Gender Pay Gap: Formula with Mean and Median Example

The gender pay gap is the difference between the average pay of men and women in an organization, expressed as a percentage of men's average pay. An overall gap often reflects who holds which jobs as much as individual pay decisions, so it is read alongside an adjusted gap that compares men and women in the same grade and role.

Formula

Gender pay gap (%) = (Average pay of men minus Average pay of women) / Average pay of men x 100

Term	Meaning
Average pay of men	Mean monthly gross pay of male employees on the rolls on the measurement date. Use the same pay element for both groups.
Average pay of women	Mean monthly gross pay of female employees on the same date.
Median version	The same formula using median pay, which a few very high salaries affect far less.

Worked example

A software company in Kochi has 120 men with total monthly gross pay of ₹54,00,000 and 80 women with total monthly gross pay of ₹30,40,000 in September 2026. In grade L2 alone, 30 men average ₹52,000 and 20 women average ₹50,960.

Average pay of men = ₹54,00,000 / 120 = ₹45,000
Average pay of women = ₹30,40,000 / 80 = ₹38,000
Overall gap = (₹45,000 minus ₹38,000) / ₹45,000 x 100 = ₹7,000 / ₹45,000 x 100 = 15.56% (15.556 rounded to 2 decimals)
Grade L2 gap = (₹52,000 minus ₹50,960) / ₹52,000 x 100 = ₹1,040 / ₹52,000 x 100 = 2%

Result: The overall gap is 15.56 percent, but within grade L2 it is only 2 percent. That pattern suggests fewer women in senior grades is the bigger driver, which HR should confirm grade by grade.

Pay gap is not the same as unequal pay

Equal pay means paying men and women the same for the same or similar work, and any difference within the same role and grade needs a clear, documented reason. The gender pay gap is broader: it compares all men with all women, so it also captures how many women reach senior, better-paid roles. A company can pay equally for equal work and still show a large gap if women are concentrated in junior grades. Measure both.

Mean, median and adjusted gaps

The mean gap uses averages and moves when a few people earn very high salaries. The median gap uses the middle salary of each group and is steadier. The adjusted gap compares men and women within the same grade, role or location, and it is the one that tests pay decisions. Report all three every year and compare them with your own previous years, since each tells a different part of the story.

Mean gap: sensitive to top salaries.
Median gap: the typical employee.
Adjusted gap: same grade or role, tests pay fairness.
Gaps in increments and bonus, not just in salary.

Pitfalls in pay gap analysis

Use the same pay element for everyone: monthly gross against monthly gross, or total cash including bonus against total cash. Compare part-time staff on an hourly or full-time equivalent basis. Very small groups make percentages swing and can identify individuals, so combine grades where numbers are small and keep individual pay data restricted. Question explanations critically, because a lower starting offer after weaker negotiation is a cause to fix, not a justification.

How to improve it

Review pay for men and women in the same grade and role before every increment cycle.
Set salary ranges for each grade and make offers within them.
Check promotion rates for women at each level and remove barriers to progression.
Record a written reason for any pay difference within the same role and grade.
Apply the same increment guideline to employees returning from maternity leave.

Tracking it in ZeniaHR

ZeniaHR's employee records hold gender and grade, and Direct Payroll holds each salary structure built from monthly gross. Access Control can mask salary fields by role, so only people with the right access see individual pay. There is no pay gap report, so an authorized HR or finance user lists salaries with gender and grade and calculates the mean, median and adjusted gaps in a spreadsheet.

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Frequently asked questions

How do you calculate the gender pay gap?

Work out the average pay of men and the average pay of women, subtract the women's average from the men's, divide by the men's average and multiply by 100. For example, averages of ₹45,000 for men and ₹38,000 for women give a gap of ₹7,000 / ₹45,000 x 100 = 15.56 percent.

What is the difference between the gender pay gap and equal pay?

Equal pay is about paying men and women the same for the same or similar work. The gender pay gap compares the average pay of all men with all women, so it also reflects how many women hold senior roles. A company can have equal pay for equal work and still show a gap.

Should I use mean or median for the gender pay gap?

Report both. The mean shows the effect of top salaries, which can be large when senior roles are mostly held by men. The median shows the gap for the typical employee and is steadier from year to year. Add an adjusted gap within the same grade to test pay decisions directly.