The Bonus Gap

Alongside the hourly pay gap, employers must report the difference in bonus pay between men and women, and the proportion of each gender receiving a bonus. The bonus gap is often much larger than the hourly pay gap because bonuses tend to be more concentrated among senior roles, which are disproportionately occupied by men.

For job seekers, the bonus gap reveals something important about progression and reward structures. If the bonus gap is very large, it may indicate that bonus-eligible roles (typically management and senior positions) are overwhelmingly filled by men. The proportion of each gender receiving a bonus is also telling: if 80% of men receive a bonus but only 40% of women do, it suggests that women are concentrated in roles that are not bonus-eligible, which often correlates with lower seniority and fewer progression opportunities.

Pay Quartiles

Employers must also publish the proportion of men and women in each pay quartile. All employees are ranked by hourly pay and divided into four equal groups (quartiles). The lower quartile is the bottom 25% of earners; the upper quartile is the top 25%. For each quartile, the employer reports the percentage of men and women.

Pay quartiles are perhaps the most illuminating piece of gender pay gap data because they show you exactly where the imbalance lies. A company might have a 50/50 gender split overall, but if the upper quartile is 80% male and the lower quartile is 80% female, you can see that women are concentrated in lower-paid roles. This tells you something concrete about career progression — are women reaching the top of the organisation, or are they hitting a ceiling? If you are a woman considering joining a company with a heavily male upper quartile, it is worth asking what the company is doing to address this imbalance and what your own progression opportunities look like.

Why Gaps Exist

Gender pay gaps are driven by several structural factors. Occupational segregation means that certain industries and roles are dominated by one gender — for example, engineering remains predominantly male while social care is predominantly female, and these sectors have different pay levels. Vertical segregation means that within organisations, men are more likely to occupy senior, higher-paid roles. The impact of caring responsibilities falls disproportionately on women, who are more likely to take career breaks, work part-time, or choose roles with greater flexibility (which often come with lower pay). Working patterns also play a role — part-time roles are disproportionately held by women and tend to be lower paid per hour even after controlling for role type.

Understanding why the gap exists at a specific company helps you interpret whether it is being actively addressed or is simply accepted. A company with a large gap that publishes a detailed action plan and shows year-on-year improvement is making genuine effort. A company with a large gap and no narrative explanation may not be taking the issue seriously.

Improving vs Worsening: Reading Trends

With several years of data now available, you can often see whether a company's gender pay gap is improving, stable, or worsening. A company that has reduced its median gap from 20% to 12% over four years is making meaningful progress. A company whose gap has stayed flat or increased may be doing less to address the underlying causes.

However, trends need context. A company that acquires a business with a large gap may see its own gap increase temporarily. A company that promotes a significant number of women into senior roles may see its gap decrease sharply. Restructuring, industry changes, and even the timing of data collection (a single snapshot date each year) can all cause fluctuations. Look at the overall direction over three or more years rather than focusing on year-to-year movements.

Limitations of Gender Pay Gap Data

Gender pay gap data has important limitations that you should be aware of. It only covers employers with 250 or more employees, so the majority of UK companies do not report. The data is a single snapshot taken on 5 April each year, which may not be representative of the full year. The data does not account for different roles, seniority levels, or working patterns — it is a raw comparison of all men versus all women, regardless of what they do. And the data only captures the binary gender split; non-binary employees are not separately reported.

Perhaps most importantly, gender pay gap data tells you about the organisation as a whole, not about the specific team or role you would be joining. A company with a large overall gap might have excellent pay equity within your particular department. Conversely, a company with a small overall gap might have significant issues in specific areas. Use the data as one input among many, not as a definitive judgement.

How to Use GPG Data When Evaluating a Job Offer

When you receive a job offer, look up the company's gender pay gap data as part of your due diligence. Check the median hourly pay gap and compare it to the national average and the sector norm. Look at the pay quartiles to see whether women are represented at senior levels. Review the bonus gap and the proportion receiving bonuses. Check whether the gap has been improving over time. And read the company's narrative (if they have published one) to see what actions they are taking to close the gap.

If you are comfortable asking about it, the gender pay gap can be a good topic to raise in an interview. Asking "What is the company doing to address its gender pay gap?" signals that you care about equity and gives you insight into the company's values and priorities. EmployerCheck includes gender pay gap data and trends in company reports, and you can explore GPG rankings across sectors on our GPG rankings page.

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