Pay Equity - Meaning & Definition

Published in Human Resources Terms by MBA Skool Team Last Updated: June 03, 2023Reading time:

What is Pay Equity?

The concept of pay equity was established when it was observed that female occupations had been undervalued over a period of time. Pay equity helps in eliminating this discrimination. 

Pay Equity

It essentially involves 4 steps:

  • Firstly, the male dominated and female dominated job classes are identified. For this, one must first ensure that the organization has job classes defined. A job class is essentially a collection of all similar jobs. It is said to be male dominated if it has 60% or more men, female dominated if there are 60% or more females, else it is a neutral job class.


  • Once these have been identified, each job class is evaluated on 4 different parameters, primarily the efforts required, the responsibilities involved, Qualifications for the job and finally the environment or working conditions.


  • Once the evaluation is complete, the jobs of equal value to the employer from both the female and male dominated classes are identified and checked for compensation gaps. If it is found that the predominantly male job classes are getting paid more, then measures are taken to bridge the gap. But it is to be noted that:
    • The compensation of the male dominated job class is not reduced, but that of the female job class is increased to bridge the gap.
    • If it is found that the female job class is getting paid more, then no action is taken.
    • Compensation of neutral jobs (not dominated by either gender) is not affected by the concept of pay equity.


  • Finally, the compensation is rolled out and the gap is bridged, and also it is ensured that the future job roles created will not be subject to pay inequity.

Hence, this concludes the definition of Pay Equity along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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