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What Is Equitable Remuneration?

By Osmand Vitez
Updated May 17, 2024
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Equitable remuneration is a term that defines equal pay for equal work. The attempt here is to put all individuals on an even pay scale regardless of class, creed, race, or sex. Many governments create laws to ensure equitable remuneration amongst all workers in an environment. A significant problem to overcome, however, is that equal pay may not be an easy measurement. The result may be a modified version of the original intent, with equivalent responsibilities and qualifications resulting in equal remuneration.

Legally speaking, equitable remuneration can have a more narrowly defined purpose in the business environment. A common legal review of the term attempts to ensure that remuneration represents good faith practices and is proportionate to the performance of the individual. Common instances of equitable remuneration occur in industries dominated by copyrights or patents. The film, writing, and creative industries tend to have particular focus on this and other practices. Lawyers and attorneys are often necessary to define this term.

Free market economic theory tends to state that equitable remuneration is between the individual spending the money and the individual receiving the payment. Therefore, minimum wage laws and other attempts to create equal pay in a market are unnecessary. The reason behind this theory comes from the fact that not all individuals are exactly the same in the market. Remuneration should depend on each individual’s knowledge, skills, and abilities. Under this principle, individuals would most likely receive different pay based on these individual characteristics.

Courts can be typical intermediaries in some cases that settle equitable remuneration conflicts. If a contract does not pay out remuneration as expected, or some other issue arises, this third party is helpful in settling the dispute. In some cases, instances of equitable remuneration are actually accurate and correct despite the beliefs of outsiders. Mediators and arbitrators can also help decide these issues if two or more parties do not use the court system. Legal cases are often necessary when there is no reasonable expectation for proper remuneration.

Though all individuals should have proper expectations of remuneration, ideas of fairness are not often a factor. Fairness is a squirmy term to define when it comes to wages. Those who believe in remuneration fairness might believe an executive’s salary should have ties to the lowest employee in the company. These tendencies are often myopic, as alterations to a CEO’s salary may affect the lowest employee. Other methods of fairness can also create difficulties in terms of remuneration.

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