Pay equity refers to:

Pay equity is a fundamental principle in compensation that refers to fair compensation for work of comparable value. It means ensuring that employees receive equitable pay for jobs that, while perhaps different in nature, require similar levels of skill, effort, responsibility, and working conditions. This concept goes beyond "equal pay for equal work," which addresses identical jobs, by aiming to eliminate systemic wage discrimination based on gender, race, or other protected characteristics across different but similarly valued roles. Pay equity seeks to correct historical biases in compensation structures.

• Paying all employees exactly the same is impractical and ignores differences in job roles, experience, performance, and market value.
• Performance-based bonuses are a form of variable pay tied to individual or organizational achievement, distinct from the principle of fair valuation of work.
• Profit sharing is an incentive plan where employees receive a portion of the company's profits, which is a type of benefit, not the definition of pay equity.